EXHIBIT 10(b)
CREDIT AGREEMENT
Dated as of March 25, 2003
among
K2 INC.
and
CERTAIN OF ITS SUBSIDIARIES PARTY HERETO,
as the Borrowers and the Guarantors,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as the Lenders,
and
BANK ONE, NA,
as Administrative Agent,
GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent,
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK
as Documentation Agent,
LASALLE BANK NATIONAL ASSOCIATION
and
FLEET CAPITAL CORPORATION,
as Co-Agents
[LOGO OF BANK ONE]
BANC ONE CAPITAL MARKETS, INC.
LEAD ARRANGER AND SOLE BOOK RUNNER
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS ..........................................................1
Section 1.1 Definitions ...........................................1
ARTICLE 2 THE CREDITS .........................................................34
Section 2.1 Revolving Commitments ................................34
Section 2.2 Term Loans B .........................................39
Section 2.3 Evidence of Indebtedness; Noteless Agreement .........39
Section 2.4 Facility LCs and Acceptances .........................39
Section 2.5 Interest .............................................47
Section 2.6 Continuation and Conversion of Outstanding Loans .....48
Section 2.7 Borrowing Notices Irrevocable ........................49
Section 2.8 Interest Periods .....................................49
Section 2.9 Limitation of Interest ...............................49
Section 2.10 Fees .................................................50
Section 2.11 Payment of the Loans .................................52
Section 2.12 Termination of Facilities ............................52
Section 2.13 Prepayment of the Loans ..............................53
Section 2.14 Payments by the Borrowers ............................54
Section 2.15 Payments as Revolving Advances .......................54
Section 2.16 Apportionment, Application, and Reversal of Payments..55
Section 2.17 Settlement ...........................................56
Section 2.18 Indemnity for Returned Payments ......................57
Section 2.19 Judgment Currency ....................................58
ARTICLE 3 YIELD PROTECTION; TAXES ..............................................58
Section 3.1 Yield Protection .....................................58
Section 3.2 Changes in Capital Adequacy Regulations ..............59
Section 3.3 Availability of Types of Advances ....................60
Section 3.4 Funding Indemnification ..............................60
Section 3.5 Taxes.................................................60
Section 3.6 Lender Statements; Survival of Indemnity .............62
Section 3.7 Replacement of a Lender ..............................62
ARTICLE 4 CONDITIONS PRECEDENT 63
Section 4.1 Initial Credit Extension .............................63
Section 4.2 Each Credit Extension ................................66
ARTICLE 5 REPRESENTATIONS AND WARRANTIES ......................................67
Section 5.1 Existence and Standing ...............................67
Section 5.2 Capitalization and Subsidiaries ......................67
Section 5.3 Authorization and Validity ...........................67
Section 5.4 Name; Prior Transactions .............................67
Section 5.5 No Conflict; Government Consent ......................67
Section 5.6 Security Interest in Facility Collateral .............68
Section 5.7 Financial Statements..................................68
Section 5.8 Material Adverse Change ..............................69
Section 5.9 Taxes ................................................69
Section 5.10 Litigation and Contingent Obligations ................69
Section 5.11 ERISA and Foreign Plans ..............................69
Section 5.12 Accuracy of Information ..............................70
Section 5.13 Regulations Concerning Margin Stock ..................70
Section 5.14 Material Agreements ..................................70
Section 5.15 Compliance With Laws .................................71
Section 5.16 Ownership of Properties ..............................71
Section 5.17 Plan Assets; Prohibited Transactions .................71
Section 5.18 Environmental Matters ................................71
Section 5.19 Investment Company Act ...............................71
Section 5.20 Public Utility Holding Company Act ...................71
Section 5.21 Bank Accounts ........................................71
Section 5.22 Indebtedness .........................................71
Section 5.23 Real Estate; Leases ..................................72
Section 5.24 Intellectual Property Rights .........................72
Section 5.25 Accounts Payable .....................................72
Section 5.26 Solvency .............................................72
Section 5.27 Subordinated Indebtedness ............................73
Section 5.28 Post-Retirement Benefits .............................73
Section 5.29 Investment Property ..................................73
Section 5.30 Common Enterprise ....................................73
Section 5.31 Insider Transactions .................................74
ARTICLE 6 COVENANTS ...........................................................74
Section 6.1 Reporting ............................................74
Section 6.2 Use of Proceeds ......................................77
Section 6.3 Notices ..............................................78
Section 6.4 Conduct of Business ..................................78
Section 6.5 Taxes ................................................78
Section 6.6 Payment of Indebtedness and Other Liabilities ........78
Section 6.7 Insurance ............................................79
Section 6.8 Application of Proceeds of Insurance .................79
Section 6.9 Compliance with Laws; Maintenance of Existence
and Good Standing ..............................80
Section 6.10 Maintenance of Properties and Licenses ...............80
Section 6.11 Amendment of Organization Certificates and
Management Agreements ..........................80
Section 6.12 Inspection ...........................................80
Section 6.13 Dividends ............................................81
Section 6.14 Indebtedness .........................................81
Section 6.15 Guaranties ...........................................82
Section 6.16 Prepayment of Indebtedness ...........................82
Section 6.17 Merger ...............................................82
Section 6.18 Sale of Assets .......................................82
Section 6.19 Investments and Acquisitions .........................83
Section 6.20 Liens ................................................85
Section 6.21 Restrictions on Liens ................................86
Section 6.22 Sale and Leaseback Transactions and
Other Off-Balance Sheet Liabilities ............86
Section 6.23 Affiliate Transactions ...............................86
Section 6.24 Appraisals ...........................................86
Section 6.25 Reserved .............................................86
Section 6.26 Capital Expenditures .................................87
Section 6.27 Financial Covenants ..................................87
Section 6.28 Fiscal Year ..........................................87
Section 6.29 Reserved .............................................87
Section 6.30 Collateral Waiver Agreements; Deposit
Control Agreements .............................87
Section 6.31 Guaranties of the Obligations ........................88
Section 6.32 Additional Collateral; Further Assurances ............88
Section 6.33 Amendments to Agreements .............................90
Section 6.34 Subordinated Indebtedness ............................90
Section 6.35 Lenders as Depository ................................90
ARTICLE 7 DEFAULTS ............................................................90
Section 7.1 Events of Default ....................................90
ARTICLE 8 REMEDIES; WAIVERS AND AMENDMENTS ....................................93
Section 8.1 Remedies; Acceleration; Facility LC/Acceptance
Collateral Account .............................93
Section 8.2 Amendments ...........................................96
Section 8.3 Preservation of Rights ...............................97
ARTICLE 9 GENERAL PROVISIONS ..................................................98
Section 9.1 Survival of Representations ..........................98
Section 9.2 Governmental Regulation ..............................98
Section 9.3 Headings .............................................98
Section 9.4 Entire Agreement .....................................98
Section 9.5 Several Obligations; Benefits of this Agreement ......98
Section 9.6 Expenses; Indemnification ............................98
Section 9.7 Numbers of Documents .................................100
Section 9.8 Accounting ...........................................100
Section 9.9 Severability of Provisions ...........................100
Section 9.10 Nonliability of the Lenders ..........................100
Section 9.11 Confidentiality ......................................100
Section 9.12 Nonreliance ..........................................101
Section 9.13 Disclosure ...........................................101
Section 9.14 Designated Senior Debt ...............................101
ARTICLE 10 THE AGENT ..........................................................101
Section 10.1 Appointment; Nature of Relationship ..................101
Section 10.2 Powers ...............................................101
Section 10.3 General Immunity .....................................101
Section 10.4 No Responsibility for Loans, Recitals, etc ...........102
Section 10.5 Action on Instructions of the Lenders ................102
Section 10.6 Employment of Agents and Counsel .....................102
Section 10.7 Reliance on Documents; Counsel .......................102
Section 10.8 The Agent's Reimbursement and Indemnification ........102
Section 10.9 Notice of Default ....................................103
Section 10.10 Rights as a Lender ...................................103
Section 10.11 Lender Credit Decision ...............................103
Section 10.12 Successor Agent ......................................104
Section 10.13 Agent Fees ...........................................104
Section 10.14 Delegation to Affiliates .............................104
Section 10.15 Execution of Loan Documents ..........................105
Section 10.16 Facility Collateral Matters ..........................105
Section 10.17 Agency for Perfection ................................107
Section 10.18 Reports ..............................................107
Section 10.19 Co-Agents ............................................107
Section 10.20 Agent as U.K. Security Trustee .......................107
ARTICLE 11 SETOFF; RATABLE PAYMENTS ...........................................108
Section 11.1 Setoff ...............................................108
Section 11.2 Ratable Payments .....................................109
ARTICLE 12 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS ..................109
Section 12.1 Successors and Assigns ...............................109
Section 12.2 Participations .......................................110
Section 12.3 Assignments ..........................................111
Section 12.4 Dissemination of Information .........................112
Section 12.5 Tax Treatment ........................................112
ARTICLE 13 NOTICES ............................................................112
Section 13.1 Notices ..............................................112
Section 13.2 Change of Address ....................................113
ARTICLE 14 COUNTERPARTS .......................................................113
Section 14.1 Counterparts .........................................113
ARTICLE 15 CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL .......113
Section 15.1 Choice of Law ........................................113
Section 15.2 Consent to Jurisdiction ..............................113
Section 15.3 Waiver of Jury Trial .................................114
ARTICLE 16 RELATIONSHIP OF THE OBLIGATED PARTIES ..............................114
Section 16.1 Joint and Several Liability ..........................114
Section 16.2 Contribution and Indemnification Among the
U.S. Borrowers .................................117
Section 16.3 Agency of the Parent for Each Other Obligated Party ..117
Section 16.4 Additional Borrowers and Guarantors ..................118
Section 16.5 Express Waivers By the Obligated Parties In Respect of
Cross Guaranties and Cross Collateralization ...118
TABLE OF CONTENTS
EXHIBITS
Exhibit A - Form of Note
Exhibit B - Form of Borrowing Base Certificate
Exhibit C - Form of Borrowing Notice
Exhibit D - Form of Compliance Certificate
Exhibit E - Form of Money Transfer Instructions
Exhibit F - Form of Assignment Agreement
TABLE OF CONTENTS
SCHEDULES
Schedule 1.1A - Pricing Schedule
Schedule 5.2 - Capitalization and Subsidiaries
Schedule 5.4 - Names; Prior Transactions
Schedule 5.10 - Litigation and Contingent Obligations
Schedule 5.16 - Ownership of Properties
Schedule 5.21 - Bank Accounts
Schedule 5.22 - Indebtedness
Schedule 5.23 - Real Estate; Leases
Schedule 5.24 - Intellectual Property Rights
Schedule 5.29 - Investment Property
Schedule 5.31 - Insider Transactions
Schedule 6.20 - Permitted Liens
Schedule 6.23 - Affiliate Transactions
TABLE OF CONTENTS
CREDIT AGREEMENT
This Credit Agreement, dated as of March 25, 2003, is among K2 Inc. and
each of its Subsidiaries party hereto, each of the lending institutions from
time to time party hereto (such lending institutions, together with their
respective successors and assigns, are referred to herein individually as a
"Lender" and collectively as the "Lenders"), and Bank One, NA, a national
banking association having its principal office in Chicago, Illinois, as
contractual representative for the Lenders (the "Agent"), and acting through its
London branch as the "U.K. Security Trustee". The parties hereto agree as
follows:
RECITALS:
A. The Obligated Parties have requested the Lenders to make available
to the Borrowers revolving credit facilities for loans, letters of credit, and
bankers acceptances, and a term loan facility in an initial aggregate amount of
$225,000,000 with the option to increase such amount by up to an additional
$25,000,000 as specified herein and subject to satisfaction of certain
conditions precedent set forth herein, which extensions of credit the Borrowers
will use for the purposes permitted pursuant to Section 6.2.
B. The Lenders have agreed to make available to the Borrowers revolving
credit facilities and a term loan facility upon the terms and conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Obligated Parties, the Lenders,
and the Agent hereby agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions. Each of the following terms, wherever used in this
Agreement, shall have the following respective meanings.
"Acceptance" and "Acceptances" respectively mean any and all existing and
future drafts drawn by the Parent or beneficiary under any Letter of Credit as
drawer that are processed and accepted for payment by any Acceptance Lender in
its absolute discretion.
"Acceptance Fee" has the meaning specified in Section 2.10(c).
"Acceptance Date" means the date any Acceptance is accepted, created or
deemed accepted or created hereunder.
"Acceptance Lender" means any Lender in its capacity as an "acceptance
lender" of Acceptances hereunder.
CREDIT AGREEMENT Page 1
"Acceptance Obligations" means, at any time, without duplication, the
sum of (a) the aggregate amount of all Acceptances outstanding at such time,
plus (b) the aggregate unpaid amount at such time of all Acceptance
Reimbursement Obligations.
"Acceptance Reimbursement Obligations" means, at any time, the
aggregate of all indebtedness, liabilities, and obligations of the Parent then
outstanding under Section 2.4(f) to pay to any Acceptance Lender (or reimburse
any Acceptance Lender for) any amount due under any Acceptance at maturity.
"Account" and "Accounts" have the meanings specified in the Security
Agreements and includes "Receivables" as such term is defined in the U.K.
Debenture.
"Account Debtor" means any Person obligated on an Account.
"Accounts Advance Rate" means 85.0%.
"Acquisition" means any transaction, or any series of related
transactions, consummated on or after the Closing Date, by which any Obligated
Party (a) acquires any going business or all or substantially all of the assets
of any Person or division thereof, whether through purchase of assets, merger,
or otherwise or (b) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) a majority (in number
of votes) of the Capital Stock of a Person which has ordinary voting power for
the election of directors or other similar management personnel of a Person
(other than Capital Stock having such power only by reason of the happening of a
contingency) or a majority of the outstanding Capital Stock of a Person,
including, without limitation, the Rawlings Acquisition.
"Advance" means an advance of funds under the Revolving Loans, (a) made
by some or all of the Lenders on the same Borrowing Date or (b) continued or
converted by the Lenders on the same date of continuation or conversion,
consisting, in either case, of the aggregate amount of the several Loans of the
same Type and, in the case of Eurodollar Loans, for the same Interest Period.
The term "Advance" shall include Non-Ratable Loans and Collateral Protection
Advances unless otherwise expressly provided.
"Affected Lender" has the meaning specified in Section 3.7.
"Affiliate" means, with respect to any Person (the "subject Person"),
any other Person directly or indirectly controlling, controlled by, or under
common control with the subject Person. A Person shall be deemed to control
another Person if the controlling Person owns 10.0% or more of any class of
voting Capital Stock of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of Capital Stock,
by contract, or otherwise.
"Agent" means Bank One in its capacity as contractual representative of
the Lenders pursuant to Article 10, and not in its individual capacity as a
Lender, and any successor Agent appointed pursuant to Article 10.
CREDIT AGREEMENT Page 2
"Agent-Related Party" means any of the Agent, its directors, officers,
agents, or employees, and "Agent-Related Parties" means more than one of any of
the foregoing.
"Aggregate Commitment" means the aggregate of the Aggregate Revolving
Commitment and the aggregate outstanding principal balance of the Term Loans B.
"Aggregate Outstanding Credit Exposure" means, at any time, the
aggregate of the Outstanding Credit Exposure of all the Lenders.
"Aggregate Outstanding Revolving Credit Exposure" means, at any time,
the aggregate of the Outstanding Revolving Credit Exposure of all the Lenders.
"Aggregate Revolving Commitment" means the aggregate of the Revolving
Commitments of all the Lenders, as reduced or increased from time to time
pursuant to the terms of this Agreement. As of the Closing Date, the Aggregate
Revolving Commitment is equal to $205,000,000.
"Aggregate Unused Revolving Commitment" means, at any time, the amount
of the Aggregate Revolving Commitment, minus the Aggregate Outstanding Revolving
Credit Exposure at such time.
"Agreement" means this Credit Agreement, as it may be amended,
restated, or otherwise modified and in effect from time to time.
"Alternate Base Rate" means, for any day, a fluctuating per annum rate
of interest equal to the higher of (a) the Prime Rate for such day or (b) the
sum of the Federal Funds Effective Rate for such day, plus one-half percent
(0.50%) per annum.
"Applicable Acceptance Rate" means, at any time, with respect to
Acceptances, the percentage per annum rate for determining the applicable fee
payable in respect of Acceptances pursuant to Section 2.10(c), as set forth in
Schedule 1.1(A).
"Applicable LC Rate" means, at any time, with respect to Facility LCs,
the percentage per annum rate for determining the LC Fee applicable in respect
of a standby Facility LC or a commercial Facility LC, as the case may be, as set
forth in Schedule 1.1(A).
"Applicable Margin" means, with respect to Loans of any Type at any
time, the percentage rate per annum which is applicable at such time with
respect to Loans of such Type as set forth in Schedule 1.1A.
"Applicable Unused Commitment Fee Rate" means, at any time, the
percentage per annum rate at which fees accrue on the Aggregate Unused Revolving
Commitment at such time as set forth in Schedule 1.1A.
CREDIT AGREEMENT Page 3
"Appraised Inventory" means Inventory of the Canadian Obligated
Parties, the U.K. Obligates Parties, and the U.S. Borrowers, as applicable,
which is of a type which is the subject of an Inventory Appraisal.
"Approved Fund" means any Fund that is administered or managed by (a) a
Lender, (b) an Affiliate of a Lender, or (c) an entity or an Affiliate of an
entity that administers or manages a Lender.
"Arranger" means Banc One Capital Markets, Inc., a Delaware
corporation, and its successors, in its capacity as Lead Arranger and Sole Book
Runner.
"Article" means an article of this Agreement unless another document is
specifically referenced.
"Assignment Agreement" has the meaning specified in Section 12.3(a).
"Authorized Officer" means, with respect to any Obligated Party, any of
the chief executive officer, president, chief financial officer, secretary, or
treasurer of such Obligated Party, acting singly.
"Availability Reserves" means any and all reserves which the Agent
deems necessary in the exercise of its reasonable credit judgment to maintain
(including, without limitation, reserves for accrued and unpaid interest on the
Obligations, Banking Services Reserves, Priority Payable Reserve, reserves for
up to three months rent at locations leased by any Obligated Party and for
warehousemen's and bailee's charges, reserves for dilution of Accounts (such
reserve to not be less than an amount equal to the dilution percentage for the
six preceding calendar months, minus 8.0%), reserves for Inventory shrinkage,
reserves for customs charges and shipping charges related to any Eligible
Inventory in transit, reserves for taxes (including any amount which represents
a sales or excise tax or goods and services tax), fees, assessments, and other
governmental charges) with respect to the Facility Collateral or any Obligated
Party which limit the availability of Credit Extensions hereunder or which
represent amounts the Agent or any Lender may be obligated to pay in the future
on behalf of an Obligated Party.
"Bank One" means Bank One, NA, a national banking association having
its principal office in Chicago, Illinois, in its individual capacity, and its
successors.
"Banking Services" means each and any of the following bank services
provided to any Obligated Party by any Lender or its respective Affiliates: (a)
Facility Rate Management Transactions, (b) commercial credit cards, (c) treasury
management services (including, without limitation, controlled disbursing,
automated clearinghouse transactions, return items, and interstate depository
network services), and (d) foreign exchange.
"Banking Services Reserves" means all Availability Reserves which the
Agent from time to time establishes in its sole discretion for the Banking
Services then provided or outstanding.
CREDIT AGREEMENT Page 4
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
ss. 101 et seq.) as amended, reformed, or otherwise modified from time to time,
and any rule or regulation issued thereunder.
"BIA" means the Bankruptcy and Insolvency Act (Canada) as amended,
reformed, or otherwise modified from time to time and any rule or regulation
issued thereunder.
"Borrower" means any of K2 Canada, any U.K. Borrower, or any U.S.
Borrower, and "Borrowers" means two or more of such Persons, as the context
requires.
"Borrowing Base" means each of the Canadian Borrowing Base, the U.K.
Borrowing Base, and the U.S. Borrowing Base, as the context requires.
"Borrowing Base Calculation" means an amount equal to the sum of (a)
the amount of Eligible Accounts, multiplied by the Accounts Advance Rate, plus
(b) the Inventory Advance Amount.
"Borrowing Base Certificate" means a certificate, signed by an
Authorized Officer of the Parent, in the form of Exhibit B or another form which
is acceptable to the Agent in its discretion.
"Borrowing Date" means a date on which a Loan or an Advance is made
hereunder.
"Borrowing Notice" has the meaning specified in Section 2.1(c)(i).
"Business Day" means (a) in all cases, a day (other than a Saturday or
Sunday) on which banks generally are open in Chicago, Illinois for the conduct
of substantially all of their commercial lending activities and interbank wire
transfers can be made on the Fedwire system, (b) with respect to any borrowing,
payment, or rate selection of Eurodollar Loans or Eurodollar Advances, a
Business Day pursuant to clause (a) preceding and on which dealings in U.S.
dollars are carried on in the London interbank market, (c) with respect to any
transaction in connection with any Loan to K2 Canada, a Business Day pursuant to
clause (a) preceding and on which banks generally are open in Toronto, Canada
for the conduct of substantially all of their commercial lending activities, and
(d) with respect to any transaction in connection with any Loan to a U.K.
Borrower, a Business Day pursuant to clause (a) preceding and on which banks
generally are open in London, England for the conduct of substantially all of
their commercial lending activities.
"Canadian Borrowing Base" means, at any time, an amount equal to the
lesser of (a) $7,500,000 or (b) the Borrowing Base Calculation of the Canadian
Obligated Parties, minus Availability Reserves applicable to the Canadian
Obligated Parties.
"Canadian Guarantee Agreement" means a guarantee agreement (in form and
substance satisfactory to the Agent), dated concurrently herewith, duly executed
by one or more of the Canadian Obligated Parties, and any other agreement
executed by a Person whereby such Person
CREDIT AGREEMENT Page 5
guarantees or assures payment and performance of the Canadian Obligations or
any portion thereof.
"Canadian Guarantor" means each Person who is or becomes a party to any
Canadian Guarantee Agreement, whether pursuant to the terms of this Agreement or
otherwise, including each such Person's successors and assigns, and "Canadian
Guarantors" means two or more of such Persons, collectively.
"Canadian Obligated Parties" means each of K2 Canada and each Canadian
Guarantor, individually, and "Canadian Obligated Parties" means two or more of
such Persons, collectively, as the context requires.
"Canadian Obligations" means all unpaid principal of and accrued and
unpaid interest on the Loans to K2 Canada and all accrued and unpaid fees,
expenses, reimbursements, indemnities, and other indebtedness, liabilities, and
obligations of the Canadian Obligated Parties to the Lenders or to any Lender
(including with respect to Facility Rate Management Obligations owing by the
Canadian Obligated Parties), the Agent, or any indemnified party arising under
any of the Loan Documents.
"Canadian Security Agreements" means any general security agreement,
dated concurrently herewith, and any future general security agreement or deed
of hypothec, between one or more of the Canadian Obligated Parties and the Agent
(in form and substance satisfactory to the Agent), for the benefit of the Agent
and the Lenders, as such agreement may be amended, restated, or otherwise
modified from time to time.
"Capital Expenditures" means, without duplication, any expenditures for
any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Parent and its
Subsidiaries prepared in accordance with GAAP, excluding (a) expenditures of
insurance proceeds to rebuild or replace any asset after a casualty loss and (b)
leasehold improvement expenditures for which the Parent or a Subsidiary of the
Parent is reimbursed by the lessor within 45 days of such expenditure.
"Capital Stock" means any and all corporate stock, units, shares,
partnership interests, membership interests, equity interests, rights,
securities, or other equivalent evidences of ownership (howsoever designated)
issued by any Person.
"Capitalized Lease" means, with respect to any Person, any lease of
Property by such Person as lessee which would be capitalized on a balance sheet
of such Person prepared in accordance with GAAP.
"Capitalized Lease Obligations" means, with respect to any Person, the
amount of the obligations of such Person under Capitalized Leases which would be
shown as a liability on a balance sheet of such Person prepared in accordance
with GAAP.
"Cash Equivalent Investments" means (a) short-term obligations of, or
fully guaranteed by, the U.S., (b) commercial paper rated A-1 or better by S&P
or P-1 or better by Moody's,
CREDIT AGREEMENT Page 6
(c) demand deposit accounts maintained in the ordinary course of business, (d)
certificates of deposit and guaranteed investment certificates issued by and
time deposits with commercial banks (whether domestic or foreign) having capital
and surplus in excess of $100,000,000, (e) investments in repurchase agreements
or bankers acceptances having terms of less than 30 days, and (f) mutual funds
substantially all of the assets of which are invested in assets of a type
described in clause (a) through clause (e) preceding; provided in each case that
any such investment provides for payment of both principal and interest (and not
principal alone or interest alone) and is not subject to any contingency
regarding the payment of principal or interest.
"Cash Purchase Consideration" means, as of any date of determination
and with respect to any Acquisition by an Obligated Party, the purchase price to
be paid for the Capital Stock issued by the Person being acquired or for the
assets being acquired, as the case may be, including all cash consideration paid
(whether classified as purchase price, noncompete payments, consulting payments,
or otherwise and without regard to whether such amount is paid at closing or
paid over time) and the dollar value of all other assets, excluding any Capital
Stock of the Parent, transferred or to be transferred by the purchaser in
connection with such Acquisition to the seller or sellers, all valued in
accordance with the applicable agreement entered into between the Person being
acquired or selling such assets and/or the seller or sellers and the purchaser,
and including (without duplication) the amount of any Indebtedness incurred,
assumed, or acquired by any Obligated Party in connection with such Acquisition.
"Change in Control" means (a) the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the meaning of
Rule 13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 25.0% or more of the outstanding shares of voting
Capital Stock of the Parent or (b) any Obligated Party (other than the Parent)
shall cease to be a Wholly-Owned Subsidiary of the Parent.
"Civil Code" means the Civil Code of Quebec (or any successor statute).
"Closing Date" means the date of this Agreement.
"Co-agent" means any of General Electric Capital Corporation, as
"Syndication Agent," ▇▇ ▇▇▇▇▇▇ Chase Bank, as "Documentation Agent," and LaSalle
Bank National Association and Fleet Capital Corporation, as "Co-Agents".
"Code" means the Internal Revenue Code of 1986, as amended, reformed,
or otherwise modified from time to time, and any rule or regulation issued
thereunder.
"Collateral Protection Advances" has the meaning specified in Section
2.1(i).
"Collateral Shortfall Amount" has the meaning specified in Section
8.1(a).
"Collateral Waiver Agreement" means any agreement, in form and
substance satisfactory to the Agent, between the Agent and any third party
(including any bailee, consignee, customs broker, processor, warehouseman, or
other similar Person) in possession of any Facility
CREDIT AGREEMENT Page 7
Collateral or any landlord of any Obligated Party for any real Property where
any Facility Collateral is located, as such agreement may be amended, restated,
or otherwise modified from time to time.
"Compliance Certificate" has the meaning specified in Section 6.1(e).
"Consolidated Capital Expenditures" means, for any period, the Capital
Expenditures of the Parent and its Subsidiaries calculated on a consolidated
basis for such period.
"Consolidated Debt Service Coverage Ratio" means, for any period, the
ratio of (a) Consolidated EBITDA, minus Consolidated Capital Expenditures (net
of any purchase money Indebtedness or Capital Lease Obligations entered into in
connection therewith), minus the aggregate amount of Taxes paid in cash by the
Parent and its Subsidiaries during such period, minus the aggregate amount of
dividends and other distributions paid to owners of the Capital Stock of the
Parent and any of its Subsidiaries, excluding any such dividends and
distributions paid in Capital Stock of the Parent or made to any Obligated
Party, divided by (b) the aggregate amount of all interest paid or payable in
cash by the Parent and its Subsidiaries during such period, plus (i) actual cash
payments made by the Parent and its Subsidiaries pursuant to Section 412 of the
Code or Section 302 of ERISA with respect to all Plans and (ii) the aggregate
amount of all cash payments of principal which are paid by the Parent and its
Subsidiaries with respect to the Indebtedness (excluding (v) principal payments
made with respect to any revolving credit facility, (w) the aggregate principal
amount of any prepayment with respect to any Indebtedness during the period from
February 1, 2003 through and including the Closing Date, (x) the amount of
principal payments made on the Term Loans B during such period pursuant to
Section 2.13(b)(ii) and Section 2.13(c), and (y) the amount of Indebtedness
repaid to the extent refinanced pursuant to Section 6.14 and the actual
"Make-Whole Amount" (as defined in the Senior Notes), to the extent not in
excess of $4,800,000, payable in respect of the Senior Notes) of the Parent and
its Subsidiaries.
"Consolidated EBITDA" means, for any period, Consolidated Net Income,
plus (a) to the extent deducted from revenues in determining Consolidated Net
Income, (i) Consolidated Interest Expense, (ii) taxes paid or accrued, (iii)
depreciation, (iv) amortization, (v) other non-cash charges, and (vi)
extraordinary losses (as determined in accordance with GAAP) realized other than
in the ordinary course of business, minus (b) to the extent included in
Consolidated Net Income, extraordinary gains (as determined in accordance with
GAAP) realized other than in the ordinary course of business, all calculated for
the Parent and its Subsidiaries on a consolidated basis.
"Consolidated Interest Expense" means, for any period, the interest
expense of the Parent and its Subsidiaries calculated on a consolidated basis
for such period.
"Consolidated Net Income" means, for any period, the net income (or
loss) of the Parent and its Subsidiaries calculated on a consolidated basis for
such period.
"Consolidated Net Worth" means, at any time, the consolidated
stockholders' equity (or other similar capital account of the owners of the
Capital Stock of the Parent) of the Parent and
CREDIT AGREEMENT Page 8
its Subsidiaries calculated on a consolidated basis as of such time, but
excluding from such calculation (a) the effects of fluctuations in exchange
rates of foreign currencies on Subsidiaries of the Parent which are not formed,
incorporated, or organized under the laws of the U.S., but only to the extent
any such effect is not related to any cash loss or gain and (b) reductions
resulting from increases in Unfunded Liabilities to the extent such increases do
not exceed $20,000,000.
"Contingent Obligation" means, with respect to any Person (the "subject
Person"), any agreement, undertaking, or arrangement by which the subject Person
assumes, guarantees, endorses, contingently agrees to purchase or provide funds
for the payment of, or otherwise becomes or is contingently liable upon, the
obligation or liability of any other Person, or the subject Person agrees to
maintain the net worth or working capital or other financial condition of any
other Person, or the subject Person otherwise assures any creditor of any other
Person against loss, including, without limitation, any operating agreement,
take-or-pay contract, or the obligations of any other Person as general partner
of a partnership with respect to the liabilities of the partnership.
"Controlled Group" means all members of a controlled group of
corporations or other business entities and all trades or businesses (whether or
not incorporated) under common control which, together with the Parent or any of
its Subsidiaries, are treated as a single employer under Section 414 of the
Code, and shall in any event include the Parent and each of its Subsidiaries.
"Convertible Subordinated Debentures" means the $25,000,000 aggregate
principal amount of 7.25% Convertible Subordinated Debentures maturing March 3,
2010 of the Parent issued pursuant to the certain Securities Purchase Agreement,
dated as of November 22, 2002, by and among the Parent and the "Purchasers" set
forth on the signature pages thereto.
"Copyrights" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all copyrights, rights
and interests in copyrights, works protectable by copyright, copyright
registrations, and copyright applications; (b) all renewals of any of the
foregoing; (c) all income, royalties, damages, and payments now or hereafter due
and/or payable under any of the foregoing, including, without limitation,
damages or payments for past or future infringements or any of the foregoing;
(d) the right to ▇▇▇ for past, present, and future infringements of any of the
foregoing; and (e) all rights corresponding to any of the foregoing throughout
the world.
"Credit Extension" means the making of an Advance or Loan, the issuance
of a Facility LC, or the creation of an Acceptance hereunder.
"Credit Extension Date" means the Borrowing Date for an Advance or
Loan, the issuance date for a Facility LC, or the Acceptance Date for an
Acceptance.
"Default" means an event described in Article 7.
CREDIT AGREEMENT Page 9
"Deposit Account Control Agreement" means an agreement, including a
blocked account agreement, in form and substance satisfactory to the Agent (or
the U.K. Security Trustee on behalf of the Agent), among an Obligated Party, a
banking institution holding funds of such Obligated Party, and the Agent with
respect to collection and control of all deposits and balances held in a deposit
account maintained by such Obligated Party with such banking institution.
"Eligible Accounts" means, at any time, the Accounts of the Canadian
Obligated Parties, the U.K. Obligated Parties, or the U.S. Borrowers, as
applicable, which the Agent determines in its reasonable credit judgment are
eligible as the basis for Credit Extensions hereunder. Without limiting the
Agent's discretion provided herein, Eligible Accounts shall not include any
Account:
(a) which is not subject to a first priority perfected Lien in favor
of the Agent;
(b) which is subject to any Lien other than (i) a Lien in favor of the
Agent and (ii) a Permitted Lien which does not have priority over the Lien
in favor of the Agent;
(c) which was originally entered into (i) on terms requiring payment
not more than 60 days after the original invoice date and (A) with respect
to which more than 90 days have elapsed since the date of the original
invoice therefor or (B) which is more than 60 days past due for payment,
(ii) on terms requiring payment more than 60 days after the original
invoice date and (A) which is more than 30 days past due for payment or (B)
which is due for payment more than 180 days after the date of
determination, (iii) on terms requiring payment more than 60 days after the
original invoice date and which are not excluded from Eligible Accounts
pursuant to clause (ii) preceding to the extent the aggregate of such
Accounts which are on terms requiring payment 120 days or more but less
than 150 days after the original invoice date are in excess of 15.0% of
Eligible Accounts or which are on terms requiring payment 150 days or more
after the original invoice date are in excess of 10.0% of Eligible
Accounts, or (iv) on terms which require payment by the Account Debtor upon
delivery of goods or rendition of services;
(d) which is owing by an Account Debtor for which more than 50.0% of
the Accounts owing from such Account Debtor and its Affiliates are
ineligible hereunder;
(e) which is owing by an Account Debtor to the extent the aggregate
amount of Accounts owing from such Account Debtor and its Affiliates to the
Canadian Obligated Parties, the U.K. Obligated Parties, and the U.S.
Borrowers, individually, exceeds 25.0% of the aggregate Eligible Accounts;
(f) with respect to which any covenant, representation, or warranty
contained in this Agreement or the applicable Security Agreement has been
breached or is not true in any material respect;
(g) which (i) does not arise from the sale of goods or performance of
services in the ordinary course of business, (ii) is not evidenced by an
invoice or other documentation reasonably satisfactory to the Agent which
has been sent to the Account Debtor, (iii) represents a progress billing,
(iv) is contingent upon the applicable Borrower's completion of any further
performance, or (v) represents a sale on a ▇▇▇▇-and
CREDIT AGREEMENT Page 10
hold, guaranteed sale, sale-and-return, sale on approval, consignment,
or any other repurchase or return basis;
(h) for which the goods giving rise to such Account have not been
shipped to, for the account of, or at the direction of the Account Debtor
or for which the services giving rise to such Account have not been
performed by the applicable Canadian Obligated Party, U.K. Obligated Party,
or U.S. Borrower;
(i) with respect to which any check or other instrument of payment has
been returned uncollected for any reason;
(j) which, unless such Account is covered by credit insurance pursuant
to a policy in form and substance (including the right of the Agent to
directly collect such insurance during the existence of any Default), and
from an insurer, reasonably acceptable to the Agent or unless otherwise
approved by the Agent in its sole discretion, is owed by an Account Debtor
which has (i) applied for, suffered, or consented to the appointment of any
receiver, custodian, trustee, monitor, administrator, or liquidator of its
assets, (ii) had possession of all or a material part of its property taken
by any receiver, custodian, trustee or liquidator, (iii) filed, or had
filed against it, any request or petition or proposal (or intention to file
a proposal) for liquidation, reorganization, arrangement, adjustment of
debts, adjudication as bankrupt, winding-up, or voluntary or involuntary
case under any state, provincial, or federal bankruptcy laws, (iv) admitted
in writing its inability, or is generally unable to, pay its debts as they
become due, (v) become insolvent, or (vi) ceased operation of its business;
(k) which is owed by any Account Debtor which has sold all or
substantially all of its assets;
(l) which, unless such Account is covered by credit insurance pursuant
to a policy in form and substance (including the right of the Agent to
directly collect such insurance during the existence of any Default), and
from an insurer, reasonably acceptable to the Agent or is supported by a
Letter of Credit acceptable to the Agent, which is in the possession of the
Agent, and which, together with all related Letter-of-Credit Rights, is
subject to a first priority Lien in favor of the Agent,
(i) for any Canadian Obligated Party, is owed by an Account
Debtor, which (A) does not maintain its chief executive office in
Canada (excluding Quebec) or the U.S. or (B) is not organized under
applicable law of Canada or the U.S. or any province of Canada
(excluding Quebec) or state of the U.S.,
(ii) for any U.K. Obligated Party, is owed by an Account Debtor,
which (A) does not maintain its chief executive office in the U.K. or
the U.S. or (B) is not organized under applicable law of the England
or the U.S. or any state of the U.S., and
(iii) for any U.S. Borrower, is owed by an Account Debtor,
other than Canadian Subsidiaries of WalMart Stores, Inc., which
(A) does not maintain its
CREDIT AGREEMENT Page 11
chief executive office in the U.S. or (B) is not organized
under applicable law of the U.S. or any state of the U.S.;
(m) which is owed (a) to any Canadian Obligated Party in any
currency other than Canadian dollars or U.S. dollars, (b) to any U.K.
Obligated Party in any currency other than British Pounds Sterling or
U.S. dollars, or (c) to any U.S. Borrower in any currency other than
U.S. dollars or, with respect to Canadian Subsidiaries of WalMart
Stores, Inc., in Canadian dollars;
(n) which is owed by (i) the government (or any department,
agency, public corporation, crown corporation, or instrumentality
thereof) of any country other than the U.S. unless and to the extent
such Account is supported by a Letter of Credit acceptable to the
Agent, which is in the possession of the Agent, and which, together
with all related letterofcredit rights, is subject to a first
priority Lien in favor of the Agent, (ii) the government of the U.S.,
or any department, agency, public corporation, or instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as
amended (31 ▇.▇.▇.▇▇. 3727 et seq. and 41 U.S.C.ss.15 et seq.), and
any other steps necessary to perfect the Lien of the Agent in such
Account have been complied with to the Agent's satisfaction, or (iii)
the government of any state of the U.S. or province or municipality of
Canada, or any department, agency, public corporation, or
instrumentality thereof, unless the applicable U.S. Borrower has
complied with all applicable laws necessary to perfect the Lien of the
Agent therein, and in all proceeds thereof, to the Agent's
satisfaction;
(o) which is owed by any Affiliate, employee, or director of any
Obligated Party;
(p) which, for any Account Debtor, exceeds a credit limit
determined by the Agent, to the extent of such excess;
(q) which is owed by an Account Debtor to which any Obligated
Party is indebted or to which any Obligated Party is indebted to any
Affiliate of such Account Debtor, or which is subject to any right of
setoff, counterclaim, deduction, defense, or dispute by the Account
Debtor to the extent of such indebtedness or the amount of such
setoff, counterclaim, deduction, defense, or dispute;
(r) with respect to which the Account Debtor has disputed
liability or made any claim with respect to any other Account to the
extent of such dispute or claim;
(s) which is evidenced by any promissory note, chattel paper, or
instrument;
(t) which is owed by an Account Debtor located in any
jurisdiction which requires filing of a "Notice of Business Activities
Report" or other similar report in order to permit the applicable
Canadian Obligated Party, U.K. Obligated Party, or U.S. Borrower to
seek judicial enforcement in such jurisdiction of payment of such
Account, unless the applicable Canadian Obligated Party, U.K.
Obligated Party, or U.S. Borrower has filed such report or qualified
to do business in such jurisdiction;
CREDIT AGREEMENT Page 12
(u) with respect to which the applicable Canadian Obligated
Party, U.K. Obligated Party, or U.S. Borrower has made any agreement
with the Account Debtor for any reduction thereof, other than
discounts and adjustments given in the ordinary course of business;
(v) which the Agent determines may not be paid by reason of the
Account Debtor's inability to pay or which the Agent determines is
unacceptable;
(w) which is acquired in connection with any Acquisition to the
extent the Agent has not completed an audit of such Accounts with
results satisfactory to the Agent; and
(x) except as provided in clause (n) preceding, with respect to
which either the perfection, enforceability, or validity of the
Agent's Liens in such Account, or the Agent's right or ability to
obtain direct payment to the Agent of the proceeds of such Account, is
governed by any federal, provincial, municipal, state, or local
statutory requirements other than those of the UCC (in the case of a
U.S. Borrower), the PPSA (in the case of the Canadian Obligated
Parties), or similar applicable law in the case of the U.K. Obligated
Parties;
"Eligible Inventory" means, at any time, the Inventory of the Canadian
Obligated Parties, U.K. Obligated Parties, or U.S. Borrowers, as applicable,
which the Agent determines in its reasonable credit judgment is eligible as the
basis for Credit Extensions hereunder. Without limiting the Agent's discretion
provided herein, Eligible Inventory shall not include any Inventory:
(a) which is not subject to a first priority perfected Lien in
favor of the Agent;
(b) which is subject to any Lien other than (i) a Lien in favor
of the Agent and (ii) a Permitted Lien which does not have priority
over the Lien in favor of the Agent;
(c) which is, in the Agent's reasonable credit judgment, slow
moving, obsolete, unmerchantable, defective, unfit for sale, or not
salable at prices approximating at least the cost of such Inventory in
the normal course of business;
(d) with respect to which any covenant, representation, or
warranty contained in this Agreement or the applicable Security
Agreement has been breached or is not true in any material respect;
(e) which does not conform to all standards imposed by any
governmental authority;
(f) which is not finished goods or raw materials or which
constitutes work-in-process not otherwise deemed eligible by the Agent
in its sole discretion, spare or replacement parts, packaging and
shipping material, manufacturing supplies, display items,
▇▇▇▇-and-hold goods, returned or repossessed goods, defective goods,
goods held on
CREDIT AGREEMENT Page 13
consignment, or goods which are not of a type held for sale in
the ordinary course of business;
(g) which is not located in Canada (with respect to any
Canadian Obligated Party), England (with respect to any U.K. Obligated
Party), or the U.S. (with respect to any U.S. Borrower); provided that
up to $5,000,000 of Inventory which is in transit to a Canadian
Obligated Party, U.K. Obligated Party, or U.S. Borrower may be included
as Eligible Inventory if the Agent has received (i) a true and correct
copy of the nonnegotiable ▇▇▇▇ of lading and other shipping documents
for such Inventory, (ii) casualty insurance naming the Agent as loss
payee and otherwise covering such risks as the Agent may reasonably
request, and (iii) a duly executed Collateral Waiver Agreement from the
applicable customs broker for such Inventory;
(h) which at any time after June 30, 2003 is located in any
location leased by any Person unless (i) the lessor has delivered to
the Agent a Collateral Waiver Agreement or (ii) an Availability Reserve
for not more than three months rent, charges, and other amounts due or
to become due with respect to such location has been established by the
Agent in its sole discretion;
(i) which is located in any public warehouse or is in the
possession of a bailee unless such warehouseman or bailee has delivered
to the Agent a Collateral Waiver Agreement and such other documentation
as the Agent may require;
(j) which is the subject of a consignment by a Canadian
Obligated Party, U.K. Obligated Party, or U.S. Borrower as consignor;
(k) which at any time after May 31, 2003 contains or bears any
Intellectual Property Rights licensed to a Canadian Obligated Party,
U.K. Obligated Party, or U.S. Borrower unless the Agent is reasonably
satisfied that it may sell or otherwise dispose of such Inventory
without (i) infringing the rights of such licensor, (ii) violating any
contract with such licensor, or (iii) incurring any liability with
respect to payment of royalties other than royalties incurred pursuant
to sale of such Inventory under the current licensing agreement;
(l) which is not reflected in a current perpetual inventory
report of the applicable Canadian Obligated Party, U.K. Obligated
Party, or U.S. Borrower (unless such Inventory is reflected in a report
to the Agent as "in transit" Inventory); and
(m) that is acquired in connection with any Acquisition to the
extent the Agent has not completed an audit of such Inventory with
results satisfactory to the Agent.
"Environmental Laws" means any and all federal, state, provincial,
local, and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, decrees, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements, and other governmental restrictions
relating to (a) the protection of the environment, (b) the effect of the
environment on human health, (c) emissions, discharges, or releases of
pollutants, contaminants,
CREDIT AGREEMENT Page 14
hazardous substances, or wastes into surface water, ground water, or land, or
(d) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, hazardous
substances, or wastes or the clean-up or other remediation thereof.
"Equipment" has the meaning specified in the Security Agreements.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, reformed, or otherwise modified from time to time, and any rule or
regulation issued thereunder.
"Eurodollar Advance" means an Advance which bears interest at the
applicable Eurodollar Rate.
"Eurodollar Base Rate" means, with respect to a Eurodollar Advance or a
Eurodollar Loan for the relevant Interest Period, the applicable British
Bankers' Association LIBOR rate for deposits in U.S. dollars as reported by any
generally recognized financial information service as of 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, and
having a maturity equal to such Interest Period, provided that if no such
British Bankers' Association LIBOR rate is available to the Agent, the
applicable Eurodollar Base Rate for the relevant Interest Period shall instead
be the rate determined by the Agent to be the rate at which Bank One or one of
its Affiliate banks offers to place deposits in U.S. dollars with first-class
banks in the London interbank market at approximately 11:00 a.m. (London time)
two Business Days prior to the first day of such Interest Period, in the
approximate amount of Bank One's relevant Eurodollar Loan and having a maturity
equal to such Interest Period.
"Eurodollar Loan" means a Loan which bears interest at the applicable
Eurodollar Rate.
"Eurodollar Rate" means, with respect to a Eurodollar Advance or a
Eurodollar Loan for the relevant Interest Period, the sum of (a) the quotient of
(i) the Eurodollar Base Rate applicable to such Interest Period, divided by (ii)
one minus the Reserve Requirement (expressed as a decimal) applicable to such
Interest Period, plus (b) the Applicable Margin.
"Excess Cash Flow" means, as determined as of the end of each Fiscal
Year of the Parent and based upon the financial statements of the Parent
delivered to the Lenders pursuant to Section 6.1(a), an amount equal to the
lesser of, without duplication, (a) Consolidated EBITDA, minus the sum of (i)
the aggregate amount of Taxes paid by the Parent and its Subsidiaries during
such Fiscal Year, plus (ii) Capital Expenditures, plus (iii) the aggregate
amount of dividends and other distributions paid to the owners of the Capital
Stock of the Parent and any of its Subsidiaries, excluding any such dividends
and distributions paid in Capital Stock of the Parent or made to any Obligated
Party, plus (iv) the aggregate amount of all interest paid or payable in cash by
the Parent and its Subsidiaries during such Fiscal Year, plus (v) the aggregate
amount of all cash payments of principal which are paid by the Parent and its
Subsidiaries with respect to the Indebtedness (excluding (w) principal payments
made with respect to any revolving credit facility, (x) the aggregate principal
amount of any prepayment with respect to any Indebtedness during the period from
February 1, 2003 through and including the Closing Date, (y) the amount of
principal payments made on the Term Loans B during such period
CREDIT AGREEMENT Page 15
pursuant to Section 2.13(b)(ii) and Section 2.13(c), and (z) the actual
"Make-Whole Amount" (as defined in the Senior Notes), to the extent not in
excess of $4,800,000, payable in respect of the Senior Notes), minus (vi) the
increase (or plus the decrease, if applicable) of the excess of current assets
over current liabilities or (b) $5,000,000.
"Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation and the Agent, taxes imposed on its overall revenue or net
income, and franchise taxes imposed on it, by (a) the jurisdiction under the
laws of which such Lender or the Agent is incorporated or organized or (b) the
jurisdiction in which the Agent's or such Lender's principal executive office or
such Lender's applicable Lending Installation is located, or any political
subdivision thereof.
"Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.
"Facility Collateral" means (a) all "Collateral" as defined in the
Security Agreements, (b) all real Property which is subject to the Lien created
by any Real Estate Mortgage, (c) any other Property of any Obligated Party which
at any time is the subject of any Lien in favor of the Agent, for the benefit of
the Agent and the Lenders, and (d) all accessions to, substitutions for, and
replacements, products, and proceeds of any of the foregoing.
"Facility LC" has the meaning specified in Section 2.4(a).
"Facility LC Application" has the meaning specified in Section 2.4(c).
"Facility LC/Acceptance Collateral Account" has the meaning specified
in Section 2.4(m).
"Facility Rate Management Obligations" means any Rate Management
Obligations existing under a Facility Rate Management Transaction.
"Facility Rate Management Transaction" means any Rate Management
Transaction entered into by any Obligated Party with a Lender and which relates
to interest payable on the Obligations.
"Facility Termination Date" means March 25, 2006.
"Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m.
(Chicago, Illinois time) on such day on such transactions received by the Agent
from three Federal funds brokers of recognized standing selected by the Agent in
its sole discretion.
CREDIT AGREEMENT Page 16
"Fiscal Quarter" means one of the four three calendar month measurement
periods in a Fiscal Year, with the first of such measurement periods for the
Parent ending on March 31 of each Fiscal Year.
"Fiscal Year" means, with respect to any Obligated Party, such
Obligated Party's fiscal year for financial accounting purposes. The current
Fiscal Year of the Parent will end on December 31, 2003.
"Floating Rate" means, for any day, a rate per annum equal to (a) the
Alternate Base Rate for such day plus (b) the Applicable Margin, in each case
changing when and as the Alternate Base Rate changes.
"Floating Rate Advance" means an Advance which bears interest at the
Floating Rate.
"Floating Rate Loan" means a Loan which bears interest at the Floating
Rate.
"Floating Rate Revolving Loan" means a Revolving Loan which is a
Floating Rate Loan.
"Foreign Loan Balance" means the aggregate principal amount of Loans
outstanding under this Agreement to K2 Canada and the U.K. Borrowers.
"Foreign Plan" means any benefit plan established or maintained outside
of the U.S. which an Obligated Party maintains, sponsors, or to which such
Person has any obligation or liability and which provides or otherwise makes
available retirement or deferred benefits of any kind whatsoever to employees.
"Fund" means any Person (other than a natural person) that is (or will
be) engaged in making, purchasing, holding, or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
"Funding Account" means, individually, a deposit account of K2 Canada,
the U.K. Borrowers, or the U.S. Borrowers maintained with the Agent (or as
applicable the U.K. Security Trustee on behalf of the Agent) to which the Agent
is authorized by each of such Persons to deposit the proceeds of its Revolving
Loans.
"GAAP" means generally accepted accounting principles as in effect from
time to time, and, with respect to any Obligated Party, as applied in a manner
consistent with that used in preparing the financial statements referred to in
Section 5.7.
"Guarantor" means any of the Parent, a Canadian Guarantor, a U.K.
Guarantor, or a U.S. Subsidiary Guarantor, individually, and "Guarantors" means
two or more of such Persons, collectively.
"Guaranty Agreement" means, collectively and individually (as
applicable), the Parent Guaranty Agreement, the Canadian Guarantee Agreement,
the U.K. Debenture, the U.S.
CREDIT AGREEMENT Page 17
Subsidiary Guaranty Agreement, and any other agreement executed by a Person
whereby such Person guarantees or assures payment or performance of the
Obligations, or any portion thereof.
"Highest Lawful Rate" means, at any time, the maximum rate of interest
the Lenders may lawfully contract for, charge, or receive in respect of the
Obligations as allowed by any applicable law.
"Indebtedness" means, with respect to any Person, (a) obligations for
borrowed money, (b) obligations representing the deferred purchase price of
Property or services (other than accounts payable arising in the ordinary course
of such Person's business), (c) obligations, whether or not assumed, secured by
Liens or payable out of the proceeds or production from Property now or
hereafter owned or acquired by such Person, (d) obligations which are evidenced
by notes, acceptances, or other instruments, (e) obligations of such Person to
purchase securities or other Property arising out of or in connection with the
sale of the same or substantially similar securities or Property, (f)
Capitalized Lease Obligations, (g) Contingent Obligations for which the
underlying transaction constitutes Indebtedness under this definition, (h) any
other obligation for borrowed money or other financial accommodation for
borrowed money which in accordance with GAAP would be shown as a liability on
the consolidated balance sheet of such Person, (i) reimbursement or payment
obligations with respect to Letters of Credit, banker's acceptances and similar
agreements (including, without limitation, with respect to the Obligated
Parties, Facility LCs and Acceptances), (j) Net ▇▇▇▇-to-Market Exposure under
Rate Management Transactions, and (k) Off-Balance Sheet Liabilities.
"Insolvency Act" means the Insolvency ▇▇▇ ▇▇▇▇ of England and Wales, as
amended, reformed, or otherwise modified from time to time, and any rules or
regulations issued thereunder.
"Intellectual Property Rights" means, with respect to any Person, all
of such Person's Patents, Copyrights, Trademarks, and Licenses, all other rights
under any of the foregoing, all extensions, renewals, reissues, divisions,
continuations and continuations-in-part of any of the foregoing, and all rights
to ▇▇▇ for past, present, and future infringement of any of the foregoing.
"Interest Period" means, with respect to a Eurodollar Advance, a period
of one, two, three, or six months commencing on a Business Day selected by a
Borrower pursuant to this Agreement. Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three, or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third, or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, or
third, or sixth succeeding month. If an Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall end on the next
succeeding Business Day, provided, however, that if such next succeeding
Business Day falls in a new calendar month, such Interest Period shall end on
the immediately preceding Business Day.
"Inventory" has the meaning specified in the Security Agreements.
CREDIT AGREEMENT Page 18
"Inventory Advance Amount" means the lesser of (a) with respect to
Eligible Inventory, (i) for monofilament line, fishing tackle, and ▇▇▇▇▇▇▇
Inventory, 60.0% of the lower of cost or market value, determined on a
first-in-first-out basis, (ii) for Rawlings Inventory, 65.0% of the lower of
cost or market value, determined on a first-in-first-out basis, and (iii) for
all other Inventory, 55.0% of the lower of cost or market value, determined on a
first-in-first-out basis, or (b) 80.0% of the Net Orderly Liquidation Value of
Appraised Inventory; provided that, during the period from December 1 of each
calendar year through and including March 31 of the following calendar year, to
the extent the Borrowing Base Calculation does not increase by more than
$10,000,000 on the date of determination after giving effect to the increases in
advance rates described in this proviso, the advance rate percentages expressed
in clause (a)(i), clause (a)(ii), and clause (a)(iii) preceding shall be
increased to 70.0%, 75.0%, and 65.0%, respectively, and the advance rate
percentage expressed in clause (b) preceding shall be increased to 90.0%.
"Inventory Appraisal" means an appraisal of the Inventory of a Canadian
Obligated Party, a U.K. Obligated Party, or a U.S. Borrower by an experienced
and reputable appraiser acceptable to the Agent of the orderly liquidation value
thereof, net of all costs of liquidation.
"Investment" means, with respect to any Person, any (a) loan, advance
(other than commission, travel, and similar advances to officers and employees
made in the ordinary course of business), extension of credit (other than
accounts receivable arising in the ordinary course of business on terms
customary in the trade), or contribution of capital by such Person, (b) stocks,
bonds, mutual funds, partnership interests, notes, debentures, or other
securities owned by such Person, (c) deposit accounts, certificates of deposit,
and guaranteed investment certificates owned by such Person, and (d) structured
notes, derivative financial instruments, and other similar instruments or
contracts owned by such Person; provided that "Investment" shall not include any
Acquisition.
"Investment Property" has the meaning specified in the Security
Agreements.
"IP Security Agreement" means any Copyright Security Agreement, Patent
Security Agreement, or Trademark Security Agreement executed and delivered by
any Obligated Party in connection herewith, as such agreement may be amended,
restated, or otherwise modified from time to time, and "IP Security Agreements"
means any two or more of such agreements, collectively, as the context requires.
"Issuer" has the meaning specified in Section 5.29(b).
"K2 Canada" means K2 Corporation of Canada, an Ontario corporation, and
its successors and assigns.
"LC Fee" has the meaning specified in Section 2.10(b).
"LC Issuer" means any Lender (or any Subsidiary or Affiliate of any
Lender designated by such Lender) in its capacity as the issuer of Facility LCs
hereunder.
CREDIT AGREEMENT Page 19
"LC Obligations" means, at any time, without duplication, the sum of
(a) the aggregate undrawn stated amount under all Facility LCs outstanding at
such time, plus (b) the aggregate unpaid amount at such time of all
Reimbursement Obligations.
"LC Payment Date" has the meaning specified in Section 2.4(d).
"Lender" and "Lenders" have the meanings specified in the introductory
paragraph of this Agreement and include each of their respective successors and
assigns. Unless otherwise specified, the term "Lenders" includes Bank One with
respect to its Non-Ratable Loans and the Agent with respect to the Collateral
Protection Advances.
"Lending Installation" means, with respect to each Lender, the office,
branch, subsidiary, or Affiliate of such Lender listed on the signature pages
hereof (or any Assignment Agreement which such Lender is a party to) or
otherwise selected by such Lender pursuant to the terms of this Agreement.
"Letter of Credit" means a letter of credit or similar instrument which
is issued upon the application of a Person or upon which such Person is an
account party or for which such Person is in any way liable.
"Licenses" means, with respect to any Person, all of such Person's
right, title, and interest in and to (a) any and all licensing agreements or
similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all
income, royalties, damages, claims, and payments now or hereafter due or payable
under and with respect thereto, including, without limitation, damages and
payments for past and future breaches thereof, and (c) all rights to ▇▇▇ for
past, present, and future breaches thereof.
"Lien" means any lien (statutory or other, ▇▇▇▇▇▇ or inchoate),
security interest, mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance or preference, priority, charge, secured claim, title
retention, garnishment right, deemed trust, or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, the interest of a vendor or lessor under any conditional sale,
Capitalized Lease, or other title retention agreement) arising pursuant to any
statute, act of law of any jurisdiction at common law or equity, or by
agreement.
"Loan" means a Revolving Loan (including a Non-Ratable Loan or a
Collateral Protection Advance) or Term Loan B.
"Loan Documents" means this Agreement, the Facility LC Applications,
the Notes, the Security Agreements, the IP Security Agreements, the Guaranty
Agreements, all agreements providing for Banking Services, the Real Estate
Mortgages, the Deposit Account Control Agreements, any agreements in respect of
Acceptances, and any other agreements, documents, or instruments now or
hereafter executed and/or delivered pursuant to or in connection with any of the
foregoing, and any and all amendments, modifications, supplements, renewals,
extensions, or restatements thereof.
CREDIT AGREEMENT Page 20
"Management Agreement" means, (a) with respect to any corporation, its
bylaws, (b) with respect to any entity incorporated in England and Wales, its
memorandum and articles of association, (c) with respect to any limited
liability company or other similar entity, its operating agreement, management
agreement, or other similar agreement, (d) with respect to any limited
partnership, its partnership agreement, and (e) with respect to any other
entity, any agreement or other document similar in nature to any of the
foregoing.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Obligated Parties taken as a whole, (b) the ability of the
Obligated Parties, taken as a whole, to perform their obligations under the Loan
Documents, or (c) the validity or enforceability of any of the Loan Documents or
the rights or remedies of the Agent, the U.K. Security Trustee, any LC Issuer,
any Acceptance Lender, or the Lenders thereunder.
"Material Indebtedness" means Indebtedness in an outstanding principal
amount of $10,000,000 or more in the aggregate (or the equivalent thereof in any
currency other than U.S. dollars).
"Material Indebtedness Agreement" means any agreement under which any
Material Indebtedness was created or is governed or which provides for the
incurrence of Indebtedness in an amount which would constitute Material
Indebtedness (whether or not an amount of Indebtedness constituting Material
Indebtedness is outstanding thereunder).
"Modify" and "Modification" have the respective meanings specified in
Section 2.4(a).
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Multi-employer Plan" means a Plan maintained pursuant to a collective
bargaining agreement or any other arrangement to which the Parent or any member
of the Controlled Group is a party to which more than one employer is obligated
to make contributions.
"Net ▇▇▇▇-to-Market Exposure" means, with respect to any Person as of
any date of determination, the aggregate net payment obligations (including the
net amount of all indebtedness, liabilities, and obligations owing by such
Person with respect to Rate Management Transactions) if all Rate Management
Transactions to which such Person is a party were terminated as of such date.
"Net Orderly Liquidation Value of Appraised Inventory" means the amount
determined by multiplying the amount of Appraised Inventory of such Person by
the Net Orderly Liquidation Value Percentage.
"Net Orderly Liquidation Value Percentage" means the percentage
determined pursuant to an Inventory Appraisal which represents the value of the
Inventory appraised to the lesser of the cost or market value of such Inventory.
CREDIT AGREEMENT Page 21
"Non-Ratable Loan" and "Non-Ratable Loans" have the respective meanings
specified in Section 2.1(h).
"Non-U.S. Lender" has the meaning specified in Section 3.5(d).
"Note" has the meaning specified in Section 2.3(d).
"Obligated Party" means each of the Borrowers and any Guarantor which
is not a Borrower, individually, and "Obligated Parties" means two or more of
such Persons, collectively, as the context requires.
"Obligations" means all of the Canadian Obligations, U.K. Obligations,
and U.S. Obligations.
"Off-Balance Sheet Liability" means, with respect to any Person, (a)
any repurchase indebtedness, liability, or obligation of such Person with
respect to accounts or notes receivable sold by such Person, (b) any
indebtedness, liability, or obligation under any Sale and Leaseback Transaction
which is not a Capitalized Lease, (c) any indebtedness, liability, or obligation
under any so-called "synthetic lease" transaction entered into by such Person,
excluding the interest component thereof, or (d) any indebtedness, liability, or
obligation arising with respect to any other transaction which is the functional
equivalent of or takes the place of borrowing but which does not constitute a
liability on the balance sheet of such Person, but excluding from this clause
(d) Operating Leases.
"Operating Lease" means, with respect to any Person, any lease of
Property (other than a Capitalized Lease) by such Person as lessee which has an
original term (including any required renewals and any renewals effective at the
option of the lessor) of one year or more.
"Organization Certificate" means, (a) with respect to any corporation,
its articles or certificate of incorporation, (b) with respect of any company
incorporated in England or Wales, its certificate of incorporation, (c) with
respect to any limited liability company or other similar entity, its
certificate of formation or organization, (d) with respect to any limited
partnership, its certificate of limited partnership, and (e) with respect to any
other entity, any certificate or other document similar in nature to any of the
foregoing.
"Other Taxes" has the meaning specified Section 3.5(b).
"Outstanding Credit Exposure" means, with respect to any Lender at any
time, the sum of (a) such Lender's Outstanding Revolving Credit Exposure, plus
(b) the aggregate principal amount of its Term Loans B outstanding at such time.
"Outstanding Revolving Credit Exposure" means, with respect to any
Lender at any time, the sum of (a) the aggregate principal amount of its
Revolving Loans outstanding at such time, plus (b) an amount equal to its
Revolving Pro Rata Share of the LC Obligations, plus (c) an amount equal to its
Revolving Pro Rata Share of the Acceptance Obligations at such time, plus
CREDIT AGREEMENT Page 22
(d) an amount equal to its Revolving Pro Rata Share of the aggregate principal
amount of Non-Ratable Loans and the Collateral Protection Advances outstanding
at such time.
"Parent" means K2 Inc., a Delaware corporation, and its successors and
assigns.
"Parent Guaranty Agreement" means that certain Guaranty Agreement (in
form and substance satisfactory to the Agent), dated concurrently herewith, duly
executed by the Parent in favor of the Agent, for the benefit of the Agent and
the Lenders, as such agreement may be amended, restated, or otherwise modified
and in effect from time to time.
"Parent Security Agreements" means that certain Pledge and Security
Agreement and that certain Equitable Mortgage Over Shares (each in form and
substance satisfactory to the Agent), dated concurrently herewith, between the
Parent and the Agent or the U.K. Security Trustee on behalf of the Agent, as
applicable, for the benefit of the Agent and the Lenders, as such agreements may
be amended, restated, or otherwise modified from time to time.
"Participants" has the meaning specified in Section 12.2(a).
"Patents" means, with respect to any Person, all of such Person's
right, title, and interest in and to: (a) any and all patents and patent
applications; (b) all inventions and improvements described and claimed therein;
(c) all reissues, divisions, continuations, renewals, extensions, and
continuations-in-part thereof; (d) all income, royalties, damages, claims, and
payments now or hereafter due or payable under and with respect thereto,
including, without limitation, damages and payments for past and future
infringements thereof; (e) all rights to ▇▇▇ for past, present, and future
infringements thereof; and (f) all rights corresponding to any of the foregoing
throughout the world.
"Payment Date" means (a) with respect to interest payments due on any
Floating Rate Loan, the first day of each calendar month and the Facility
Termination Date, (b) with respect to interest payments due on any Eurodollar
Loan, (i) the last day of the applicable Interest Period, (ii) in the case of
any Interest Period in excess of three months, the day which is three months
after the first day of such Interest Period, and (iii) the Facility Termination
Date, (c) with respect to principal payments due on the Term Loan B, the last
day of each calendar month, (d) with respect to any payment of Unused Commitment
Fees, the first day of each calendar month and the Facility Termination Date and
(e) with respect to any payment of LC Fees and Acceptance Fees, the first day of
each Fiscal Quarter and the Facility Termination Date; provided that
notwithstanding the foregoing, with respect to any Loans made to the U.K.
Borrowers, the earliest Payment Date shall not be before September 26, 2003.
"PBA" means the Pension Benefits Act of Ontario and all regulations
thereunder as amended from time to time and any successor legislation.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor thereto.
"Permitted Acquisition" means the Rawlings Acquisition (provided that
the requirements of clause (c), clause (g), clause (i), and clause (o) following
shall be met at the time of
CREDIT AGREEMENT Page 23
consummation of the Rawlings Acquisition and Unused Availability after giving
effect to such Acquisition shall not be less than $15,000,000) and any other
Acquisition by an Obligated Party in a transaction that satisfies each of the
following requirements:
(a) such Acquisition has been approved by the board of
directors (or other similar governing body) of the Person which is
being acquired or which owns the assets being acquired in connection
with such Acquisition;
(b) the business acquired in connection with such Acquisition
is not engaged, directly or indirectly, in any line of business other
than the businesses in which the Borrowers are engaged on the Closing
Date and any business activities that are substantially similar,
related, incidental, or complementary thereto;
(c) both before and after giving effect to such Acquisition
and the Loans (if any) requested to be made in connection therewith,
each of the representations and warranties in the Loan Documents is
true and correct in all material respects (except (i) any such
representation or warranty which relates to a specified prior date and
(ii) to the extent the Agent and the Lenders have been notified in
writing by the Obligated Parties that any representation or warranty is
not correct and the Required Lenders have explicitly waived in writing
compliance with such representation or warranty) and no Default or
Unmatured Default exists, will exist, or would result therefrom;
(d) as soon as available, but not less than fifteen days prior
to such Acquisition, the Borrowers have provided the Lenders (i) notice
of such Acquisition and (ii) a copy of all business and financial
information reasonably requested by the Agent including pro forma
financial statements, statements of cash flow, and projections of
Unused Availability;
(e) if the Accounts and Inventory acquired in connection with
such Acquisition are proposed to be included in the determination of
the Borrowing Base, the Agent shall have conducted an audit and field
examination of such Accounts and Inventory to its satisfaction in the
exercise of its reasonable credit judgment;
(f) the Cash Purchase Consideration paid in connection with
any single Acquisition shall not exceed $10,000,000 and for all such
Acquisitions during the term of this Agreement shall not exceed
$30,000,000;
(g) if such Acquisition is an acquisition of the Capital Stock
of a Person, the Acquisition is structured so that the acquired Person
shall become a Wholly-Owned Subsidiary of an Obligated Party and, (if
applicable) subject to Section 16.4, an Obligated Party pursuant to the
terms of this Agreement;
(h) if such Acquisition is an acquisition of assets, the
Acquisition is structured so that an Obligated Party (or a Person that
concurrently with such Acquisition becomes an Obligated Party) shall
acquire such assets;
CREDIT AGREEMENT Page 24
(i) if such Acquisition is an acquisition of Capital Stock,
such Acquisition will not result in any violation of Regulation U;
(j) no Obligated Party shall, as a result of or in connection
with any such Acquisition, assume or incur any direct or contingent
liabilities (whether relating to environmental, tax, litigation, or
other matters) that could have a Material Adverse Effect;
(k) in connection with an Acquisition of the Capital Stock of
any Person, all Liens on the Accounts and Inventory of such Person
shall be terminated unless the Agent in its discretion in the exercise
of its reasonable credit judgment consents otherwise, and in connection
with an Acquisition of the assets of any Person, all Liens on any such
assets which are Accounts and Inventory shall be terminated;
(l) the Consolidated Debt Service Coverage Ratio shall be
greater than 1.25 to 1.00 for the most recently completed twelve
calendar month period;
(m) the Consolidated Debt Service Coverage Ratio, determined
on a pro forma projected basis, including any projected impact from the
proposed Acquisition, for the twelve calendar month period following
such Acquisition shall be greater than 1.25 to 1.00;
(n) the Parent shall certify (and provide the Agent with a pro
forma calculation in form and substance reasonably satisfactory to the
Agent) to the Agent and the Lenders that, after giving effect to
completion of such Acquisition, (i) if such Acquisition occurs between
April 1 and November 30 of any calendar year, the Unused Availability
will not be less than $40,000,000 and (ii) if such Acquisition occurs
between December 1 of a calendar year and March 31 of the following
calendar year, the Unused Availability will not be less than
$25,000,000, each determined on a pro forma basis which includes all
consideration given in connection with such Acquisition, other than
Capital Stock of the Parent delivered to the seller(s) in such
Acquisition, as having been paid in cash at the time of making such
Acquisition; and
(o) no Default or Unmatured Default exists or would result
therefrom.
"Permitted Lien has the meaning specified in Section 6.20.
"Person" means any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust, or other
entity or organization, or any government or political subdivision or any
agency, department, or instrumentality thereof.
"Plan" means an employee pension benefit plan, including any
Multi-employer Plan, which is a defined benefit plan that is covered by
applicable law of any jurisdiction, including, without limitation, Title IV of
ERISA or the PBA, or subject to the minimum funding standards under Section 412
of the Code or Section 302 of ERISA, as to which the Parent, any of its
Subsidiaries, or any member of the Controlled Group may have any liability.
CREDIT AGREEMENT Page 25
"PPSA" means the Personal Property Security Act of Ontario (or any
successor statute) or similar legislation (including, without limitation, the
Civil Code) of any other jurisdiction the laws of which are required by such
legislation to be applied in connection with the issue, perfection, enforcement,
validity, or effect of security interests.
"Prime Rate" means a rate per annum equal to the prime rate of interest
announced from time to time by Bank One or its parent (which is not necessarily
the lowest rate charged to any customer), changing when and as said prime rate
changes.
"Priority Payable Reserve" means reserves established in the reasonable
credit judgment of the Agent for amounts secured by any Liens, ▇▇▇▇▇▇ or
inchoate, which rank or are capable of ranking higher in priority to the Liens
of the Agent and/or for amounts which may represent costs relating to the
enforcement of the Liens of the Agent including, without limitation, in the
reasonable credit judgment of the Agent, any such amounts due and not paid for
vacation pay, amounts due and not paid under any legislation relating to
workers' compensation or to employment insurance, all amounts deducted or
withheld and not paid and remitted when due under the Income Tax Act (Canada),
amounts currently or past due and not paid for realty, municipal, or similar
taxes (to the extent impacting personal or moveable property), and all amounts
currently or past due and not contributed, remitted, or paid to any Plan or
under the Canada Pension Plan, the PBA, or any similar legislation.
"Projections" means (a) as of the Closing Date and thereafter until
delivery of the items required pursuant to Section 6.1(d), the projections of
the Parent's and its Subsidiaries' financial condition (including results of
operations and cash flow) for the period commencing January 1, 2003 and ending
December 31, 2005, delivered to the Lenders prior to the Closing Date and (b)
thereafter, the projections of the Parent's and its Subsidiaries' financial
condition, in substantially the form received by the Lenders on or prior to the
Closing Date.
"Property" means, with respect to any Person, any and all property,
whether real, personal, moveable, immovable, tangible, intangible, or mixed, of
such Person, or other assets owned, leased, or operated by such Person.
"Pro Rata Share" means, with respect to each Lender, a portion equal to
a fraction the numerator of which is such Lender's Revolving Commitment, plus
its Term Loans B, and the denominator of which is the Aggregate Commitment.
"Purchasers" has the meaning specified in Section 12.3(a).
"Rate Management Obligations" means, with respect to any Person, all
obligations of such Person, whether absolute or contingent and howsoever and
whensoever created, arising, evidenced, or acquired (including all renewals,
extensions, and other modifications thereof and substitutions therefor), under
(a) any and all Rate Management Transactions and (b) any and all cancellations,
buy backs, reversals, terminations, or assignments of any Rate Management
Transactions.
CREDIT AGREEMENT Page 26
"Rate Management Transaction" means any transaction (including an
agreement with respect thereto) now existing or hereafter entered by any
Obligated Party which is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap, equity or equity
index option, bond option, interest rate option, foreign exchange transaction,
cap transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option, or any other similar transaction (including any option with respect to
any of these transactions) or any combination thereof, whether linked to one or
more interest rates, foreign currencies, commodity prices, equity prices, or
other financial measures.
"Rawlings" means Rawlings Sporting Goods Company, Inc., a Delaware
corporation, and its successors and assigns.
"Rawlings Acquisition" means the Acquisition of Rawlings by the Parent
pursuant to the Rawlings Acquisition Agreement (including, without limitation,
(i) satisfaction of all conditions precedent thereto described in the Rawlings
Acquisition Agreement except as may be approved otherwise by the Agent and (ii)
a consent of Major League Baseball to such Acquisition) and consummated in
accordance with applicable law, the Organization Certificate and Management
Agreement of Rawlings, the Parent, and any Subsidiary of the Parent party
thereto.
"Rawlings Acquisition Agreement" means that certain Agreement and Plan
of Merger, dated as of December 15, 2002, among the Parent, Rawlings, and Lara
Acquisition Sub, as such agreement may be amended, restated, or otherwise
modified from time to time and as delivered to the Agent and the Lenders prior
to the Closing Date.
"Rawlings Inventory" means, after the Rawlings Acquisition, any
Inventory owned by Rawlings, its successor, or any of their respective
Subsidiaries.
"Real Estate Mortgages" means any mortgage, deed of trust, deed of
immovable hypothec, or other agreement which conveys or evidences a Lien in
favor of the Agent, for the benefit of the Agent and the Lenders, on real
Property of an Obligated Party, including any amendment, modification, or
supplement thereto.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official interpretation of said Board of Governors
relating to reserve requirements applicable to member banks of the Federal
Reserve System.
"Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit for the purpose of buying or carrying margin stocks.
"Reimbursement Obligations" means, at any time, the aggregate of all
indebtedness, liabilities, and obligations of the Parent then outstanding under
Section 2.4(e) to reimburse the
CREDIT AGREEMENT Page 27
LC Issuer for amounts paid by the LC Issuer in respect of any one or more
drawings under Facility LCs.
"Reportable Event" means a reportable event as defined in Section 4043
of ERISA and the regulations issued under such section, with respect to a Plan,
excluding, however, such events as to which the PBGC has by regulation waived
the requirement of Section 4043(a) of ERISA that it be notified within 30 days
of the occurrence of such event, provided, however, that a failure to meet the
minimum funding standard of Section 412 of the Code and of Section 302 of ERISA
shall be a Reportable Event regardless of the issuance of any such waiver of the
notice requirement in accordance with either Section 4043(a) of ERISA or Section
412(d) of the Code.
"Reports" has the meaning specified in Section 6.12.
"Required Lenders" means Lenders in the aggregate having more than
50.0% of the Aggregate Commitment or, if the Aggregate Commitment has been
terminated, Lenders in the aggregate holding at least a majority of the
Aggregate Outstanding Credit Exposure; provided that solely for purposes of
application of Section 8.2(a) with respect to Section 2.13(b) and Section
2.13(c), "Required Lenders" means Lenders having at least 80.0% of the Aggregate
Commitment or, if the Aggregate Commitment has been terminated, Lenders in the
aggregate holding at least 80.0% of the Aggregate Outstanding Credit Exposure.
"Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal, and other reserves) which is imposed under Regulation D on
Eurocurrency liabilities.
"Resolutions" means, (a) with respect to any business entity other than
a limited partnership, resolutions of such Person's board of directors, board of
managers, board of governors, or other similar governing body and (b) with
respect to any limited partnership, resolutions of its general partner, in each
case duly adopted in compliance with such Person's Management Agreement.
"Revolving Commitment" means, for each Lender, the obligation of such
Lender to make Revolving Loans to any Borrower, to participate in Facility LCs
issued upon the application of the Parent, and to participate in Acceptances
created or deemed created hereunder in an aggregate amount not exceeding the
amount set forth under the heading "Revolving Commitment" on such Lender's
signature page to this Agreement, in any Assignment Agreement entered into
pursuant to Section 12.3 (including such amount as it may be increased or
decreased from time to time pursuant to Section 2.1(b), Section 2.12(b), or
Section 12.3), or as otherwise provided in this Agreement.
"Revolving Loan" means, with respect to each Lender, such Lender's loan
made pursuant to its commitment to lend set forth in Section 2.1 (or any
continuation or conversion thereof).
"Revolving Pro Rata Share" means, with respect to each Lender holding a
Revolving Commitment, a portion equal to a fraction the numerator of which is
the Revolving Commitment of such Lender and the denominator of which is the
Aggregate Revolving Commitment.
CREDIT AGREEMENT Page 28
"S&P" means Standard and Poor's Ratings Services, a division of The
McGraw Hill Companies, Inc.
"Sale and Leaseback Transaction" means any sale or other transfer of
Property by any Person with the intent to lease such Property as lessee.
"Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.
"Secretary" means (a) with respect to any business entity other than a
partnership, such Person's secretary, assistant secretary, or other individual
granted similar authority, duties, and responsibilities by the board of
directors or other similar governing body of such Person, (b) with respect to
any limited partnership, its general partner or the Secretary (as specified in
clause (a) preceding) of its general partner, and (c) with respect to any
general partnership, any partner with the authority granted to a Secretary of
any Person in clause (a) preceding.
"Section" means a numbered section of this Agreement, unless another
document is specifically referenced.
"Security Agreements" means the Canadian Security Agreements, the U.K.
Debenture, the U.K. Equitable Mortgages, the Parent Security Agreements, the
U.S. Subsidiary Security Agreements, and any other agreement (excluding the Real
Estate Mortgages) executed and delivered by any Person which creates a Lien on
any Property to secure payment or performance of the Obligations, or any portion
thereof, collectively and individually, and "Security Agreement" means any one
of such agreements, individually.
"Senior Notes" means, collectively, the certain 8.39% Senior Notes due
2004 issued pursuant to the certain Note Agreement dated October 15, 1992,
between the Parent and the Purchasers named therein, and the certain 8.41%
Senior Notes due 2009 issued pursuant to the certain Note Purchase Agreement
dated December 1, 1999, between the Parent and the Purchasers named therein, and
includes, as applicable, each agreement, amendment, certificate, document,
instrument, restatement, or supplement entered into or delivered in connection
therewith.
"Single Employer Plan" means a Plan maintained by the Parent or any
member of the Controlled Group for employees of the Parent or any member of the
Controlled Group.
"Stated Rate" has the meaning specified in Section 2.9.
"▇▇▇▇▇▇▇ Inventory" means Inventory owned by ▇▇▇▇▇▇▇, Inc, a
Wholly-Owned Subsidiary of the Parent.
"Subordinated Indebtedness" means the Convertible Subordinated
Debentures and any other Indebtedness of a Person the payment of which is
subordinated to payment of the Obligations in a manner satisfactory to the
Required Lenders.
CREDIT AGREEMENT Page 29
"Subsidiary" means, with respect to any Person (the "subject Person"),
(a) any corporation, partnership, limited liability company, association, joint
venture, or similar business organization more than 50.0% of the outstanding
Capital Stock having ordinary voting power of which shall at the time be owned
or controlled, directly or indirectly, by the subject Person or by one or more
of its Subsidiaries or by the subject Person and one or more of its
Subsidiaries. Unless otherwise expressly provided, all references herein to a
"Subsidiary" shall mean a Subsidiary of the Parent.
"Substantial Portion" means, with respect to the Property of the Parent
and its Subsidiaries, Property which represents more than 10.0% of the
consolidated assets of the Parent and its Subsidiaries or property which is
responsible for more than 10.0% of the consolidated net sales or of the
consolidated net income of the Parent and its Subsidiaries, in each case, as
would be shown in the consolidated financial statements of the Parent and its
Subsidiaries as at the beginning of the twelve calendar month period ending with
the calendar month in which such determination is made (or if financial
statements have not been delivered hereunder for that calendar month which
begins the twelve calendar month period, then the financial statements delivered
hereunder for the Fiscal Quarter ending immediately prior to that calendar
month).
"Supporting Letter of Credit" has the meaning specified in Section
2.4(l).
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges, or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.
"Term Loan B" means, with respect to each Lender, such Lender's loan
made pursuant to Section 2.2, if any, or any continuation or conversion thereof.
"Termination Event" means (a) the complete or partial withdrawal under
Title IV of ERISA or otherwise of the Parent or any member of the Controlled
Group from a Plan during a plan year, (b) the filing of a notice of intent to
terminate in whole or in part a Plan or any other action by the Parent or any
member of the Controlled Group to terminate all or any portion of a Plan, (c)
the institution of proceedings by any governmental authority to terminate in
whole or in part or have a trustee appointed to administer a Plan, (d) any other
event or condition which is reasonably likely to constitute grounds for the
termination of, or the appointment of a trustee to administer, all or any
portion of any Plan, in each of clause (a) through clause (d) preceding where
the liability of the Parent or a member of the Controlled Group exceeds
$1,000,000, (e) there is any indebtedness, liability, or obligation (other than
a contingent liability) which is not satisfied at the time permitted under
applicable law (without regard to any waivers permitted under applicable law)
pursuant to, related to, or concerning Section 302 of ERISA, Title IV of ERISA,
or Section 412 of the Code, of (f) the amount of the Unfunded Liabilities cause
any governmental authority to take any official action against the Parent or any
member of the Controlled Group with regard to or concerning such Unfunded
Liabilities.
"Trademarks" means, with respect to any Person, all of such Person's
right, title, and interest in and to the following: (a) all trademarks
(including service marks), trade names, trade
CREDIT AGREEMENT Page 30
dress, and trade styles and the registrations and applications for registration
thereof and the goodwill of the business symbolized by the foregoing; (b) all
licenses of the foregoing, whether as licensee or licensor; (c) all renewals of
the foregoing; (d) all income, royalties, damages, and payments now or hereafter
due or payable with respect thereto, including, without limitation, damages,
claims, and payments for past and future infringements thereof; (e) all rights
to ▇▇▇ for past, present, and future infringements of the foregoing, including
the right to settle suits involving claims and demands for royalties owing; and
(f) all rights corresponding to any of the foregoing throughout the world.
"Trust Property" means all or any of the assets, rights, powers,
authorities, and discretions at any time subject to or expressed to be subject
to the security from time to time constituted by or arising pursuant to the U.K.
security Documents or vested in the U.K. Security Trustee or given under or
pursuant to the U.K. Security Documents, including all income and other sums at
any time received or receivable by the U.K. Security Trustee in respect thereof.
"Transferee" has the meaning specified in Section 12.4.
"Type" means, with respect to any Advance, its nature as a Floating
Rate Advance or a Eurodollar Advance and with respect to any Loan, its nature as
a Floating Rate Loan or a Eurodollar Loan.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the State of California or any other state the laws of which are required to
be applied in connection with the issue of perfection of security interests.
"U.K. Borrower" means, separately and individually, any of Shakespeare
Company (UK) Limited, Shakespeare Monofilament UK Limited, any other Person who
becomes a party to this Agreement as a "U.K. Borrower" pursuant to the terms of
this Agreement, jointly, severally, and collectively, including their respective
successors and assigns, and "U.K. Borrowers" means one or more or all of the
foregoing Persons, jointly, severally, and collectively, as the context
requires.
"U.K. Borrowing Base" means, at any time, an amount equal to the lesser
of (a) $7,500,000 or (b) the Borrowing Base Calculation of the U.K. Obligated
Parties, minus Availability Reserves applicable to the U.K. Obligated Parties.
"U.K. Debenture" means the certain Syndicated Composite Guarantee and
Debenture, dated concurrently herewith (in form and substance satisfactory to
the Agent), between each of the U.K. Obligated Parties and the U.K. Security
Trustee, for the benefit of the Agent and Lenders, as such agreement may be
amended, restated, or otherwise modified from time to time.
"U.K. Equitable Mortgages" means the certain Equitable Mortgage Over
Securities, dated concurrently herewith (in form and substance satisfactory to
the Agent), between the Parent and the U.K. Security Trustee, for the benefit of
the Agent and the Lenders, and the certain Equitable Mortgage Over Securities,
dated concurrently herewith (in form and substance satisfactory to the Agent),
between Shakespeare Company LLC and the U.K. Security Trustee,
CREDIT AGREEMENT Page 31
for the benefit of the Agent and the Lenders, as each such agreement may be
amended, restated, or otherwise modified from time to time.
"U.K. Guarantor" means each Person who is or becomes a party to the
U.K. Debenture or any other agreement executed by a Person whereby such Person
guarantees or assures payment or performance of the U.K. Obligations or any
portion thereof, whether pursuant to the terms of this Agreement or otherwise,
including each such Person's successors and assigns, and "U.K. Guarantors" means
two or more of such Persons, collectively.
"U.K. Obligated Parties" means each of the U.K. Borrowers and each U.K.
Guarantor, individually, and "U.K. Obligated Parties" means two or more of such
Persons, collectively, as the context requires.
"U.K. Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans to the U.K. Borrowers and all accrued and unpaid fees,
expenses, reimbursements, indemnities, and other indebtedness, liabilities, and
obligations of the U.K. Obligated Parties to the Lenders or to any Lender
(including with respect to Facility Rate Management Obligations owing by the
U.K. Obligated Parties), the Agent, the U.K. Security Trustee, or any
indemnified party arising under any of the Loan Documents.
"U.K. Security Documents" means the U.K. Debenture, the U.K. Equitable
Mortgages, any other Guaranty Agreement or Security Agreement governed by
English Law pursuant to which the U.K. Security Trustee holds the security
thereby created for the benefit of the Agent and the Lenders, and any other
security document from time to time executed and delivered by any Obligated
Party which grants a Lien in Property of such Obligated Party as security for
the U.K. Obligations in favor of the U.K. Security Trustee for the benefit of
the Agent and the Lenders.
"U.K. Security Trustee" means Bank One, NA acting through its London
branch at ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, in its capacity as
security trustee of the security created by the U.K. Security Documents and
includes any successor entity thereto.
"Unfunded Liabilities" means the amount (if any) by which the present
value of all vested and unvested accrued benefits under all Single Employer
Plans exceeds the fair market value of all such Plan assets allocable to such
benefits, all determined as of the then most recent valuation date for such
Plans using PBGC actuarial assumptions for single employer plan terminations as
if the Plan then terminated under Title IV of ERISA, and in the case of any Plan
regulated by the PBA or the applicable laws of any foreign jurisdiction, any
unfunded liability or solvency deficiency as determined under the PBA or other
applicable foreign law in accordance with assumptions reasonably acceptable to
the Required Lenders.
"Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.
"Unused Availability" means, on any day, the amount of the Borrowing
Base Calculation, minus the Aggregate Outstanding Revolving Credit Exposure.
CREDIT AGREEMENT Page 32
"U.S." means the United States of America.
"U.S. Borrower" means, separately and individually, any of the Parent,
Shakespeare Conductive Fibers, LLC, Shakespeare Company, LLC, Sitca Corporation,
K2 Corporation, Planet Earth Skateboards, Inc., K2 International, Inc., SMCA,
Inc., ▇▇▇▇▇▇▇ Inc., Ride, Inc., Hilton Corporate Casuals, LLC, and any other
Person who becomes a party to this Agreement as a "U.S. Borrower" pursuant to
the terms of this Agreement, jointly, severally, and collectively, including
their respective successors and assigns, and "U.S. Borrowers" means more than
one or all of the foregoing Persons, jointly, severally, and collectively, as
the context requires.
"U.S. Borrowing Base" means, at any time, an amount equal to the lesser
of (a) the Aggregate Revolving Commitment, minus the Foreign Loan Balance or (b)
the Borrowing Base Calculation of the U.S. Borrowers, minus the Availability
Reserves applicable to the U.S. Borrowers.
"U.S. Obligated Parties" means each of the U.S. Borrowers and each U.S.
Guarantor, individually, and "U.S. Obligated Parties" means two or more of such
Persons, collectively, as the context requires.
"U.S. Obligations" means all unpaid principal of and accrued and unpaid
interest on the Loans to the U.S. Borrowers, all Reimbursement Obligations, all
Acceptance Reimbursement Obligations, and all accrued and unpaid fees, expenses,
reimbursements, indemnities, and other indebtedness, liabilities, and
obligations of the U.S. Obligated Parties to the Lenders or to any Lender
(including with respect to Facility Rate Management Obligations owing by the
U.S. Obligated Parties), the Agent, any LC Issuer, any Acceptance Lender, or any
indemnified party arising under any of the Loan Documents.
"U.S. Subsidiary Guarantor" means each Person who is or becomes a party
to any U.S. Subsidiary Guaranty Agreement, whether pursuant to the terms of this
Agreement or otherwise, including each such Person's successors and assigns, and
"U.S. Subsidiary Guarantors" means two or more of such Persons, collectively.
"U.S. Subsidiary Guaranty Agreement" means, that certain Guaranty
Agreement (in form and substance satisfactory to the Agent), dated concurrently
herewith, duly executed by the U.S. Obligated Parties (other than the Parent),
and any other agreement executed by a Person whereby such Person guarantees or
assures payment and performance of the U.S. Obligations or any portion thereof.
"U.S. Subsidiary Security Agreements" means that certain Pledge and
Security Agreement, dated concurrently herewith, between each of the U.S.
Obligated Parties (other than the Parent) and the Agent (or the U.K. Security
Trustee on behalf of the Agent), and that certain Equitable Mortgage Over
Securities, dated concurrently herewith, between Shakespeare Company, LLC, a
Delaware limited liability company, and the U.K. Security Trustee, for the
benefit of the Agent and the Lenders (each of such agreements in form and
substance satisfactory
CREDIT AGREEMENT Page 33
to the Agent), as such agreements may be amended, restated, or otherwise
modified from time to time.
"Wholly-Owned Subsidiary" means, with respect to any Person (the
"subject Person"), any Person all of the outstanding voting Capital Stock of
which shall at the time be owned or controlled, directly or indirectly, by the
subject Person or one or more Wholly-Owned Subsidiaries of the subject Person,
or by the subject Person and one or more Wholly-Owned Subsidiaries of the
subject Person.
The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.
ARTICLE 2
THE CREDITS
Subject to the terms and conditions of this Agreement, the Lenders
agree to make the credit facilities described in this Article 2 available to the
Borrowers for use for any purpose pursuant to Section 6.2 from time to time
during the term of this Agreement. The credit facilities shall be composed of a
revolving credit facility in an initial aggregate principal amount of
$205,000,000 consisting of Revolving Loans, Non-Ratable Loans, Facility LCs and
Acceptances, and a term loan in an initial principal amount of $20,000,000.
Section 2.1 Revolving Commitments.
(a) Amounts. Subject to the satisfaction of the conditions precedent
set forth in Article 4, each Lender severally, but not jointly, agrees,
upon a Borrower's request from time to time on any Business Day during the
period from the Closing Date to the Facility Termination Date, to make
Credit Extensions to, or for the account of, the applicable Borrower in an
aggregate amount not in excess of such Lender's Revolving Pro Rata Share of
the applicable Borrowing Base, except for Collateral Protection Advances.
The Lenders, however, in their unanimous discretion, may elect to make
Credit Extensions in excess of the applicable Borrowing Base on one or more
occasions, but if they do so, neither the Agent nor the Lenders shall be
deemed thereby to have changed the limits of any Borrowing Base or to be
obligated to exceed such limits on any other occasion. If any requested
Credit Extension exceeds (i) the Unused Availability (as determined prior
to giving effect to such Credit Extension), (ii) with respect to any Credit
Extension to K2 Canada, the unused portion of the Canadian Borrowing Base
(after giving effect to all outstanding Loans to K2 Canada but prior to
making any requested Loan to K2 Canada), (iii) with respect to any Credit
Extension to any U.K. Borrower, the unused portion of the U.K. Borrowing
Base (after giving effect to all outstanding Loans to the U.K. Borrowers
but prior to making any requested Loan to such U.K. Borrower), or (iv) with
respect to any Credit Extension to any U.S. Borrower, the unused portion of
the U.S. Borrowing Base (after giving effect to all outstanding Loans to
the U.S. Borrowers but prior to making any requested Loan to such U.S.
Borrower), then the Lenders may refuse to make or may otherwise restrict
the making of Credit Extensions, subject to the Agent's authority, in its
sole discretion, to make Collateral Protection
CREDIT AGREEMENT Page 34
Advances pursuant to the terms of Section 2.1(i). Subject to the terms
of this Agreement, the Borrowers may borrow, repay, and reborrow
Revolving Loans at any time prior to the Facility Termination Date.
(b) Increase of Aggregate Revolving Commitment.
(i) Upon notice to the Agent (who shall promptly notify the
Lenders), the Borrowers may, from time to time, request increases in
the Aggregate Revolving Commitment in an aggregate amount of up to
$25,000,000; provided that any such increase shall not increase the
maximum amount of Loans available to K2 Canada or the U.K. Borrowers
and shall be in a minimum amount of $10,000,000 and integral multiples
of $5,000,000 in excess thereof. At the time of sending such notice,
the Borrowers (in consultation with the Agent) shall specify the time
period (not less than 10 days) within which each Lender is requested
to respond to such request. Each Lender shall respond within such time
period to the Agent whether or not it agrees to increase its Revolving
Commitment and, if so, whether by an amount equal to or less than its
Revolving Pro Rata Share of such requested increase. Any Lender not
responding within such time period shall be deemed to have declined to
increase its Revolving Commitment. The Agent shall notify the
Borrowers and each Lender of the Lenders' responses to each request
made hereunder. To achieve the full amount of a requested increase,
the Borrowers may also (i) request that one or more other Lenders, in
their sole and absolute discretion, nonratably increase their
Revolving Commitment, and/or (ii) invite additional lending
institutions which otherwise qualify as Purchasers under Section 12.3
to become Lenders under the terms of this Agreement. In connection
with the foregoing, each of the Lenders agrees to execute and deliver
such amendments or other agreements as are reasonably required to give
effect to the adjustment of such Lender's Revolving Commitment or of
the Aggregate Revolving Commitment. Any new Purchaser added as a
Lender pursuant to the preceding sentence shall be required to have a
Revolving Commitment of not less than $5,000,000. In connection with
each increase in any Lender's Revolving Commitment pursuant to this
Section 2.1(b) and each addition of a new Lender, the Borrowers shall
pay to the Agent, for its own account, a fee of $3,500 for processing
such increase and addition.
(ii) If any requested increase in the Revolving Commitments is
agreed to in accordance with clause (i) preceding, the Agent and the
Borrowers shall determine the effective date of such increase (the
"Increase Effective Date"). The Agent, with the consent and approval
of the Borrowers, shall promptly confirm in writing to the Lenders the
final allocation of such increase and the Increase Effective Date. As
a condition precedent to the effectiveness of such increase, the
Borrowers shall deliver to the Agent a certificate dated as of the
Increase Effective Date (in sufficient copies for each Lender) signed
by a responsible officer of the Parent on behalf of all of the
Borrowers, including a Compliance Certificate demonstrating compliance
with the terms of this Agreement and certification that, before and
after giving effect to such increase, the representations and
warranties contained in Article 5 are true and correct in all
CREDIT AGREEMENT Page 35
material respects on and as of the Increase Effective Date (except to
the extent any such representation or warranty is stated to
relate solely to an earlier date) and no Default or Unmatured Default
exists. Upon the request of any Lender, the Borrowers shall deliver a
new or amended Note reflecting the new or increased Revolving
Commitment of each new or affected Lender as of the Increase Effective
Date. The Borrowers shall prepay any Revolving Loans which are
Eurodollar Loans and which are outstanding on the Increase Effective
Date (and pay any costs incurred in connection with such prepayment
pursuant to Section 3.4) to the extent necessary to keep the
outstanding Revolving Loans ratable with any revised Revolving Pro
Rata Shares arising from any nonratable increase in the Revolving
Commitments.
(iii) This Section 2.1(b) shall supersede any provisions of Section
8.2.
(c) Procedure for Borrowing.
(i) Each Advance shall be made upon a Borrower's written notice
delivered to the Agent in the form of Exhibit C (a "Borrowing Notice"), or
upon telephonic notice pursuant to Section 2.7, which must be received by
the Agent prior to 12:00 noon (Chicago, Illinois time) (x) three Business
Days prior to the requested Borrowing Date, in the case of any Eurodollar
Advance, (y) on the requested Borrowing Date, in the case of any Floating
Rate Advance requested by a U.S. Borrower, and (z) three Business Days
prior to the requested Borrowing Date, in the case of any Floating Rate
Advance requested by K2 Canada or a U.K. Borrower. Each Borrowing Notice
shall specify (A) the Borrowing Date (which shall be a Business Day) of
such Advance, (B) the amount of the Advance requested, which (1) in the
case of Eurodollar Advances shall be in an amount that is not less than
$1,500,000 or an integral multiple of $500,000 in excess thereof, (2) in
the case of Floating Rate Advances to K2 Canada or a U.K. Borrower shall be
in an amount that is not less than $500,000 or an integral multiple of
$250,000 in excess thereof, or (3) in the case of Floating Rate Advances to
the U.S. Borrowers shall be in an amount that is not less than $50,000 or
an integral multiple of $10,000 in excess thereof (other than a Floating
Rate Advance made pursuant to Section 2.15 or which is used to repay
NonRatable Loans which may be in the amount of the Non-Ratable Loans being
repaid), (C) the Type of Advance requested; provided that if such Borrower
fails to specify the Type of Advance requested, such request shall be
deemed a request for a Floating Rate Advance, and (D) the duration of the
Interest Period if the Type of Advance requested is a Eurodollar Advance;
provided that if such Borrower fails to select the duration of the Interest
Period requested for any Eurodollar Advance, such Borrower shall be deemed
to have requested such Eurodollar Advance be made with an Interest Period
of one month in duration.
(ii) The Borrowers shall have no right to request a Eurodollar Advance
while any Default or Unmatured Default exists.
CREDIT AGREEMENT Page 36
(d) Funding Account. The Borrowers shall deliver to the Agent, on the
Closing Date, a notice setting forth the deposit accounts of the Borrowers
(each a "Funding Account") to which the Agent is authorized by the
Borrowers to transfer the proceeds of the Advances requested hereunder. A
separate Funding Account shall be designated for each of K2 Canada
(individually), the U.K. Borrowers (collectively), and the U.S. Borrowers
(collectively). The Borrowers may designate a replacement Funding Account
(as applicable) from time to time by written notice to the Agent. Any
designation by the Borrowers of the Funding Account must be reasonably
acceptable to the Agent.
(e) Reliance Upon Authority; No Liability. The Agent is entitled to
rely conclusively on any individual's request for Advances hereunder, so
long as the proceeds thereof are to be transferred to the applicable
Funding Account. The Agent shall have no duty to verify the identity of any
individual representing himself or herself as a person authorized by any
Borrower to make such requests on its behalf. The Agent shall not incur any
liability to the Borrowers as a result of acting upon any notice referred
to in Section 2.1(c), Section 2.1(d), Section 2.6, and Section 2.7 which
the Agent reasonably believes to have been given by an officer or other
person duly authorized by a Borrower to request Advances on its behalf or
for otherwise acting under this Agreement. The crediting of Advances to the
applicable Funding Account shall conclusively establish the obligation of
the applicable Borrowers to repay such Advances as provided herein.
(f) The Agent's Election. Subject to the requirements of Section
2.1(g), promptly after receipt of a Borrowing Notice (or telephonic notice
in lieu thereof) of a requested Floating Rate Advance from the U.S.
Borrowers, the Agent shall elect in its discretion to have the terms of
Section 2.1(g) or Section 2.1(h) apply to such requested Advance. If Bank
One declines in its sole discretion to make a Non-Ratable Loan pursuant to
Section 2.1(h), the terms of Section 2.1(g) shall apply to the requested
Advance.
(g) Making of Advances. If the Agent elects to have the terms of this
Section 2.1(g) apply to a requested Floating Rate Advance or if a requested
Advance is for a Eurodollar Advance, then promptly after receipt of a
Borrowing Notice or telephonic notice in lieu thereof, the Agent shall
notify the Lenders by telecopy, telephone, or email of the requested
Advance. Each Lender shall transfer its Revolving Pro Rata Share of the
requested Advance to the Agent in immediately available funds, to the
account from time to time designated by the Agent, not later than 2:00 p.m.
(Chicago, Illinois time) on the applicable Borrowing Date. After the
Agent's receipt of all proceeds of such requested Advance, the Agent shall
make the proceeds of such requested Advance available to the applicable
Borrower on the applicable Borrowing Date by transferring same day funds to
the applicable Funding Account; provided, however, that the amount of
Credit Extensions made to the Borrowers on any Borrowing Date shall not
exceed the Unused Availability on such date, may not cause the Aggregate
Outstanding Revolving Credit Exposure to exceed the Aggregate Revolving
Commitment, and shall not cause the aggregate amount of Credit Extensions
outstanding to K2 Canada, the U.K. Borrowers, or the U.S. Borrowers to
exceed the Canadian Borrowing Base, the U.K.
CREDIT AGREEMENT Page 37
Borrowing Base, or the U.S. Borrowing Base (as applicable) after giving
effect to any such Credit Extension.
(h) Making of Non-Ratable Loans. Subject to Section 2.1(f), if the
Agent elects, with the consent of Bank One, to have the terms of this
Section 2.1(h) apply to a requested Floating Rate Advance requested by any
U.S. Borrower, Bank One shall make an Advance in the amount requested
available to the U.S. Borrowers on the applicable Borrowing Date by
transferring same day funds to the applicable Funding Account. Each advance
made solely by Bank One pursuant to this Section 2.1(h) is referred to in
this Agreement as a "Non-Ratable Loan," and such Advances are referred to
as the "Non-Ratable Loans." Each Non-Ratable Loan shall be subject to all
the terms and conditions applicable to other Advances funded by the
Lenders, except that all payments thereon shall be payable to Bank One
solely for its own account. The aggregate amount of Non-Ratable Loans
outstanding at any time shall not exceed $10,000,000. The Agent shall not
request Bank One to make any Non-Ratable Loan if (A) the Agent has received
written notice from any Lender that one or more of the applicable
conditions precedent set forth in Article 4 will not be satisfied on the
requested Borrowing Date for the applicable Non-Ratable Loan, or (B) the
requested Non-Ratable Loan exceeds the Unused Availability (before giving
effect to such Non-Ratable Loan) or would cause the Aggregate Outstanding
Revolving Credit Exposure (after giving effect to such Non-Ratable Loan) to
exceed the Aggregate Revolving Commitment on the applicable Borrowing Date.
The Non-Ratable Loans shall be secured by the Liens granted to the Agent in
and to the Facility Collateral and shall constitute Obligations hereunder.
All Non-Ratable Loans shall be Floating Rate Advances.
(i) Collateral Protection Advances. Subject to the limitations set
forth below, the Agent is authorized by the Borrowers and the Lenders, from
time to time in the Agent's sole discretion, (i) during the existence of a
Default or (ii) at any time that any of the other conditions precedent set
forth in Article 4 have not been satisfied, to make Advances (each such
Advance to be a Floating Rate Advance) to any of the Borrowers on behalf of
the Lenders in an aggregate amount outstanding at any time not to exceed,
at the time of making such Advance, the lesser of 10.0% of the aggregate
amount of the Borrowing Base or $10,000,000 which the Agent, in its
reasonable business judgment, deems necessary or desirable (A) to preserve
or protect the Facility Collateral, or any portion thereof, (B) to enhance
the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (C) to pay any other amount chargeable to or required
to be paid by the Borrowers pursuant to the terms of this Agreement,
including costs, fees, and expenses as described in Section 9.6 (any of
such Advances are herein referred to as "Collateral Protection Advances");
provided that the Required Lenders may at any time revoke the Agent's
authorization to make Collateral Protection Advances. Any such revocation
must be in writing and shall become effective prospectively upon the
Agent's receipt thereof. Absent such revocation, the Agent's determination
that the making of a Collateral Protection Advance is required for any such
purposes shall be conclusive. The Collateral Protection Advances shall be
secured by the Liens in favor of the Agent in and to the Facility
Collateral and shall constitute Obligations hereunder. All Collateral
Protection Advances shall be Floating Rate Advances.
CREDIT AGREEMENT Page 38
Section 2.2 Term Loans B. Subject to the terms and conditions of this
Agreement, each Lender designated on the signature pages hereof as holding any
commitment with respect to the Term Loans B, severally agrees to make a Loan on
the Closing Date to the U.S. Borrowers, each in an amount equal to such Lender's
Term Loan B as specified opposite such Lender's name on its signature page
hereto. The aggregate amount of the Term Loans B on the Closing Date shall be
equal to $20,000,000.
Section 2.3 Evidence of Indebtedness; Noteless Agreement.
(a) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrowers to such
Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable and paid to such
Lender from time to time hereunder.
(b) The Agent shall also maintain accounts in which it will record (i)
the amount of each Loan made hereunder, the Type thereof, and the Interest
Period with respect thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrowers to each
Lender hereunder, (iii) the original stated amount of each Facility LC and
the amount of LC Obligations outstanding at any time (which shall be to the
knowledge of the Agent where it is not the LC Issuer), (iv) the original
amount of each Acceptance and the amount of the Acceptance Obligations
outstanding at any time (which shall be to the knowledge of the Agent where
it is not the Acceptance Lender), and (v) the amount of any sum received by
the Agent hereunder from the Borrowers and each Lender's share thereof.
(c) The entries maintained in the accounts maintained pursuant to
clause (a) and clause (b) preceding shall be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided,
however, that the failure of the Agent or any Lender to maintain such
accounts or any error therein shall not in any manner affect the obligation
of the Borrowers to repay the Obligations in accordance with their terms.
(d) Any Lender may request that its Loans be evidenced by one or more
promissory notes representing its Revolving Loans and Term Loans B,
respectively, substantially in the form of Exhibit A, with appropriate
changes (each such promissory note being referred to herein as a "Note").
In such event, the Borrowers shall execute and deliver to such Lender such
Note or Notes payable to the order of such Lender. Thereafter, the Loans
evidenced by each such Note and interest thereon shall at all times (prior
to any assignment pursuant to Section 12.3) be represented by one or more
Notes payable to the order of the payee named therein, except to the extent
that any such Lender subsequently returns any such Note for cancellation
and requests that such Loans once again be evidenced as described in clause
(a) and clause (b) preceding.
Section 2.4 Facility LCs and Acceptances.
(a) Issuance and Creation. Each of the Lenders, if and to the extent
acting as the LC Issuer or Acceptance Lender hereunder (it being agreed and
understood that an Acceptance may or may not be accepted for payment by an
Acceptance Lender in
CREDIT AGREEMENT Page 39
accordance with the underlying application, agreement, or Letter of
Credit), hereby agrees, on the terms and conditions set forth in this
Agreement, to issue standby and commercial letters of credit (each, a
"Facility LC") and to renew, extend, increase, decrease, or otherwise
modify each Facility LC ("Modify" and each such action a "Modification") or
to accept or create (or cause or deem to be accepted or created)
Acceptances hereunder, in each case from time to time from and including
the Closing Date and prior to the Facility Termination Date upon the
request of the Parent in support of obligations of any Obligated Party or,
up to an aggregate amount outstanding at any time not in excess of
$15,000,000, any Subsidiary of the Parent which is not an Obligated Party;
provided that immediately after each such Facility LC is issued or Modified
or such Acceptance is accepted or created (or deemed accepted or created),
(i) the aggregate amount of the outstanding LC Obligations and Acceptance
Obligations shall not exceed $75,000,000, and (ii) the sum (without
duplication) of all Loans to the U.S. Borrowers, plus all LC Obligations,
plus all Acceptance Obligations shall not exceed the U.S. Borrowing Base.
No Facility LC shall have an expiry date later than the earlier of (y) the
fifth Business Day prior to the Facility Termination Date or (z) one year
after its issuance; provided that, subject to clause (y) preceding, any
Facility LC with an original one year term may provide for automatic
renewals thereof for up to one year. With respect to any Facility LC which
provides for automatic renewal of such Facility LC, each Lender shall be
deemed to have consented to any such extension or renewal unless such
Lender shall have provided to the Agent written notice that such Lender
declines to consent to any such extension or renewal at least 30 days prior
to the date on which the LC Issuer is entitled to decline to extend or
renew the Facility LC; provided that, notwithstanding the foregoing, if all
of the requirements of this Section 2.4(a) are met and no Default or
Unmatured Default exists, no Lender may decline to consent to any such
extension or renewal.
(b) Participations. Upon the issuance or Modification by the LC Issuer
of a Facility LC or the creation or deemed creation of an Acceptance by the
Acceptance Lender, in each case in accordance with this Section 2.4, the LC
Issuer or the Acceptance Lender, as applicable, shall be deemed, without
further action by any party hereto, to have unconditionally and irrevocably
sold to each Lender, and each Lender shall be deemed, without further
action by any party hereto, to have unconditionally and irrevocably
purchased from the LC Issuer or the Acceptance Lender, as applicable, a
participation in such Facility LC (and each Modification thereof) or
Acceptance, as applicable, and the related LC Obligations or Acceptance
Obligations in proportion to its Revolving Pro Rata Share. Each Lender
acknowledges and agrees that each such participation in a Facility LC (and
each Modification thereof) or Acceptance, as applicable, and its payment
and other obligations with respect thereto: (i) is absolute and
unconditional; (ii) shall remain and continue in full force and effect
without regard (A) to any waiver, modification, extension, renewal,
amendment or restatement of any other term or provision of any Facility LC
or Acceptance, (B) to any act or circumstance respecting any Facility LC or
Acceptance consented to or waived by any Borrower, (C) to any full,
partial, or nonexercise of any of the rights, powers, privileges,
remedies, and interests of the LC Issuer or Acceptance Lender respecting
any Facility LC or Acceptance or under any related application, any Loan
Document or applicable law, against any Person or with respect to any
Facility Collateral, (D) to any Default or
CREDIT AGREEMENT Page 40
Unmatured Default, whenever occurring or continuing, or (E) to any act
or omission on the part of the LC Issuer or Acceptance Lender, the Agent,
any Lender, or any other Person; (iii) shall not be subject to any defense,
counterclaim, set off, right of recoupment, abatement, reduction, or other
claim or determination that such Lender may have against the Agent, any
other Lender, any Borrower, or any other Person; and (iv) shall not be
diminished or qualified by the death, disability, dissolution,
reorganization, insolvency, bankruptcy, custodianship, or receivership of
the LC Issuer, the Acceptance Lender, any Lender, any Borrower, any other
coobligor, guarantor, surety or pledgor, or any other Person, or the
inability of any of them to pay its debts or perform or otherwise satisfy
its obligations as they become due for any reason whatsoever.
(c) Notice of Facility LCs. Subject to Section 2.4(a), the Parent
shall give the LC Issuer notice prior to 12:00 noon (Chicago, Illinois
time) at least three Business Days prior to the proposed date of issuance
or Modification of each Facility LC, specifying the beneficiary, the
proposed date of issuance (or Modification), and the expiry date of such
Facility LC, and describing the proposed terms of such Facility LC and the
nature of the transactions proposed to be supported thereby. Upon receipt
of such notice, the LC Issuer shall promptly notify the Agent, and the
Agent shall notify each Lender (at the time of a Settlement pursuant to
Section 2.17), of the contents thereof and of the amount of such Lender's
participation in such proposed Facility LC. The issuance or Modification by
the LC Issuer of any Facility LC shall, in addition to the conditions
precedent set forth in Article 4 (the satisfaction of which the LC Issuer
shall have no duty to ascertain), be subject to the conditions precedent
that such Facility LC shall be satisfactory to the LC Issuer and that the
Parent shall have executed and delivered such application agreement and/or
such other instruments and agreements relating to such Facility LC as the
LC Issuer shall have reasonably requested (each, a "Facility LC
Application"). In the event of any conflict between the terms of this
Agreement and the terms of any Facility LC Application, the terms of this
Agreement shall control.
(d) Facility LC Administration; Reimbursement by the Lenders. Upon
receipt from the beneficiary of any Facility LC of any demand for payment
under such Facility LC, the LC Issuer shall notify the Agent and the Parent
as to the amount to be paid by the LC Issuer as a result of such demand and
the proposed payment date (the "LC Payment Date"). The responsibility of
the LC Issuer to the Parent and the Lenders shall be only to determine that
the documents (including each demand for payment) delivered under each
Facility LC in connection with such presentment shall be in conformity in
all material respects with such Facility LC. The LC Issuer shall endeavor
to exercise the same care in the issuance and administration of the
Facility LCs as it does with respect to letters of credit in which no
participations are granted, it being understood that in the absence of any
gross negligence or willful misconduct by the LC Issuer, each Lender shall
be unconditionally and irrevocably liable, without regard to the occurrence
of any Default, Unmatured Default, or any condition precedent whatsoever,
to reimburse the LC Issuer on demand for (i) such Lender's Revolving Pro
Rata Share of the amount of each payment made by the LC Issuer under each
Facility LC to the extent such amount is not reimbursed by the Parent
pursuant to Section 2.4(e), plus (ii) interest on the foregoing amount to
be reimbursed by such Lender, for each day from the date of the LC Issuer's
CREDIT AGREEMENT Page 41
demand for such reimbursement (or, if such demand is made after 1:00
p.m. (Chicago, Illinois time) on such date, from the next succeeding
Business Day) to the date on which such Lender pays the amount to be
reimbursed by it, at a rate of interest per annum equal to the Federal
Funds Effective Rate for the first three days and, thereafter, at a rate of
interest equal to the rate applicable to Floating Rate Advances.
(e) Reimbursement by the Parent. The Parent shall be irrevocably and
unconditionally obligated to reimburse the LC Issuer on the applicable LC
Payment Date for any amounts to be paid by the LC Issuer upon any drawing
under any Facility LC, without presentment, demand, protest, or other
formalities of any kind; provided that neither the Parent nor any Lender
shall hereby be precluded from asserting any claim for direct (but not
consequential) damages suffered by the Parent or such Lender to the extent,
but only to the extent, caused by (i) the willful misconduct or gross
negligence of the LC Issuer in determining whether a request presented
under any Facility LC issued by it complied with the terms of such Facility
LC or (ii) the LC Issuer's failure to pay under any Facility LC issued by
it after the presentation to it of a request strictly complying with the
terms and conditions of such Facility LC. All such amounts paid by the LC
Issuer and remaining unpaid by the Parent shall bear interest, payable on
demand, for each day until paid at a rate per annum equal to (y) the rate
applicable to Floating Rate Advances for such day if such day falls on or
before the applicable LC Payment Date and (z) the sum of 2.00%, plus the
rate applicable to Floating Rate Advances for such day if such day falls
after such LC Payment Date. The LC Issuer will pay to each Lender ratably
in accordance with its Revolving Pro Rata Share all amounts received by the
LC Issuer from the Parent for application in payment, in whole or in part,
of the Reimbursement Obligation in respect of any Facility LC issued by the
LC Issuer, but only to the extent such Lender has made payment to the LC
Issuer in respect of such Facility LC pursuant to Section 2.4(d). Subject
to the terms and conditions of this Agreement (including, without
limitation, the submission of a Borrowing Notice in compliance with Section
2.1(c) and the satisfaction of the applicable conditions precedent set
forth in Article 4), the Parent may request an Advance hereunder for the
purpose of satisfying any Reimbursement Obligation.
(f) Acceptance, Creation and Additional Acceptance Provisions.
(i) In the event a LC Issuer accepts a LC Application from the
Parent calling for acceptance (rather than immediate payment) on
presentment, then upon due presentment to the LC Issuer by the
beneficiary under any Facility LC of a time draft in accordance
therewith and herewith, (A) the LC Issuer shall be deemed to be an
Acceptance Lender, (B) the LC Issuer shall accept the draft presented
by the beneficiary of the Facility LC in accordance with the terms
thereof and hereof (which may be by way of notice to the beneficiary
or delivery of the Acceptance), (C) the accepted draft of the
beneficiary shall be deemed to be an Acceptance, and (D) the
Acceptance Lender shall provide notice to the Agent of creation of
such Acceptance. The amount of the Acceptance shall be equal to the
face amount of the beneficiary's draft.
CREDIT AGREEMENT Page 42
(ii) Notwithstanding anything herein to the contrary, the
Acceptance Lender shall not be required to accept any draft that
(A) did not arise out of the purchase or sale of goods by any
Borrower in the ordinary course of its business, (B) arose out of
a purchase from or sale to an Affiliate of any Borrower, (C)
involves any purchase or sale for which each of the Agent and the
Acceptance Lender has not received all related documents,
instruments, and forms requested by either the Agent or the
Acceptance Lender, or (D) is not eligible for discounting with
Federal Reserve Banks pursuant to paragraph 7 of Section 13 of
the Federal Reserve Act, as amended.
(iii) The Acceptance Lender shall pay the amount of the
Acceptance on maturity to the presenting Facility LC beneficiary
or its assignee (if not previously discounted by the beneficiary
to the Acceptance Lender). The Acceptance Lender may in its
discretion discount the Acceptance for the presenting Facility LC
beneficiary at its request, which may be subject to such interest
(discount) rate for the applicable maturity period and other
charges as such beneficiary and the Acceptance Lender may agree.
The Lenders shall not participate in such interest (discount)
rate and charges.
(iv) The Parent shall pay to the Acceptance Lender the
amount of any Acceptance on its maturity date. In addition, each
of the Agent and the Acceptance Lender is hereby irrevocably
authorized, in its sole discretion, to cause the Lenders to make
Revolving Loans to the U.S. Borrowers (and the U.S. Borrowers
agree to request and accept such Revolving Loans for all purposes
of this Agreement) from time to time, or to charge any account of
the U.S. Borrowers, to pay any Acceptance for which payment is
due, or at any time after the occurrence of a Default to fund
cash collateral for any outstanding Acceptance.
(v) Each Acceptance shall be payable in Dollars and shall be
in the face amount of at least $10,000. The maturity of each
Acceptance shall be in any 30 day increment equal to or greater
than 30 days and less than or equal to 180 days or, if such
maturity date is not a Business Day, on the next succeeding
Business Day and, in any event, no later than the fifth Business
Day prior to the Facility Termination Date.
(vi) The Parent and other Borrowers acknowledge and agree
that none of the Acceptance Lender, the LC Issuer (except in so
far as this Agreement provides otherwise with respect to a LC
Issuer's liability for a Facility LC issued by it), the Agent, or
any Lender, and none of their respective affiliates,
correspondents, custodians, participants, and representatives,
shall be responsible or have any liability for: (A) the
existence, character, quantity, quality, condition, packing,
value, or delivery of any goods or other property relating to any
draft or Acceptance; (B) the validity, sufficiency, or
genuineness of any documents or endorsements or other notations
thereon; (C) the time, place, manner, or order in which shipment
is made; (D) any insurance or insurer; or (E) any act or omission
CREDIT AGREEMENT Page 43
of any shipper, warehouseman, carrier, correspondent, or
other party involved in any transaction related to any draft or
Acceptance.
(g) Obligations Absolute. The Parent's obligations under this Section
2.4 shall be absolute and unconditional under any and all circumstances and
irrespective of any setoff, counterclaim, or defense to payment which the
Parent may have or have had against the LC Issuer, the Acceptance Lender,
any Lender, or any beneficiary of a Facility LC, and irrespective of
whether any such party has received notice or otherwise has knowledge of
the same. Each of the Parent and the other Borrowers further agrees with
the LC Issuer, the Acceptance Lender and the Lenders that (i) neither the
Parent nor any other Borrower can request or stop payment under any
Facility LC or Acceptance in accordance with its terms and (ii) the Agent,
the LC Issuer, the Acceptance Lender, and the Lenders shall not be
responsible for, and the LC Obligation or Acceptance Obligation in respect
of any Facility LC or Acceptance shall not be affected by, among other
things, (A) the validity or genuineness of documents or of any endorsements
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent, or forged, (B) any dispute between or among
the Parent, any of its Affiliates, the beneficiary of any Facility LC or
Acceptance, or any financial institution or other party to whom any
Facility LC or Acceptance may be transferred, or (C) any claims or defenses
whatsoever of the Parent or of any of its Affiliates against the
beneficiary of any Facility LC or Acceptance or any such transferee.
Neither the Agent, the LC Issuer, the Acceptance Lender, or any Lender
shall be liable for any error, omission, interruption, or delay in
transmission, dispatch, or delivery of any message or advice, however
transmitted, in connection with any Facility LC or Acceptance. The Parent
agrees that any action taken or omitted by the Agent, the LC Issuer, the
Acceptance Lender, or any Lender under or in connection with each Facility
LC or Acceptance and the related drafts and documents, if done without
gross negligence or willful misconduct, shall be binding upon the Parent
and shall not put the Agent, the LC Issuer, the Acceptance Lender, or any
Lender under any liability to the Parent. Nothing in this Section 2.4(g) is
intended to limit the right of the Parent to make a claim against the LC
Issuer for damages as contemplated by the proviso to the first sentence of
Section 2.4(e).
(h) Actions of the LC Issuer and the Acceptance Lender. The LC Issuer
and the Acceptance Lender shall be entitled to rely, and shall be fully
protected in relying, upon any Facility LC, Acceptance, draft, writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order, or other
document believed by it to be genuine and correct and to have been signed,
sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants, and other experts
selected by the LC Issuer or the Acceptance Lender, as applicable. The LC
Issuer and the Acceptance Lender shall be fully justified in failing or
refusing to take any action under this Agreement unless it shall first have
received such advice or concurrence of the Required Lenders as it
reasonably deems appropriate or it shall first be indemnified to its
reasonable satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to
take any such action. Notwithstanding any other provision of this Section
2.4, the LC Issuer and the Acceptance Lender shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement in
accordance with
CREDIT AGREEMENT Page 44
a request of the Required Lenders, and such request and any action
taken or failure to act pursuant thereto shall be binding upon the Lenders
and any future holders of a participation in any Facility LC or Acceptance.
(i) Inventory Financed with Facility LCs and Acceptances.
(i) During the existence of any Default, in connection with all
Inventory financed for any Obligated Party with any Facility LC or
Acceptance, each Obligated Party hereby appoints the Agent, or the
Agent's designee, as its attorney, with full power and authority: (A)
to sign and/or endorse such Obligated Party's name upon any warehouse
or other receipts; (B) to sign such Obligated Party's name on bills of
lading and other negotiable and nonnegotiable documents; (C) to clear
Inventory through customs in the Agent's or such Obligated Party's
name, and to sign and deliver to customs officials powers of attorney
in such Obligated Party's name for such purpose; (D) to complete in
such Obligated Party's or the Agent's name, any order, sale, or
transaction, obtain the necessary documents in connection therewith,
and collect the proceeds thereof; and (E) to do such other acts and
things as are necessary in order to enable the Agent to obtain
possession or control of such Inventory and to obtain payment of the
Obligations. Neither the Agent nor its designee, as such Obligated
Party's attorney, will be liable for any acts or omissions, nor for
any error of judgment or mistakes of fact or law other than for gross
negligence or willful misconduct. This power, being coupled with an
interest, is irrevocable until all Obligations have been paid and
satisfied.
(ii) During the existence of any Default, in connection with all
Inventory financed by any Facility LC or Acceptance, each Obligated
Party will, at the Agent's request, instruct all suppliers, carriers,
forwarders, customs brokers, warehouses, or others receiving or
holding cash, checks, Inventory, documents, or instruments in which
the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come into any
Obligated Party's possession, to deliver them, upon request, to the
Agent in their original form. Each Obligated Party shall also, at the
Agent's request, designate the Agent as the consignee on all bills of
lading and other negotiable and nonnegotiable documents.
(j) Indemnification. The Parent hereby agrees to indemnify and hold
harmless each Lender, the LC Issuer, the Acceptance Lender, and the Agent,
and their respective directors, officers, agents, and employees from and
against any and all claims and damages, losses, liabilities, costs, or
expenses which such Lender, the LC Issuer, the Acceptance Lender, or the
Agent may incur (or which may be claimed against such Lender, the LC
Issuer, the Acceptance Lender, or the Agent by any Person whatsoever) by
reason of or in connection with the issuance, execution, and delivery or
transfer of or payment or failure to pay under any Facility LC or
Acceptance or any actual or proposed use of any Facility LC or Acceptance,
including, without limitation, any claims, damages, losses, liabilities,
costs, or expenses which the LC Issuer or the Acceptance Lender may incur
by reason of or in connection with (i) the failure of any other Lender to
fulfill or
CREDIT AGREEMENT Page 45
comply with its obligations to the LC Issuer or the Acceptance Lender
hereunder (but nothing herein contained shall affect any rights the Parent
may have against any defaulting Lender) or (ii) by reason of or on account
of the LC Issuer issuing any Facility LC which specifies that the term
"Beneficiary" included therein includes any successor by operation of law
of the named "Beneficiary", but which Facility LC does not require that any
drawing by any such successor "Beneficiary" be accompanied by a copy of a
legal document, satisfactory to the LC Issuer, evidencing the appointment
of such successor "Beneficiary"; provided that the Parent shall not be
required to indemnify any Lender, the LC Issuer, the Acceptance Lender, or
the Agent for any claims, damages, losses, liabilities, costs, or expenses
to the extent, but only to the extent, caused by (x) the willful misconduct
or gross negligence of the LC Issuer or the Acceptance Lender in
determining whether a request presented under any Facility LC complied with
the terms of such Facility LC, (y) the LC Issuer's failure to pay or create
an Acceptance as contemplated under any Facility LC after the presentation
to it of a request strictly complying with the terms and conditions of such
Facility LC, or (z) the failure of the Acceptance Lender to pay the amount
of the Acceptance on maturity to the applicable beneficiary (if not
previously discounted by the beneficiary to the Acceptance Lender). Nothing
in this Section 2.4(i) is intended (or shall be deemed or construed) to
limit the obligations of the Parent under any other provision of this
Agreement.
(k) The Lenders' Indemnification of the LC Issuer. Each Lender shall,
ratably in accordance with its Revolving Pro Rata Share, indemnify the LC
Issuer, its Affiliates, and their respective directors, officers, agents,
and employees (to the extent not reimbursed by the Parent) against any
cost, expense (including reasonable counsel fees and disbursements), claim,
demand, action, loss, or liability (except such as result from such
indemnitees' own gross negligence or willful misconduct or the LC Issuer's
failure to pay under any Facility LC after the presentation to it of a
request strictly complying with the terms and conditions of the Facility
LC) that such indemnitees may suffer or incur in connection with this
Section 2.4 or any action taken or omitted by such indemnitees hereunder.
(l) The Lender's Indemnification of the Acceptance Lender. Each Lender
shall, ratably in accordance with its Revolving Pro Rata Share, indemnify
the Acceptance Lender, its Affiliates, and their respective directors,
officers, agents, and employees (to the extent not reimbursed by the
Parent) against any cost, expense (including reasonable counsel fees and
disbursements), claim, demand, action, loss, or liability (except such as
result from such indemnitees' own gross negligence or willful misconduct or
the failure of the Acceptance Lender to pay the amount of the Acceptance on
maturity to the applicable beneficiary (if not previously discounted by the
beneficiary to the Acceptance Lender)) that such indemnitees may suffer or
incur in connection with this Section 2.4 or any action taken or omitted by
such indemnitees hereunder.
(m) Rights as a Lender. In its capacity as a Lender, each LC Issuer
and each Acceptance Lender shall have the same rights and obligations as
any other Lender.
(n) Termination. If, notwithstanding the provisions of Section 2.4(a),
any Facility LC or Acceptance is outstanding upon the termination of this
Agreement, then
CREDIT AGREEMENT Page 46
upon such termination the Parent shall deposit with the Agent, for the
benefit of the Agent and the Lenders, with respect to each such Facility LC
or Acceptance then outstanding, as the Agent in its discretion shall
specify, either (i) a standby letter of credit (a "Supporting Letter of
Credit"), in form and substance satisfactory to the Agent, issued by an
issuer satisfactory to the Agent in an amount equal to 110% of the sum of
the amount for which each such Facility LC may be drawn and the amount of
each such Acceptance, plus any fees and expenses associated with such
Facility LC or Acceptance, under which Supporting Letter of Credit the
Agent is entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments to be made by the Agent and the Lenders under such
Facility LC or Acceptance and any fees and expenses associated with such
Facility LC or Acceptance or (ii) cash in an amount equal to 110% of the
amount necessary to reimburse the Agent and the Lenders for payments to be
made by the Agent and the Lenders under such Facility LC or Acceptance,
plus any fees and expenses associated with such Facility LC or Acceptance.
Such Supporting Letter of Credit or deposit of cash shall be held by the
Agent, for the benefit of the Agent and the Lenders, as security for, and
to provide for the payment of, the aggregate undrawn amount of such
Facility LC or Acceptance remaining outstanding.
(o) Facility LC/Acceptance Collateral Account. The Parent agrees that
it will, during the existence of any Default, upon the request of the Agent
or the Required Lenders, maintain a special collateral account pursuant to
arrangements satisfactory to the Agent (the "Facility LC/Acceptance
Collateral Account") at the Agent's office at the address specified
pursuant to Article 13, in the name of the Parent but under the sole
dominion and control of the Agent, for the benefit of the Agent and the
Lenders and in which the Parent shall have no interest other than as set
forth in Section 8.1. The Parent hereby pledges, assigns, and grants to the
Agent, for the benefit of the Agent and the Lenders, a security interest in
all of the Parent's right, title, and interest in and to all funds which
may from time to time be on deposit in the Facility LC/Acceptance
Collateral Account to secure the prompt and complete payment and
performance of all U.S. Obligations. Nothing in this clause (o) shall
either obligate the Agent to require the Parent to deposit any funds in the
Facility LC/Acceptance Collateral Account or limit the right of the Agent
to release any funds held in the Facility LC/Acceptance Collateral Account
in each case other than as required by Section 8.1.
Section 2.5 Interest.
(a) Interest Rates. All outstanding Obligations shall bear interest on
the unpaid principal amount thereof (including, to the extent permitted by
law, on accrued interest thereon not paid when due) from the date made or
incurred until paid in full in cash at a rate determined by reference to
the Floating Rate or the Eurodollar Rate, as applicable. Except as
otherwise provided herein, the outstanding Obligations shall bear interest
as follows:
(i) for all Floating Rate Loans and other Obligations (other than
Eurodollar Loans) at a fluctuating per annum rate equal to the lesser
of (A) the Floating Rate or (B) the Highest Lawful Rate; and
CREDIT AGREEMENT Page 47
(ii) for all Eurodollar Loans at a per annum rate equal to the
lesser of (A) the Eurodollar Rate or (B) the Highest Lawful Rate.
Each change in the Prime Rate shall be reflected in the interest rate
described in clause (i) preceding as of the effective date of such
change. Subject to Section 2.9, all (y) interest charges on Eurodollar
Loans and the fees specified in Section 2.10 shall be computed on the
basis of a year of 360 days and actual days elapsed (which results in
more interest and fees being paid than if computed on the basis of a
365 day year) and (z) all other Obligations shall be computed on the
basis of a 365 (or 366, if applicable) day year. For the purposes of
the Interest Act (Canada), the yearly rate of interest to which any
rate calculated on the basis of a period of time different from the
actual number of days in the year is equivalent to the stated rate
multiplied by the actual number of days in the year and divided by the
number of days in the shorter period.
(b) Rates Applicable After Default. Subject to Section 2.9, during the
existence of a Default the Agent or the Required Lenders may, at their
option, by notice to the Borrowers (which notice may be revoked at the
option of the Required Lenders notwithstanding any provision of Section 8.2
requiring unanimous consent of the Lenders to changes in interest rates),
declare that (a) each Eurodollar Loan shall bear interest for the remainder
of the applicable Interest Period at the rate otherwise applicable to such
Interest Period, plus 2.00% per annum and (b) each Floating Rate Loan shall
bear interest at a rate per annum equal to the applicable Floating Rate in
effect from time to time plus 2.00% per annum, provided that during the
existence of a Default under Section 7.1(f) or Section 7.1(g), the interest
rates set forth in clause (a) and clause (b) preceding shall be applicable
to all Obligations without any election or action on the part of the Agent
or any Lender.
Section 2.6 Continuation and Conversion of Outstanding Loans.
(a) Floating Rate Loans (other than NonRatable Loans) shall continue
as Floating Rate Loans unless and until such Floating Rate Loans are
converted into Eurodollar Loans pursuant to this Section 2.6 or are repaid
in accordance with Section 2.11. Each Eurodollar Loan shall continue as a
Eurodollar Loan until the end of the then applicable Interest Period
therefor, at which time such Eurodollar Loan shall be automatically
converted into a Floating Rate Loan unless (a) such Eurodollar Loan is
repaid in accordance with Section 2.11 or (b) the applicable Borrower
requests that, at the end of such Interest Period, such Eurodollar Loan
continue as a Eurodollar Loan for the same or another Interest Period. The
applicable Borrower may elect from time to time to convert all or any part
of the Floating Rate Loans owing by such Borrower (other than the
Non-Ratable Loans) into a Eurodollar Loan. No Borrower may continue any
Eurodollar Loan as a Eurodollar Loan or convert any Floating Rate Loans
into a Eurodollar Loan if the Eurodollar Loan resulting from such
continuation or conversion is less than $1,500,000 or an integral multiple
of $500,000 in excess thereof. In connection with any proposed continuation
of a Eurodollar Loan as a Eurodollar Loan or conversion of a Floating Rate
Loan to a Eurodollar Loan, the applicable Borrower shall deliver to the
Agent a Borrowing Notice not later than 12:00 noon (Chicago, Illinois time)
at least three Business Days prior to the date of the requested
continuation or conversion, specifying:
CREDIT AGREEMENT Page 48
(i) the requested date, which shall be a Business Day, of such
continuation or conversion;
(ii) the aggregate amount and Type of the Loan which is to be
continued or converted; and
(iii) the amount of such Loan which is to be continued as or
converted into a Eurodollar Loan and the duration of the Interest
Period applicable thereto; provided that no Borrower may select an
Interest Period that ends after the Facility Termination Date or that,
with respect to any portion of the Term Loans B, extends beyond an
installment payment date for the Term Loans B unless, after giving
effect to such election, the portion of the Term Loans B not subject
to interest periods ending after such installment payment date is
equal to or greater than the principal due on such installment payment
date. If any Borrowing Notice delivered pursuant to this Section
2.6(a) fails to select the duration of the Interest Period for the
requested Eurodollar Loan, the applicable Borrower shall be deemed to
have requested such Eurodollar Loan be made with an Interest Period of
one month in duration.
(b) Notwithstanding Section 2.6(a), if upon the expiration of any
Interest Period applicable to Eurodollar Loans any Default or Unmatured
Default then exists, the applicable Borrower shall be deemed to have
elected to convert such Eurodollar Loans into Floating Rate Loans effective
as of the expiration date of such Interest Period.
(c) The Agent will promptly notify each Lender of its receipt of a
Borrowing Notice with respect to any continuation or conversion.
(d) All continuations and conversions shall be made ratably according
to the respective outstanding principal amounts of the Loans with respect
to which such notice was given held by each Lender.
Section 2.7 Borrowing Notices Irrevocable. Any Borrowing Notice (or
telephonic notice in lieu thereof) shall be irrevocable and the applicable
Borrower(s) shall be bound to borrow the funds requested therein in accordance
therewith. With respect to any request by the U.S. Borrowers for a Revolving
Loan which is to be a Floating Rate Advance, in lieu of delivering a Borrowing
Notice, a U.S. Borrower may give the Agent telephonic notice of such request for
advances to the Funding Account not later than the required time specified in
Section 2.1(c)(i). The Agent at all times shall be entitled to rely on such
telephonic notice in making any such Advance, regardless of whether any written
confirmation is received by the Agent.
Section 2.8 Interest Periods. After giving effect to any Loan, Advance, or
continuation or conversion of any Eurodollar Loan, there may not be more than
eight different Interest Periods in effect hereunder.
Section 2.9 Limitation of Interest. The Borrowers, the Agent, and the
Lenders intend to strictly comply with all applicable laws, including applicable
usury laws. Accordingly, the provisions of this Section 2.9 shall govern and
control over every other provision of this
CREDIT AGREEMENT Page 49
Agreement or any other Loan Document which conflicts or is inconsistent with
this Section 2.9, even if such provision declares that it controls. As used in
this Section 2.9, the term "interest" includes the aggregate of all charges,
fees, benefits, or other compensation which constitute interest under applicable
law, provided that, to the maximum extent permitted by applicable law, (a) any
non-principal payment shall be characterized as an expense or as compensation
for something other than the use, forbearance, or detention of money and not as
interest and (b) all interest at any time contracted for, reserved, charged, or
received shall be amortized, prorated, allocated, and spread, in equal parts
during the full term of the Obligations. In no event shall the Borrowers or any
other Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive, or retain, (i) any interest in excess of the maximum amount of
nonusurious interest permitted under the laws of the State of California or the
applicable laws (if any) of the U.S. or of any other applicable state or (ii)
total interest in excess of the amount which such Lender could lawfully have
contracted for, reserved, received, retained, or charged had the interest been
calculated for the full term of the Obligations at the Highest Lawful Rate. On
each day, if any, that the interest rate (the "Stated Rate") called for under
this Agreement or any other Loan Document exceeds the Highest Lawful Rate, the
rate at which interest shall accrue shall automatically be fixed by operation of
this sentence at the Highest Lawful Rate for that day, and shall remain fixed at
the Highest Lawful Rate for each day thereafter until the total amount of
interest accrued equals the total amount of interest which would have accrued if
there were no such ceiling rate as is imposed by this sentence. Thereafter,
interest shall accrue at the Stated Rate unless and until the Stated Rate again
exceeds the Highest Lawful Rate when the provisions of the immediately preceding
sentence shall again automatically operate to limit the interest accrual rate.
The daily interest rates to be used in calculating interest at the Highest
Lawful Rate shall be determined by dividing the applicable Highest Lawful Rate
per annum by the number of days in the calendar year for which such calculation
is being made. None of the terms and provisions contained in this Agreement or
in any other Loan Document which directly or indirectly relate to interest shall
ever be construed without reference to this Section 2.9, or be construed to
create a contract to pay for the use, forbearance, or detention of money at an
interest rate in excess of the Highest Lawful Rate. If the term of any
Obligation is shortened by reason of acceleration of maturity as a result of any
Default or by any other cause, or by reason of any required or permitted
prepayment, and if for that (or any other) reason any Lender at any time,
including but not limited to, the stated maturity, is owed or receives (and/or
has received) interest in excess of interest calculated at the Highest Lawful
Rate, then and in any such event all of any such excess interest shall be
canceled automatically as of the date of such acceleration, prepayment, or other
event which produces the excess, and, if such excess interest has been paid to
such Lender, it shall be credited pro tanto against the then outstanding
principal balance of the Borrowers' obligations to such Lender, effective as of
the date or dates when the event occurs which causes it to be excess interest,
until such excess is exhausted or all of such principal has been fully paid and
satisfied, whichever occurs first, and any remaining balance of such excess
shall be promptly refunded to its payor.
Section 2.10 Fees.
(a) Unused Commitment Fee. Subject to Section 2.9, until termination
of the Aggregate Revolving Commitment, the U.S. Borrowers agree to pay to
the Agent, for the account of the Lenders ratably, in accordance with their
respective Revolving Pro Rata Shares, on each Payment Date, an unused
commitment fee (the "Unused Commitment
CREDIT AGREEMENT Page 50
Fee") equal to the Applicable Unused Commitment Fee Rate, multiplied
by the daily Aggregate Unused Revolving Commitment from the Closing Date
through and including the Facility Termination Date payable on each Payment
Date. Subject to Section 2.9, the Unused Commitment Fee shall be computed
on the basis of a 360 day year for the actual number of days elapsed. For
purposes of calculating the Unused Commitment Fee pursuant to this Section
2.10, any payment received by the Agent (if received prior to 12:00 noon
(Chicago, Illinois time)) shall be deemed to be credited to the Borrowers'
account on the Business Day following the date such payment is received by
the Agent.
(b) LC Fees. The Parent shall pay to the Agent, for the account of the
Lenders ratably in accordance with their respective Revolving Pro Rata
Shares, with respect to each Facility LC, a letter of credit fee at a per
annum rate equal to (i) for standby Facility LCs, the Applicable LC Rate
for a standby Facility LC in effect from time to time and (ii) for
commercial Facility LCs, the Applicable LC Rate for a commercial Facility
LC in effect from time to time, in each case multiplied by the average
daily undrawn stated amount under such Facility LC (provided that, during
the existence of a Default, upon notice by the Agent or the Required
Lenders to the Parent (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in fees), the Applicable LC
Rate otherwise in effect shall be increased by 2.00% per annum), such fee
to be payable in arrears on each Payment Date (each such fee paid pursuant
to this sentence, an "LC Fee"). Subject to Section 2.9, the LC Fee shall be
computed on the basis of a 360 day year for the actual number of days
elapsed. The Parent shall also pay to the LC Issuer for its own account (y)
at the time of issuance of each Facility LC, a fronting fee in an amount
equal to 0.25% of the stated amount of each Facility LC and (z) documentary
and processing charges in connection with the issuance or Modification of
and draws under Facility LCs in accordance with the LC Issuer's standard
schedule for such charges as in effect from time to time.
(c) Acceptance Fees. The Parent shall pay to the Agent, for the
account of the Lenders ratably in accordance with their respective
Revolving Pro Rata Shares, with respect to each Acceptance, a fee at a per
annum rate equal to the Applicable Acceptance Rate multiplied by the
average daily aggregate amount of outstanding Acceptances, provided, that
during the existence of a Default, upon notice by the Agent or the Required
Lenders to the Parent (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in fees), the Applicable
Acceptance Rate otherwise in effect shall be increased by an additional
2.00% per annum, such fee to be payable in arrears on each Payment Date
(each such fee, an "Acceptance Fee"). Subject to Section 2.9, each
Acceptance Fee shall be computed on the basis of a 360 day year for the
actual number of days elapsed. The Parent shall also pay to the Acceptance
Lender for its own account documentary and processing charges in connection
with the creation and payment of the contemplated Acceptance in accordance
with the Acceptance Lender's standard schedule for such charges as in
effect from time to time.
(d) Seasonal Inventory Advance Fee. During the period from December 1
of each calendar year through and including March 31 of the following
calendar year, the
CREDIT AGREEMENT Page 51
Borrowers shall pay to the Agent, for the benefit of the Lenders, a
fee in an amount equal to 0.50% per annum multiplied by the daily average
amount, if any, by which the aggregate amount of Revolving Loans exceeds
the Borrowing Base Calculation determined without giving effect to the
proviso of the definition of Borrowing Base Calculation, such fee to be
payable in arrears on the first day of each calendar month. Subject to
Section 2.9, the fee required by this Section 2.10(d) shall be computed on
the basis of a 360 day year for the actual number of days elapsed.
Section 2.11 Payment of the Loans.
(a) Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, together with all other
Obligations, other than the Term Loans and interest thereon, including all
accrued and unpaid interest thereon, on the Facility Termination Date as
follows: K2 Canada shall repay the Canadian Obligations; the U.K. Borrowers
shall repay the U.K. Obligations; and the U.S. Borrowers shall repay the
U.S. Obligations. The Borrowers may prepay their respective Revolving Loans
at any time and reborrow subject to the terms of this Agreement; provided
that with respect to any Eurodollar Loans prepaid prior to the expiration
date of the Interest Period applicable thereto, the U.S. Borrowers shall
pay to the Agent, for the account of the Lenders, the amounts described in
Section 3.4. In addition, and without limiting the generality of the
foregoing, upon demand (i) K2 Canada shall pay to the Agent, for account of
the Lenders, the amount, if any and without duplication, by which the
outstanding Revolving Loans owing by K2 Canada exceed the Canadian
Borrowing Base, (ii) the U.K. Borrowers shall pay to the Agent, for account
of the Lenders, the amount, if any and without duplication, by which the
outstanding Revolving Loans owing by the U.K. Borrowers exceed the U.K.
Borrowing Base, and (iii) the U.S. Borrowers shall pay to the Agent, for
account of the Lenders, the amount, if any and without duplication, by
which the Aggregate Outstanding Revolving Credit Exposure owing by the U.S.
Borrowers exceeds the U.S. Borrowing Base. Accrued interest on the
Revolving Loans shall be due and payable on each Payment Date.
(b) Term Loans. The U.S. Borrowers shall pay to the Agent, for the
account of the Lenders, the outstanding principal amount of the Term Loans
B in consecutive monthly principal installments of $555,555.56 on each
applicable Payment Date, and in any event, all unpaid Obligations in
respect of the Term Loans B are due and payable on the Facility Termination
Date. Accrued interest on the Term Loans B shall be due and payable on each
Payment Date.
Section 2.12 Termination of Facilities.
(a) Without limiting Section 2.11 or Section 8.1, (a) the Aggregate
Commitment shall expire on the Facility Termination Date and (b) the
Aggregate Outstanding Credit Exposure and all other unpaid Obligations
shall be paid in full on the Facility Termination Date.
(b) The Borrowers may terminate this Agreement upon at least five
Business Days prior written notice thereof to the Agent and the Lenders,
upon (a) the payment in
CREDIT AGREEMENT Page 52
full of all outstanding Loans, together with accrued and unpaid
interest thereon, (b) the cancellation and return of all outstanding
Facility LCs (or alternatively, with respect to each such Facility LC, the
furnishing to the Agent of a cash deposit or Supporting Letter of Credit as
required by Section 2.4(l)), (c) the payment in full of the early
termination fee set forth in the following sentence, (d) the payment in
full of all reimbursable expenses and other Obligations together with
accrued and unpaid interest thereon, and (e) the payment in full of any
amount due under Section 3.4. Subject to Section 2.9, if this Agreement is
terminated at any time prior to the Facility Termination Date, whether
pursuant to this Section 2.12 or pursuant to Section 8.1, the U.S.
Borrowers shall pay to the Agent, for the account of the Lenders, an early
termination fee determined in accordance with the following table:
=========================================== =================================
Period during which early
termination occurs Early Termination Fee
=========================================== =================================
On or prior to the first anniversary of the 1.00% of the Aggregate Commitment
Closing Date
=========================================== =================================
After the first anniversary of the Closing 0.50% of the Aggregate
Date but the on or prior to the second Commitment
anniversary of the Closing Date
=========================================== =================================
As used in the preceding table, notwithstanding any other definition
or provision of this Agreement to the contrary, "Aggregate Commitment"
shall mean the sum of the Aggregate Revolving Commitment as of the date of
termination of this Agreement, plus the highest aggregate amount of the
Term Loans B outstanding during the 60 day period immediately preceding the
date of termination of this Agreement. No early termination fee shall be
payable in connection with any early payment of the Term Loans B if the
Aggregate Revolving Commitment is not terminated within 90 days of such
early payment of the Term Loans B. Additionally, no such early termination
fee shall be payable in the event this Agreement is terminated in
connection with refinancing of the Obligations in a transaction in which
Bank One or one of its Affiliates provides or arranges a replacement credit
facility for the Borrowers or any of them. The Borrowers may, without
premium or penalty, permanently reduce the Aggregate Revolving Commitment
ratably among the Lenders to an amount not less than $170,000,000 or any
integral multiple of $10,000,000 in excess thereof, upon at least five
Business Days written notice to the Agent, which notice shall specify the
amount of any such reduction, provided, however, that the amount of the
Aggregate Revolving Commitment may not be reduced below the Aggregate
Outstanding Revolving Credit Exposure.
Section 2.13 Prepayment of the Loans.
(a) The Borrowers may prepay the principal of the Revolving Loans, in
whole or in part, at any time and from time to time.
(b) The U.S. Borrowers (i) may prepay the principal of the Term Loans
B, in whole or in part, at any time and from time to time if, after giving
effect to any such prepayment, the Unused Availability is greater than (A)
for any prepayment between April 1 and November 30 of any calendar year,
$40,000,000 and (B) for any prepayment
CREDIT AGREEMENT Page 53
between December 1 of a calendar year and March 31 of the following
calendar year, $20,000,000 and (ii) shall prepay the principal of the Term
Loans B as required by Section 6.14(g).
(c) Notwithstanding any provision of this Agreement to the contrary
(including, without limitation, Section 2.13(b) and Section 2.16), not
later than fifteen days after delivery of the Parent's financial statements
pursuant to Section 6.1(a), the U.S. Borrowers shall make a prepayment of
the principal of the Term Loans B in an amount equal to 50.0% of the Excess
Cash Flow for the preceding Fiscal Year of the Parent, to the extent Unused
Availability is greater than $20,000,000.
(d) Immediately upon receipt by any Obligated Party of proceeds of any
sale of any Facility Collateral, the Borrowers shall cause such Obligated
Party to deliver such proceeds to the Agent, or deposit such proceeds in a
deposit account subject to a Deposit Account Control Agreement. All of such
proceeds shall be applied, without premium or penalty, as a payment to the
Loans as provided in Section 2.16.
(e) All cash amounts received by any Obligated Party from any other
Person as a result of or in connection with any dividend, distribution,
loan, or other advance (other than a loan or advance by an Obligated Party
to a Borrower and excluding the proceeds of the Revolving Loans) to such
Obligated Party shall be paid to the Agent, promptly upon such receipt, for
application to the Revolving Loans in accordance with Section 2.16.
Section 2.14 Payments by the Borrowers.
(a) All payments to be made by the Borrowers shall be made without
setoff, recoupment, or counterclaim. Without in any way limiting any
provision of any Security Agreement (including, without limitation, Article
7 of the Parent Security Agreement which is a "Pledge and Security
Agreement" or Article 7 of the U.S. Subsidiary Security Agreement which is
a "Pledge and Security Agreement"), except as otherwise expressly provided
herein, all payments by the Borrowers shall be made to the Agent, for the
account of the Lenders, to the account designated by the Agent and shall be
made in U.S. dollars and in immediately available funds, no later than
12:00 noon (Chicago, Illinois time) on the date specified herein. Any
payment received by the Agent after such time shall be deemed to have been
received on the following Business Day and any applicable interest or fee
shall continue to accrue.
(b) Subject to the provisions set forth in the definition of Interest
Period, whenever any payment is due on a day other than a Business Day,
such payment shall be due on the following Business Day, and such extension
of time shall in such case be included in the computation of interest or
fees, as the case may be.
Section 2.15 Payments as Revolving Advances. At the election of the Agent,
all payments of principal, interest, reimbursement obligations in connection
with Facility LCs and Acceptances, fees, premiums, reimbursable expenses
(including, without limitation, all reimbursement for fees and expenses pursuant
to Section 9.6), and other sums payable under the
CREDIT AGREEMENT Page 54
Loan Documents, may be paid from the proceeds of Revolving Advances made
hereunder whether made following a request by the Borrowers pursuant to Section
2.1 or a deemed request as provided in this Section 2.15 or may be deducted from
any Funding Account or any other deposit account of any Borrower maintained with
the Agent. The Borrowers hereby irrevocably authorize the Agent to make an
Advance for the purpose of paying all amounts from time to time due under the
Loan Documents and agree that all such amounts charged shall constitute
Revolving Loans (including Non-Ratable Loans and Collateral Protection Advances)
and that all such Advances shall be deemed to have been requested pursuant to
Section 2.1.
Section 2.16 Apportionment, Application, and Reversal of Payments.
Principal and interest payments shall be apportioned ratably among the Lenders
(according to the unpaid principal balance of the Loans to which such payments
relate held by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders, except for fees payable solely to the
Agent, the LC Issuer, and the Acceptance Lender, respectively, and except as
provided in Section 10.13. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of any Facility
Collateral received by the Agent, shall be applied, ratably, subject to the
provisions of this Agreement (including, the first sentence of Section 2.11(a)
and Section 6.32(b)) first, to pay any fees, indemnities, or expense
reimbursements including amounts then due to the Agent from the Borrowers,
second, to pay any fees or expense reimbursements then due to the Lenders from
the Borrowers, third, to pay interest due in respect of the Revolving Loans,
including Non-Ratable Loans and Collateral Protection Advances, fourth, to pay
or prepay principal of the Non-Ratable Loans and the Collateral Protection
Advances, fifth, to pay or prepay principal of the Revolving Loans (other than
Non-Ratable Loans and Collateral Protection Advances), unpaid Reimbursement
Obligations, and unpaid Acceptance Reimbursement Obligations, sixth, during the
existence of any Default, to pay an amount to the Agent equal to 110% of the
aggregate undrawn face amount of all outstanding Facility LCs and Acceptances,
to be held as cash collateral in the Facility LC/Acceptance Collateral Account
for such Obligations, seventh, to the payment of the Term Loans B as specified
in the following sentence, eighth, to payment of any amounts owing with respect
to Banking Services, and ninth, to the payment of any other Obligation due to
the Agent or any Lender by the Borrowers; provided that any payment received
from or proceeds of Facility Collateral of (a) any Canadian Obligated Party
shall be applied only to the Canadian Obligations and (b) any U.K. Obligated
Party shall be applied only to the U.K. Obligations. With respect to any
payments due on the Term Loans B, such payments shall be applied ratably,
subject to the provisions of this Agreement, first, to pay interest due in
respect of the Term Loans B and second, to pay or prepay principal of the Term
Loans B, with any prepayment amount being applied to scheduled installments of
the Term Loans B in the inverse order of maturity. Notwithstanding anything to
the contrary contained in this Agreement, unless so directed by a Borrower, or
unless a Default is in existence, neither the Agent nor any Lender shall apply
any payment which it receives to any Eurodollar Loan, except (y) on the
expiration date of the Interest Period applicable to any such Eurodollar Loan or
(z) in the event, and only to the extent, that there are no outstanding Floating
Rate Loans and, in any event, the Borrowers shall pay the Eurodollar breakage
losses in accordance with Section 3.4. Subject to the first sentence of Section
2.11(a), the Agent and the Lenders shall have the continuing and exclusive right
to apply and reverse and reapply any and all such proceeds and payments to any
portion of the Obligations.
CREDIT AGREEMENT Page 55
Section 2.17 Settlement. Each Lender's funded portion of the Revolving
Loans is intended by the Lenders to be equal at all times to such Lender's
Revolving Pro Rata Share of the outstanding Revolving Loans. Notwithstanding
such agreement, the Agent, Bank One (with respect to the Non-Ratable Loans), and
the Lenders agree (which agreement shall not be for the benefit of or
enforceable by the Obligated Parties) that in order to facilitate the
administration of this Agreement and the other Loan Documents, settlement among
them as to the Revolving Loans, including the Non-Ratable Loans and the
Collateral Protection Advances shall take place on a periodic basis in
accordance with the following provisions:
(a) The Agent shall request settlement (a "Settlement") with the
Lenders on at least a weekly basis, or on a more frequent basis at the
Agent's election, (A) on behalf of Bank One, with respect to each
outstanding Non-Ratable Loan, (B) for itself, with respect to each
Collateral Protection Advance, and (C) with respect to collections
received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone, or email, of such requested Settlement,
no later than 12:00 noon (Chicago, Illinois time) on the date of such
requested Settlement (the "Settlement Date"). Each Lender (other than Bank
One, in the case of the Non-Ratable Loans, and the Agent, in the case of
the Collateral Protection Advances) shall transfer the amount of such
Lender's Revolving Pro Rata Share of the outstanding principal amount of
the Non-Ratable Loans and the Collateral Protection Advances with respect
to which Settlement is requested to the Agent, to such account of the Agent
as the Agent may designate, not later than 2:00 p.m. (Chicago, Illinois
time), on the Settlement Date applicable thereto. Settlements may occur
during the existence of a Default or an Unmatured Default and whether or
not the applicable conditions precedent set forth in Article 4 have then
been satisfied. Such amounts transferred to the Agent shall be applied
against the amounts of the applicable Non-Ratable Loan or Collateral
Protection Advance and, together with the portion of such Non-Ratable Loan
or Collateral Protection Advance representing Bank One's Revolving Pro Rata
Share thereof, shall constitute Revolving Loans of such Lenders,
respectively. If any such amount is not transferred to the Agent by any
Lender on the Settlement Date applicable thereto, the Agent shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Rate for the first three days from
and after the Settlement Date and thereafter at the Interest Rate then
applicable to the Floating Rate Revolving Loans (Y) on behalf of Bank One,
with respect to each outstanding Non-Ratable Loan and (Z) for itself, with
respect to each Collateral Protection Advance.
(b) Notwithstanding the foregoing, not more than one Business Day
after demand is made by the Agent (whether before or after the occurrence
of a Default or an Unmatured Default and regardless of whether the Agent
has requested a Settlement with respect to a Non-Ratable Loan or Collateral
Protection Advance), each other Lender (A) shall irrevocably and
unconditionally purchase and receive from Bank One or the Agent, as
applicable, without recourse or warranty, an undivided interest and
participation in such Non-Ratable Loan or Collateral Protection Advance
equal to such Lender's Revolving Pro Rata Share of such Non-Ratable Loan or
Collateral Protection Advance, and (B) if Settlement has not previously
occurred with respect to such Non-Ratable Loans or Collateral Protection
Advances, upon demand by the Agent or Bank One, as applicable, shall pay to
the Agent or Bank One, as applicable, as the purchase
CREDIT AGREEMENT Page 56
price of such participation an amount equal to 100% of such Lender's
Revolving Pro Rata Share of such Non-Ratable Loans or Collateral Protection
Advances. If such amount is not in fact transferred to the Agent by any
Lender, the Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds Rate for
the first three days from and after such demand and thereafter at the
interest rate then applicable to Floating Rate Revolving Loans.
(c) From and after the date, if any, on which any Lender purchases an
undivided interest and participation in any Non-Ratable Loan or Collateral
Protection Advance pursuant to clause (b) preceding, the Agent shall
promptly distribute to such Lender, such Lender's Revolving Pro Rata Share
of all payments of principal and interest and all proceeds of Collateral
received by the Agent in respect of such Non-Ratable Loan or Collateral
Protection Advance.
(d) Between Settlement Dates, to the extent no Agent Advances are
outstanding, the Agent may pay over to Bank One any payments received by
the Agent, which in accordance with the terms of this Agreement would be
applied to the reduction of the Revolving Loans, for application to Bank
One's Revolving Loans including Non-Ratable Loans. If, as of any Settlement
Date, collections received since the then immediately preceding Settlement
Date have been applied to Bank One's Revolving Loans (other than to
Non-Ratable Loans or Collateral Protection Advances in which a Lender has
not yet funded its purchase of a participation pursuant to clause (b)
preceding), as provided for in the previous sentence, Bank One shall pay to
the Agent for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall,
upon receipt of such amount, have, as of such Settlement Date, its
Revolving Pro Rata Share of the Revolving Loans. During the period between
Settlement Dates, Bank One with respect to Non-Ratable Loans, the Agent
with respect to Collateral Protection Advances, and each Lender with
respect to the Revolving Loans other than Non-Ratable Loans and Collateral
Protection Advances, shall be entitled to interest at the applicable rate
or rates payable under this Agreement on the actual average daily amount of
funds employed by Bank One, the Agent, and the other Lenders.
Section 2.18 Indemnity for Returned Payments. If after receipt of any
payment which is applied to the payment of all or any part of the Obligations,
the Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or voidable
as a preference, impermissible setoff, or a diversion of trust funds, or for any
other reason, then the Obligations or part thereof intended to be satisfied
shall be revived and continued and this Agreement shall continue in full force
as if such payment or proceeds had not been received by the Agent or such Lender
and the Borrowers shall be liable to pay to the Agent and the Lenders, and each
Borrower hereby indemnifies the Agent and the Lenders and holds the Agent and
the Lenders harmless for the amount of such payment or proceeds surrendered. The
provisions of this Section 2.18 shall be and remain effective notwithstanding
any contrary action which may have been taken by the Agent or any Lender in
reliance upon such payment or application of proceeds, and any such contrary
action so taken shall be without prejudice to the Agent's and the Lenders'
rights under this Agreement and shall be deemed to have been
CREDIT AGREEMENT Page 57
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this Section 2.18 shall survive the termination
of this Agreement.
Section 2.19 Judgment Currency. If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due from any Borrower hereunder in
U.S. dollars into another currency, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be
that at which in accordance with normal banking procedures the Agent could
purchase U.S. dollars with such other currency at the Agent's office in Chicago,
Illinois on the Business Day preceding that on which final, non-appealable
judgment is given. The obligations of the Borrowers in respect of any sum due to
any Lender or the Agent hereunder shall, notwithstanding any judgment in a
currency other than U.S. dollars, be discharged only to the extent that on the
Business Day following receipt by such Lender or the Agent (as the case may be)
of any sum adjudged to be so due in such other currency such Lender or the Agent
(as the case may be) may in accordance with normal, reasonable banking
procedures purchase U.S. dollars with such other currency. If the amount of U.S.
dollars so purchased is less than the sum originally due to such Lender or the
Agent, as the case may be, in the specified currency, the Borrower agrees, to
the fullest extent that it may effectively do so, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender or the Agent, as the
case may be, against such loss, and if the amount of the specified currency so
purchased exceeds (a) the sum originally due to any Lender or the Agent, as the
case may be, in the specified currency and (b) any amounts shared with other
Lenders as a result of allocations of such excess as a disproportionate payment
to such Lender under Section 12.2, such Lender or the Agent, as the case may be,
agrees to remit such excess to the applicable Borrower.
ARTICLE 3
YIELD PROTECTION; TAXES
Section 3.1 Yield Protection. If, on or after the Closing Date, the
adoption of any law or any governmental or quasi-governmental rule, regulation,
policy, guideline, or directive (whether or not having the force of law), or any
change in the interpretation or administration thereof by any governmental or
quasi-governmental authority, central bank, or comparable agency charged with
the interpretation or administration thereof, or compliance by any Lender,
applicable Lending Installation, LC Issuer, or Acceptance Lender with any
request or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency:
(a) subjects any Lender, applicable Lending Installation, LC Issuer,
or Acceptance Lender to any Taxes, or changes the basis of taxation of
payments (other than with respect to Excluded Taxes) to any Lender, LC
Issuer or Acceptance Lender in respect of its Eurodollar Loans, Facility
LCs, Acceptances, or participations therein;
(b) imposes or increases or deems applicable any reserve, assessment,
insurance charge, special deposit, or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any Lender,
applicable Lending Installation, LC Issuer, or Acceptance Lender (other
than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances); or
CREDIT AGREEMENT Page 58
(c) imposes any other condition the result of which is to increase the
cost to any Lender, applicable Lending Installation, LC Issuer, or
Acceptance Lender of making, funding, or maintaining its Eurodollar Loans,
or of issuing or participating in Facility LCs or Acceptances, or reduces
any amount receivable by any Lender, applicable Lending Installation, LC
Issuer, or Acceptance Lender in connection with its Eurodollar Loans,
Facility LCs, Acceptances, or participations in Facility LCs or
Acceptances, or requires any Lender, applicable Lending Installation, LC
Issuer, or Acceptance Lender to make any payment calculated by reference to
the amount of Eurodollar Loans, Facility LCs, Acceptances, or
participations in Facility LCs or Acceptances held or interest or LC Fees
or Acceptance Fees received by it, by an amount deemed material by such
Lender, LC Issuer, or Acceptance Lender, as the case may be;
and the result of any of the foregoing is to increase the cost to such Lender,
applicable Lending Installation, LC Issuer, or Acceptance Lender, as the case
may be, of making or maintaining its Eurodollar Loans or Revolving Commitment,
of issuing or participating in Facility LCs, or of accepting or participating in
Acceptances or to reduce the return received by such Lender, applicable Lending
Installation, LC Issuer, or Acceptance Lender, as the case may be, in connection
with such Eurodollar Loans, Revolving Commitment, Facility LCs, Acceptances, or
participations in Facility LCs or Acceptances, then, within fifteen days of
demand by such Lender, LC Issuer, or Acceptance Lender (any such demand to be
made within 180 days of the date such Lender, LC Issuer, or Acceptance Lender
obtains knowledge that it is entitled to compensation pursuant to this Section
3.1), as the case may be, the applicable Borrower or Borrowers shall pay such
Lender, LC Issuer, or Acceptance Lender, as the case may be, such additional
amount or amounts as will compensate such Lender, LC Issuer, or Acceptance
Lender, as the case may be, for such increased cost or reduction in amount
received.
Section 3.2 Changes in Capital Adequacy Regulations. If any Lender, LC
Issuer, or Acceptance Lender determines the amount of capital required or
expected to be maintained by such Lender, LC Issuer, Acceptance Lender, or any
Lending Installation of such Lender, LC Issuer, or Acceptance Lender, or any
corporation controlling such Lender, LC Issuer, or Acceptance Lender is
increased as a result of a Change (as defined below), then, within fifteen days
of demand by such Lender, LC Issuer, or Acceptance Lender, the Borrowers shall
pay such Lender, LC Issuer, or Acceptance Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender, LC Issuer, or Acceptance Lender reasonably
determines is attributable to this Agreement, its Outstanding Credit Exposure,
or its commitment to make Loans, issue or participate in Facility LCs, and
accept or participate in Acceptances, as the case may be, hereunder (after
taking into account such Lender's, LC Issuer's, or Acceptance Lender's policies
as to capital adequacy). As used in this Section, "Change" means (a) any change
after the Closing Date in the Risk-Based Capital Guidelines (as defined below)
or (b) any adoption of or change after the Closing Date 0in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) which
affects the amount of capital required or expected to be maintained by any
Lender, LC Issuer, Acceptance Lender, Lending Installation of any Lender, LC
Issuer, or Acceptance Lender, or any corporation controlling any Lender, LC
Issuer, or Acceptance Lender. As used in this Section, "Risk-Based Capital
Guidelines" means (y) the risk-based capital guidelines in effect in the U.S. on
the Closing Date, including transition rules, and (z) the corresponding capital
regulations promulgated by regulatory authorities outside
CREDIT AGREEMENT Page 59
the U.S. implementing the July 1988 report of the Basle Committee on Banking
Regulation and Supervisory Practices Entitled "International Convergence of
Capital Measurements and Capital Standards," including transition rules, and any
amendments to such regulations adopted prior to the Closing Date.
Section 3.3 Availability of Types of Advances. If any Lender determines
that maintenance of its Eurodollar Loans at a suitable Lending Installation
would violate any applicable law, rule, regulation, or directive, whether or not
having the force of law, or if the Required Lenders determine that (a) deposits
of a type and maturity appropriate to match fund Eurodollar Loans are not
available or (b) the interest rate applicable to Eurodollar Loans does not
accurately reflect the cost of making or maintaining Eurodollar Loans, then the
Agent shall suspend the availability of Eurodollar Loans and require any
affected Eurodollar Loans to be repaid or converted to Floating Rate Loans,
subject to the payment of any funding indemnification amounts required by
Section 3.4.
Section 3.4 Funding Indemnification. If any payment of a Eurodollar Loan
occurs on a date which is not the last day of the applicable Interest Period,
whether because of acceleration, prepayment, or otherwise, or a Eurodollar Loan
is not made on the date specified by the U.S. Borrowers for any reason other
than default by the Lenders, the applicable Borrower will indemnify each Lender
for any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain such Eurodollar Loan, but in any event excluding loss of
anticipated profit.
Section 3.5 Taxes.
(a) All payments by any Borrower to or for the account of any Lender,
any LC Issuer, any Acceptance Lender, or the Agent hereunder or under any
Note, Facility LC Application, or request for Acceptance shall be made free
and clear of and without deduction for any and all Taxes. If any Borrower
shall be required by law to deduct any Taxes, or the Agent or any Lender
shall be obligated to remit any Taxes, in either case from or in respect of
any sum payable hereunder to any Lender, any LC Issuer, any Acceptance
Lender or the Agent, (i) the sum payable shall be increased as necessary so
that after making all required deductions or remittances (including
deductions applicable to additional sums payable under this Section 3.5)
such Lender, such LC Issuer, such Acceptance Lender or the Agent (as the
case may be) receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the applicable Borrower shall make such
deductions, (iii) the applicable Borrower shall pay the full amount
deducted to the relevant authority in accordance with applicable law, and
(iv) the applicable Borrower shall furnish to the Agent the original copy
of a receipt evidencing payment thereof within 30 days after such payment
is made.
(b) In addition, each Borrower hereby agrees to pay any present or
future stamp or documentary taxes and any other excise or property taxes,
charges, or similar levies which arise from any payment made hereunder or
under any Note or Facility LC Application or from the execution or delivery
of, or otherwise with respect to, this Agreement, any Note, or any Facility
LC Application ("Other Taxes").
CREDIT AGREEMENT Page 60
(c) Each Borrower hereby agrees to indemnify the Agent, each LC
Issuer, each Acceptance Lender, and each Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other
Taxes imposed on amounts payable under this Section 3.5) paid by, or
assessable against, the Agent, such LC Issuer, such Acceptance Lender, or
such Lender (including any amounts required to be remitted by any of such
Persons) as a result of its commitment to make Loans hereunder, any Loans
made by it hereunder, or otherwise in connection with its participation in
this Agreement and any liability (including penalties, interest, and
expenses, including any failure by the Agent or any Lender to make any
remittance) arising therefrom or with respect thereto. Payments due under
this indemnification shall be made within 30 days of the date the Agent,
such LC Issuer, such Acceptance Lender, or such Lender makes demand
therefor pursuant to Section 3.6.
(d) Each Lender that is not incorporated under the laws of the U.S. or
a state thereof (each a "Non-U.S. Lender") agrees that it will, not more
than ten Business Days after the Closing Date (or the date of assignment by
which such Lender becomes a party to this Agreement), (i) deliver to the
Agent two duly completed copies of U.S. Internal Revenue Service Form W8BEN
or W8ECI, certifying in either case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any U.S.
federal income taxes, and (ii) deliver to the Agent a U.S. Internal Revenue
Form W8 or W9, as the case may be, and certify that it is entitled to an
exemption from U.S. backup withholding tax. Each Non-U.S. Lender further
undertakes to deliver to each of the Borrowers and the Agent (y) renewals
or additional copies of any such form (or any successor form) on or before
the date that such form expires or becomes obsolete and (z) after the
occurrence of any event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments thereto as may be
reasonably requested by the Borrowers or the Agent. All forms or amendments
described in the preceding sentence shall certify that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any U.S. federal income taxes, unless an event (including,
without limitation, any change in treaty, law, or regulation) has occurred
prior to the date on which any such delivery would otherwise be required
which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form or amendment with
respect to it and such Lender advises the Borrowers and the Agent that it
is not capable of receiving payments without any deduction or withholding
of U.S. federal income tax.
(e) For any period during which a Non-U.S. Lender has failed to
provide the Borrowers with an appropriate form pursuant to clause (d)
preceding (unless such failure is due to a change in treaty, law, or
regulation, or any change in the interpretation or administration thereof
by any governmental authority, occurring subsequent to the date on which a
form originally was required to be provided), such Non-U.S. Lender shall
not be entitled to indemnification under this Section 3.5 with respect to
Taxes imposed by the U.S.; provided that, should a Non-U.S. Lender which is
otherwise exempt from or subject to a reduced rate of withholding tax
become subject to Taxes because of its failure to deliver a form required
under clause (d) preceding, the Borrowers shall take such steps as such
Non-U.S. Lender shall reasonably request to assist such Non-U.S. Lender to
recover such Taxes.
CREDIT AGREEMENT Page 61
(f) Any Lender that is entitled to an exemption from or reduction of
withholding tax with respect to payments under this Agreement or any Note
pursuant to the law of any relevant jurisdiction or any treaty shall
deliver to the Borrowers (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to
be made without withholding or at a reduced rate. Each Lender agrees to
promptly notify the Agent of any change in circumstances which would modify
or render invalid any claimed exemption or reduction.
(g) If the U.S. Internal Revenue Service or any other governmental
authority of the U.S. or any other country or any political subdivision
thereof asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the appropriate
form was not delivered or properly completed, because such Lender failed to
notify the Agent of a change in circumstances which rendered its exemption
from withholding ineffective, or for any other reason), such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax, withholding therefor, or otherwise, including penalties
and interest, and including taxes imposed by any jurisdiction on amounts
payable to the Agent under this Section 3.5(g), together with all costs and
expenses related thereto (including attorneys fees and time charges of
attorneys for the Agent, which attorneys may be employees of the Agent).
The obligations of the Lenders under this Section 3.5(g) shall survive the
payment of the Obligations and termination of this Agreement.
Section 3.6 Lender Statements; Survival of Indemnity. To the extent
reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its Eurodollar Loans to reduce any liability of the
Borrowers to such Lender under Section 3.1, Section 3.2, and Section 3.5 or to
avoid the unavailability of Eurodollar Loans under Section 3.3, so long as such
designation is not, in the judgment of such Lender, disadvantageous to such
Lender. Each Lender shall deliver a written statement of such Lender to the
Borrowers (with a copy to the Agent) as to the amount due, if any, under Section
3.1, Section 3.2, Section 3.4, or Section 3.5. Such written statement shall set
forth in reasonable detail the calculations upon which such Lender determined
such amount and shall be final, conclusive, and binding on the Borrowers in the
absence of manifest error. Determination of amounts payable under such Sections
in connection with a Eurodollar Loan shall be calculated as though each Lender
funded its Eurodollar Loan through the purchase of a deposit of the type and
maturity corresponding to the deposit used as a reference in determining the
Eurodollar Rate applicable to such Loan, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of any Lender shall be payable on demand after receipt by the
Borrowers of such written statement. The obligations of the Borrowers under
Section 3.1, Section 3.2, Section 3.4, and Section 3.5 shall survive payment of
the Obligations and termination of this Agreement.
Section 3.7 Replacement of a Lender. If the Borrowers are required pursuant
to Section 3.1, Section 3.2, or Section 3.5 to make any additional payment to
any Lender or if any Lender's obligation to make or continue, or to convert
Floating Rate Advances into, Eurodollar Advances shall be suspended pursuant to
Section 3.3 (any Lender so affected an "Affected Lender"), the Borrowers may
elect, if such amounts continue to be charged or such suspension is
CREDIT AGREEMENT Page 62
still effective, to replace such Affected Lender as a Lender party to this
Agreement, provided that no Default or Unmatured Default shall have occurred and
be continuing at the time of such replacement, and provided further that,
concurrently with such replacement, (a) another bank or other entity which is
reasonably satisfactory to the Borrowers and the Agent shall agree, as of such
date, to purchase for cash the Advances and other Obligations due to the
Affected Lender pursuant to an Assignment Agreement and to become a Lender for
all purposes under this Agreement and to assume all obligations of the Affected
Lender to be terminated as of such date and to comply with the requirements of
Section 12.3 applicable to assignments and (b) the Borrowers shall pay to such
Affected Lender in same day funds on the day of such replacement (i) all
interest, fees, and other amounts then accrued but unpaid to such Affected
Lender by the Borrowers hereunder to and including the date of termination,
including, without limitation, payments due to such Affected Lender under
Section 3.1, Section 3.2, and Section 3.5 and (ii) an amount, if any, equal to
the payment which would have been due to such Lender on the day of such
replacement under Section 3.4 had the Loans of such Affected Lender been prepaid
on such date rather than sold to the replacement Lender.
ARTICLE 4
CONDITIONS PRECEDENT
Section 4.1 Initial Credit Extension. The Lenders shall not be required to
make the initial Credit Extension hereunder unless the Borrowers have satisfied
each of the following conditions in a manner satisfactory to the Agent and the
Lenders, and with respect to any condition requiring delivery of any agreement,
certificate, document, or instrument, the Borrowers shall have, furnished to the
Agent sufficient copies of any such agreement, certificate, document, or
instrument for distribution to the Lenders.
(a) The Borrowers shall furnish copies of the Organization Certificate
of each Obligated Party and for each of the U.K. Obligated Parties a copy
of its "Register of Members", together with all amendments thereto, each
certified by the appropriate governmental officer in such Obligated Party's
jurisdiction of incorporation, formation, or organization or, with respect
to each U.K. Obligated Party, by an Authorized Officer of each such U.K.
Obligated Party, as the case may be.
(b) The Borrowers shall furnish copies of the Management Agreement of
each Obligated Party, and all amendments thereto, each certified by the
secretary of such Obligated Party as being true, correct, and complete.
(c) The Borrowers shall furnish copies of duly approved Resolutions
authorizing the execution and delivery of the Loan Documents to which such
Obligated Party is a party, and, with respect to the Borrowers, authorizing
borrowings and requests for issuance of Facility LCs hereunder, each
certified by the secretary of such Obligated Party as being true, correct,
and complete.
(d) The Borrowers shall furnish copies of certificates of existence
and good standing (as applicable) for each Obligated Party from the
jurisdiction of incorporation, organization, or formation of such Obligated
Party and each other jurisdiction in which
CREDIT AGREEMENT Page 63
such Obligated Party is required to be qualified as a foreign business
entity to transact its business as presently conducted.
(e) The Borrowers shall furnish an incumbency certificate, executed by
the secretary of each Obligated Party, which shall identify by name and
title and bear the signatures of the Authorized Officers and any other
officers of such Obligated Party authorized to sign the Loan Documents to
which such Obligated Party is a party and authorized to request Credit
Extensions on behalf of each Borrower, upon which certificate the Agent,
the LC Issuer, the Acceptance Lender, and the Lenders shall be entitled to
rely until informed of any change in writing by the Borrowers.
(f) The Borrowers shall furnish a certificate, signed by the chief
financial officer of the Parent on behalf of all of the Borrowers, stating
that on the Closing Date:
(i) no Default or Unmatured Default has occurred and is
continuing;
(ii) specifying the deposit accounts which are the respective
Funding Accounts of K2 Canada, the U.K. Borrowers, and the U.S.
Borrowers; and
(iii) certifying as to such other factual matters as may be
reasonably requested by the Agent or any Lender.
(g) The Borrowers shall furnish written opinions of Canadian, U.K.,
and U.S. counsel to the Obligated Parties, addressed to the Agent and the
Lenders, in form and substance satisfactory to the Agent.
(h) The Borrowers shall furnish written money transfer instructions,
in substantially the form of Exhibit E, addressed to the Agent and signed
by an Authorized Officer, together with such other related money transfer
authorizations as the Agent may have requested.
(i) The Borrowers shall deliver any Notes requested by a Lender
pursuant to Section 2.3 payable to the order of such requesting Lender.
(j) The Borrowers shall deliver each of the other Loan Documents
required by the Agent and the Lenders in connection with this Agreement. In
addition, with respect to each parcel of real Property which is required to
be subject to a Lien in favor of the Agent, the Borrowers shall deliver to
the Agent each of the following, in form and substance reasonably
satisfactory to the Agent:
(i) ALTA or other mortgagee's title policy (excluding the real
Property located in ▇▇▇▇▇▇ County, Alabama and Carson City, Nevada);
and
(ii) such other information, documentation, and certifications as
may be reasonably required by the Agent.
(k) The Borrowers shall deliver duly executed UCC, PPSA, and Civil
Code termination statements or amendments (or equivalent filings under such
statutes, as
CREDIT AGREEMENT Page 64
applicable) to existing UCC and PPSA financing statements and Civil
Code equivalent filings with respect to any filings against the Facility
Collateral as may be requested by the Agent, and the Agent shall have been
authorized to file any UCC and PPSA financing statements and Civil Code
equivalent filings that the Agent deems necessary to perfect its Liens in
the Facility Collateral and the Agent shall have received any other
agreement, certificate, document, or instrument which the Agent determines
is necessary to perfect its Liens in any Facility Collateral with the
priority specified herein or in any other Loan Document.
(l) The Borrowers shall deliver a Borrowing Base Certificate which
calculates each Borrowing Base as of March 14, 2003.
(m) The Borrowers shall deliver to the Agent, in each case in form and
substance satisfactory to the Agent and the Lenders, a copy of (i) the
Rawlings Acquisition Agreement, the "Disclosure Letter" referred to
therein, and each of the other agreements, documents, and instruments
executed or delivered by any party in connection therewith and (ii) a copy
of the Convertible Subordinated Debentures, the Securities Purchase
Agreement pursuant to which the Convertible Subordinated Debentures were
issued, and all other agreements, certificates, documents, and instruments
executed or delivered in connection therewith.
(n) The Borrowers shall deliver evidence of insurance coverage in
form, scope, and substance reasonably satisfactory to the Agent and
otherwise in compliance with the terms of Section 6.7.
(o) The Borrowers shall have delivered each Collateral Waiver
Agreement required to be provided pursuant to Section 6.30(a).
(p) The Borrowers shall have delivered each Deposit Account Control
Agreement required to be provided pursuant to Section 6.30(c).
(q) The Agent shall have determined that (i) since February 4, 2003,
there is an absence of any material adverse change or disruption in primary
or secondary loan syndication markets, financial markets, or in capital
markets generally that would likely impair syndication of the Loans
hereunder and (ii) the Borrowers have fully cooperated with the Agent's
syndication efforts including, without limitation, by providing the Agent
with information regarding the Borrowers' operations and prospects and such
other information as the Agent deems necessary to successfully syndicate
the Loans hereunder.
(r) If the initial Credit Extensions include the issuance of a
Facility LC, the Parent shall have delivered a properly completed Facility
LC Application.
(s) After giving effect to all Credit Extensions to be made on the
Closing Date or on the date of the Rawlings Acquisition, and payment of all
fees and expenses due hereunder, and with all of the Obligated Parties'
indebtedness, liabilities, and obligations current, the Unused Availability
shall not be less than $15,000,000.
CREDIT AGREEMENT Page 65
(t) The Borrowers shall have paid all of the fees and expenses owing
to the Agent and the Lenders pursuant to Section 2.10, Section 9.6, and
Section 10.13.
(u) The Borrowers shall provide, concurrently with the Lenders making
the initial Credit Extensions, evidence satisfactory to the Agent of the
termination of the receivables securitization facility with General
Electric Capital Corporation, the payment in full of all indebtedness,
liabilities, and obligations under the Credit Agreement dated December 21,
1999, between the Parent, Bank of America, N.A., and the financial
institutions party thereto as lenders, and any other Indebtedness to be
repaid or retired with the proceeds of the initial Credit Extensions.
(v) The Borrowers shall provide, concurrently with the Lenders making
the initial Credit Extensions, evidence, satisfactory to the Agent of the
prepayment of the Senior Notes in full and termination of the Amended and
Restated InterCreditor Agreement, dated as of March 28, 2002, among various
creditors of the Parent and Bank of America, N.A. as collateral agent.
(w) Since November 30, 2002, there shall not have occurred any event,
and no circumstances shall exist, which could have a Material Adverse
Effect.
Execution and delivery of this Agreement to the Agent by any party to this
Agreement constitutes acceptance by such Person that all of the conditions
specified in this Section 4.1 have been fulfilled to such Person's satisfaction
and that all of the Loan Documents and any other agreement, certificate,
document, or instrument executed or delivered in connection herewith on the
Closing Date are acceptable to such Person.
Section 4.2 Each Credit Extension. The Lenders shall not (except as
otherwise set forth in Section 2.17 with respect to Revolving Loans for the
purpose of repaying Non-Ratable Loans and Collateral Protection Advances) be
required to make any Credit Extension unless on the applicable Credit Extension
Date each of the following conditions is met.
(a) There exists no Default or Unmatured Default and no Default or
Unmatured Default would result from any such Credit Extension.
(b) The representations and warranties contained in Article 5 are true
and correct in all material respects as of such Credit Extension Date
except to the extent any such representation or warranty is stated to
relate solely to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such earlier date.
(c) No event shall have occurred, and no circumstances shall exist,
which could have a Material Adverse Effect.
Each Borrowing Notice or request for issuance of a Facility LC, as the case may
be, with respect to each such Credit Extension shall constitute a representation
and warranty by the Borrowers that the conditions contained in Sections 4.2(a),
Section 4.2(b), and Section 4.2(c) have been satisfied.
CREDIT AGREEMENT Page 66
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrowers represent and warrant to the Agent (including in its
capacity as the U.K. Security Trustee) and the Lenders as follows.
Section 5.1 Existence and Standing. Except for any Obligated Party which is
dissolved or ceases to exist or subsist as permitted by Section 6.9, each of the
Obligated Parties is a corporation, partnership, limited liability company, or
other business entity duly and properly incorporated, organized, or formed, as
the case may be, validly existing, and (to the extent applicable) in good
standing under the laws of its jurisdiction of incorporation, organization, or
formation and has all requisite authority to conduct its business in each
jurisdiction in which its business is conducted.
Section 5.2 Capitalization and Subsidiaries. Schedule 5.2 sets forth (a) a
correct and complete list of the name and relationship to the Parent of each and
all of the Parent's Subsidiaries, (b) the location of the chief executive office
of the Parent and each of its Subsidiaries and each other location where any of
them have maintained their chief executive office in the past five years, (c) a
true and complete listing of each class of each of the Parent's Subsidiaries'
authorized Capital Stock, of which all of such issued shares are validly issued,
outstanding, fully paid and nonassessable, and owned beneficially and of record
by the Persons identified on Schedule 5.2, and (d) the type of entity of the
Parent and each of its Subsidiaries. With respect to each Obligated Party,
Schedule 5.2 sets forth the employer or taxpayer identification number of each
Obligated Party and the organizational identification number issued by each
Obligated Party's jurisdiction of organization or a statement that no such
number has been issued.
Section 5.3 Authorization and Validity. Each Obligated Party has the power
and authority and legal right to execute and deliver the Loan Documents to which
it is a party and to perform its obligations thereunder. The execution and
delivery by each Obligated Party of the Loan Documents to which it is a party
and the performance of its obligations thereunder have been duly authorized by
proper proceedings, and the Loan Documents to which such Obligated Party is a
party constitute legal, valid, and binding obligations of such Obligated Party
enforceable against such Obligated Party in accordance with their terms, except
as enforceability may be limited by bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally.
Section 5.4 Name; Prior Transactions. Except as set forth on Schedule 5.4,
the Obligated Parties have not, during the past five years, been known by or
used any other corporate or fictitious name, or been a party to any merger or
consolidation, or been a party to any Acquisition.
Section 5.5 No Conflict; Government Consent. Neither the execution and
delivery by any Obligated Party of the Loan Documents to which it is a party,
nor the consummation of the transactions therein contemplated, nor compliance
with the provisions thereof will violate (a) any law, rule, regulation, order,
writ, judgment, injunction, decree, or award binding on such
CREDIT AGREEMENT Page 67
Obligated Party, (b) such Obligated Party's Organization Certificate or
Management Agreement, as the case may be, or (c) the provisions of any
indenture, instrument, or agreement to which such Obligated Party is a party or
is subject, or by which it, or its Property, is bound, or conflict with or
constitute a default thereunder, or result in, or require, the creation or
imposition of any Lien in, of or on the Property of such Obligated Party
pursuant to the terms of any such indenture, instrument, or agreement. No order,
consent, adjudication, approval, license, authorization, or validation of, or
filing, recording, or registration with, or exemption by, or other action in
respect of any governmental or public body or authority, or any subdivision
thereof, which has not been obtained by the applicable Obligated Party, is
required to be obtained by any Obligated Party in connection with the execution
and delivery of the Loan Documents, the borrowings under this Agreement, the
payment and performance by the Borrowers of the Obligations or the legality,
validity, binding effect, or enforceability of any of the Loan Documents.
Section 5.6 Security Interest in Facility Collateral. The provisions of
this Agreement and the other Loan Documents create legal and valid Liens on all
the Facility Collateral in favor of the Agent or the U.K. Security Trustee (as
applicable), for the benefit of the Agent and the Lenders, and upon filing of
appropriate UCC financing statements and the recordation of the Real Estate
Mortgages such Liens constitute perfected and continuing Liens on the Facility
Collateral, to the extent such Liens can be perfected by filing of financing
statements or the recordation of such Real Estate Mortgages, securing the
Obligations, enforceable against the applicable Obligated Party and all third
parties, and having priority over all other Liens on the Facility Collateral
except in the case of (a) Permitted Liens, to the extent any such Permitted
Liens would have priority over the Liens in favor of the Agent or the U.K.
Security Trustee (as applicable) pursuant to any applicable law or agreement and
(b) Liens perfected only by control or possession (including possession of any
certificate of title) to the extent the Agent or the U.K. Security Trustee (as
applicable) has not obtained or does not maintain control or possession of such
Collateral.
Section 5.7 Financial Statements.
(a) The consolidated financial statements of the Parent and its
Subsidiaries for the Fiscal Years ended December 31, 2000 and December 31,
2001 heretofore delivered by the Borrowers to the Lenders were prepared in
accordance with GAAP (as in effect on the date such statements were
prepared) and fairly present in all material respects the consolidated
financial condition and operations of the Parent and its Subsidiaries at
such date and the consolidated results of their operations for the period
then ended. The consolidated financial statements of the Parent and its
Subsidiaries for the calendar month ended November 30, 2002 heretofore
delivered by the Borrowers to the Lenders were prepared in accordance with
GAAP (as in effect on the date such statements were prepared except for the
presentation of footnotes and for applicable normal year-end audit
adjustments) and fairly present in all material respects the consolidated
financial condition and operations of the Parent and its Subsidiaries at
such date and the consolidated results of their operations for the period
then ended.
(b) The most recent Projections when delivered to the Agent and the
Lenders, including Projections delivered pursuant to Section 6.1(d),
represent the Borrowers' good
CREDIT AGREEMENT Page 68
faith estimate of the future financial performance of the Borrowers
for the period set forth therein. Nothing herein shall be construed as a
representation that the financial results set forth in the Projections will
be achieved. The Agent and the Lenders acknowledge that the Projections are
forward looking statements and that the financial results of the Parent and
its Subsidiaries could differ materially from those set forth in the
Projections.
Section 5.8 Material Adverse Change. Since November 30, 2002 there has been
no change in the business, Property, prospects, condition (financial or
otherwise), or results of operations of the Parent and its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect.
Section 5.9 Taxes. As of the Closing Date:
(a) each Obligated Party has filed all federal, national, state,
provincial, municipal, and other tax returns and reports, if any, which are
required to be filed (or appropriate extensions have been timely filed) and
has paid all taxes due pursuant to such returns and reports or pursuant to
any assessment received by such Obligated Party, except such taxes, if any,
as are being contested in good faith and as to which adequate reserves have
been provided in accordance with GAAP and as to which no Lien, other than a
Permitted Lien, exists;
(b) the income tax returns of each Obligated Party delivered pursuant
to applicable laws of Canada, England, and the U.S. have been audited by
the Internal Revenue Service or similar governmental authority through the
Parent's Fiscal Year ended December 31, 1998;
(c) no tax Liens have been filed and no claims are being asserted with
respect to any taxes owed pursuant to any tax return required to be filed
by any Obligated Party; and
(d) the charges, accruals, and reserves on the books of each Obligated
Party in respect of any taxes or other governmental charges are adequate.
Section 5.10 Litigation and Contingent Obligations. Except as set forth on
Schedule 5.10, as of the Closing Date, there is no litigation, arbitration,
governmental investigation, proceeding, or inquiry pending or, to the knowledge
of any officer of any Obligated Party, threatened against any Obligated Party
which could reasonably be expected to have a Material Adverse Effect or which
seeks to prevent, enjoin, or delay the making of any Credit Extension. Other
than any liability incident to any litigation, arbitration, or proceeding which
could not reasonably be expected to have a Material Adverse Effect, no Obligated
Party has any Contingent Obligations not provided for or disclosed in the
financial statements referred to in Section 5.7(a).
Section 5.11 ERISA and Foreign Plans.
(a) As of the Closing Date: (i) there is no "accumulated funding
deficiency" (as defined in Section 4971(c)(1) of the Code without regard to
any funding waivers available under the Code) with respect to any Plan and
the projected minimum funding
CREDIT AGREEMENT Page 69
contributions as required pursuant to Section 412 of the Code with
respect to all Plans for the next three plan years are not projected to
exceed $10,000,000 in any such year; (ii) neither the Parent nor any other
member of the Controlled Group has incurred, or is reasonably expected to
incur, any withdrawal liability to Multiemployer Plans in excess of
$1,000,000 in the aggregate; (iii) each Plan complies in all material
respects with all applicable requirements of law and regulations; (iv) no
Reportable Event has occurred with respect to any Plan; and (v) within the
last six years, neither the Parent nor any other member of the Controlled
Group has withdrawn from any Plan or initiated steps to do so, and no steps
have been taken to reorganize or terminate any Plan.
(b) Each Foreign Plan is in compliance in all material respects with
the laws and regulations applicable to such Foreign Plan and each Obligated
Party has satisfied all contribution obligations in all material respects
with respect to such Foreign Plan (to the extent applicable). Each Foreign
Plan and related funding arrangement that is intended to qualify for
tax-favored status has been reviewed and approved for such status by the
appropriate governmental authority (or has been submitted for such review
and approval within the applicable time period), and nothing has occurred
and no condition exists that is likely to cause the loss or denial of such
tax-favored status. No Foreign Plan has any liabilities in any material
respect in excess of the current value of such Foreign Plan's assets,
determined in accordance with the assumptions used for funding such Foreign
Plan pursuant to reasonable accounting standards in accordance with
applicable law. No Obligated Party has incurred or reasonably expects to
incur any material liability as a result of the termination or other
insolvency of any Foreign Plan or any material liability which is not
otherwise funded or satisfied with readily available assets set aside with
respect to such Foreign Plan.
Section 5.12 Accuracy of Information. No information, exhibit, or report
furnished by any Obligated Party to the Agent or to any Lender in connection
with the negotiation of, or compliance with, the Loan Documents contained any
material misstatement of fact or omitted to state a material fact or any fact
necessary to make the statements contained therein not misleading.
Section 5.13 Regulations Concerning Margin Stock. Margin Stock constitutes
less than 25.0% of the value of those assets of the Obligated Parties which are
subject to any limitation on sale, pledge, or other restriction hereunder. No
Obligated Party is engaged in the business of buying or selling Margin Stock or
extending credit for the purpose of buying or selling Margin Stock.
Section 5.14 Material Agreements. No Obligated Party is a party to any
agreement or instrument or subject to any charter or other restriction which
could reasonably be expected to have a Material Adverse Effect. No Obligated
Party is in default in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in (a) any agreement to which it
is a party, which default could reasonably be expected to have a Material
Adverse Effect or (b) any agreement or instrument evidencing or governing
Indebtedness in a principal amount in excess of $5,000,000.
CREDIT AGREEMENT Page 70
Section 5.15 Compliance With Laws. Each Obligated Party has complied with
all applicable statutes, rules, regulations, orders, and restrictions 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 Property
except for any failure to comply with any of the foregoing which could not
reasonably be expected to have a Material Adverse Effect.
Section 5.16 Ownership of Properties. Except as set forth on Schedule 5.16,
on the Closing Date, each Obligated Party has good title, free of all Liens
other than Permitted Liens, to all of the Property and assets owned by such
Obligated Party and reflected in the Parent's most recent consolidated financial
statements provided to the Lenders.
Section 5.17 Plan Assets; Prohibited Transactions. No Obligated Party is an
entity deemed to hold "plan assets" within the meaning of 29 C.F.R. ss.
2510.3101 of an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to Title I of ERISA or any plan (within the meaning of Section
4975 of the Code), and neither the execution of this Agreement nor the making of
Credit Extensions hereunder gives rise to a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code.
Section 5.18 Environmental Matters. In the ordinary course of its business,
the officers of each Obligated Party consider the effect of Environmental Laws
on the business of such Obligated Party, in the course of which such officers
identify and evaluate potential risks and liabilities accruing to such Obligated
Party due to Environmental Laws. On the basis of this consideration, the each
Obligated Party has concluded that Environmental Laws cannot reasonably be
expected to have a Material Adverse Effect. No Obligated Party has received any
notice to the effect that its operations are not in material compliance with any
of the requirements of applicable Environmental Laws or are the subject of any
federal, state, provincial, or municipal investigation evaluating whether any
remedial action is needed to respond to a release of any toxic or hazardous
waste or substance into the environment, which noncompliance or remedial action
could reasonably be expected to have a Material Adverse Effect.
Section 5.19 Investment Company Act. No Obligated Party is an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
Section 5.20 Public Utility Holding Company Act. No Obligated Party is a
"holding company" or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
Section 5.21 Bank Accounts. As of the Closing Date, Schedule 5.21 contains
a complete and accurate list of all bank accounts maintained by each Obligated
Party with any bank or other financial institution.
Section 5.22 Indebtedness. As of the Closing Date and after giving effect
to the making of the Loans to be made on the Closing Date and the issuance of
the Facility LCs to be issued on the Closing Date (if any), (a) the Obligated
Parties have no Indebtedness, except (i) the Obligations and (ii) Indebtedness
described on Schedule 5.22 and (b) no Obligated Party is in
CREDIT AGREEMENT Page 71
default with respect to any note, indenture, loan agreement, mortgage, or other
agreement which evidences or is related to any Indebtedness set forth on
Schedule 5.22.
Section 5.23 Real Estate; Leases. As of the Closing Date, Schedule 5.23
sets forth a correct and complete list of all real Property owned by each
Obligated Party, all leases and subleases of real Property by each Obligated
Party as lessee or sublessee, and all leases and subleases of real Property by
each Obligated Party as lessor or sublessor. To each Obligated Party's
knowledge, each of such leases and subleases is valid and enforceable in
accordance with its terms and is in full force and effect, and no default by any
party to any such lease or sublease exists. Each Obligated Party has good and
indefeasible title in fee simple to the real Property identified on Schedule
5.23 as owned by such Obligated Party, or valid leasehold interests in all real
Property designated therein as "leased" by such Obligated Party.
Section 5.24 Intellectual Property Rights. As of the Closing Date: (a)
Schedule 5.24 sets forth a correct and complete list of all material licenses
and all registered Intellectual Property Rights of each Obligated Party; (b)
none of the Intellectual Property Rights listed in Schedule 5.24 is subject to
any licensing agreement or similar arrangement except as set forth in Schedule
5.24; (c) the Intellectual Property Rights described in Schedule 5.24 constitute
all of the property of such type necessary to the current and anticipated future
conduct of the Obligated Parties' business; (d) to the best of each Obligated
Party's knowledge, no slogan or other advertising device, product, process,
method, substance, part, or other material now employed, or now contemplated to
be employed, by any Obligated Party infringes in any material respect upon any
rights held by any other Person; and (e) no claim or litigation regarding any of
the foregoing is pending or, to any Obligated Party's knowledge, threatened, and
no patent, invention, device, application, principle or any statute, law, rule,
regulation, standard, or code is pending or, to the knowledge of any Obligated
Party, proposed, which, in either case, could reasonably be expected to have a
Material Adverse Effect.
Section 5.25 Accounts Payable. Each of the Obligated Parties' business
practices regarding payment of accounts payable by such Obligated Party are
consistent with its historical practices.
Section 5.26 Solvency.
(a) Immediately after the consummation of the transactions to occur on
the Closing Date and immediately following the making of each Credit
Extension, if any, made on the Closing Date and after giving effect to the
application of the proceeds of such Credit Extensions, (i) the fair value
of the assets of the Parent and its Subsidiaries on a consolidated basis,
at a fair valuation, will exceed the debts and liabilities, subordinated,
contingent, or otherwise, of the Parent and its Subsidiaries on a
consolidated basis, (ii) the present fair saleable value of the Property of
the Parent and its Subsidiaries on a consolidated basis will be greater
than the amount that will be required to pay the probable liability of the
Parent and its Subsidiaries on a consolidated basis on their debts and
other liabilities, subordinated, contingent, or otherwise, as such debts
and other liabilities become absolute and matured, (iii) the Parent and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent, or otherwise, as such debts and
liabilities become absolute and matured, and (iv) the
CREDIT AGREEMENT Page 72
Parent and its Subsidiaries on a consolidated basis will not have
unreasonably small capital with which to conduct the businesses in which
they are engaged as such businesses are now conducted and are proposed to
be conducted after the Closing Date.
(b) No Obligated Party intends to, or intends to permit any other
Obligated Party to, and does not believe that any Obligated Party will,
incur debts beyond its ability to pay such debts as they mature, taking
into account the timing of and amounts of cash to be received by it or any
such Obligated Party and the timing of the amounts of cash to be payable on
or in respect of its Indebtedness or the Indebtedness of any such Obligated
Party.
Section 5.27 Subordinated Indebtedness. The Obligations constitute "Senior
Indebtedness" and "Designated Senior Indebtedness" which is entitled to the
benefits of the subordination provisions of the Convertible Subordinated
Debentures.
Section 5.28 PostRetirement Benefits. As of the Closing Date, the
accumulated postretirement medical and insurance benefit obligations of any
Obligated Party to its employees and former employees, as estimated by such
Obligated Party in accordance with procedures and assumptions deemed reasonable
by the Required Lenders, does not exceed $500,000.
Section 5.29 Investment Property.
(a) Schedule 5.29 sets forth a correct and complete list of all
Investment Property (including Capital Stock of Subsidiaries) owned by each
Obligated Party as of the Closing Date. Each Obligated Party is the legal
and beneficial owner of such Investment Property, as so reflected, free and
clear of any Lien (other than Permitted Liens), and has not sold, granted
any option with respect to, assigned or transferred, or otherwise disposed
of any of its rights or interest therein.
(b) To the extent any Obligated Party is the owner of or becomes the
issuer of any Investment Property that is Facility Collateral (each such
Person which issues any such Investment Property being referred to herein
as an "Issuer"): (i) the Issuer's shareholders that are Obligated Parties
and the ownership interest of each such shareholder are as set forth on
Schedule 5.29, and each such shareholder is the registered owner thereof on
the books of the Issuer; (ii) the Issuer acknowledges the Liens granted in
favor of the Agent in connection herewith; (iii) to the extent required to
perfect the Liens of the Agent therein, such security interest, collateral
assignment, lien, and pledge in favor of the Agent has been registered on
the books of the Issuer for such purpose as of the date hereof; and (iv)
the Issuer is not aware of any liens, restrictions, or adverse claims which
exist on any such Investment Property other than the Liens of the Agent.
Section 5.30 Common Enterprise. The successful operation and condition of
each of the Obligated Parties is dependent on the continued successful
performance of the functions of the group of the Obligated Parties as a whole
and the successful operation of each of the Obligated Parties is dependent on
the successful performance and operation of each other Obligated Party. Each
Obligated Party expects to derive benefit (and its board of directors or
CREDIT AGREEMENT Page 73
other governing body has determined that it may reasonably be expected to derive
benefit), directly and indirectly, from successful operations of each of the
other Obligated Parties. Each Obligated Party expects to derive benefit (and the
boards of directors or other governing body of each Obligated Party has
determined that it may reasonably be expected to derive benefit), directly and
indirectly, from the credit extended by the Lenders to the Borrowers hereunder,
both in their separate capacities and as members of the group of companies. Each
Obligated Party has determined that execution, delivery, and performance of this
Agreement and any other Loan Documents to be executed by such Obligated Party is
within its purpose, will be of direct and indirect benefit to such Obligated
Party, and is in its best interest.
Section 5.31 Insider Transactions. Except as set forth on Schedule 5.31, as
of the Closing Date, there are no existing or proposed agreements, arrangements,
understandings, or transactions between any Obligated Party and any of the
officers, members, managers, directors, stockholders, parents, other interest
holders, employees, or Affiliates (other than Subsidiaries) of any Obligated
Party or any members of their respective immediate families, and none of the
foregoing Persons are directly or indirectly indebted to or have any direct or
indirect ownership, partnership, or voting interest in any Affiliate of any
Obligated Party or any Person with which any Obligated Party has a business
relationship or which competes with any Obligated Party.
ARTICLE 6
COVENANTS
During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing, the Obligated Parties shall keep each of the
following covenants.
Section 6.1 Reporting. Each Obligated Party will maintain, a system of
accounting established and administered in accordance with generally accepted
accounting principles, and will furnish the following items to the Lenders:
(a) within 120 days after the close of each Fiscal Year, of the
Parent, an unqualified audit report certified by Ernst & Young or other
independent certified public accountants acceptable to the Lenders,
prepared in accordance with GAAP on a consolidated and consolidating basis
(consolidating statements need not be certified by such accountants) for
the Parent and its Subsidiaries, including balance sheets as of the end of
such Fiscal Year and related statements of profit and loss, shareholders'
equity, and cash flow, accompanied by a certificate of such accountants
that, in the course of their examination necessary for their certification
of the foregoing, they have obtained no knowledge of any Default occurring
under Section 6.27, or if, in the opinion of such accountants, any such
Default shall exist, stating the nature and status thereof;
(b) within 50 days after the close of each Fiscal Quarter of each
Fiscal Year of the Parent, for the Parent and its Subsidiaries,
consolidated and consolidating unaudited balance sheets as at the close of
each such Fiscal Quarter and consolidated and consolidating statements of
profit and loss, shareholders' equity, and cash flow for the period from
the beginning of the applicable Fiscal Year to the end of such Fiscal
Quarter,
CREDIT AGREEMENT Page 74
all prepared in accordance with GAAP (except for exclusion of
footnotes and subject to normal year-end audit adjustments) and certified
by its chief financial officer;
(c) within 35 days after the close of each calendar month, for the
Parent and its Subsidiaries, consolidated unaudited balance sheets as at
the close of each such calendar month and consolidated statements of profit
and loss and cash flow for the period from the beginning of the applicable
Fiscal Year to the end of such calendar month, all prepared in accordance
with GAAP (except for exclusion of footnotes) and subject to past practices
of the Parent with respect to normal adjustments made as of the end of each
Fiscal Quarter and Fiscal Year, and a reconciliation of each Borrower's
accounts receivable aging and perpetual inventory report to the financial
statements being delivered;
(d) as soon as available, but in any event not more than 30 days prior
to the end of each Fiscal Year of the Parent, but not later than February
28 of the following calendar year, a copy of the plan and forecast
(including a projected consolidated and consolidating balance sheet, income
statement, and funds flow statement) of the Parent for such Fiscal Year in
form reasonably satisfactory to the Agent;
(e) together with each of the financial statements of the Parent
delivered to the Lenders pursuant to Section 6.1(a) and Section 6.1(c), a
certificate in substantially the form of Exhibit D (a "Compliance
Certificate") signed by the chief financial officer of the Parent showing
the calculations necessary to determine compliance with this Agreement and
stating that no Default or Unmatured Default exists, or if any Default or
Unmatured Default exists, stating the nature and status thereof;
(f) upon request of the Agent, copies of all tax returns filed by any
Obligated Party with the U.S. Internal Revenue Service;
(g) as soon as possible and in any event within 270 days after the
close of each Fiscal Year of the Parent, a statement of the Unfunded
Liabilities of each Single Employer Plan, certified as correct by an
actuary enrolled under ERISA;
(h) as soon as possible and in any event within ten days after an
Authorized Officer of any Obligated Party knows that any Reportable Event
or a Termination Event has occurred with respect to any Plan, a statement,
signed by the chief financial officer of the Parent, describing such
Reportable Event or Termination Event and the action which the Parent
proposes to take with respect thereto;
(i) as soon as possible and in any event within ten days of filing
therewith with the PBGC, the Pension Commission of Ontario, the U.S.
Internal Revenue Service or any other governmental entity, a copy of each
annual report or other filing with respect to any Plan;
(j) as soon as possible and in any event within ten days after receipt
by any Obligated Party, a copy of (i) any notice or claim to the effect
that any Obligated Party or any of its Subsidiaries is or may be liable to
any Person as a result of the release by such Obligated Party, any of its
Subsidiaries, or any other Person of any toxic or hazardous
CREDIT AGREEMENT Page 75
waste or substance into the environment and (ii) any notice alleging
any violation of any federal, state, or local environmental, health, or
safety law or regulation by such Obligated Party or any of its
Subsidiaries;
(k) concurrently with the furnishing thereof to the shareholders of
the Parent, copies of all financial statements, reports, and proxy
statements so furnished;
(l) promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly, or other regular reports which
any Obligated Party files with the Securities and Exchange Commission;
(m) annually upon request by the Agent, a certificate of good standing
for each Obligated Party from the appropriate governmental officer in its
jurisdiction of incorporation, formation, or organization;
(n) as soon as available and in any event within ten days of receipt
thereof, copies of all management reports and management letters received
from any Obligated Party's independent certified public accountants;
(o) as soon as available and in any event (i) on the twentieth day of
each calendar month as of the end of the preceding calendar month, and at
such other times as the Borrowers determine is necessary to redetermine
availability of Advances hereunder, a Borrowing Base Certificate and
supporting information with respect to the determination of Eligible
Accounts and Eligible Inventory and (ii) within five days of the fifteenth
day and the last day of each calendar month a report of Accounts collected
and new Accounts created since the date of the previous such report;
(p) as soon as available but in any event within twenty days of the
end of each calendar month, as of the calendar month then ended:
(i) a summary aged trial balance of the Accounts of each
Obligated Party including the name and balance due for each Account
Debtor and reconciled to the Borrowing Base Certificate delivered as
of such date, and upon request by the Agent, a detailed aged trial
balance of the Accounts of each Obligated Party specifying the name,
address, and balance due for each Account Debtor;
(ii) a schedule in form reasonably satisfactory to the Agent
summarizing each Obligated Party's Inventory (A) presented with
respect to location, product type, volume on hand, and cost and (B)
reconciled to the Borrowing Base Certificate delivered as of such
date, and upon request by the Agent such schedule detailing such items
for each Obligated Party;
(iii) in form reasonably satisfactory to the Agent, a schedule of
each Obligated Party's Inventory located with a third party under any
consignment, bailee arrangement, or warehouse agreement;
CREDIT AGREEMENT Page 76
(iv) a worksheet of calculations by the Borrowers to determine
Eligible Accounts and Eligible Inventory, such worksheets detailing
the Accounts and Inventory excluded from Eligible Accounts and
Eligible Inventory;
(v) upon request by the Agent, a schedule and aging of each
Obligated Party's accounts payable; and
(vi) a schedule of all new deposit accounts opened by the
Obligated Parties since the date of the last such schedule;
(q) promptly upon the Agent's request:
(i) copies of invoices issued by any Obligated Party in
connection with any Accounts and credit memos, shipping and
delivery documents, and other information related thereto;
(ii) copies of purchase orders, invoices, and shipping and
delivery documents in connection with any Inventory or Equipment
purchased by any Obligated Party; and
(iii) a schedule detailing the balance of all intercompany
accounts of the Obligated Parties; and
(r) such other information (including non-financial information) as
the Agent or any Lender may from time to time reasonably request.
Section 6.2 Use of Proceeds.
(a) The Borrowers will use the proceeds of the Credit Extensions (i)
to repay the outstanding indebtedness, liabilities, and obligations under
that certain Credit Agreement, dated December 21, 1999, between the Parent,
Bank of America, N.A., and the financial institutions party thereto as
lenders, (ii) to repay Indebtedness outstanding under the Senior Notes,
(iii) to repurchase the Accounts sold pursuant to that certain Receivables
Sale and Contribution Agreement dated March 28, 2002 among the Parent, the
"Originators" identified therein, and K2 Finance Company LLC (including the
making of any intercompany loan made in connection therewith to the extent
required to repurchase such Accounts), and pay all indebtedness,
liabilities, and obligations of any Obligated Party thereunder, (iv) for
general corporate purposes (not otherwise prohibited by this Agreement),
and (v) as required in connection with any Permitted Acquisition.
(b) The Borrowers will not use any of the proceeds of the Credit
Extensions, directly or indirectly, to (i) buy or carry any Margin Stock in
violation of Regulation U, (ii) repay or refinance any Indebtedness of any
Person incurred to buy or carry any Margin Stock, (iii) acquire any
security in any transaction that is subject to Section 13 or Section 14 of
the Securities Exchange Act of 1934 (and the regulations promulgated
thereunder), or (iv) make any Acquisition other than Permitted
Acquisitions.
CREDIT AGREEMENT Page 77
Section 6.3 Notices. The Obligated Parties will give prompt notice in
writing to the Agent and the Lenders of:
(a) the occurrence of any Default or Unmatured Default;
(b) any other development, financial or otherwise, which could
reasonably be expected to have a Material Adverse Effect;
(c) the assertion by the holder of any Capital Stock of any Obligated
Party or the holder of any Material Indebtedness that any default exists
with respect thereto or that any Obligated Party is not in compliance
therewith;
(d) receipt of any written notice that any Obligated Party is subject
to any investigation by any governmental entity with respect to any
potential or alleged violation of any applicable environmental law or of
imposition of any Lien against any Property of any Obligated Party for any
liability with respect to damages arising from, or costs resulting from,
any violation of any Environmental Laws;
(e) in any event not less than 15 days prior thereto, any change of
any Obligated Party's name, type of entity, or new location where Facility
Collateral will be maintained; and
(f) commencement of any proceedings contesting any tax, fee,
assessment, or other governmental charge in excess of $5,000,000.
Section 6.4 Conduct of Business. The Obligated Parties will carry on and
conduct their respective business in substantially the same manner and in
substantially the same fields of enterprise as presently conducted and any
business activities that are substantially similar, related, incidental, or
complementary thereto.
Section 6.5 Taxes. Each Obligated Party will timely file complete and
correct U.S., and applicable foreign, federal, state, provincial, municipal, and
local tax returns required by law and pay when due all taxes, assessments, and
governmental charges and levies upon it or its income, profits, or Property,
except those which are being contested in good faith by appropriate proceedings
diligently pursued and with respect to which adequate reserves have been set
aside in accordance with GAAP. The Obligated Parties will cause K2 Canada and
the U.K. Borrowers, as applicable, to have the certified public accountants
which prepare the financial statements delivered pursuant to Section 6.1(a)
timely prepare and file with each applicable governmental authority any filing
required with respect to any Taxes which are required to be withheld, paid, or
remitted pursuant to Section 3.5, and such Borrower will make any payment of
such Taxes in accordance with applicable law. The Agent may, at the sole expense
of the applicable Borrower, have any such filing reviewed by independent
consultants or accountants the Agent may select in its sole discretion.
Section 6.6 Payment of Indebtedness and Other Liabilities. Each Obligated
Party will pay or discharge when due all Indebtedness owed by such Obligated
Party and all other liabilities and obligations due to materialmen, mechanics,
carriers, warehousemen, and landlords, except
CREDIT AGREEMENT Page 78
those which are being contested in good faith by appropriate proceedings
diligently pursued and with respect to which adequate reserves have been set
aside in accordance with GAAP.
Section 6.7 Insurance.
(a) Each Obligated Party shall at all times maintain with financially
sound and reputable carriers having a rating of at least A+ by Best Rating
Guide (or otherwise as may be acceptable to the Agent in its discretion)
insurance against: (i) loss or damage by fire, theft, burglary, pilferage,
loss in transit; (ii) theft, burglary, pilferage, larceny, embezzlement,
and other criminal activities; (iii) business interruption; and (iv) and
such other hazards as is customary in the business of such Obligated Party.
All such insurance shall be in amounts and under policies acceptable to the
Agent in its reasonable credit judgment. In the event any Facility
Collateral is located in any area that has been designated by the Federal
Emergency Management Agency as a "Special Flood Hazard Area," the
applicable Obligated Party shall purchase and maintain flood insurance on
such Facility Collateral (including any personal Property which is located
on any real Property leased by such Obligated Party within a "Special Flood
Hazard Area"). The amount of all insurance required by this Section shall
at a minimum comply with applicable law, including the Flood Disaster
Protection Act of 1973. All premiums on such insurance shall be paid when
due by the applicable Obligated Party, and copies of the policies delivered
to the Agent. If any Obligated Party fails to obtain any insurance as
required by this Section, the Agent at the direction of the Required
Lenders may obtain such insurance at the Borrowers' expense. No Obligated
Party will use or permit any Property to be used in violation of applicable
law or in any manner which might render inapplicable any insurance
coverage.
(b) All insurance policies required under Section 6.7(a) (other than
business interruption insurance) shall name the Agent (for the benefit of
the Agent and the Lenders) as an additional insured, as applicable, and
shall contain loss payable clauses or mortgagee clauses, in form and
substance reasonably satisfactory to the Agent, naming the Agent as loss
payee and first mortgagee (as applicable) and providing that:
(i) all proceeds thereunder with respect to any Facility
Collateral shall be payable to the Agent;
(ii) no such insurance shall be affected by any act or neglect of
the insured or owner of the Property described in such policy; and
(iii) such policy and loss payable clauses may be canceled,
amended, or terminated only upon at least 30 days prior written notice
given to the Agent.
Section 6.8 Application of Proceeds of Insurance. The Obligated Parties
shall promptly notify the Agent and the Lenders of any claim in excess of
$2,000,000 under any insurance policy required pursuant to Section 6.7 or of
receipt of any such proceeds pursuant to any claim. During the existence of a
Default, the Agent is hereby authorized to directly collect all insurance
proceeds in respect of any Facility Collateral. All proceeds of any insurance
required pursuant to Section 6.7 shall be delivered to the Agent and applied to
the Obligations in
CREDIT AGREEMENT Page 79
the manner specified in Section 2.16, after deducting from such proceeds the
reasonable expenses (if any) incurred by the Agent in the collection or handling
thereof and any amount required to repay Indebtedness owing to the holder of a
Permitted Lien which in accordance with the terms of this Agreement has a Lien
on such Property which has priority over the Lien of the Agent.
Section 6.9 Compliance with Laws; Maintenance of Existence and Good
Standing. Each Obligated Party will comply in all material respects with all
laws, rules, regulations, orders, writs, judgments, injunctions, decrees, or
awards to which such Obligated Party may be subject including, without
limitation, all applicable Environmental Laws and ERISA. Except as permitted by
Section 6.17, or where the failure to preserve its good standing or
qualification could not reasonably be expected to result in a material adverse
effect on the business, Property, condition (financial or otherwise), results of
operations, or prospects of such Obligated Party, the ability of such Obligated
Party to perform its respective obligations under the Loan Documents to which it
is a party, or the validity or enforceability of any of the Loan Documents or
the rights or remedies of the Agent, any LC Issuer, any Acceptance Lender, or
the Lenders thereunder, each Obligated Party will maintain its legal existence,
authority to conduct business, valid subsistence, and good standing and
qualification in each jurisdiction where it is required to be qualified and in
good standing and validly subsisting in order to conduct its business in such
jurisdiction; provided that any Obligated Party, excluding the ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇▇, and the U.K. Borrowers, may be dissolved, cease to exist, or cease to
subsist if all of its Property is transferred to a Borrower (subject to Section
6.18(b)).
Section 6.10 Maintenance of Properties and Licenses. Each Obligated Party
will do all things necessary to maintain, preserve, protect, and keep its
Property in good repair, working order, and condition, and make all necessary
and proper repairs, renewals, and replacements so that its business carried on
in connection therewith may be properly conducted at all times. Each Obligated
Party will do all things necessary to obtain and maintain in effect at all times
all material franchises, governmental authorizations, Intellectual Property
Rights, licenses, and permits, which are necessary for it to own its Property or
conduct its business as conducted on the Closing Date.
Section 6.11 Amendment of Organization Certificates and Management
Agreements. No Obligated Party will amend or otherwise modify its Organization
Certificate or Management Agreement without the prior written consent of the
Agent (such consent not to be unreasonably withheld) or in any manner which
could have an adverse effect on the ability of such Obligated Party to perform
any of its duties and obligations under any of the Loan Documents or pay the
Obligations when due.
Section 6.12 Inspection. Each Obligated Party will permit the Agent
(accompanied by each Lender at its own expense), and its respective
representatives, agents, and independent contractors to inspect any of the
Property, books, and financial records of such Obligated Party, to examine and
make copies of the books of accounts and other financial records of such
Obligated Party, and to discuss the affairs, finances, and accounts of such
Obligated Party with, and to be advised as to the same by, their respective
officers, directors, and independent public accountants at any time during the
existence of a Default or an Unmatured Default and at such other reasonable
times and intervals as the Agent may designate. The Obligated Parties
CREDIT AGREEMENT Page 80
acknowledge that from time to time the Agent may prepare and may distribute to
the Lenders certain audit reports (the "Reports") pertaining to the Obligated
Parties' assets for internal use by the Agent and the Lenders from information
furnished to it by or on behalf of the Obligated Parties, after the Agent has
exercised its rights of inspection pursuant to this Agreement. Without limiting
any other provision of this Agreement, the Canadian Obligated Parties and the
U.K. Obligated Parties, respectively, will permit the Agent to conduct an
inspection and field examination of the Canadian Obligated Parties and the U.K.
Obligated Parties, respectively, and the Agent agrees to undertake such
inspections and field examinations, within 90 days of the Closing Date, each
such inspection and field examination to be conducted at the expense of the
Canadian Obligated Parties and the U.K. Obligated Parties (as applicable) and
shall not be included in the number of examinations to be paid by the Borrowers
pursuant to Section 9.6.
Section 6.13 Dividends. The Parent will not, nor will it permit any of its
Subsidiaries to, declare or pay any dividends or make any distributions on its
Capital Stock (other than dividends and distributions payable in its own Capital
Stock) or redeem, repurchase, or otherwise acquire or retire any of its Capital
Stock at any time outstanding (each of such dividends, distributions, or other
transactions with respect to such Person's Capital Stock being referred to in
this Section as a "restricted payment"), except that (a) any Subsidiary of the
Parent may declare and pay dividends or make distributions to the Parent or to a
Wholly-Owned Subsidiary of the Parent which is an Obligated Party and (b) the
Parent may make restricted payments in an aggregate amount not to exceed
$1,000,000 in any Fiscal Year so long as no Default exists or would result
therefrom. The Parent will not, nor will it permit any of its Subsidiaries to
make any change in its capital structure which could have an adverse effect on
the ability of the Obligated Parties to perform any of their respective duties
and obligations under any Loan Document or pay the Obligations when due.
Section 6.14 Indebtedness. The Obligated Parties will not create, incur, or
suffer to exist any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness existing on the date hereof and described in Schedule
5.22;
(c) Indebtedness constituting Net ▇▇▇▇-to-Market Exposure arising
under Facility Rate Management Transactions;
(d) purchase money Indebtedness (including Capital Lease Obligations)
incurred in connection with the acquisition of any Equipment or real
Property; provided that the amount of such Indebtedness shall be limited to
an amount not in excess of the purchase price of such Equipment or real
Property and the aggregate of all such Indebtedness incurred in any Fiscal
Year shall not exceed $5,000,000;
(e) Indebtedness which represents an extension, refinancing, or
renewal of any of the Indebtedness described in clause (b), clause (c), and
clause (d), preceding; provided that (i) the principal amount of such
Indebtedness is not increased, (ii) any Liens securing such Indebtedness
are not extended to any additional Property of any
CREDIT AGREEMENT Page 81
Obligated Party, and (iii) no Obligated Party that is not originally
obligated with respect to repayment of such Indebtedness is required to
become obligated with respect thereto;
(f) unsecured Indebtedness owing by any Obligated Party to any other
Obligated Party;
(g) other unsecured Indebtedness in an amount not in excess of
$30,000,000; provided that (i) such Indebtedness shall be on terms
satisfactory to the Agent (including, without limitation, provisions for a
maturity date after the Facility Termination Date and payment of interest
only until after repayment of the Obligations and termination of the
commitments of the Agent and the Lenders under this Agreement), (ii) such
Indebtedness shall be subordinated to the Obligations pursuant to
documentation satisfactory to the Agent, (iii) to the extent any Term Loans
B are outstanding on the date of incurring such Indebtedness the proceeds
thereof shall be used to make a prepayment on the Term Loans B, and (iv)
the Consolidated Debt Service Coverage Ratio for the immediately preceding
twelve calendar months and on a pro forma basis for the following twelve
calendar months shall not be less than 1.25 to 1.00;
(h) other unsecured Indebtedness in an amount not in excess of
$5,000,000; and
(i) guaranties of Indebtedness permitted pursuant to clause (b)
through clause (h) preceding.
Section 6.15 Guaranties. No Obligated Party will become liable under any
Contingent Obligation; provided that (a) the Obligated Parties may guarantee
payment of any Indebtedness permitted pursuant to Section 6.14, (b) the
Obligated Parties may enter into endorsements of instruments for deposit or
collection in the ordinary course of business, (c) the Parent may (i) guarantee
payment of any Indebtedness and other obligations of any of its Subsidiaries
which are not formed, incorporated, or organized in the U.S. as specified on
Schedule 6.14 and (ii) enter into additional such guarantees after the Closing
Date as permitted under Section 6.19(c), (d) the Parent may have Facility LCs
issued with respect to obligations of its Subsidiaries which are not Obligated
Parties in accordance with Section 2.4, and (e) the Obligated Parties may incur
Contingent Obligations permitted under Section 6.19(g).
Section 6.16 Prepayment of Indebtedness. No Obligated Party will
voluntarily prepay any Indebtedness other than the Obligations.
Section 6.17 Merger. No Obligated Party will merge or consolidate with or
into any other Person, except (a) any Subsidiary of the Parent may merge into
the Parent, (b) any Borrower (other than the Parent) may merge with any other
Borrower, (c) any Obligated Party which is not a Borrower may merge with any
other Obligated Party, and (d) mergers in which the applicable Obligated Party
is the survivor and which constitute Permitted Acquisitions.
Section 6.18 Sale of Assets. No Obligated Party will lease, sell, or
otherwise dispose of its Property to any other Person, except:
(a) sales of Inventory in the ordinary course of business;
CREDIT AGREEMENT Page 82
(b) provided the respective Obligated Party complies with Section
6.32, sales and transfers of Property to any other Obligated Party;
provided further, that any such sale or transfer of any Facility Collateral
is expressly made by the transferring Obligated Party, and accepted by any
such other Obligated Party, subject to the Liens in favor of the Agent and
after giving effect to such sale or transfer the Agent continues to have a
perfected Lien therein;
(c) dispositions of Property as a "trade-in" in connection with any
Capital Expenditures;
(d) sales of obsolete or unusable Equipment and real Property in the
ordinary course of business;
(e) dispositions of cash and Cash Equivalent Investments in the
ordinary course of business;
(f) the licensing on a nonexclusive basis of Intellectual Property
Rights in the ordinary course of business;
(g) the sale of the "Shakespeare" composite light pole business and
other associated composite assets;
(h) sales of Accounts, excluding Eligible Accounts, and notes
receivable received by an Obligated Party with respect to any Account which
is not an Eligible Account in connection with collection of such Accounts
and notes receivable, provided that the aggregate amount of all such
Accounts and notes receivable, prior to giving effect to any discount or
write-off thereof, shall not exceed $1,000,000 in any Fiscal Year of the
Parent; and
(i) dispositions of any other Property of the Obligated Parties not
included in clause (a) through clause (h) preceding (including sales or
exclusive licensing agreements with respect to Intellectual Property
Rights) with an aggregate book value or fair market value (whichever is
greater) not in excess of $1,000,000 in any Fiscal Year of the Parent.
The proceeds of any sale permitted pursuant to this Section 6.18, net of any
purchase money Indebtedness required to be repaid in connection with such sale
and expenses of any such sale, shall be delivered to the Agent and applied to
the Obligations as provided by Section 2.16.
Section 6.19 Investments and Acquisitions. No Obligated Party will make or
suffer to exist any Investments (including, without limitation, loans and
advances to, and other Investments in, Subsidiaries), or commitments therefor
(including Contingent Obligations), or create any Subsidiary, except any
Subsidiary which, subject to Section 16.4, becomes an Obligated Party, or become
or remain a partner in any partnership or joint venture, or make any
Acquisition, except:
(a) Cash Equivalent Investments;
(b) existing Investments in Subsidiaries;
CREDIT AGREEMENT Page 83
(c) additional Investments and commitments therefor, including
Contingent Obligations (referred to in this clause (c) as a "subject
Investment") not in excess of $10,000,000 (net of any returned or repaid
subject Investments) made during any Fiscal Year of the Parent, provided
that such additional subject Investments may be increased to $20,000,000
during any Fiscal Year of the Parent if Unused Availability after giving
effect to making such additional subject Investment is (y) $20,000,000 for
any subject Investment made during the period between April 1 and November
30 of a calendar year and (z) $40,000,000 for any subject Investment made
during the period between December 1 of a calendar year and March 31 of the
following calendar year; provided, further, that the aggregate amount of
all subject Investments made pursuant to this clause (c) during the term of
this Agreement shall not exceed $30,000,000 (net of any returned or repaid
subject Investments), as follows:
(i) cash Investments in Subsidiaries which are not Obligated
Parties, including any Investment resulting from funding of a Facility
LC which has been issued with respect to any obligation of a
Subsidiary of the Parent which is not an Obligated Party and for which
the Parent is not reimbursed within ten Business Days of the funding
thereof;
(ii) Investments in, or the incurrence of Contingent Obligations
with respect to Indebtedness of, joint ventures in which an Obligated
Party is a partner;
(iii) the incurrence of Contingent Obligations by the Parent with
respect to Indebtedness of any of its Subsidiaries which is not
formed, incorporated, or organized under the laws of the U.S.; and
(iv) other Investments not included in clause (a) and clause (b)
preceding and clause (d) through clause (h) following;
(d) unsecured intercompany loans owing by an Obligated Party to
another Obligated Party;
(e) Investments in existence on the Closing Date and described in
Schedule 5.29;
(f) Permitted Acquisitions;
(g) loans and other extensions of credit made in connection with the
Parent's employee stock ownership plan; provided that the aggregate amount
of such loans and other extensions of credit made shall not exceed
$1,500,000 during any Fiscal Year of the Parent;
(h) notes receivable received in connection with any disposition
permitted hereunder; provided that the aggregate amount of such notes
receivable received shall not exceed $2,000,000 in the aggregate during any
Fiscal Year of the Parent; and
(i) loans made to repurchase Accounts sold pursuant to that certain
Receivables Sale and Contribution Agreement dated March 28, 2002 among the
Parent,
CREDIT AGREEMENT Page 84
the "Originators" identified therein, and K2 Finance Company LLC to
the extent required to repurchase such Accounts.
Section 6.20 Liens. No Obligated Party will create, incur, or suffer to
exist any Lien in, of, or on the Property of such Obligated Party, except the
following (collectively, "Permitted Liens"):
(a) Liens for taxes, fees, assessments, or other governmental charges
or levies on the Property of such Obligated Party if with respect to any
such Lien (i) the obligation which gives rise to such Lien is not at the
time delinquent or (ii) such Lien, together with all other such Liens, (A)
does not secure obligations in excess of $10,000,000 in the aggregate, (B)
does not have priority over the Liens of the Agent in any Facility
Collateral, (C) is being contested in good faith and by appropriate
proceedings diligently pursued and has not been filed for more than 30
days, (D) adequate reserves in accordance with GAAP have been set aside on
the books of such Obligated Party with respect to such Lien, and (E) a stay
of enforcement of such Lien is in effect;
(b) Liens imposed by law, such as carrier's, warehousemen's, and
mechanic's Liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not delinquent or which are
being contested in good faith by appropriate proceedings diligently pursued
and for which adequate reserves have been set aside on such Obligated
Party's books;
(c) statutory Liens in favor of landlords of real Property leased by
such Obligated Party; provided that such Obligated Party is current with
respect to payment of all rent and other amounts, except any such other
amount which is being contested in good faith pursuant to appropriate
proceedings diligently pursued, due to such landlord under any lease of
such real Property;
(d) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other
social security or retirement benefits, or similar legislation or to secure
the performance of bids, tenders, or contracts (other than for the
repayment of Indebtedness) or to secure indemnity, performance, or other
similar bonds for the performance of bids, tenders, or contracts (other
than for the repayment of Indebtedness) or to secure statutory obligations
(other than Liens arising under ERISA, the PBA or in respect of any Foreign
Plan, or Environmental Laws) or surety or appeal bonds, or to secure
indemnity, performance, or other similar bonds;
(e) utility easements, building restrictions, and such other
encumbrances or charges against real Property as are of a nature generally
existing with respect to properties of a similar character and which do not
in any material way affect the marketability of such real Property or
interfere with the use thereof in the business of such Obligated Party;
(f) Liens existing on the Closing Date and described in Schedule 6.20
and Liens resulting from any extension, refinancing, or renewal of the
related Indebtedness as
CREDIT AGREEMENT Page 85
permitted pursuant to Section 6.14(e); provided that the Liens
evidenced thereby are not increased to cover any additional Property not
originally covered thereby;
(g) Liens securing purchase money Indebtedness (including Capital
Lease Obligations) of such Obligated Party permitted pursuant to Section
6.14(d); provided that such Liens attach only to the Property which was
acquired with the proceeds of such purchase money Indebtedness; and
(h) Liens in favor of the Agent (or the U.K. Security Trustee on
behalf of the Agent) granted pursuant to any Loan Document. Notwithstanding
any of the foregoing, (y) none of the Liens permitted pursuant to this
Section 6.20, other than clause (h) preceding, may at any time attach to
any Accounts of any Obligated Party and (z) none of the Liens listed in
clause (a) and clause (d) through clause (g) preceding may attach to any
Inventory owned by any Obligated Party.
Section 6.21 Restrictions on Liens. Other than as provided in the Loan
Documents or in connection with the creation or incurrence of any Indebtedness
under Section 6.14(d) or restrictions arising by reason of customary
non-assignment or no subletting clauses in leases or other contracts entered
into in the ordinary course of business, no Obligated Party will enter into or
become subject to any negative pledge or other restriction on the right of such
Obligated Party to grant Liens on any of its Property; provided that any such
negative pledge or other restriction entered into in connection with the
creation of Indebtedness under Section 6.14(d) shall be limited to the Property
securing such purchase money Indebtedness.
Section 6.22 Sale and Leaseback Transactions and Other Off-Balance Sheet
Liabilities. No Obligated Party will enter into or suffer to exist any (a) Sale
and Leaseback Transaction or (b) any other transaction pursuant to which it
incurs or has incurred Off-Balance Sheet Liabilities, other than Rate Management
Transactions which relate to interest payable on the Obligations.
Section 6.23 Affiliate Transactions. Except as set forth on Schedule 6.23,
no Obligated Party will enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, make any
payment or transfer to (including, without limitation, any payment or transfer
with respect to any fees or expenses for management services), or make any
investment in any Affiliate. Notwithstanding the foregoing, if no Default
exists, an Obligated Party may, upon fair and reasonable terms no less favorable
to such Obligated Party than it could obtain in a comparable arms-length
transaction, may engage in commercial transactions with an Affiliate in the
ordinary course of business consistent with past practices.
Section 6.24 Appraisals. Whenever a Default exists, and at such other times
not more frequently than twice per calendar year as the Agent requests, the
Obligated Parties shall, at their sole expense, provide the Agent with
appraisals or updates thereof of their Inventory from an appraiser, and prepared
on a basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulations and
by the internal policies of the Lenders.
Section 6.25 Reserved.
CREDIT AGREEMENT Page 86
Section 6.26 Capital Expenditures. During any Fiscal Year of the Parent,
the Obligated Parties will not expend, or be committed to expend, in excess of
$25,000,000 in the aggregate for Capital Expenditures for the Obligated Parties
during such Fiscal Year.
Section 6.27 Financial Covenants.
(a) Consolidated Debt Service Coverage Ratio. As of the end of any
Fiscal Quarter of the Parent, the Obligated Parties will not permit the
Consolidated Debt Service Coverage Ratio, determined for the immediately
preceding four Fiscal Quarters of the Parent, to be less than 1.25 to 1.00.
(b) Minimum Net Worth. The Obligated Parties will not permit the
Consolidated Net Worth as of the end of any Fiscal Quarter of the Parent to
be less than the sum of (a) $186,000,000, plus (b) 80.0% of the amount of
the increase in Consolidated Net Worth resulting from consummation of the
Rawlings Acquisition as reported on the financial statements of the Parent
delivered pursuant to Section 6.1(b), plus (c) 75.0% of Consolidated Net
Income earned in each Fiscal Quarter of the Parent beginning with the
Fiscal Quarter ending March 31, 2003 (without deduction for losses).
Section 6.28 Fiscal Year. Each Obligated Party (excluding the Parent) shall
cause the last day of its Fiscal Year to be the same as the last day of the
Parent's Fiscal Year. The Parent shall not change the last day of its Fiscal
Year.
Section 6.29 Reserved.
Section 6.30 Collateral Waiver Agreements; Deposit Control Agreements.
(a) The Obligated Parties will use their best efforts to provide to
the Agent upon the Agent's request, a Collateral Waiver Agreement duly
executed on behalf of each landlord or mortgagee, as the case may be, of
real Property on which any Facility Collateral is located and on behalf of
any bailee (including customs brokers) with possession of any Facility
Collateral. The Agent may, in its discretion establish an Availability
Reserve with respect to any Facility Collateral located on any real
Property or in the possession of any bailee (including customs brokers) for
which the Agent has not received any such Collateral Waiver Agreement.
(b) The Obligated Parties agree that any Collateral Waiver Agreement
with any customs broker shall include provisions which require the customs
broker, after notice from the Agent, to deliver all Inventory received by
such customs broker exclusively in accordance with the Agent's
instructions. The Obligated Parties, the Lenders, and the Agent agree that
the Agent shall not and shall not be required to, deliver any such notice
to any customs broker unless a Default has occurred and is continuing. The
Obligated Parties agree that they will not change customs brokers without
providing the Agent at least 30 days prior written notice and using their
best efforts to obtain a Collateral Waiver Agreement duly executed by the
proposed replacement customs broker.
CREDIT AGREEMENT Page 87
(c) The Obligated Parties will provide to the Agent, a Deposit Account
Control Agreement duly executed on behalf of each financial institution
holding a deposit account of any Obligated Party, as follows: (i) within 30
days of the Closing Date, for any deposit account of any U.S. Obligated
Party to which proceeds of any Facility Collateral are deposited; and (ii)
upon the Agent's request, for any other deposit account of any Obligated
Party.
Section 6.31 Guaranties of the Obligations.
(a) The Parent shall guarantee payment and performance of the
Obligations (including, without limitation, the Canadian Obligations, the
U.K. Obligations, and the U.S. Obligations) pursuant to the Parent Guaranty
Agreement.
(b) Each Canadian Obligated Party (other than K2 Canada), including
any Person which becomes a Canadian Guarantor after the Closing Date
pursuant to the terms of this Agreement, shall guarantee payment and
performance of the Canadian Obligations pursuant to a Canadian Guarantee
Agreement.
(c) Each U.K. Obligated Party, including any Person which becomes a
U.K. Guarantor after the Closing Date pursuant to the terms of this
Agreement, shall guarantee payment and performance of the U.K. Obligations
by becoming a party to the U.K. Debenture.
(d) Each U.S. Obligated Party, including any Person which becomes a
U.S. Borrower or a U.S. Subsidiary Guarantor after the Closing Date
pursuant to the terms of this Agreement, shall guarantee payment and
performance of the U.S. Obligations pursuant to a U.S. Subsidiary Guaranty
Agreement.
Section 6.32 Additional Collateral; Further Assurances.
(a) Subject to Section 16.4 and applicable law, each Obligated Party
shall, unless the Required Lenders otherwise consent, cause each
Wholly-Owned Subsidiary of the Parent, excluding Lara Acquisition Sub, Inc.
(prior to consummation of the Rawlings Acquisition), Ride Snowboard
Company, Ride Manufacturing, Inc., SMP Clothing, Inc., Smiley Hats, Inc.,
Carve, Inc., Preston Binding Company, K2 Funding Inc., K2 Finance Company,
K2 Receivables Corporation (collectively referred to in this Section as the
"excluded U.S. Subsidiaries") and any other such Subsidiary which is not
organized under the laws of Canada (or any province thereof), England, or
the U.S. (or any state of the U.S.), to become a Borrower and a Guarantor,
or a Guarantor (but not a Borrower), as follows:
(i) each Subsidiary of the Parent organized under the laws of
Canada (or any province thereof) shall become a Canadian Guarantor;
(ii) each Subsidiary of the Parent organized under the laws of
England shall become a U.K. Guarantor;
CREDIT AGREEMENT Page 88
(iii) each Subsidiary of the Parent organized under the laws of
the U.S. (or any state thereof) shall become a U.S. Borrower and a
U.S. Guarantor, as applicable; provided that in the event that any of
the excluded U.S. Subsidiaries (individually or collectively) owns any
Property with an aggregate book value or fair market value in excess
of $100,000 or has revenue in any Fiscal Year in excess of $100,000,
the Obligated Parties shall notify the Agent in writing thereof and
propose to the Agent that such excluded Subsidiary (or excluded
Subsidiaries) become, and with the Agent's and the Required Lenders'
consent pursuant to Section 16.4 cause such excluded Subsidiary (or
excluded Subsidiaries) to become, either a U.S. Borrower and a U.S.
Subsidiary Guarantor or a U.S. Subsidiary Guarantor (but not a U.S.
Borrower) subject to the terms of this Agreement to the extent
required to cause the aggregate book value or fair market value of all
Property owned by such excluded Subsidiaries to be equal to or less
than $100,000 and to cause the revenue of all such excluded
Subsidiaries, collectively, to be equal to or less than $100,000.
(b) Upon the request of the Agent, each Obligated Party shall (x)
grant Liens to the Agent, for the benefit of the Agent and the Lenders,
pursuant to such documents as the Agent may reasonably deem necessary and
deliver such property, documents, and instruments as the Agent may request
to perfect the Liens of the Agent in any Property of such Obligated Party
which constitutes Facility Collateral, including any parcel of real
Property located in the U.S. or Canada owned by any Obligated Party
(provided that, with respect to any such real Property, the Obligated
Parties shall only be required to deliver agreements, documents,
information, and instruments of the type referenced in Section 4.1(j)), (y)
execute a Guaranty Agreement as required by Section 6.31, and (z) in
connection with the foregoing requirements, or either of them, deliver to
the Agent (in its discretion) all items of the type required by Section 4.1
(as applicable). Notwithstanding any other provision of this Agreement:
(i) Liens on Facility Collateral owned by the Parent shall secure
all of the Obligations;
(ii) Liens on Facility Collateral owned by the Canadian Obligated
Parties shall secure the Canadian Obligations;
(iii) Liens on Facility Collateral owned by the U.K. Obligated
Parties shall secure the U.K. Obligations; and
(iv) Liens on Facility Collateral owned by the U.S. Obligated
Parties (other than the Parent) shall secure the U.S. Obligations.
Upon execution and delivery of such Loan Documents and other
agreements, certificates, documents, and instruments, each such Person
shall automatically become a Borrower and a Guarantor, or a Guarantor (but
not a Borrower), as applicable, hereunder and thereupon shall have all of
the rights, benefits, duties, and obligations in such capacity under the
Loan Documents.
CREDIT AGREEMENT Page 89
(c) Without limiting the foregoing, each Obligated Party shall, and
shall cause each of the Parent's Subsidiaries which is required to become
an Obligated Party pursuant to the terms of this Agreement to, execute and
deliver, or cause to be executed and delivered, to the Agent such documents
and agreements, and shall take or cause to be taken such actions as the
Agent may, from time to time, reasonably request to carry out the terms and
conditions of this Agreement and the other Loan Documents.
Section 6.33 Amendments to Agreements. No Obligated Party will amend or
terminate (a) the Rawlings Acquisition Agreement, (b) the Convertible
Subordinated Debentures, (c) the Securities Purchase Agreement entered into in
connection with the Convertible Subordinated Debentures, or (d) any agreement,
certificate, document, or instrument entered into or delivered in connection
with any of the agreements referenced in clause (a) through clause (c)
preceding.
Section 6.34 Subordinated Indebtedness. No Obligated Party will directly or
indirectly voluntarily prepay, defease, or in substance defease, purchase,
redeem, retire prior to its stated maturity, or otherwise acquire, any
Subordinated Indebtedness. No Obligated Party will make any payment (including
any principal, interest, or fees) with respect to any Subordinated Indebtedness
if any Default or Unmatured Default exists at the time of making such payment or
would result from the making of such payment.
Section 6.35 Lenders as Depository. On or before June 30, 2003, each
Obligated Party shall have established, and thereafter shall maintain, one or
more of the Lenders as such Obligated Party's principal depository bank(s),
including for the maintenance of operating, administrative, cash management,
collection activity, and other deposit accounts for the conduct of its business.
ARTICLE 7
DEFAULTS
Section 7.1 Events of Default. The occurrence of any one or more of the
following events shall constitute a Default:
(a) any representation or warranty made or deemed made by or on behalf
of any Obligated Party to the Agent (or the U.K. Security Trustee on behalf
of the Agent and the Lenders) or any Lender under or in connection with
this Agreement, any other Loan Document, any Credit Extension, or any
certificate or information delivered in connection with any of the
foregoing shall be materially false on the date as of which made;
(b) nonpayment when due of any principal, interest, commitment fee, LC
Fee, Reimbursement Obligation, Acceptance Reimbursement Obligation or any
other amount owing under any Loan Document;
(c) breach by any Obligated Party of any of the terms or provisions of
Section 6.1, Section 6.2, Section 6.3, Section 6.8, Section 6.11 through
Section 6.29, and Section 6.31 through Section 6.35;
CREDIT AGREEMENT Page 90
(d) breach by any Obligated Party (other than a breach which
constitutes a Default under another clause of this Article 7) of any of the
terms or provisions of this Agreement or any other Loan Document which is
not remedied within fifteen days after written notice to the Parent from
the Agent;
(e) any event of default shall occur with respect to any Material
Indebtedness of any Obligated Party (beyond the applicable grace period
with respect thereto, if any), or any other default or event shall occur or
condition exist, the effect of which default, event, or condition is to
cause, or to permit the holder(s) of any Material Indebtedness or the
lender(s) under any Material Indebtedness Agreement to cause, such Material
Indebtedness to become due prior to its stated maturity or any commitment
to lend under any such agreement to be terminated prior to its stated
expiration date, or any Material Indebtedness of any Obligated Party shall
be declared to be due and payable or required to be prepaid or repurchased
(other than by a regularly scheduled payment) prior to the stated maturity
thereof;
(f) any Obligated Party shall (i) have an order for relief or any
other order or decree of court entered with respect to it under the
Bankruptcy Code, the BIA, the Companies Creditors Arrangement Act (Canada),
the Insolvency Act, or any similar laws of any applicable jurisdiction,
(ii) make an assignment for the benefit of creditors, (iii) apply for,
seek, consent to, or acquiesce in, the appointment of a receiver,
custodian, trustee, examiner, liquidator, monitor, administrator, or
similar official for it or any Substantial Portion of its Property, (iv)
institute any proceeding (including by petition, proposal, notice of intent
to file a proposal, or similar action) seeking an order for relief under
the Bankruptcy Code, the BIA, the Companies Creditors Arrangement Act
(Canada), the Insolvency Act, or any similar laws of any applicable
jurisdiction, or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
consolidation, adjustment, or composition of it or its debts under any law
relating to bankruptcy, insolvency, or reorganization or relief of debtors
or fail to file an answer or other pleading denying the material
allegations of any such proceeding filed against it, (v) take any action to
authorize or effect any of the foregoing actions set forth in this clause
(f), (vi) not pay, or admit in writing its inability to pay, its debts
generally as they become due, or (vii) fail to contest in good faith any
appointment or proceeding described in clause (g) following;
(g) a receiver, trustee, examiner, liquidator, monitor, administrator,
or similar official shall be appointed for any Obligated Party or any
Substantial Portion of its Property (excluding any such appointment
specified in Section 7.1(f)(iv)) and such appointment continues
undischarged for a period of 60 consecutive days, or a warrant of
attachment or execution, writ of seizure or seizure and sale, or similar
process shall be issued against any Substantial Portion of its Property;
(h) a proceeding described in Section 7.1(f)(iv) shall be instituted
by any third party against any Obligated Party and such proceeding
continues undismissed or unstayed for a period of 60 consecutive days;
CREDIT AGREEMENT Page 91
(i) any court, government, or governmental agency shall seize or
otherwise appropriate, or take custody or control of, all or any portion of
the Property of any Obligated Party which, when taken together with all
other Property of the Obligated Parties so seized, appropriated, or taken
custody or control of, during the twelve month period ending with the month
in which any such action occurs, constitutes a Substantial Portion;
(j) any Obligated Party shall fail within 30 days to pay, bond, or
otherwise discharge one or more (i) judgments or orders for the payment of
money which is $5,000,000 or more (or the equivalent thereof in currencies
other than U.S. dollars) in excess of the amount of insurance coverage
therefor or (ii) nonmonetary judgments or orders which, individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect, which judgments, in any such case, are not stayed on appeal or
otherwise being appropriately contested in good faith by proper proceedings
diligently pursued;
(k) (i) the occurrence of any Reportable Event which is reasonably
expected to cause the Parent or any member of the Controlled Group to incur
any liability, indebtedness, or obligations in excess of $1,000,000, or
(ii) the occurrence of any Termination Event;
(l) any Change in Control shall occur;
(m) the Parent or any other member of the Controlled Group shall have
been notified by the sponsor of a Multi-employer Plan that it has incurred
withdrawal liability to such Multi-employer Plan in an amount which, when
aggregated with all other amounts required to be paid to Multi-employer
Plans by the Parent or any other member of the Controlled Group as
withdrawal liability (determined as of the date of such notification),
exceeds $1,000,000;
(n) the Parent or any other member of the Controlled Group shall have
been notified by the sponsor of a Multi-employer Plan that such
Multi-employer Plan is in reorganization or is being terminated, within the
meaning of Title IV of ERISA, if as a result of such reorganization or
termination the aggregate annual contributions of the Parent and the other
members of the Controlled Group (taken as a whole) to all Multi-employer
Plans which are then in reorganization or being terminated have been or
will be increased over the amounts contributed to such Multi-employer Plans
for the respective plan years of each such Multi-employer Plan immediately
preceding the plan year in which the reorganization or termination occurs
by an amount exceeding $1,000,000;
(o) any Obligated Party shall (i) be the subject of any proceeding or
investigation pertaining to the release by such Obligated Party or any
other Person of any toxic or hazardous waste or substance into the
environment or (ii) violate any Environmental Law, which, in the case of an
event described in clause (i) or clause (ii) preceding, could reasonably be
expected to have a Material Adverse Effect;
CREDIT AGREEMENT Page 92
(p) any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Guaranty Agreement, any Guarantor
shall fail to comply with any of the terms or provisions of any Guaranty
Agreement to which it is a party, any Guarantor shall deny that it has any
further liability under any Guaranty Agreement to which it is a party or
shall give notice to such effect, any Security Agreement or Real Estate
Mortgage shall for any reason fail to create a valid and perfected first
priority (other than Permitted Liens which are specifically permitted to
have priority over the Liens of the Agent pursuant to this Agreement) Lien
in any Facility Collateral purported to be covered thereby, or any Loan
Document shall fail to remain in full force or effect or any action shall
be taken to discontinue or to assert the invalidity or unenforceability of
any Loan Document;
(q) there shall occur any "Mandatory Redemption Event" under the
Convertible Subordinated Debentures or the Securities Purchase Agreement
entered into in connection therewith or (ii) the Parent makes or the
holders of the Convertible Subordinated Debentures receive without
immediately paying over to the Agent, for the benefit of the Lenders, any
payment in respect of the Convertible Subordinated Debentures prohibited by
the subordination provisions thereof or any such holder commences an
"Enforcement Action" prohibited by the Convertible Subordinated Debentures;
(r) the occurrence of any Material Adverse Effect; or
(s) the representation and warranty set forth in Section 5.15 shall at
any time not be true and correct.
ARTICLE 8
REMEDIES; WAIVERS AND AMENDMENTS
Section 8.1 Remedies; Acceleration; Facility LC/Acceptance Collateral
Account.
(a) If any Default occurs hereunder, the Required Lenders (or the
Agent with the consent of the Required Lenders) may (i) reduce the
Aggregate Revolving Commitment or the Accounts Advance Rate or the
Inventory Advance Rate, (ii) terminate or suspend the obligations of the
Lenders to make Loans hereunder, the obligation of the LC Issuer to issue
Facility LCs, and the obligation of the Acceptance Lender to accept
Acceptances, (iii) declare the Obligations to be due and payable, whereupon
the Obligations shall become immediately due and payable, without
presentment, demand, protest, or notice of any kind, all of which the
Borrowers hereby expressly waive, (iv) terminate the Aggregate Revolving
Commitment, (v) upon notice to the Parent and in addition to the continuing
right to demand payment of all amounts payable under this Agreement, make
demand on the Parent to pay, and the Parent will, forthwith upon such
demand and without any further notice or act, pay to the Agent an amount in
immediately available funds, which funds shall be held in the Facility
LC/Acceptance Collateral Account, equal to 110% of the difference of (y)
the sum of the amount of LC Obligations, plus the amount of Acceptance
Obligations at such time, less
CREDIT AGREEMENT Page 93
(z) the amount on deposit in the Facility LC/Acceptance Collateral
Account at such time which is free and clear of all rights and claims of
third parties and has not been applied against the Obligations (such
difference, the "Collateral Shortfall Amount"), which funds shall be
deposited in the Facility LC/Acceptance Collateral Account, and (vi) pursue
their other rights and remedies under the Loan Documents and applicable
law.
(b) Upon the occurrence of any Default described in Section 7.1(f) or
Section 7.1(g), the Aggregate Commitment shall automatically and
immediately terminate, the obligations of the Lenders to make Loans
hereunder, the obligation of the LC Issuer to issue Facility LCs, and the
obligation of the Acceptance Lender to accept Acceptances shall
automatically and immediately terminate and the Obligations shall
immediately become due and payable without any election or action on the
part of the Agent, the LC Issuer, the Acceptance Lender, or any Lender, and
the Parent will be and become thereby unconditionally obligated, without
any further notice, act, or demand, to pay to the Agent the Collateral
Shortfall Amount.
(c) During the existence of any Default: (i) the Agent shall have, for
the benefit of the Agent and the Lenders, in addition to all other rights
of the Agent and the Lenders, the rights and remedies of a secured party
under the Loan Documents and the UCC; (ii) the Agent may, at any time, take
possession of the Facility Collateral and keep it on any Obligated Party's
premises, at no cost to the Agent or any Lender, or remove any part of it
to such other place or places as the Agent may desire, or any Obligated
Party shall, upon the Agent's demand, at such Obligated Party's cost,
assemble the Facility Collateral and make it available to the Agent at a
place reasonably convenient to the Agent; and (iii) the Agent may sell and
deliver any Facility Collateral at public or private sales, for cash, upon
credit, or otherwise, at such prices and upon such terms as the Agent deems
advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Facility Collateral by an
announcement at the time and place of sale or of such postponed or
adjourned sale without giving a new notice of sale. Without in any way
requiring notice to be given in the following manner, each Obligated Party
agrees that any notice by the Agent of sale, disposition, or other intended
action hereunder or in connection herewith, whether required by the UCC or
otherwise, shall constitute reasonable notice to the Obligated Parties if
such notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at
least ten days prior to such action to the Obligated Parties' address
specified pursuant to Section 13.1. If any Facility Collateral is sold on
terms other than payment in full at the time of sale, no credit shall be
given against the Obligations until the Agent or the Lenders receive
payment, and if the buyer defaults in payment, the Agent may resell the
Facility Collateral without further notice to any Obligated Party. In the
event the Agent seeks to take possession of all or any portion of the
Facility Collateral by judicial process, each Obligated Party irrevocably
waives: (A) the posting of any bond, surety, or security with respect
thereto which might otherwise be required; (B) any demand for possession
prior to the commencement of any suit or action to recover the Facility
Collateral; and (C) any requirement that the Agent retain possession and
not dispose of any Facility Collateral until after trial or final judgment.
Each Obligated Party agrees that the Agent has no obligation to preserve
rights to the Facility Collateral or marshal any Facility Collateral for
the benefit of any
CREDIT AGREEMENT Page 94
Person. The Agent is hereby granted a license or other right to use,
without charge, each Obligated Party's labels, patents, copyrights, name,
trade secrets, trade names, trademarks, and advertising matter, or any
similar property, in completing production of, advertising, or selling any
Facility Collateral, and each Obligated Party's rights under all licenses
and all franchise agreements shall inure to the Agent's benefit for such
purpose. The proceeds of sale shall be applied first to all expenses of
sale, including reasonable attorneys fees, and then to the Obligations. The
Agent will return any excess to the Obligated Parties and the Obligated
Parties shall remain liable for any deficiency.
(d) If at any time while any Default is continuing, the Agent
determines that the Collateral Shortfall Amount at such time is greater
than zero, the Agent may make demand on the Parent to pay, and the Parent
will, forthwith upon such demand and without any further notice or act, pay
to the Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC/Acceptance Collateral Account. The Parent
hereby pledges, assigns, and grants to the Agent, on behalf of and for the
benefit of the Agent, the Lenders, the LC Issuer, and the Acceptance
Lender, a security interest in all of the Parent's right, title, and
interest in and to all funds which may from time to time be on deposit in
the Facility LC/Acceptance Collateral Account to secure the prompt and
complete payment and performance of the Obligations. Nothing in this
Section 8.1(d) shall either obligate the Agent to require the Parent to
deposit any funds in the Facility LC/Acceptance Collateral Account or limit
the right of the Agent to release any funds held in the Facility
LC/Acceptance Collateral Account other than as required by this Section
8.1.
(e) The Agent may at any time or from time to time after funds are
deposited in the Facility LC/Acceptance Collateral Account, apply such
funds to the payment of the Obligations and any other amounts as shall from
time to time have become due and payable by the Borrowers to the Agent, the
Lenders, the LC Issuer, or the Acceptance Lender under the Loan Documents.
(f) At any time while any Default is continuing, neither the Parent
nor any Person claiming on behalf of or through the Parent shall have any
right to withdraw any of the funds held in the Facility LC/Acceptance
Collateral Account. After all of the Obligations have been indefeasibly
paid in full and the Aggregate Commitment has been terminated, any funds
remaining in the Facility LC/Acceptance Collateral Account shall be
returned by the Agent to the Parent or paid to whomever may be legally
entitled thereto at such time.
(g) If a Default occurs and is continuing, each Obligated Party hereby
waives all rights to notice and hearing prior to the exercise by the Agent
or the U.K. Security Trustee of their respective rights to repossess the
Facility Collateral without judicial process or to replevy, attach, or levy
upon the Facility Collateral without notice or hearing.
CREDIT AGREEMENT Page 95
Section 8.2 Amendments.
(a) Except as specified in clause (b) following, subject to the
provisions of this Section 8.2, the Required Lenders (or the Agent with the
consent in writing of the Required Lenders) and the Obligated Parties may
enter into agreements supplemental hereto (including amendments of this
Agreement and waivers of any provision of this Agreement or any Default)
for the purpose of adding or modifying any provisions to the Loan Documents
or changing in any manner the rights of the Lenders or the Obligated
Parties hereunder or waiving any Default hereunder.
(b) No supplemental agreement entered into pursuant to clause (a)
preceding shall, without the consent of all of the Lenders:
(i) extend the final maturity of any Loan, extend the expiry date
of any Facility LC to a date after the Facility Termination Date,
forgive all or any portion of the principal amount thereof or any
Reimbursement Obligation related thereto, or forgive all or any
portion of the principal amount of any Acceptance or any Acceptance
Reimbursement Obligation related thereto;
(ii) reduce the rate (except as provided in Section 2.5(b)) or
change the time of payment of principal, interest, fees, or other
amounts payable to the Lenders pursuant to any Loan Document;
(iii) extend the Facility Termination Date;
(iv) increase the amount contained in clause (a) of the
definition of Canadian Borrowing Base and U.K. Borrowing Base,
increase the amount of the Aggregate Revolving Commitment (other than
pursuant to Section 2.1(b)), increase the amount of the Term Loan B,
increase the maximum amount of Non-Ratable Loans in Section 2.1(h), or
increase the maximum amount of Collateral Protection Advances in
Section 2.1(i);
(v) amend the definition of Required Lenders;
(vi) amend Section 2.16;
(vii) increase the Accounts Advance Rate or the Inventory Advance
Amount;
(viii) permit any Obligated Party to assign its rights under this
Agreement;
(ix) amend this Section 8.2 or any provision of any Loan Document
requiring consent or approval of all of the Lenders;
(x) release any Borrower or Guarantor, other than in connection
with any permitted merger or consolidation under Section 6.17; or
CREDIT AGREEMENT Page 96
(xi) release any Facility Collateral, other than as provided in
Section 10.16.
No amendment of any provision of this Agreement relating to the Agent
shall be effective without the written consent of the Agent. Unless
requiring consent of all of the Lenders, no amendment of any provision of
this Agreement relating to the Term Loans B or the Lenders holding any
portion of the Term Loans B (with respect to such Lenders in such capacity)
shall be effective without the written consent of Lenders holding at least
a majority of the Term Loans B. No increase of a Lender's Revolving
Commitment may be effected without the consent of the affected Lender. No
reduction of the amount of principal, interest, or fees due to any Lender
may be effected without the consent of such Lender. No amendment of any
provision of this Agreement relating to the NonRatable Loans shall be
effective without the written consent of Bank One. No amendment of any
provision relating to the LC Issuer shall be effective without the written
consent of the LC Issuer. No amendment of any provision relating to the
Acceptance Lender shall be effective without the written consent of the
Acceptance Lender. The Agent may (i) waive payment of the fee required
under Section 12.3(a) and (ii) amend the amount of the Revolving
Commitments specified on the signature pages of each Lender hereto to
reflect increases in the Revolving Commitment of any Lender pursuant to
Section 2.1(b) and assignments entered into pursuant to Section 12.3, each
without obtaining the consent of any other party to this Agreement.
Notwithstanding the foregoing, the Agent may, in its sole discretion
request that Bank One make Non-Ratable Loans in accordance with Section
2.1(h) and make Collateral Protection Advances in accordance with Section
2.1(i).
(c) If any fees are paid to the Lenders as consideration for
amendments, waivers, or consents with respect to this Agreement, at the
Agent's election, such fees may be paid only to those Lenders that agree to
such amendments, waivers, or consents within the time specified for
submission thereof.
Section 8.3 Preservation of Rights. No delay or omission of the Agent, the
U.K. Security Trustee, the Lenders, the LC Issuer, or the Acceptance Lender to
exercise any right under the Loan Documents shall impair such right or be
construed to be a waiver of any Default or an acquiescence therein, and the
making of a Credit Extension notwithstanding the existence of a Default or the
inability of the Borrowers to satisfy the conditions precedent to such Credit
Extension shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment, or other variation
of the terms, conditions, or provisions of the Loan Documents whatsoever shall
be valid unless in writing signed by the Lenders required pursuant to Section
8.2, and then only to the extent in such writing specifically set forth. All
remedies contained in the Loan Documents or by law afforded shall be cumulative
and all shall be available to the Agent, the U.K. Security Trustee, the Lenders,
the LC Issuer, and the Acceptance Lender until the Obligations have been paid in
full.
CREDIT AGREEMENT Page 97
ARTICLE 9
GENERAL PROVISIONS
Section 9.1 Survival of Representations. All representations and warranties
of the Obligated Parties contained in this Agreement and the other Loan
Documents shall survive execution, delivery, and acceptance of the Loan
Documents and the making of the Credit Extensions herein contemplated.
Section 9.2 Governmental Regulation. Anything contained in this Agreement
to the contrary notwithstanding, neither the LC Issuer, the Acceptance Lender,
nor any Lender shall be obligated to extend credit to the Borrowers in violation
of any limitation or prohibition provided by any applicable statute or
regulation.
Section 9.3 Headings. Section headings in the Loan Documents are for
convenience of reference only and shall not govern the interpretation of any of
the provisions of the Loan Documents.
Section 9.4 Entire Agreement. The Loan Documents embody the entire
agreement and understanding among the Obligated Parties, the Agent, the U.K.
Security Trustee, the LC Issuer, the Acceptance Lender, and the Lenders and
supersede all prior agreements and understandings among the Borrowers, the
Agent, the LC Issuer, the Acceptance Lender, and the Lenders relating to the
subject matter thereof other than those contained in the fee letter described in
Section 10.13 which shall survive and remain in full force and effect during the
term of this Agreement.
Section 9.5 Several Obligations; Benefits of this Agreement. The respective
obligations of the Lenders hereunder are several and not joint and no Lender
shall be the partner, coventurer, or agent of any other Lender (except to the
extent to which the Agent is authorized to act as administrative agent for the
Lenders hereunder). The failure of any Lender to perform any of its obligations
hereunder shall not relieve any other Lender from any of its obligations
hereunder. This Agreement shall not be construed so as to confer any right or
benefit upon any Person other than the parties to this Agreement and their
respective successors and assigns, provided, however, that the parties hereto
expressly agree that the Arranger shall enjoy the benefits of the provisions of
Section 9.6, Section 9.10, and Section 10.11 to the extent specifically set
forth therein and shall have the right to enforce such provisions on its own
behalf and in its own name to the same extent as if it were a party to this
Agreement.
Section 9.6 Expenses; Indemnification.
(a) The Borrowers shall reimburse the Agent and the Arranger for any
costs, internal charges, and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent, which
attorneys may be employees of the Agent) paid or incurred by the Agent or
the Arranger in connection with the preparation, negotiation, execution,
delivery, syndication, distribution (including, without limitation, via the
internet), review, amendment, modification, and administration of the Loan
Documents. The Borrowers also agree to reimburse the Agent, the Arranger,
the LC
CREDIT AGREEMENT Page 98
Issuer, and the Acceptance Lender for any costs, internal charges, and
out-of-pocket expenses (including reasonable attorneys' fees and time
charges of attorneys for the Agent, the Arranger, the LC Issuer, and the
Acceptance Lender, which attorneys may be employees of the Agent, the
Arranger, the LC Issuer, or the Acceptance Lender) paid or incurred by the
Agent, the Arranger, the LC Issuer, or the Acceptance Lender in connection
with the collection and enforcement of the Loan Documents. Expenses being
reimbursed by the Borrowers pursuant to this Section include, without
limitation, (i) the cost and expense of obtaining appraisals of receivables
and inventory, provided that, if no Default is in existence, the Borrowers'
obligation to reimburse the Agent for the cost of any such appraisal shall
be limited to two such appraisals in any Fiscal Year, (ii) costs and
expenses (including reasonable attorney fees and expenses of the Agent) for
any amendment, supplement, waiver, consent, or subsequent closing in
connection with the Loan Documents and the transactions contemplated
thereby, (iii) reasonable costs and expenses of lien and title searches,
title insurance, and environmental audits, (iv) taxes, fees, and other
charges for recording each Real Estate Mortgage, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Liens in favor of the Agent created under the Loan Documents
(including costs and expenses paid or incurred by the Agent in connection
with the consummation of this Agreement), (v) sums paid or incurred by the
Agent to pay any amount or take any action required of any Obligated Party
under the Loan Documents that such Obligated Party fails to pay or take;
(vi) costs of inspections and verifications of the Facility Collateral,
including travel, lodging, and meals for field examinations and inspections
of the Facility Collateral and the Obligated Parties' operations by the
Agent, plus the Agent's then customary charge for field examinations and
audits and the preparation of reports thereof (such charge is currently
$750 per day (or portion thereof) for each Person retained or employed by
the Agent with respect to each field examination or audit) to the extent
incurred (A) during the existence of any Default or Unmatured Default or
(b) at any other time up to three times during any calendar year, and (vii)
costs and expenses of forwarding loan proceeds, collecting checks and other
items of payment, and establishing and maintaining deposit accounts and
lockboxes required under the Loan Documents, and costs and expenses of
preserving and protecting the Facility Collateral.
(b) The Borrowers hereby further agree to indemnify the Agent, the
Arranger, the LC Issuer, the Acceptance Lender, each Lender, their
respective Affiliates, and each of their directors, officers, agents, and
employees against all losses, claims, damages, penalties, judgments,
liabilities, and expenses (including, without limitation, all expenses of
litigation or preparation therefor whether or not the Agent, the Arranger,
the LC Issuer, the Acceptance Lender, any Lender or any Affiliate is a
party thereto) which any of them may pay or incur arising out of or
relating to this Agreement, the other Loan Documents, the transactions
contemplated hereby, or the direct or indirect application or proposed
application of the proceeds of any Credit Extension hereunder except to the
extent that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the party seeking indemnification.
The obligations of the Borrowers under this Section 9.6 shall survive the
termination of this Agreement.
CREDIT AGREEMENT Page 99
Section 9.7 Numbers of Documents. All statements, notices, closing
documents, and requests hereunder required to be provided to the Agent shall be
provided to the Agent with sufficient counterparts so that the Agent may deliver
one to each of the Lenders.
Section 9.8 Accounting. Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with GAAP, except that any
calculation or determination which is to be made on a consolidated basis shall
be made for the Parent and all its Subsidiaries, including those Subsidiaries,
if any, which are unconsolidated on the Parent's audited financial statements.
Section 9.9 Severability of Provisions. Any provision in any Loan Document
that is held to be inoperative, unenforceable, or invalid in any jurisdiction
shall, as to that jurisdiction, be inoperative, unenforceable, or invalid
without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.
Section 9.10 Nonliability of the Lenders. The relationship between each
Obligated Party on the one hand and the Lenders, the LC Issuer, the Acceptance
Lender, the Arranger, the Agent, and the U.K. Security Trustee on the other hand
shall be solely that of debtor and creditor. Neither the Agent, the Arranger,
the U.K. Security Trustee, the LC Issuer, the Acceptance Lender, nor any Lender
shall have any fiduciary responsibilities to any Obligated Party. Neither the
Agent, the Arranger, the U.K. Security Trustee, the LC Issuer, the Acceptance
Lender, nor any Lender undertakes any responsibility to any Obligated Party to
review or inform such Obligated Party of any matter in connection with any phase
of the other Obligated Parties' business or operations. Each Obligated Party
agrees that neither the Agent, the Arranger, the U.K. Security Trustee, the LC
Issuer, the Acceptance Lender, nor any Lender shall have liability to such
Obligated Party (whether sounding in tort, contract, or otherwise) for losses
suffered by such Obligated Party in connection with, arising out of, or in any
way related to, the transactions contemplated and the relationship established
by the Loan Documents, or any act, omission, or event occurring in connection
therewith, unless it is determined in a final non-appealable judgment by a court
of competent jurisdiction that such losses resulted from the gross negligence or
willful misconduct of the party from which recovery is sought. Neither the
Agent, the Arranger, the U.K. Security Trustee, the LC Issuer, the Acceptance
Lender, nor any Lender shall have any liability with respect to, and each
Obligated Party hereby waives, releases, and agrees not to ▇▇▇ for, any special,
indirect, consequential, or punitive damages suffered by such Obligated Party in
connection with, arising out of, or in any way related to the Loan Documents or
the transactions contemplated thereby.
Section 9.11 Confidentiality. Each Lender agrees to hold any confidential
information which it may receive from the Obligated Parties pursuant to this
Agreement in confidence, except for disclosure (a) to such Lender's Affiliates
and to other Lenders and their respective Affiliates, (b) to legal counsel,
accountants, and other professional advisors to such Lender or to a Transferee,
(c) to regulatory officials, (d) to any Person as requested pursuant to or as
required by law, regulation, or legal process, (e) to any Person in connection
with any legal proceeding to which such Lender is a party, (f) to such Lender's
direct or indirect contractual counter-parties in swap agreements or to legal
counsel, accountants, and other professional advisors to such counter-parties,
and (g) permitted by Section 12.4.
CREDIT AGREEMENT Page 100
Section 9.12 Nonreliance. Each Lender hereby represents that it is not
relying on or looking to any Margin Stock for the repayment of the Credit
Extensions provided for herein.
Section 9.13 Disclosure. Each Obligated Party and each Lender hereby
acknowledges and agrees that Bank One and/or its Affiliates from time to time
may hold investments in, make other loans to or have other relationships with
any of the Obligated Parties and their respective Affiliates.
Section 9.14 Designated Senior Debt. The Obligations under this Agreement
and the other Loan Documents, and all rights, remedies, powers, and privileges
of the Agent and each of the Lenders hereunder and thereunder, constitute
"Designated Senior Debt" for all purposes of the Convertible Subordinated
Debentures.
ARTICLE 10
THE AGENT
Section 10.1 Appointment; Nature of Relationship. Bank One, NA is hereby
appointed by each of the Lenders as its contractual representative (herein
referred to as the "Agent") hereunder and under each other Loan Document, and
each of the Lenders irrevocably authorizes the Agent to act as the contractual
representative of such Lender with the rights and duties expressly set forth
herein and in the other Loan Documents. The Agent agrees to act as such
contractual representative upon the express conditions contained in this Article
10. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement or any other Loan
Document and that the Agent is merely acting as the contractual representative
of the Lenders with only those duties as are expressly set forth in this
Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (a) does not hereby assume any fiduciary
duties to any of the Lenders, (b) is a "representative" of the Lenders within
the meaning of the term "secured party" as defined in the UCC, and (iii) is
acting as an independent contractor, the rights and duties of which are limited
to those expressly set forth in this Agreement and the other Loan Documents.
Each of the Lenders hereby agrees to assert no claim against the Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Lender hereby waives.
Section 10.2 Powers. The Agent shall have and may exercise such powers
under the Loan Documents as are specifically delegated to the Agent by the terms
of each thereof, together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Lenders, or any obligation to the
Lenders to take any action thereunder except any action specifically provided by
the Loan Documents to be taken by the Agent.
Section 10.3 General Immunity. No Agent-Related Party shall be liable to
any Obligated Party or any Lender for any action taken or omitted to be taken by
an Agent-Related Party hereunder or under any other Loan Document or in
connection herewith or therewith except to the extent such action or inaction is
determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of
such Agent-Related Party.
CREDIT AGREEMENT Page 101
Section 10.4 No Responsibility for Loans, Recitals, etc. No Agent-Related
Party shall be responsible for or have any duty to ascertain, inquire into, or
verify (a) any statement, warranty, or representation made in connection with
any Loan Document or any borrowing hereunder, (b) the performance or observance
of any of the covenants or agreements of any obligor under any Loan Document,
including, without limitation, any agreement by an obligor to furnish
information directly to each Lender, (c) the satisfaction of any condition
specified in Article 4, (d) the existence or possible existence of any Default
or Unmatured Default, (e) the validity, enforceability, effectiveness,
sufficiency, or genuineness of any Loan Document or any other instrument or
writing furnished in connection therewith, (f) the value, sufficiency, creation,
perfection, or priority of any Lien in any Facility Collateral, or (g) the
financial condition of the Obligated Parties or of any Affiliate of any
Obligated Party. The Agent shall have no duty to disclose to the Lenders
information that is not required to be furnished by the Obligated Parties to the
Agent at such time, but is voluntarily furnished by the Obligated Parties to the
Agent (either in its capacity as the Agent or in its individual capacity).
Section 10.5 Action on Instructions of the Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Loan Document in accordance with written instructions signed by
the Required Lenders, and such instructions and any action taken or failure to
act pursuant thereto shall be binding on all of the Lenders. The Lenders hereby
acknowledge that the Agent shall be under no duty to take any discretionary
action permitted to be taken by it pursuant to the provisions of this Agreement
or any other Loan Document unless it shall be requested in writing to do so by
the Required Lenders. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Loan Document unless it shall
first be indemnified to its satisfaction by the Lenders pro rata against any and
all liability, cost, and expense that it may incur by reason of taking or
continuing to take any such action.
Section 10.6 Employment of Agents and Counsel. The Agent may execute any of
its duties as the Agent hereunder and under any other Loan Document by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders, except as to money or securities received by the Agent or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by the Agent with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between the
Agent and the Lenders and all matters pertaining to the Agent's duties hereunder
and under any other Loan Document.
Section 10.7 Reliance on Documents; Counsel. The Agent shall be entitled to
rely upon any Note, notice, consent, certificate, affidavit, letter, telegram,
statement, paper, or document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent, which counsel
may be employees of the Agent.
Section 10.8 The Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to their
respective Revolving Commitment (or, if the Revolving Commitments have been
terminated, in proportion to their Revolving Commitment immediately prior to
such termination) (a) for any amounts not reimbursed by the Borrowers for which
the Agent is entitled to reimbursement by the Borrowers
CREDIT AGREEMENT Page 102
under the Loan Documents, (b) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration, and enforcement of the Loan Documents (including, without
limitation, for any expenses incurred by the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders,
but excluding any such expenses arising as a result of the Agent's gross
negligence or willful misconduct), and (c) for any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of the Loan Documents or any other document delivered in connection therewith or
the transactions contemplated thereby (including, without limitation, for any
such amounts incurred by or asserted against the Agent in connection with any
dispute between the Agent and any Lender or between two or more of the Lenders,
but excluding any such expenses arising as a result of the Agent's gross
negligence or willful misconduct), or the enforcement of any of the terms of the
Loan Documents or of any such other documents, provided that (y) no Lender shall
be liable for any of the foregoing to the extent any of the foregoing is found
in a final non-appealable judgment by a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of the Agent and (z)
any indemnification required pursuant to Section 3.5(g) shall, notwithstanding
the provisions of this Section 10.8, be paid by the relevant Lender in
accordance with the provisions thereof. The obligations of the Lenders under
this Section 10.8 shall survive payment of the Obligations and termination of
this Agreement.
Section 10.9 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender (excluding
Bank One) or the Borrowers referring to this Agreement describing such Default
or Unmatured Default and stating that such notice is a "notice of default" and
the Agent shall have had a reasonable opportunity to confirm the existence of
any such described Default or Unmatured Default. In the event that the Agent
receives such a notice, the Agent shall give prompt notice thereof to the
Lenders. Subject to Section 8.2(b), the Agent shall take such action with
respect to such Default or Unmatured Default as may be requested by the Required
Lenders; provided, however, that unless and until the Agent has received any
such request, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Unmatured
Default as it shall deem advisable.
Section 10.10 Rights as a Lender. In its capacity as a Lender, the Agent
shall have the same rights and powers hereunder and under any other Loan
Document with respect to its Revolving Commitment and its Loans as any Lender
and may exercise the same as though it were not the Agent, and the term "Lender"
or "Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity, or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with any Obligated
Party or any of its Affiliates.
Section 10.11 Lender Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent, the Arranger, or any other
Lender and based on the financial statements prepared by the Obligated Parties
and such other documents and
CREDIT AGREEMENT Page 103
information as such Lender has deemed appropriate, made its own credit analysis
and decision to enter into this Agreement and the other Loan Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent, the Arranger, or any other Lender and based on such documents and
information as such Lender shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this Agreement and
the other Loan Documents.
Section 10.12 Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrowers, such resignation to be
effective upon the appointment of a successor Agent or, if no successor Agent
has been appointed, 45 days after the retiring Agent gives notice of its
intention to resign. The Agent may be removed at any time with or without cause
by written notice received by the Agent from the Required Lenders, such removal
to be effective on the date specified by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint, on
behalf of the Borrowers and the Lenders, a successor Agent. If no successor
Agent shall have been so appointed by the Required Lenders within 30 days after
the resigning Agent's giving notice of its intention to resign, then the
resigning Agent may appoint, on behalf of the Borrowers and the Lenders, a
successor Agent. Notwithstanding the previous sentence, the Agent may at any
time without the consent of the Borrowers or any Lender, appoint any of its
Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent hereunder and the Borrowers
shall make all payments in respect of the Obligations to the applicable Lender
and for all other purposes shall deal directly with the Lenders. No successor
Agent shall be deemed to be appointed hereunder until such successor Agent has
accepted the appointment. Any such successor Agent shall be a commercial bank
having capital and retained earnings of at least $100,000,000. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges, and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article 10 shall continue in effect for the
benefit of such resigning or removed Agent in respect of any actions taken or
omitted to be taken by it while it was acting as the Agent hereunder and under
the other Loan Documents. In the event that there is a successor to the Agent by
merger, or the Agent assigns its duties and obligations to an Affiliate pursuant
to this Section 10.12, then the term "Prime Rate" as used in this Agreement
shall mean the prime rate, base rate, or other analogous rate of the new Agent.
Section 10.13 Agent Fees. The U.S. Borrowers agree to pay to the Agent, for
its account, the fees specified in that certain letter agreement dated
concurrently herewith, or as otherwise agreed from time to time.
Section 10.14 Delegation to Affiliates. The Borrowers and the Lenders agree
that the Agent may delegate any of its duties under this Agreement to any of its
Affiliates. Any such Affiliate (and such Affiliate's directors, officers,
agents, and employees) which performs duties in connection with this Agreement
shall be entitled to the same benefits of the indemnification,
CREDIT AGREEMENT Page 104
waiver and other protective provisions to which the Agent is entitled under
Article 9 and Article 10.
Section 10.15 Execution of Loan Documents.
(a) The Lenders hereby empower and authorize the Agent, on behalf of
the Agent and the Lenders, to execute and deliver to the Obligated Parties
the Loan Documents and all related agreements, certificates, documents, or
instruments as shall be necessary or appropriate to effect the purposes of
the Loan Documents. Each Lender agrees that any action taken by the Agent
or the Required Lenders in accordance with the terms of this Agreement or
the other Loan Documents, and the exercise by the Agent or the Required
Lenders of their respective powers set forth therein or herein, together
with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders. The Lenders acknowledge that all of the
Obligations hereunder constitute one debt, secured pari passu by all of the
Facility Collateral.
(b) Without limiting the generality of clause (a) preceding, for the
purposes of creating a solidarite active in accordance with Article 1541 of
the Civil Code of Quebec, between each Lender, taken individually, on the
one hand, and the Agent, on the other hand, each Obligated Party, each such
Lender, and the Agent acknowledge and agree that such Lender and the Agent
are hereby conferred the legal status of solidary creditors of each
Obligated Party in respect of all Obligations, present and future, owed by
each Obligated Party to each such Lender and the Agent (collectively, the
"Solidary Claim"). Each Obligated Party which is not a signatory of this
Agreement but is or may become a signatory to any other Loan Documents
shall be deemed to have accepted the provisions contained in this clause
(b) by its execution of such other Loan Documents. Accordingly, but subject
(for the avoidance of doubt) to Article 1542 of the Civil Code of Quebec,
the Obligated Parties are irrevocably bound towards the Agent and each
Lender in respect of the entire Solidary Claim of the Agent and such
Lender. As a result of the foregoing, the parties hereto acknowledge that
the Agent and each Lender shall at all times have a valid and effective
right of action for the entire Solidary Claim of the Agent and such Lender
and the right to give full acquittances for it. Accordingly, without
limiting the generality of the foregoing, the Agent, as solidary creditor
with each Lender, shall at all times have a valid and effective right of
action in respect of all Obligations, present and future, owed by each
Obligated Party to the Agent and Lenders or any of them and the right to
give a full acquittance for same. The parties further agree and acknowledge
that the Liens created by the Security Agreements and any other Loan
Document on the Facility Collateral shall be granted to the Agent, for its
own benefit and for the benefit of the Lenders.
Section 10.16 Facility Collateral Matters.
(a) The Lenders hereby irrevocably authorize the Agent, at its option
and in its sole discretion, to release or subordinate (as applicable) any
Liens granted to the Agent by the Obligated Parties on any Facility
Collateral (i) upon the termination of the Aggregate Commitment and payment
and satisfaction in full of all Obligations, (ii) constituting Property
being sold or disposed of if the Obligated Party disposing of
CREDIT AGREEMENT Page 105
such Property certifies to the Agent that the sale or disposition is
made in compliance with the terms of this Agreement (and the Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting Property in which no Obligated Party has at any time during
the term of this Agreement owned any interest, (iv) constituting property
leased to an Obligated Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement, (v) owned by or
leased to an Obligated Party which is subject to a purchase money security
interest or which is the subject of a Capitalized Lease, or (vi) as
required to effect any sale or other disposition of such Facility
Collateral in connection with any exercise of remedies of the Agent and the
Lenders pursuant to Section 8.1. Upon request by the Agent or the Obligated
Parties at any time, the Lenders will confirm in writing the Agent's
authority to release any Liens upon particular types or items of Facility
Collateral pursuant to this Section 10.16. Except as provided in the
preceding sentence, the Agent will not release any Liens on Facility
Collateral without the prior written authorization of the Required Lenders;
provided that the Agent may, in its discretion, during any calendar year
without the prior authorization of the Required Lenders, release its Liens
on Facility Collateral valued in the aggregate not in excess of $5,000,000.
Upon request by the Agent or the Obligated Parties at any time, the Lenders
will confirm in writing the Agent's authority to release its Liens upon
particular types or items of Facility Collateral pursuant to this Section
10.16.
(b) Upon receipt by the Agent of any authorization required pursuant
to Section 10.16(a) from the Required Lenders of the Agent's authority to
release any Liens upon particular types or items of Facility Collateral,
and upon at least five Business Days prior written request by the Obligated
Parties, the Agent shall (and is hereby irrevocably authorized by the
Lenders to) execute such documents as may be necessary to evidence the
release of its Liens upon such Facility Collateral; provided that (i) the
Agent shall not be required to execute any such document on terms which, in
the Agent's opinion, would expose the 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 any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Obligated Parties in
respect of) all interests retained by the Obligated Parties, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Facility Collateral exists or is owned by the
Obligated Parties or is cared for, protected, or insured or has been
encumbered, or that the Liens granted to the Agent therein 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 the Agent pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Facility
Collateral, or any act, omission, or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Facility Collateral in its capacity as one of
the Lenders and that the Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing.
CREDIT AGREEMENT Page 106
Section 10.17 Agency for Perfection. Each Lender hereby appoints each other
Lender as its agent for the purpose of perfecting Liens, for the benefit of the
Agent and the Lenders, in assets which, in accordance with Article 9 of the UCC,
the PPSA, the Civil Code, or any other applicable law can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Facility Collateral, such Lender shall notify the Agent thereof, and,
promptly upon the Agent's request therefor shall deliver such Facility
Collateral to the Agent or otherwise deal with such Facility Collateral in
accordance with the Agent's instructions.
Section 10.18 Reports. Each Lender hereby agrees as follows: (a) such
Lender is deemed to have requested that the Agent furnish such Lender, promptly
after it becomes available, a copy of each Report prepared by or on behalf of
the Agent; (b) such Lender expressly agrees and acknowledges that neither Bank
One nor the Agent (i) makes any representation or warranty as to the accuracy of
any Report or (ii) shall be liable for any information contained in any Report;
(c) such Lender expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent, Bank One, or any other
party performing any audit or examination will inspect only specific information
regarding the Obligated Parties and will rely significantly upon the Obligated
Parties' books and records, as well as on representations of the Obligated
Parties' personnel; (d) such Lender agrees to keep all Reports confidential and
strictly for its internal use, and not to distribute any Report other than as
otherwise permitted pursuant to this Agreement; and (e) without limiting the
generality of any other indemnification provision contained in this Agreement,
such Lender agrees (i) to hold the Agent and any such other Person preparing a
Report harmless from any action the indemnifying Lender may take or conclusion
the indemnifying Lender may reach or draw from any Report in connection with any
Credit Extensions that the indemnifying Lender has made or may make to the
Obligated Parties, or the indemnifying Lender's participation in, or the
indemnifying Lender's purchase of, any Obligations and (ii) to pay and protect,
and indemnify, defend, and hold the Agent and any such other Person preparing a
Report harmless from and against, the claims, actions, proceedings, damages,
costs, expenses, and other amounts (including reasonable attorney fees) incurred
by the Agent and any such other Person preparing a Report as the direct or
indirect result of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
Section 10.19 Co-Agents. None of the Co-agents shall have any right, power,
obligation, liability, responsibility, or duty under any Loan Document other
than those applicable to all Lenders. Without limiting the foregoing, none of
the Co-agents shall have or be deemed to have a fiduciary relationship with any
other Lender. Each Lender hereby makes the same acknowledgments with respect to
each of the Co-agents as it makes with respect to the Agent in Section 10.11.
Section 10.20 Agent as U.K. Security Trustee.
(a) In this Agreement, any rights and remedies exercisable by, any
documents to be delivered to, or any other indemnities or obligations in
favor of the Agent shall be, as the case may be, exercisable by, delivered
to, or be indemnities or other obligations in favor of the Agent (or any
other Person acting in such capacity) in its capacity as U.K. Security
Trustee to the extent that the rights, remedies, deliveries, indemnities,
or other
CREDIT AGREEMENT Page 107
obligations relate to the U.K. Security Documents or the security
thereby created. Any obligations of the Agent in this Agreement shall be
obligations of the Agent (or any other Person acting in such capacity) in
its capacity as U.K. Security Trustee to the extent that the obligations
relate to the U.K. Security Documents or the security thereby created.
Additionally, in its capacity as U.K. Security Trustee, the Agent (or any
other Person acting in such capacity) shall have (i) all the rights,
remedies, and benefits in favor of the Agent contained in the provisions of
this Article 10, (ii) all the powers of an absolute owner of the security
constituted by the U.K. Security Documents, and (iii) all the rights,
remedies, and powers granted to it and be subject to all the obligations
and duties owed by it under the U.K. Security Documents.
(b) Each Lender and the Agent hereby appoint the U.K. Security Trustee
to act as its trustee under and in relation to the U.K. Security Documents
to which the U.K. Security Trustee is a party pursuant to this Agreement
and to hold the Trust Property as trustee for the Agent and the Lenders on
the trust and other terms contained in the U.K. Security Documents to which
the U.K. Security Trustee is a party and the Agent and each Lender hereby
irrevocably authorize the U.K. Security Trustee to exercise such rights,
remedies, powers, and discretions as are specifically delegated to the U.K.
Security Trustee by the terms of the U.K. Security Documents to which the
U.K. Security Trustee is party together with all such rights, remedies,
powers, and discretions as are reasonably incidental thereto.
(c) Any reference in this Agreement to Liens stated to be in favor of
the Agent (either expressed in those words or as "Agent's Liens" or
otherwise) shall be construed so as to include a reference to Liens granted
in favor of the U.K. Security Trustee.
(d) The Lenders agree that at any time that the U.K. Security Trustee
shall be a Person other than the Agent, such other Person shall have the
rights, remedies, benefits, and powers granted to the Agent in its capacity
as U.K. Security Trustee in this Agreement.
ARTICLE 11
SET-OFF; RATABLE PAYMENTS
Section 11.1 Set-off. In addition to, and without limitation of, any rights
of the Lenders under applicable law, if any Obligated Party becomes insolvent,
however evidenced, or during the existence of any Default, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender or any Affiliate of any Lender to or for the credit or account of any
Obligated Party may be set-off and applied toward the payment of the respective
Obligations of such Obligated Party owing to such Lender (subject to the
provisions of Section 11.2), whether or not the Obligations, or any part
thereof, shall then be due. Each Lender agrees promptly to notify the Obligated
Parties and the Agent after any such set-off and application made by such
Lender; provided that the failure to give such notice shall not affect the
validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO
LENDER
CREDIT AGREEMENT Page 108
SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST ANY
DEPOSIT ACCOUNT OR PROPERTY OF ANY OBLIGATED PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUIRED LENDERS.
Section 11.2 Ratable Payments. If any Lender, whether by set-off or
otherwise, has payment made to it upon its Outstanding Credit Exposure (other
than payments received pursuant to Section 3.1, Section 3.2, Section 3.4, or
Section 3.5) in a greater proportion than that received by any other Lender, the
Lender receiving such payment agrees, promptly upon demand, to purchase in cash
a portion of the Aggregate Outstanding Credit Exposure held by the other Lenders
so that after such purchase each Lender will hold its Pro Rata Share of the
Aggregate Outstanding Credit Exposure; provided that all such purchases shall be
purchases of the Revolving Loans and Reimbursement Obligations unless the
Revolving Loans and Reimbursement Obligations have been paid in full and then
such purchases shall be of the Term Loans B. If any Lender, whether in
connection with set-off or amounts which might be subject to set-off or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to set-off, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their respective Pro Rata
Shares of the Aggregate Outstanding Credit Exposure, subject to the limitation
set forth in the proviso in the preceding sentence. In case any such payment is
disturbed by legal process, or otherwise, appropriate further adjustments shall
be made.
ARTICLE 12
BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS
Section 12.1 Successors and Assigns. The terms and provisions of the Loan
Documents shall be binding upon and inure to the benefit of the Obligated
Parties and the Lenders and their respective successors and assigns permitted
hereby, except that (a) the Obligated Parties shall not have the right to assign
their rights or obligations under the Loan Documents without the prior written
consent of each Lender, (b) any assignment by any Lender must be made in
compliance with Section 12.3, and (c) any transfer by a participation must be
made in compliance with Section 12.2. Any attempted assignment or transfer by
any party not made in compliance with this Section 12.1 shall be null and void,
unless such attempted assignment or transfer is treated as a participation made
pursuant to Section 12.2. The parties to this Agreement acknowledge that clause
(b) preceding relates only to absolute assignments and this Section 12.1 does
not prohibit assignments creating security interests, including, without
limitation, (y) any pledge or assignment by any Lender of all or any portion of
its rights under this Agreement and any Note to a Federal Reserve Bank or (z) in
the case of a Lender which is a Fund, any pledge or assignment of all or any
portion of its rights under this Agreement and any Note to its trustee in
support of its obligations to its trustee; provided, however, that no such
pledge or assignment creating a security interest shall release the transferor
Lender from its obligations hereunder unless and until the parties thereto have
complied with the provisions of Section 12.3. The Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof for all
purposes hereof unless and until such Person complies with Section 12.3;
provided, however, that the Agent may in its discretion (but shall not be
required
CREDIT AGREEMENT Page 109
to) follow instructions from the Person which made any Loan or which holds any
Note to direct payments relating to such Loan or Note to another Person. Any
assignee of the rights to any Loan or any Note agrees by acceptance of such
assignment to be bound by all the terms and provisions of the Loan Documents.
Any request, authority, or consent of any Person, who at the time of making such
request or giving such authority or consent is the owner of the rights to any
Loan (whether or not a Note has been issued in evidence thereof), shall be
conclusive and binding on any subsequent holder or assignee of the rights to
such Loan.
Section 12.2 Participations.
(a) Permitted Participants; Effect. Any Lender may at any time sell to
one or more banks or other entities ("Participants") participating
interests in any Outstanding Credit Exposure of such Lender, any Note held
by such Lender, any Revolving Commitment of such Lender or any other
interest of such Lender under the Loan Documents. In the event of any such
sale by a Lender of participating interests to a Participant, such Lender's
obligations under the Loan Documents shall remain unchanged, such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, such Lender shall remain the owner of its
Outstanding Credit Exposure and the holder of any Note issued to it in
evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrowers under this Agreement shall be determined as if
such Lender had not sold such participating interests, and the Borrowers
and the Agent shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations under the Loan
Documents.
(b) Voting Rights. Each Lender shall retain the sole right to approve,
without the consent of any Participant, any amendment, modification, or
waiver of any provision of the Loan Documents other than any amendment,
modification, or waiver with respect to any Credit Extension or Revolving
Commitment in which such Participant has an interest which would require
consent of all of the Lenders pursuant to the terms of Section 8.2 or of
any other Loan Document.
(c) Benefit of Certain Provisions. The Obligated Parties agree that
each Participant shall be deemed to have the right of set-off provided in
Section 11.1 in respect of its participating interest in amounts owing
under the Loan Documents to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under the Loan
Documents, provided that each Lender shall retain the right of set-off
provided in Section 11.1 with respect to the amount of participating
interests sold to each Participant. The Lenders agree to share with each
Participant, and each Participant, by exercising the right of set-off
provided in Section 11.1, agrees to share with each Lender, any amount
received pursuant to the exercise of its right of set-off, such amounts to
be shared in accordance with Section 11.2 as if each Participant were a
Lender. The Borrowers further agree that each Participant shall be entitled
to the benefits of Section 3.1, Section 3.2, Section 3.4, and Section 3.5
to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 12.3, provided that (i) a Participant shall
not be entitled to receive any greater payment under Section 3.1, Section
3.2, or Section 3.5 than the Lender who sold the participating interest
CREDIT AGREEMENT Page 110
to such Participant would have received had it retained such interest
for its own account, unless the sale of such interest to such Participant
is made with the prior written consent of the Borrowers and (ii) any
Participant not incorporated under the laws of the U.S. or any state
thereof agrees to comply with the provisions of Section 3.5 to the same
extent as if it were a Lender.
Section 12.3 Assignments.
(a) Permitted Assignments. Any Lender may, in the ordinary course of
its business and in accordance with applicable law, at any time assign to
one or more banks or other entities ("Purchasers") all or any part of its
rights and obligations under the Loan Documents. Such assignment shall be
substantially in the form of Exhibit F or in such other form as may be
agreed to by the parties thereto (an "Assignment Agreement). Each such
assignment with respect to a Purchaser which is not a Lender or an
Affiliate thereof shall (unless each of the Borrowers and the Agent
otherwise consents) be in an amount not less than the lesser of (i)
$5,000,000 each for the Revolving Commitment and the Term Loans B or (ii)
the remaining amount of the assigning Lender's Revolving Commitment
(calculated as at the date of such assignment) and Term Loans B or
outstanding Loans (if the Revolving Commitment has been terminated).
(b) Consents. The consent of the Borrowers and the Agent shall be
required prior to an assignment becoming effective with respect to a
Purchaser which is not a Lender, an Affiliate thereof, or an Approved Fund;
provided that during the existence of a Default or an Unmatured Default,
the consent of the Borrowers shall not be required. Any consent required
pursuant to this Section 12.3(b) shall not be unreasonably withheld or
delayed.
(c) Effect; Effective Date. Upon (i) delivery to the Agent of an
Assignment Agreement, together with any consents required by Section
12.3(b) and (ii) payment of a $3,500 fee to the Agent for processing such
assignment, such assignment shall become effective on the effective date
specified in such Assignment Agreement. Such Assignment Agreement shall
contain a representation by the Purchaser to the effect that none of the
consideration used to make the purchase of the Revolving Commitment and
Outstanding Credit Exposure under such Assignment Agreement are "plan
assets" as defined under ERISA and that the rights and interests of the
Purchaser in and under the Loan Documents will not be "plan assets" under
ERISA. On and after the effective date of such assignment, such Purchaser
shall for all purposes be a Lender party to this Agreement and any other
Loan Document executed by or on behalf of the Lenders and shall have all
the rights and obligations of a Lender under the Loan Documents, to the
same extent as if such Purchaser were an original party hereto, and no
further consent or action by the Borrowers, the Lenders, the Agent, the LC
Issuer, or the Acceptance Lender shall be required to release the
transferor Lender with respect to the percentage of the Aggregate Revolving
Commitment and Outstanding Credit Exposure assigned to such Purchaser. Upon
the consummation of any assignment to a Purchaser pursuant to this Section
12.3, the transferor Lender, the Agent, and the Borrowers shall, if the
transferor Lender or the Purchaser desires that its Loans be evidenced by
Notes, make appropriate arrangements so that new Notes or, as appropriate,
replacement Notes are issued to such
CREDIT AGREEMENT Page 111
transferor Lender and new Notes or, as appropriate, replacement Notes,
are issued to such Purchaser, in each case in principal amounts reflecting
their respective Revolving Commitments and Term Loans B, as adjusted
pursuant to such assignment.
(d) Register. The Agent, acting solely for this purpose as a
contractual agent of the Borrowers, shall maintain at its offices in
Chicago, Illinois a copy of each Assignment Agreement delivered to it and a
register for the recordation of the names and addresses of the Lenders, and
the Revolving Commitments of, and principal amounts of the Loans owing to,
each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive, and the
Obligated Parties, the Agent, the LC Issuer, the Acceptance Lender, and the
Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Obligated Parties, the LC Issuer, the
Acceptance Lender, and any Lender, at any reasonable time and from time to
time upon reasonable prior notice.
Section 12.4 Dissemination of Information. The Obligated Parties authorize
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the credit-worthiness of the Obligated Parties,
including, without limitation, any information contained in any Reports;
provided that each Transferee and prospective Transferee agrees to be bound by
Section 9.11.
Section 12.5 Tax Treatment. If any interest in any Loan Document is
transferred to any Transferee which is not incorporated under the laws of the
U.S. or any state thereof, the transferor Lender shall cause such Transferee,
concurrently with the effectiveness of such transfer, to comply with the
provisions of Section 3.5(d).
ARTICLE 13
NOTICES
Section 13.1 Notices. Except as otherwise permitted by Section 2.7 with
respect to borrowing notices, all notices, requests, and other communications to
any party hereunder shall be in writing (including electronic transmission,
facsimile transmission, or similar writing) and shall be given to such party:
(a) in the case of each Obligated Party, at the address or facsimile number of
the Parent set forth on its signature page hereto, (b) in the case of the Agent
and the U.K. Security Trustee, at its address or facsimile number set forth on
its signature page hereto, (c) in the case of any Lender, at its address or
facsimile number set forth below its signature hereto or in any Assignment
Agreement delivered in connection with a Purchaser becoming a Lender hereunder,
or (d) in the case of any party, at such other address or facsimile number as
such party may hereafter specify for the purpose by notice to the Agent and the
Obligated Parties in accordance with the provisions of this Section 13.1. Each
such notice, request, or other communication shall be effective (x) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (y) if given by mail, 72
hours after such communication is deposited in the U.S. mail with first class
postage
CREDIT AGREEMENT Page 112
prepaid, addressed as aforesaid, or (z) if given by any other means, when
delivered (or, in the case of electronic transmission, received) at the address
specified in this Section; provided that notices to the Agent under Article 2
shall not be effective until received.
Section 13.2 Change of Address. Any Obligated Party, the Agent, and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.
ARTICLE 14
COUNTERPARTS
Section 14.1 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart and a telecopy of any such executed signature page shall be valid as
an original. This Agreement shall be effective when it has been executed by the
Obligated Parties, the Agent and the Lenders and each party has notified the
Agent by facsimile transmission or telephone that it has taken such action.
ARTICLE 15
CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
Section 15.1 Choice of Law. THE LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING
A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN ACCORDANCE
WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF
THE STATE OF CALIFORNIA, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
Section 15.2 Consent to Jurisdiction. EACH OBLIGATED PARTY HEREBY
IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR
ILLINOIS STATE COURT SITTING IN CHICAGO, ILLINOIS IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND EACH OBLIGATED PARTY HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY
BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION
IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION, OR
PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM.
NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT, THE LC ISSUER, THE ACCEPTANCE
LENDER, OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY OBLIGATED PARTY IN THE
COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY OBLIGATED PARTY
AGAINST THE AGENT, THE LC ISSUER, THE ACCEPTANCE LENDER, OR ANY LENDER OR ANY
AFFILIATE OF THE AGENT, THE LC ISSUER, THE ACCEPTANCE LENDER, OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR
CREDIT AGREEMENT Page 113
CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CHICAGO,
ILLINOIS.
Section 15.3 Waiver of Jury Trial. EACH OBLIGATED PARTY, THE AGENT, THE LC
ISSUER, THE ACCEPTANCE LENDER, AND EACH LENDER HEREBY WAIVES TRIAL BY JURY IN
ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT, OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO,
OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
ARTICLE 16
RELATIONSHIP OF THE OBLIGATED PARTIES
Section 16.1 Joint and Several Liability.
(a) All Loans to the U.K. Borrowers, upon funding, shall be deemed to
be jointly funded to and received by the U.K. Borrowers. Each U.K. Borrower
jointly and severally agrees to pay, and shall be jointly and severally
liable under this Agreement for, all U.K. Obligations, regardless of the
manner or amount in which proceeds of any Loans are used, allocated,
shared, or disbursed by or among the U.K. Borrowers themselves, or the
manner in which the Agent and/or any Lender accounts for such Loans or
other extensions of credit on its books and records. Each U.K. Borrower
shall be liable for all amounts due to the Agent or any Lender under this
Agreement which constitute U.K. Obligations, regardless of which U.K.
Borrower actually receives Loans or other extensions of credit hereunder or
the amount of such Loans and extensions of credit received or the manner in
which the Agent or such Lender accounts for such Loans or other extensions
of credit on its books and records. Each U.K. Borrower's obligations with
respect to Loans and other extensions of credit made to it, and such U.K.
Borrower's obligations arising as a result of the joint and several
liability of such U.K. Borrower hereunder, with respect to Loans made to
the other U.K. Borrowers hereunder, shall be separate and distinct
obligations, but all such U.K. Obligations shall be primary obligations of
such U.K. Borrower. The U.K. Borrowers acknowledge and expressly agree with
the Agent and each Lender that the joint and several liability of each U.K.
Borrower is required solely as a condition to, and is given solely as
inducement for and in consideration of, credit or accommodations extended
or to be extended under the Loan Documents to any or all of the other U.K.
Borrowers and is not required or given as a condition of extensions of
credit to such U.K. Borrower. Each U.K. Borrower's obligations under this
Agreement and as an obligor under a U.K. Guaranty Agreement shall be
separate and distinct obligations. Each U.K. Borrower's obligations under
this Agreement shall, to the fullest extent permitted by law, be
unconditional irrespective of (i) the validity or enforceability,
avoidance, or subordination of the U.K. Obligations of any other U.K.
Borrower or of any promissory note or other document evidencing all or any
part of the U.K. Obligations of any other U.K. Borrower, (ii) the absence
of any attempt to collect the U.K. Obligations from any other U.K.
Borrower, any U.K. Guarantor, or any other security therefor, or the
absence of any other action to enforce the same, (iii) the waiver, consent,
extension, forbearance, or granting of any indulgence by
CREDIT AGREEMENT Page 114
the Agent or any Lender with respect to any provision of any
instrument evidencing the U.K. Obligations of any other U.K. Borrower or
U.K. Guarantor, or any part thereof, or any other agreement now or
hereafter executed by any other U.K. Borrower or U.K. Guarantor and
delivered to the Agent or any Lender, (iv) the failure by the Agent or any
Lender to take any steps to perfect and maintain its security interest in,
or to preserve its rights to, any security or collateral for the U.K.
Obligations of any other U.K. Borrower or U.K. Guarantor, (v) the
disallowance of all or any portion of the Agent's or any Lender's claim(s)
for the repayment of the U.K. Obligations of any other U.K. Borrower under
any provision of applicable law, or (vi) any other circumstances which
might constitute a legal or equitable discharge or defense of a U.K.
Guarantor or of any other U.K. Borrower. With respect to any U.K.
Borrower's Obligations arising as a result of the joint and several
liability of the U.K. Borrowers hereunder with respect to Loans or other
extensions of credit made to any of the other U.K. Borrowers hereunder,
such U.K. Borrower waives, until the U.K. Obligations shall have been paid
in full and this Agreement shall have been terminated, any right to enforce
any right of subrogation or any remedy which the Agent or any Lender now
has or may hereafter have against any other U.K. Borrower, any endorser or
any U.K. Guarantor of all or any part of the U.K. Obligations, and any
benefit of, and any right to participate in, any security or collateral
given to the Agent or any Lender to secure payment of the U.K. Obligations
or any other liability of any U.K. Borrower to the Agent or any Lender.
Upon the occurrence of any Default, the Agent may proceed directly and at
once, without notice, against any U.K. Borrower to collect and recover the
full amount, or any portion of the U.K. Obligations, without first
proceeding against any other U.K. Borrower or any other Person, or against
any security or collateral for the U.K. Obligations. Each U.K. Borrower
consents and agrees that the Agent shall be under no obligation to marshal
any assets in favor of any U.K. Borrower or against or in payment of any or
all of the U.K. Obligations.
(b) All Loans to the U.S. Borrowers, upon funding, shall be deemed to
be jointly funded to and received by the U.S. Borrowers. Each U.S. Borrower
jointly and severally agrees to pay, and shall be jointly and severally
liable under this Agreement for, all U.S. Obligations, regardless of the
manner or amount in which proceeds of any Loans are used, allocated,
shared, or disbursed by or among the U.S. Borrowers themselves, or the
manner in which the Agent and/or any Lender accounts for such Loans or
other extensions of credit on its books and records. Each U.S. Borrower
shall be liable for all amounts due to the Agent or any Lender under this
Agreement which constitute U.S. Obligations, regardless of which U.S.
Borrower actually receives Loans or other extensions of credit hereunder or
the amount of such Loans and extensions of credit received or the manner in
which the Agent or such Lender accounts for such Loans or other extensions
of credit on its books and records. Each U.S. Borrower's obligations with
respect to Loans and other extensions of credit made to it, and such U.S.
Borrower's obligations arising as a result of the joint and several
liability of such U.S. Borrower hereunder, with respect to Loans made to
the other U.S. Borrowers hereunder, shall be separate and distinct
obligations, but all such U.S. Obligations shall be primary obligations of
such U.S. Borrower. The U.S. Borrowers acknowledge and expressly agree with
the Agent and each Lender that the joint and several liability of each U.S.
Borrower is required solely as a condition to, and is given solely as
inducement for and in consideration of, credit or accommodations extended
or to be extended under the Loan
CREDIT AGREEMENT Page 115
Documents to any or all of the other U.S. Borrowers and is not
required or given as a condition of extensions of credit to such U.S.
Borrower. Each U.S. Borrower's obligations under this Agreement and as an
obligor under a U.S. Guaranty Agreement shall be separate and distinct
obligations. Each U.S. Borrower's obligations under this Agreement shall,
to the fullest extent permitted by law, be unconditional irrespective of
(i) the validity or enforceability, avoidance, or subordination of the U.S.
Obligations of any other U.S. Borrower or of any promissory note or other
document evidencing all or any part of the U.S. Obligations of any other
U.S. Borrower, (ii) the absence of any attempt to collect the U.S.
Obligations from any other U.S. Borrower, any U.S. Guarantor, or any other
security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance, or granting of any
indulgence by the Agent or any Lender with respect to any provision of any
instrument evidencing the U.S. Obligations of any other U.S. Borrower or
U.S. Guarantor, or any part thereof, or any other agreement now or
hereafter executed by any other U.S. Borrower or U.S. Guarantor and
delivered to the Agent or any Lender, (iv) the failure by the Agent or any
Lender to take any steps to perfect and maintain its security interest in,
or to preserve its rights to, any security or collateral for the U.S.
Obligations of any other U.S. Borrower or U.S. Guarantor, (v) the Agent's
or any Lender's election, in any proceeding instituted under the Bankruptcy
Code, of the application of Section 1111(b)(2) of the Bankruptcy Code, (vi)
any borrowing or grant of a security interest by any other U.S. Borrower,
as debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of the Agent's or any Lender's claim(s)
for the repayment of the U.S. Obligations of any other U.S. Borrower under
Section 502 of the Bankruptcy Code, or (viii) any other circumstances which
might constitute a legal or equitable discharge or defense of a U.S.
Guarantor or of any other U.S. Borrower. With respect to any U.S.
Borrower's Obligations arising as a result of the joint and several
liability of the U.S. Borrowers hereunder with respect to Loans or other
extensions of credit made to any of the other U.S. Borrowers hereunder,
such U.S. Borrower waives, until the U.S. Obligations shall have been paid
in full and this Agreement shall have been terminated, any right to enforce
any right of subrogation or any remedy which the Agent or any Lender now
has or may hereafter have against any other U.S. Borrower, any endorser or
any U.S. Guarantor of all or any part of the U.S. Obligations, and any
benefit of, and any right to participate in, any security or collateral
given to the Agent or any Lender to secure payment of the U.S. Obligations
or any other liability of any U.S. Borrower to the Agent or any Lender.
Upon the occurrence of any Default, the Agent may proceed directly and at
once, without notice, against any U.S. Borrower to collect and recover the
full amount, or any portion of the U.S. Obligations, without first
proceeding against any other U.S. Borrower or any other Person, or against
any security or collateral for the U.S. Obligations. Each U.S. Borrower
consents and agrees that the Agent shall be under no obligation to marshal
any assets in favor of any U.S. Borrower or against or in payment of any or
all of the U.S. Obligations.
(c) Notwithstanding any other provision of this Agreement:
(i) the Canadian Obligated Parties shall not be required to make
any payment with respect to, or provide any Facility Collateral as
security for, the U.K. Obligations or the U.S. Obligations; and
CREDIT AGREEMENT Page 116
(ii) the U.K. Obligated Parties shall not be required to make any
payment with respect to, or provide any Facility Collateral as
security for, the Canadian Obligations or the U.S. Obligations.
Section 16.2 Contribution and Indemnification Among the U.S. Borrowers.
Each U.S. Borrower is obligated to repay the U.S. Obligations as joint and
several obligors under this Agreement. To the extent that any U.S. Borrower
shall, under this Agreement as a joint and several obligor, repay (directly or
by application of proceeds of Facility Collateral provided by such U.S.
Borrower) any of the U.S. Obligations constituting Loans made to another U.S.
Borrower hereunder or other U.S. Obligations incurred directly and primarily by
any other U.S. Borrower (an "Accommodation Payment"), then the U.S. Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other U.S. Borrowers in
an amount, for each of such other U.S. Borrowers, equal to its pro rata share of
such Accommodation Payment. For the purposes of this Section 16.2, each
nonpaying U.S. Borrower's "pro rata share" with respect to any Accommodation
Payment shall be determined as of the date on which such Accommodation Payment
was made by reference to the ratio of (a) such nonpaying U.S. Borrower's Maximum
Liability as of such date (without giving effect to any right to receive, or
obligation to make, any contribution hereunder) or, if such nonpaying U.S.
Borrower's Maximum Liability has not been determined, the aggregate amount of
all monies received (and not repaid or returned) by such nonpaying U.S. Borrower
from any Lenders or any other U.S. Borrower after the date hereof (whether by
loan, capital infusion, or by other means) to (b) the aggregate Maximum
Liability of all U.S. Borrowers (including such paying U.S. Borrower) as of such
date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for any U.S. Borrower, the aggregate amount of all monies received
(and not repaid or returned) by such U.S. Borrowers from any Lenders or any
other U.S. Borrower after the date hereof (whether by loan, capital infusion, or
by other means). Nothing in this Section 16.2 shall affect any U.S. Borrower's
joint and several liability for the entire amount of the U.S. Obligations (up to
such U. S. Borrower's Maximum Liability). As used herein, a U.S. Borrowers'
"Maximum Liability" is the highest amount payable as provided in this Section
16.2 that is valid and enforceable as is or would be determined in any action or
proceeding involving any state corporate law, or any state, federal, or foreign
bankruptcy, insolvency, reorganization, or other law effecting the rights of
creditors generally, up to but not equaling any amount that would otherwise be
held or determined to be avoidable, invalid, or unenforceable on the account of
the amount of such U.S. Borrowers' liability under this Section 16.2. The
provisions of this Section 16.2 are for the benefit of the Agent, the Lenders,
and the U.S. Borrowers and may be enforced by any one, or more, or all of them
in accordance with the terms hereof. All rights and claims of contribution,
indemnification, and reimbursement under this Section shall be subordinate in
right of payment to the prior payment in full of the U.S. Obligations. The
provisions of this Section shall, to the extent expressly inconsistent with any
provision in any Loan Document, supersede such inconsistent provision.
Section 16.3 Agency of the Parent for Each Other Obligated Party. Each of
the other Obligated Parties irrevocably appoints the Parent as its agent for all
purposes relevant to this Agreement, including the giving and receipt of notices
and execution and delivery of all documents, instruments, and certificates
contemplated herein (including, without limitation, execution and delivery to
the Agent of Borrowing Base Certificates and Borrowing Notices) and
CREDIT AGREEMENT Page 117
all modifications hereto. Any acknowledgment, consent, direction, certification,
or other action which might otherwise be valid or effective only if given or
taken by all or any of the Obligated Parties or acting singly, shall be valid
and effective if given or taken only by the Parent, whether or not any of the
other Obligated Parties joins therein, and the Agent and the Lenders shall have
no duty or obligation to make further inquiry with respect to the authority of
the Parent under this Section 16.3, provided that nothing in this Section 16.3
shall limit the effectiveness of, or the right of the Agent and the Lenders to
rely upon, any notice (including, without limitation, any Borrowing Notice),
document, instrument, certificate, acknowledgment, consent, direction,
certification, or other action delivered by any Obligated Party pursuant to this
Agreement.
Section 16.4 Additional Borrowers and Guarantors. Addition of any Person as
a Borrower or a Guarantor to this Agreement is subject to approval of the Agent
and the Required Lenders, and may be conditioned upon such requirements as they
may determine in their discretion, including, without limitation, (a) the
furnishing of such financial and other information as the Agent or any such
Lender may request, (b) approval by all appropriate approval authorities of the
Agent and each such Lender, and (c) execution and delivery by the Obligated
Parties, such Person, the Agent, and the Required Lenders of such agreements and
other documentation (including, without limitation, an amendment to this
Agreement or any other Loan Document), and the furnishing by such Person or any
of the Obligated Parties of such certificates, opinions, and other
documentation, as the Agent and any such Lender may request. Neither the Agent
nor any Lender shall have any obligation to approve any such Person for addition
as a party to this Agreement.
Section 16.5 Express Waivers By the Obligated Parties In Respect of Cross
Guaranties and Cross Collateralization. Each Obligated Party agrees as follows:
(a) Each Obligated Party hereby waives: (i) notice of acceptance of
this Agreement; (ii) notice of the making of any Loan or Advance, the
issuance of any Facility LC, or any other financial accommodations made or
extended under the Loan Documents or the creation or existence of any
Obligations; (iii) notice of the amount of the Obligations, subject,
however, to such Obligated Party's right to make inquiry of the Agent to
ascertain the amount of the Obligations at any reasonable time; (iv) notice
of any adverse change in the financial condition of any other Obligated
Party or of any other fact that might increase such Obligated Party's risk
with respect to such other Obligated Party under the Loan Documents; (v)
notice of presentment for payment, demand, protest, and notice thereof as
to any promissory notes or other instruments among the Loan Documents; and
(vii) all other notices (except if such notice is specifically required to
be given to such Obligated Party hereunder or under any of the other Loan
Documents to which such Obligated Party is a party) and demands to which
such Obligated Party might otherwise be entitled.
(b) Each Obligated Party hereby waives the right by statute or
otherwise to require the Agent or any Lender to institute suit against any
other Obligated Party or to exhaust any rights and remedies which the Agent
or any Lender has or may have against any other Obligated Party. Each
Obligated Party further waives any defense arising by reason of any
disability or other defense of any other Obligated Party (other than the
defense that the Obligations shall have been fully and finally performed
and indefeasibly
CREDIT AGREEMENT Page 118
paid) or by reason of the cessation from any cause whatsoever of the
liability of any such Obligated Party in respect thereof.
(c) Each Obligated Party hereby waives and agrees not to assert
against the Agent, any Lender, the LC Issuer, or the Acceptance Lender: (i)
any defense (legal or equitable), setoff, counterclaim, or claim which such
Obligated Party may now or at any time hereafter have against any other
Obligated Party or any other party liable under the Loan Documents; (ii)
any defense, setoff, counterclaim, or claim of any kind or nature available
to any other Obligated Party against the Agent, any Lender, the LC Issuer,
or the Acceptance Lender, arising directly or indirectly from the present
or future lack of perfection, sufficiency, validity, or enforceability of
the Obligations or any security therefor; (iii) any right or defense
arising by reason of any claim or defense based upon an election of
remedies by the Agent, any Lender, the LC Issuer, or the Acceptance Lender
under any applicable law; (iv) the benefit of any statute of limitations
affecting any other Obligated Party's liability hereunder.
(d) Each Obligated Party consents and agrees that, without notice to
or by such Obligated Party and without affecting or impairing the
obligations of such Obligated Party hereunder, the Agent may (subject to
any requirement for consent of any of the Lenders to the extent required by
this Agreement), by action or inaction: (i) compromise, settle, extend the
duration or the time for the payment of, or discharge the performance of,
or may refuse to or otherwise not enforce the Loan Documents; (ii) release
all or any one or more parties to any one or more of the Loan Documents or
grant other indulgences to any other Obligated Party in respect thereof;
(iii) amend or modify in any manner and at any time (or from time to time)
any of the Loan Documents; or (iv) release or substitute any Person liable
for payment of the Obligations, or enforce, exchange, release, or waive any
security for the Obligations or any guaranty of the Obligations.
(e) Each of the terms and provisions of Section 6.1 of each of the
Parent Guaranty Agreement and the U.S. Subsidiary Guaranty Agreement are
expressly incorporated herein by this reference, mutatis mutandis, and are
hereby made applicable to each Obligated Party under this Agreement with
the same force and effect as if fully set forth herein.
Each Obligated Party represents and warrants to the Agent and the Lenders that
such Obligated Party is currently informed of the financial condition of all
other Obligated Parties and all other circumstances which a diligent inquiry
would reveal and which bear upon the risk of nonpayment of the Obligations. Each
Obligated Party further represents and warrants that such Obligated Party has
read and understands the terms and conditions of the Loan Documents. Each
Obligated Party agrees that neither the Agent, any Lender, the LC Issuer, nor
the Acceptance Lender has any responsibility to inform any Obligated Party of
the financial condition of any other Obligated Party or of any other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.
CREDIT AGREEMENT Page 119
IN WITNESS WHEREOF, the Obligated Parties, the Lenders, the LC Issuer,
the Acceptance Lender, and the Agent have executed this Agreement as of the date
first above written.
OBLIGATED PARTIES:
K2 INC.
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President-Finance
Address for Notices to the Obligated Parties:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
HILTON CORPORATE CASUALS, LLC
By: K2 Inc., its sole Member and Manager
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President-Finance
SHAKESPEARE COMPANY, LLC
By: K2 Inc., its sole Member and Manager
By:___________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President-Finance
CREDIT AGREEMENT Page 120
SHAKESPEARE CONDUCTIVE FIBERS, LLC
By: K2 Inc., its sole Member and Manager
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President-Finance
K2 CORPORATION
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
K2 INTERNATIONAL, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
K2 BIKE INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
▇▇▇▇▇, INC.
By:
------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
CREDIT AGREEMENT Page 121
▇▇▇▇▇▇ SNOWBOARDS INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
PLANET EARTH SKATEBOARDS, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
RIDE, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
SHAKESPEARE INDUSTRIES, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
SITCA CORPORATION
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
CREDIT AGREEMENT Page 122
SMCA, INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
▇▇▇▇▇▇▇ INC.
By:
---------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
By:
---------------------------------
Name:
---------------------------------
Title:
---------------------------------
SHAKESPEARE COMPANY (UK)
LIMITED
By:
---------------------------------
Name:
---------------------------------
Director
By:
---------------------------------
Name:
---------------------------------
Director/Secretary
CREDIT AGREEMENT Page 123
SHAKESPEARE MONOFILAMENT UK
LIMITED
By:
----------------------------------
Name:
----------------------------------
Director
By:
----------------------------------
Name:
----------------------------------
Director/Secretary
SHAKESPEARE INTERNATIONAL
LIMITED
By:
----------------------------------
Name:
----------------------------------
Director
By:
----------------------------------
Name:
----------------------------------
Director/Secretary
CREDIT AGREEMENT Page 124
AGENT:
BANK ONE, NA,
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Address for Notices:
Credit Related Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Syndication Contact/Settlements/Etc.:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 125
LENDERS:
BANK ONE, NA
Commitments:
Revolving Commitment
$30,000,000 By:_________________________________
Term Loans B Name:_______________________________
$5,000,000 Title:______________________________
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 126
GENERAL ELECTRIC CAPITAL
CORPORATION,
as a Lender and as Syndication Agent
Commitments:
Revolving Commitment
$30,000,000 By:________________________________
Term Loans B ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
$5,000,000 Duly Authorized Signatory
Address for Notices:
GE Corporate Financial Services
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 127
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK,
as a Lender and as Documentation Agent
Commitments:
Revolving Commitment
$25,000,000 By:_____________________________
Term Loans B Name:___________________________
$5,000,000 Title:__________________________
Address for Notices:
▇.▇. ▇▇▇▇▇▇ Chase Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: K2 Account Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: K2 Account Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: K2 Account Officer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 128
LASALLE BANK NATIONAL ASSOCIATION,
as a Lender and as a Co-Agent
Commitments:
Revolving Commitment
$20,000,000 By:__________________________________
Term Loans B Name:________________________________
$5,000,000 Title:_______________________________
Address for Notices:
LaSalle Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 129
FLEET CAPITAL CORPORATION,
as a Lender and as a Co-Agent
Commitments:
Revolving Commitment
$25,000,000 By:____________________________
Term Loans B Name:__________________________
N/A Title:_________________________
Address for Notices:
Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ Shorts
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
Fleet Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 130
THE CIT GROUP/BUSINESS CREDIT, INC.
Commitments:
Revolving Commitment
$15,000,000 By:_______________________________
Term Loans B Name:_____________________________
N/A Title:____________________________
Address for Notices:
The CIT Group/Business Credit, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 131
PNC BANK, NATIONAL ASSOCIATION
Commitments:
Revolving Commitment
$15,000,000 By:______________________________
Term Loans B Name:____________________________
N/A Title:___________________________
Address for Notices:
PNC Bank National Association
▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 132
SUNTRUST BANK
Commitments:
Revolving Commitment
$15,000,000 By:_______________________________
Term Loans B Name:_____________________________
N/A Title:____________________________
Address for Notices:
SunTrust Bank
303 Peachtree Street, NE
3rd Floor, MC 1908
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
3rd Floor, MC 1908
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇
3rd Floor, MC 1908
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 133
FOOTHILL CAPITAL CORPORATION
Commitments:
Revolving Commitment
$15,000,000 By:_______________________________
Term Loans B Name:_____________________________
N/A Title:____________________________
Address for Notices:
Foothill Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Lalaine Pechayco
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Lalaine Pechayco
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page ▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, N.A.
Commitments:
Revolving Commitment
$10,000,000
Term Loans B By:___________________________________
N/A Name:_________________________________
Title:________________________________
Address for Notices:
Union Bank of California, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇., #▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 135
▇▇▇▇▇▇▇ ▇▇▇▇▇ BUSINESS FINANCIAL
SERVICES INC.
Commitments:
Revolving Commitment
$5,000,000 By:_______________________________
Term Loans B Name:_____________________________
N/A Title:____________________________
Address for Notices:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Business
Financial Services Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Addresses for Lending Installations:
Eurodollar Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ Friday-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Floating Rate Loan Lending Installation:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ Friday-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT Page 136
SCHEDULE 1.1A
Pricing Schedule
"Applicable Margin," "Applicable Unused Commitment Fee Rate,"
"Applicable LC Rate," and "Applicable Acceptance Rate," respectively in each
case means:
(a) on the Closing Date and continuing on each day thereafter through
and including the day preceding the Performance Pricing Commencement Date,
the applicable percentage determined under the table in clause (b)
following corresponding to Level III Status; and
(b) on and after the Performance Pricing Commencement Date, the
applicable percentage specified under the table in this clause (b)
corresponding to the applicable Status as set forth therein:
================== ============ ============ ============ =========== ==========
LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
STATUS STATUS STATUS STATUS STATUS
APPLICABLE MARGIN
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
------------------ ------------ ------------ ------------ ----------- ----------
Floating Rate 1.00% 0.75% 0.50% 0.25% 0.00%
Revolving Loans
------------------ ------------ ------------ ------------ ----------- ----------
Eurodollar Rate 3.00% 2.75% 2.50% 2.25% 2.00%
Revolving Loans
------------------ ------------ ------------ ------------ ----------- ----------
Floating Rate 2.50% 2.25% 2.00% 1.75% 1.50%
Term Loan B
------------------ ------------ ------------ ------------ ----------- ----------
Eurodollar Rate 4.50% 4.25% 4.00% 3.75% 3.50%
Term Loan B
================== ============ ============ ============ =========== ==========
================== ============ ============ ============ =========== ==========
UNUSED COMMITMENT LEVEL I LEVEL II LEVEL III LEVEL IV LEVEL V
FEE FACILITY LCS STATUS STATUS STATUS STATUS STATUS
ACCEPTANCES
(AS APPLICABLE) PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
================= ==============================================================
Applicable Unused 0.500% 0.375% 0.375% 0.375% 0.250%
Commitment Fee
Rate
------------------ ------------ ------------ ------------ ----------- ----------
Applicable LC 3.00% 2.75% 2.50% 2.25% 2.00%
Rate (standby)
------------------ ------------ ------------ ------------ ----------- ----------
Applicable LC 1.75% 1.50% 1.25% 1.00% 0.75%
Rate (commercial)
------------------ ------------ ------------ ------------ ----------- ----------
Applicable 3.00% 2.75% 2.50% 2.25% 2.00%
Acceptance Rate
================== ============ ============ ============ =========== ==========
For the purposes of this Schedule (in addition to the definitions prescribed by
the Agreement), the following terms have the following meanings, subject to the
final paragraph of this Schedule:
"Applicable LC Rate (standby)" means the Applicable LC Rate with
respect to a standby Facility LC.
SCHEDULE 1.1A TO CREDIT AGREEMENT Page 1
"Applicable LC Rate (commercial)" means the Applicable LC Rate with
respect to a commercial Facility LC.
"Financials" means the annual or quarterly financial statements of the
Parent and its Subsidiaries delivered pursuant to Section 6.1(a) or Section
6.1(b).
"Level I Status" exists at any date if, as of the last day of the
Fiscal Quarter of the Parent referred to in the most recent Financials, the
Consolidated Debt Service Coverage Ratio for the preceding four Fiscal Quarters
of the Parent is greater than 1.25 to 1.00 and less than or equal to 1.50 to
1.00.
"Level II Status" exists at any date if, as of the last day of the
Fiscal Quarter of the Parent referred to in the most recent Financials, the
Consolidated Debt Service Coverage Ratio for the preceding four Fiscal Quarters
of the Parent is greater than 1.51 to 1.00 and less than or equal to 2.00 to
1.00.
"Level III Status" exists at any date if, as of the last day of the
Fiscal Quarter of the Parent referred to in the most recent Financials, the
Consolidated Debt Service Coverage Ratio for the preceding four Fiscal Quarters
of the Parent is greater than 2.01 to 1.00 and less than or equal to 2.50 to
1.00.
"Level IV Status" exists at any date if, as of the last day of the
Fiscal Quarter of the Parent referred to in the most recent Financials, the
Consolidated Debt Service Coverage Ratio for the preceding four Fiscal Quarters
of the Parent is greater than 2.51 to 1.00 and less than or equal to 3.00 to
1.00.
"Level V Status" exists at any date if, as of the last day of the
Fiscal Quarter of the Parent referred to in the most recent Financials, the
Consolidated Debt Service Coverage Ratio for the preceding four Fiscal Quarters
of the Parent is greater than 3.01 to 1.00.
"Performance Pricing Commencement Date" means the date which is five
Business Days after delivery of the Parent's financial statements dated
September 30, 2003 pursuant to Section 6.1(b).
"Status" means either Level I Status, Level II Status, Level III
Status, Level IV Status, or Level V Status.
Subject to the terms of the Agreement, on and after the Performance Pricing
Commencement Date the Applicable Margin, Applicable Unused Commitment Fee Rate,
Applicable LC Rate (standby), Applicable LC Rate (commercial) and Applicable
Acceptance Rate, respectively, shall be determined in accordance with the table
set forth in clause (b) preceding based on the Status as reflected in the then
most recent Financials. Adjustments, if any, to the Applicable Margin,
Applicable Unused Commitment Fee Rate, Applicable LC Rate (standby), Applicable
LC Rate (commercial), or Applicable Acceptance Rate, respectively, as the case
may be, shall be effective five Business Days after the Agent has received the
applicable Financials. Concurrently with the
SCHEDULE 1.1A TO CREDIT AGREEMENT Page 2
Agent's receipt of such Financials the Borrowers shall deliver or cause to be
delivered to the Agent and the Lenders a certificate, signed by an Authorized
Officer of the Parent, setting forth in reasonable detail the basis for the
continuance of, or any change in, the Applicable Margin, Applicable Unused
Commitment Fee Rate, Applicable LC Rate (standby), Applicable LC Rate
(commercial), or Applicable Acceptance Rate, as the case may be. If the
Borrowers fail to deliver the Financials to the Agent at the time required
pursuant to Section 6.1, then the Applicable Margin, Applicable Unused
Commitment Fee Rate, Applicable LC Rate (standby), Applicable LC Rate
(commercial) and Applicable Acceptance Rate, respectively, shall, in each case,
automatically be the highest applicable percentage set forth in the table set
forth in clause (b) preceding until five Business Days after such Financials are
so delivered.
SCHEDULE 1.1A TO CREDIT AGREEMENT Page 3