Exhibit 10.1
This
Note Purchase Agreement is subject to the provisions of that
certain Intercreditor Agreement (as may be amended, modified,
supplemented, extended, renewed, restated or replaced from time to
time, the “Intercreditor Agreement”) dated as of
May 25, 2007 among, Laminar Direct Capital L.P., GMAC
Commercial Finance LLC, Rocky Brands, Inc. and certain subsidiaries
of Rocky Brands, Inc., and each party to this Note Purchase
Agreement, by its acceptance hereof, shall be bound by the
provisions of the Intercreditor Agreement.
NOTE PURCHASE AGREEMENT
by
and among
ROCKY BRANDS, INC.
AND THE OTHER LOAN PARTIES IDENTIFIED ON
THE SIGNATURE PAGES HERETO,
LAMINAR DIRECT CAPITAL L.P.,
AS COLLATERAL AGENT,
and
THE
PURCHASERS IDENTIFIED ON
ANNEX A HERETO
May 25, 2007
$40,000,000 Second Priority Senior Secured Notes Due
May 25, 2012
TABLE OF CONTENTS
| |
|
|
|
|
| |
|
Page |
|
ARTICLE 1
DEFINITIONS
|
|
|
1 |
|
|
|
|
|
|
|
|
1.1 Certain
Definitions
|
|
|
1 |
|
|
1.2 Accounting
Principles
|
|
|
16 |
|
|
1.3 Other
Definitional Provisions; Construction
|
|
|
16 |
|
|
|
|
|
|
|
|
ARTICLE 2 ISSUE
AND SALE OF THE SENIOR TERM NOTES
|
|
|
17 |
|
|
|
|
|
|
|
|
2.1 Senior Term
Notes
|
|
|
17 |
|
|
2.2 Sale and
Purchase
|
|
|
17 |
|
|
2.3 The
Closing
|
|
|
17 |
|
|
|
|
|
|
|
|
ARTICLE 3
REPAYMENT OF SENIOR TERM NOTES
|
|
|
17 |
|
|
|
|
|
|
|
|
3.1 Interest Rates
and Interest Payments
|
|
|
17 |
|
|
3.2 Repayment of
Senior Term Notes
|
|
|
18 |
|
|
3.3 Optional
Prepayment of Senior Term Notes
|
|
|
18 |
|
|
3.4 Notice of
Optional Prepayment
|
|
|
18 |
|
|
3.5 Mandatory
Prepayment
|
|
|
18 |
|
|
3.6 Equity
Payment
|
|
|
19 |
|
|
3.7 Home Office
Payment
|
|
|
20 |
|
|
3.8 Maximum Lawful
Rate
|
|
|
20 |
|
|
3.9 Taxes
|
|
|
21 |
|
|
3.10 Capital
Adequacy
|
|
|
21 |
|
|
3.11 Certain
Waivers
|
|
|
22 |
|
|
|
|
|
|
|
|
ARTICLE 4
CONDITIONS
|
|
|
22 |
|
|
|
|
|
|
|
|
4.1 Conditions to
the Purchase of the Senior Term Notes
|
|
|
22 |
|
|
4.2 Waiver
|
|
|
24 |
|
|
|
|
|
|
|
|
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
|
|
|
25 |
|
|
|
|
|
|
|
|
5.1
Representations and Warranties of the Loan Parties
|
|
|
25 |
|
|
5.2 Absolute
Reliance on the Representations and Warranties
|
|
|
33 |
|
|
|
|
|
|
|
|
ARTICLE 6 TRANSFER
OF SENIOR TERM NOTES
|
|
|
33 |
|
|
|
|
|
|
|
|
6.1 Restricted
Securities
|
|
|
33 |
|
|
6.2 Legends;
Purchasers’ Representations
|
|
|
34 |
|
|
6.3 Transfer of
Senior Term Notes
|
|
|
34 |
|
|
6.4 Replacement of
Lost Senior Term Notes
|
|
|
35 |
|
|
6.5 No Other
Representations Affected
|
|
|
35 |
|
|
|
|
|
|
|
|
ARTICLE 7
COVENANTS
|
|
|
35 |
|
|
|
|
|
|
|
| |
|
|
|
|
| |
|
Page |
|
7.1 Affirmative
Covenants
|
|
|
35 |
|
|
7.2 Negative
Covenants
|
|
|
39 |
|
|
7.3 Financial
Covenant
|
|
|
46 |
|
|
|
|
|
|
|
|
ARTICLE 8 EVENTS
OF DEFAULT
|
|
|
47 |
|
|
|
|
|
|
|
|
8.1 Events of
Default
|
|
|
47 |
|
|
8.2 Consequences
of Event of Default
|
|
|
49 |
|
|
|
|
|
|
|
|
ARTICLE 9
AGENT
|
|
|
49 |
|
|
|
|
|
|
|
|
9.1 Authorization
and Action
|
|
|
49 |
|
|
9.2 Delegation of
Duties
|
|
|
50 |
|
|
9.3 Exculpatory
Provisions
|
|
|
50 |
|
|
9.4 Reliance
|
|
|
50 |
|
|
9.5 Non-Reliance
on Agent and Other Purchasers
|
|
|
50 |
|
|
9.6 No Liability
of Purchasers
|
|
|
51 |
|
|
9.7 Agent in its
Individual Capacity
|
|
|
51 |
|
|
9.8 Successor
Agent
|
|
|
51 |
|
|
9.9 Consent of
Purchasers.
|
|
|
51 |
|
|
9.10 This
Article Not Applicable to the Loan Parties
|
|
|
51 |
|
|
|
|
|
|
|
|
ARTICLE 10
MISCELLANEOUS
|
|
|
52 |
|
|
|
|
|
|
|
|
10.1 Successors
and Assigns
|
|
|
52 |
|
|
10.2 Modifications
and Amendments
|
|
|
52 |
|
|
10.3 No Implied
Waivers; Cumulative Remedies; Writing Required
|
|
|
52 |
|
|
10.4 Reimbursement
of Expenses
|
|
|
52 |
|
|
10.5
Holidays
|
|
|
53 |
|
|
10.6 Notices
|
|
|
53 |
|
|
10.7
Survival
|
|
|
54 |
|
|
10.8 Governing
Law
|
|
|
54 |
|
|
10.9 Jurisdiction,
Consent to Service of Process.
|
|
|
54 |
|
|
10.10 Jury Trial
Waiver
|
|
|
55 |
|
|
10.11
Severability
|
|
|
55 |
|
|
10.12
Headings
|
|
|
55 |
|
|
10.13
Indemnity
|
|
|
55 |
|
|
10.14
Environmental Indemnity
|
|
|
56 |
|
|
10.15
Counterparts
|
|
|
56 |
|
|
10.16
Integration
|
|
|
57 |
|
|
10.17
Intercreditor
|
|
|
57 |
|
|
10.18
Confidentiality
|
|
|
57 |
|
|
|
|
|
|
|
|
SIGNATURE PAGE TO
NOTE PURCHASE AGREEMENT
|
|
|
59 |
|
|
|
|
|
|
|
|
ANNEX A
INFORMATION RELATING TO THE PURCHASERS
|
|
|
3 |
|
|
|
|
|
|
|
|
ANNEX B ALLOCATION
OF SENIOR TERM NOTES AMONG PURCHASERS
|
|
|
5 |
|
ii
NOTE PURCHASE AGREEMENT
$40,000,000 Aggregate Principal Amount of
Second Priority Senior Secured Notes Due May 25,
2012
THIS
NOTE PURCHASE AGREEMENT (this “ Agreement ”),
dated as of May 25, 2007, is by and among ROCKY BRANDS, INC.,
an Ohio corporation (“ Parent ”) and the other
parties identified on the signature pages hereto as “ Loan
Parties ” (each a “ Loan Party ” and,
together with Parent, the “ Loan Parties ”), the
note purchasers that are now and hereafter at any time parties
hereto and are listed in Annex A (or any amendment or
supplement thereto) attached hereto (each, together with its
successors and permitted assigns, a “ Purchaser
” and collectively, the “ Purchasers ”),
and Laminar Direct Capital L.P., a Delaware limited partnership, as
collateral agent for the Purchasers (in such capacity “
Agent ”). Capitalized terms used and not defined
elsewhere in this Agreement are defined in Article 1
hereof.
RECITALS
A. The
Loan Parties have proposed selling Second Priority Senior Secured
Notes to the Purchasers designated on Annex A in the
aggregate amount of $40,000,000 for the purpose of
(i) refinancing certain existing outstanding indebtedness of
the Loan Parties (A) to the Lenders under the GMAC Credit
Agreement (as defined herein), including a Term Loan A in the
original principal amount of $18,000,000 (“ Term Loan
A ”) and a Term Loan C in the original principal amount
of $15,000,000 (“ Term Loan C ”) and
(B) under a certain Note Purchase Agreement in the original
aggregate principal amount in favor of American Capital Financial
Services, Inc. and the purchasers thereunder (collectively, the
“ Refinancing ”), (ii) paying transaction
costs associated with the Refinancing and (iii) providing for
general business purposes of the Loan Parties.
B. The
Loan Parties have also proposed to enter into an amended and
restated revolving credit facility with the Lenders (as defined
herein) in the aggregate amount of $100,000,000.
NOW,
THEREFORE, the parties hereto, in consideration of the promises and
their mutual covenants and agreements herein set forth and
intending to be legally bound hereby, covenant and agree as
follows:
ARTICLE 1
DEFINITIONS
1.1
Certain Definitions . In addition to other words and terms
defined elsewhere in this Agreement, the following words and terms
shall have the meanings set forth below:
“Affiliate ” shall mean, with respect to any
Person, any other Person that is directly or indirectly
controlling, controlled by or under common control with such Person
or entity or any of its Subsidiaries, and
the term
“control” (including the terms “controlled
by” and “under common control with”) means
having, directly or indirectly, the power to direct or cause the
direction of the management and policies of a Person, whether
through ownership of voting securities, by contract or otherwise.
Without limiting the foregoing, the ownership of ten percent (10%)
or more of the voting securities of a Person shall be deemed to
constitute control and notwithstanding anything to the contrary
herein, neither the Purchasers nor any of their respective
Affiliates shall be deemed to be Affiliates of the Loan Parties by
virtue of the transactions contemplated in this Agreement.
“
Agent ” shall have the meaning assigned to such term
in the preamble hereto and shall include any successor agent
provided for hereunder.
“
Agreement ” shall mean this Note Purchase Agreement,
as the same may be amended, restated, supplemented or otherwise
modified from time to time.
“
Business ” shall mean the principal business of the
Loan Parties as set forth in Section 5.1(b) herein and as such
shall continue to be conducted following the purchase and sale of
the Senior Term Notes.
“
Business Day ” shall mean any day other than a
Saturday, Sunday or other day on which banking institutions in New
York are authorized or required by law to close.
“
By-laws ” shall mean, with respect to any Person, the
by-laws, partnership agreement, operating agreement, limited
liability company agreement or analogous instrument governing the
operations of the Loan Parties, as applicable, including all
amendments and supplements thereto.
“
Capital Expenditures ” shall mean, for any period of
determination, with respect to any Person, the sum of expenditures
for, or contracts for expenditures with respect to, any fixed
assets or improvements, or for replacements, substitutions or
additions thereto, that in accordance with GAAP either would be
required to be capitalized on the balance sheet of such Person, or
would be classified and accounted for as capital expenditures on a
statement of cash flows of such Person.
“
Capitalization Schedule ” shall have the meaning
assigned to such term in Section 5.1(d).
“
Capitalized Leases ” shall mean, with respect to any
Person, any lease of any property (whether real, personal or mixed)
that in conformity with GAAP, would be required to be classified
and accounted for as a capital lease on a balance sheet of such
Person.
“
Cash Interest Expense ” shall mean, without
duplication, for any period, for Parent on a Consolidated Basis:
interest expense deducted in the determination of net income
(excluding (a) the amortization of fees and costs with respect
to the Parent’s acquisition of certain equity interests and
the financing thereof on or about January 6, 2005, which have
been capitalized as transaction costs in accordance with the
provisions of Section 1.3; (b) any non-cash charges
and/or amortization of other capitalized fees and costs subsequent
to January 6, 2005, and (c) interest paid in kind).
2
“
CERCLA ” shall mean the Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. § 9604, et
seq.), as amended, and rules, regulations, and standards
promulgated thereunder.
“
Change of Control ” shall mean the occurrence of any
of the following:
(a) any
person or group of persons (within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended) shall obtain
ownership or control in one or more series of transactions of more
than 50% of the common stock or 50% of the voting power of the
Parent entitled to vote in the election of members of the board of
directors of the Parent;
(b) a
merger, consolidation, reorganization, recapitalization or share
exchange (whether or not Parent is the surviving and continuing
corporation) in which the stockholders of Parent immediately prior
to such transaction own, as a result of such transaction, less than
fifty percent (50%) of the securities entitled to vote for the
election of directors of the resulting corporation or less than
fifty percent (50%) of the capital stock of the resulting
corporation; or
(c) a
sale, transfer or other disposition of all or substantially all of
the assets of Parent and its Subsidiaries, on a consolidated
basis.
“
Charges ” shall mean all taxes, charges, fees,
imposts, levies or other assessments, including, without
limitation, all net income, gross income, gross receipts, sales,
use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll,
employment, social security, unemployment, excise, severance,
stamp, occupation and property taxes, custom duties, fees,
assessments, liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or
additional amounts, imposed by any taxing or other authority,
domestic or foreign (including, without limitation, the PBGC or any
environmental agency or superfund), upon the Collateral, the Loan
Parties or any of their Affiliates.
“
Charter Documents ” shall mean, with respect to any
Person, the articles of incorporation, certificate of
incorporation, certificate of limited partnership, certificate of
limited liability company, charter or analogous organic instrument
filed with the appropriate Governmental Authorities of such Person,
as applicable, including all amendments and supplements
thereto.
“
Closing ” shall have the meaning assigned in
Section 2.3 hereof.
“
Closing Date ” shall have the meaning assigned to such
term in Section 2.3 hereof.
“
Code ” shall mean the Internal Revenue Code of 1986,
as amended.
“
Collateral ” shall have the meaning assigned to such
term in the Security Agreement.
“
Common Stock ” shall mean the common stock, without
par value, of Parent.
3
“
Condition ” shall mean any condition that results in
or otherwise relates to any Environmental Liabilities.
“
Controlled Group ” shall mean the “controlled
group of corporations” as that term is defined in
Section 1563 of the Code, of which the Loan Parties are a
party from time to time.
“
Copyright Licenses ” means any agreement, whether
written or oral, providing for the grant by or to the Loan Parties
or any of their Subsidiaries of any right under any Copyright,
including the grant of any right to use, copy, publicly perform,
display, create derivative works, manufacture, distribute, exploit
or sell materials derived from any Copyright.
“
Copyrights ” means (a) all right, title and
interest in or relating to copyrights, whether now owned or
hereafter acquired or existing, arising under the laws of the
United States or any other country or any political subdivision
thereof, whether registered or unregistered and whether published
or unpublished, all registrations and recordings thereof and all
applications in connection therewith, including all registrations,
recordings and applications in the United States Copyright Office
or in any counterparts thereof, and (b) the right to obtain
all renewals, continuations, reversions and extensions
thereof.
“
Covered Taxes ” shall have the meaning assigned to
such term in Section 3.9 hereof.
“
Default ” shall mean any event or condition that, but
for the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
“
Deposit Account Control Agreements ” shall have the
meaning assigned to such term in Section 4.1(c).
“
Domestic Subsidiary ” shall mean, with respect to any
Person, a Subsidiary of such Person, which Subsidiary is
incorporated or otherwise organized under the laws of a State of
the United States of America.
“
EBITDA ” means, for any period, without duplication,
the total of the following for Parent on a Consolidated Basis, each
calculated for such period: (a) net income determined in
accordance with GAAP; plus, to the extent included in the
calculation of net income, (b) the sum of (i) income and
franchise taxes paid or accrued; (ii) interest expense, net of
interest income, paid or accrued; (iii) amortization and
depreciation, (iv) Non-Recurring Charges and (v) any
non-cash intellectual property impairment charges, non-cash stock
compensation expense charges and other non-cash charges (excluding
accruals for cash expenses made in the ordinary course of
business); less, to the extent included in the calculation of net
income, (c) the sum of (i) the income of any Person
(other than wholly-owned Subsidiaries of Parent) in which Parent or
a wholly-owned Subsidiary of Parent has an ownership interest,
except to the extent such income is received by Parent or such
wholly-owned Subsidiary in a cash distribution during such period;
(ii) gains or losses from sales or other dispositions of
assets (other than inventory in the normal course of business) and
(iii) extraordinary gains.
4
“
Environmental Laws ” shall mean any Laws that address,
are related to or are otherwise concerned with environmental,
health or safety issues, including any Laws relating to any
emissions, releases or discharges of Pollutants into ambient air,
surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport, handling, clean-up or control of Pollutants or
any exposure or impact on worker health and safety.
“
Environmental Liabilities ” shall mean any obligations
or liabilities (including any claims, suits or other assertions of
obligations or liabilities) that are:
(a) related
to environmental, health or safety issues (including on-site or
off-site contamination by Pollutants of surface or subsurface soil
or water, and occupational safety and health); and
(b) based
upon or related to (i) any provision of past, present or
future United States or foreign Environmental Law (including CERCLA
and RCRA) or common law, or (ii) any judgment, order, writ,
decree, permit or injunction imposed by any court, administrative
agency, tribunal or otherwise.
The
term “Environmental Liabilities” includes:
(i) fines, penalties, judgments, awards, settlements, losses,
damages (including foreseeable and unforeseeable consequential
damages), costs, fees (including attorneys’ and
consultants’ fees), expenses and disbursements;
(ii) defense and other responses to any administrative or
judicial action (including claims, notice letters, complaints, and
other assertions of liability); and (iii) financial
responsibility for (1) cleanup costs and injunctive relief,
including any Removal, Remedial or other Response actions, and
natural resource damages, and (2) any other compliance or
remedial measures.
“
Environmental Schedule ” shall have the meaning
assigned to such term in Section 5.1(l) hereof.
“
ERISA ” shall mean the Employee Retirement Income
Security Act of 1974, as the same may from time to time be amended,
and the rules and regulations of any governmental agency or
authority, as from time to time in effect, promulgated
thereunder.
“
Equity Equivalent ” shall have the meaning assigned to
such term in Section 3.6 hereof.
“
Equity Prepayment ” shall have the meaning assigned to
such term in Section 3.6 hereof.
“
Equity Prepayment Premium ” shall have the meaning
assigned to such term in Section 3.6 hereof.
“
ERISA Affiliate ” shall mean any Loan Party and any
Person who is a member of a group which is under common control
with any Loan Party, who together with any Loan Party is treated as
a single employer within the meaning of Section 414 of the
Internal Revenue Code.
5
“
Event of Default ” shall mean any of the events of
default described in Section 8.1 hereof.
“
Financial Statements ” shall have the meaning assigned
to such term in Section 5.1(c) hereof.
“
Financing Statements ” shall have the meaning assigned
to such term in Section 4.1(c) hereof.
“
Fiscal Year ” or “fiscal year” shall mean
each twelve (12) month period ending on December 31 of
each year.
“
Fixed Charge Coverage Ratio ” shall mean, for any
period of four (4) consecutive calendar quarters, the ratio of
EBITDA of Parent on a Consolidated Basis less Capital Expenditures
on a consolidated basis during such period to the Fixed Charges
during such period.
“
Fixed Charges ” shall mean, for any period, and each
calculated for such period (without duplication) of Parent on a
Consolidated Basis, the sum of (a) Cash Interest Expense of
the Loan Parties; (b) scheduled payments of principal with
respect to all Indebtedness (other than (i) the Revolving
Financing and (ii) payments made with respect to Term Loan A
and Term Loan C); (c) any provision for income or franchise
taxes included in the determination of net income, excluding any
provision for deferred taxes; and (d) payment of deferred
taxes, income and franchise taxes accrued in any prior
period.
“
Foreign Subsidiary ” means, with respect to any
Person, a Subsidiary of such Person, which Subsidiary is not
incorporated or otherwise organized under the laws of a state of
the United States of America.
“
GAAP ” shall have the meaning assigned to such term in
Section 1.2 hereof.
“
GMAC ” shall mean GMAC Commercial Finance, LLC, a
Delaware limited liability company.
“
GMAC Agent ” shall mean the administrative agent as
defined in the GMAC Credit Agreement.
“
GMAC Credit Agreement ” shall mean that certain
Amended and Restated Loan and Security Agreement by and among the
Loan Parties and GMAC, dated as of May 25, 2007, as such may
be amended or modified from time to time as permitted hereunder;
and any loan and security agreement, credit agreement or other
financing agreement evidencing any refinancing of the Indebtedness
evidenced by such GMAC Credit Agreement; provided that
(i) the principal amount of such refinanced Indebtedness does
not exceed the amount permitted by the definition of
“Revolving Financing”, (ii) such Indebtedness does not
extend beyond December 31, 2013, (iii) the terms and
conditions of the agreements, documents and instruments related to
such refinancing, taken as a whole, are not, in the reasonable
judgment of Agent or the Required Purchasers, materially more
onerous to the Agent and the Required Purchases or the Loan Parties
than those set forth in the GMAC Credit Agreement, as in effect on
the date of such
6
refinancing and (iv) such Indebtedness, including the
documentation therefore, otherwise constitutes Senior Indebtedness
under the Intercreditor Agreement and the agent or lender
thereunder has executed a joinder or supplement to the
Intercreditor Agreement or a new intercreditor agreement on
substantially the same terms as the Intercreditor Agreement.
“
GMAC Credit Documents ” shall mean the GMAC Credit
Agreement and all ancillary documents and materials entered into in
connection with the GMAC Credit Agreement.
“
GMAC Financing ” shall mean, collectively, the
Indebtedness and other obligations under or relating to the
Revolving Financing.
“
Governmental Authorities ” shall mean any federal,
state or municipal court or other governmental department,
commission, board, bureau, agency or instrumentality, governmental
or quasi-governmental, domestic or foreign.
“
Guaranty ” shall mean any guaranty of the payment or
performance of any Indebtedness or other obligation and any other
arrangement whereby credit is extended to one obligor on the basis
of any promise of another Person, whether that promise is expressed
in terms of an obligation to pay the Indebtedness of such obligor,
or to purchase an obligation owed by such obligor, or to purchase
goods and services from such obligor pursuant to a take-or-pay
contract, or to maintain the capital, working capital, solvency or
general financial condition of such obligor, whether or not any
such arrangement is reflected on the balance sheet of such other
Person, firm or corporation, or referred to in a footnote thereto,
but shall not include endorsements of items for collection in the
ordinary course of business. For the purpose of all computations
made under this Agreement, the amount of a Guaranty in respect of
any obligation shall be deemed to be equal to the maximum aggregate
amount of such obligation or, if the Guaranty is limited to less
than the full amount of such obligation, the maximum aggregate
potential liability under the terms of the Guaranty.
“
Indebtedness ” shall mean, for any Person at the time
of any determination, without duplication, all obligations,
contingent or otherwise, of such Person that, in accordance with
GAAP, should be classified upon the balance sheet of such Person as
indebtedness, but in any event including: (i) all obligations
for borrowed money, (ii) all obligations arising from
installment purchases of property or representing the deferred
purchase price of property or services in respect of which such
Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities
incurred in the ordinary course of business on terms customary in
the trade), (iii) all obligations evidenced by notes, bonds,
debentures, acceptances or instruments, or arising out of letters
of credit or bankers’ acceptances issued for such
Person’s account, (iv) all obligations, whether or not
assumed, secured by any Lien or payable out of the proceeds or
production from any property or assets now or hereafter owned or
acquired by such Person, (v) all obligations for which such
Person is obligated pursuant to a Guaranty which are classified
under GAAP as indebtedness, (vi) the capitalized portion of
lease obligations under Capitalized Leases, (vii) all
obligations for which such Person is obligated pursuant to any
Interest Rate Protection Agreements or derivative agreements or
arrangements, (viii) all factoring arrangements and
(ix) all obligations of such Person upon which interest
charges are customarily paid or accrued.
7
“
Intellectual Property Agreements ” shall have the
meaning assigned to such term in Section 4.1(c) hereof.
“
Intellectual Property Schedule ” shall have the
meaning assigned to such term in Section 5.1(r) hereof.
“
Intercreditor Agreement ” shall have the meaning
assigned to such term in Section 10.17 hereof.
“
Interest Rate Protection Agreement ” shall mean any
interest rate swap, interest rate cap, interest rate collar or
other interest rate hedging agreement or arrangement.
“
Investment ” as applied to any Person shall mean the
amount paid or agreed to be paid or loaned, advanced or contributed
to other Persons, and in any event shall include, without
limitation, (i) any direct or indirect purchase or other
acquisition of any notes, obligations, instruments, stock,
securities or ownership interest (including partnership interests
and joint venture interests) and (ii) any capital contribution
to any other Person.
“
Laws ” shall mean all U.S. and foreign federal, state
or local statutes, laws, rules, regulations, ordinances, codes,
policies, rules of common law, and the like, now or hereafter in
effect, including any judicial or administrative interpretations
thereof, and any judicial or administrative orders, consents,
decrees or judgments.
“
Lenders ” shall collectively mean the lenders party to
the GMAC Credit Agreement.
“
Liabilities ” shall have the meaning given that term
in accordance with GAAP and shall include, without limitation,
Indebtedness.
“
Lien ” shall mean any security interest, lien, pledge,
bailment, mortgage, hypothecation, deed of trust, conditional sales
and title retention agreement (including any lease in the nature
thereof), charge, encumbrance or other similar arrangement or
interest in real or personal property, now owned or hereafter
acquired, whether such interest is based on common law, statute or
contract.
“
Litigation Schedule ” shall have meaning assigned to
such term in Section 5.1(j) hereof.
“
Loan Party ” and “Loan Parties”
shall have the meanings assigned to such terms in the preamble
hereto.
“
Management ” shall mean generation, production,
handling, distribution, processing, use, storage, treatment,
operation, transportation, recycling, reuse and/or disposal, as
those terms are defined in CERCLA, RCRA and other Environmental
Laws (including as those terms are further defined, construed, or
otherwise used in rules, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of,
such Environmental Laws).
8
“
Material Adverse Change ” shall mean any change that
has a Material Adverse Effect.
“
Material Adverse Effect ” shall mean (a) a
material adverse effect on the business, properties, assets,
liabilities or condition (financial or otherwise) of the Loan
Parties, taken together as a whole, (b) a material impairment
of the ability of the Loan Parties, taken as a whole, to perform
their material obligations under the Transaction Documents to which
they are parties, taken as a whole, or (c) a material adverse
effect upon the legality, validity, binding effect or
enforceability against the Loan Parties of the Transaction
Documents to which they are parties, taken as a whole.
“Material Contracts” shall have the meaning
assigned to such term in Section 5.1(w) hereof.
“
Maturity Date ” shall have the meaning assigned to
such term in Section 3.2 hereof.
“
Moody’s ” shall have the meaning assigned to
such term in Section 7.2(h) hereof.
“
Multiemployer Plan ” shall mean a multiemployer plan
(within the meaning of Section 3(37) of ERISA) that is
maintained for the benefit of the employees of the Loan Parties or
any member of the Controlled Group.
“
Non-Recurring Charges ” shall mean the sum of the
aggregate amount of fees, expenses, financing costs and other
expenses incurred in connection with (i) the Parent’s
acquisition of certain equity interests and the financing thereof
on or about January 6, 2005, to the extent paid substantially
contemporaneously with, on or about such acquisition and
(ii) the Transactions, to the extent paid substantially
contemporaneously with, on or about the Closing Date.
“
Offering Memorandum ” shall mean that certain Second
Priority Senior Secured Notes $40,000,000 Confidential Private
Placement Offering Memorandum dated April, 2007, prepared in
conjunction with Piper Jaffray & Co.
“
Organization Schedule ” shall have the meaning
assigned to such term in Section 5.1(a) hereof.
“
Other Taxes ” shall have the meaning assigned to such
term in Section 3.9 hereof.
“
Parent ” shall have the meaning assigned to such term
in the preamble hereof.
“
Parent on a Consolidated Basis ” shall mean the
consolidation, in accordance with GAAP, of the financial accounts
of Parent and its Subsidiaries.
“
Parent SEC Reports ” shall have the meaning assigned
to such term in Section 5.1(y) hereof.
9
“
Patent License ” means all agreements, whether written
or oral, providing for the grant by or to the Loan Parties or any
of their Subsidiaries of any right to any Patent, including the
grant of any right to manufacture, have manufactured, use, import,
lease, sell or offer for sale any invention covered in whole or in
part by a Patent.
“
Patents ” means (a) all right, title and interest
in or relating to letters patent of the United States, any other
country or any political subdivision thereof and all reissues,
reexaminations, and extensions thereof, (b) all applications
for letters patent of the United States or any other country or any
political subdivisions thereof and all divisionals, continuations
and continuations-in-part thereof and (c) all rights to obtain
any reissues, reexaminations or extensions of the foregoing.
“
Patriot Act ” shall have the meaning assigned to such
term in Section 5.1(x) hereof.
“
PBGC ” shall mean the Pension Benefit Guaranty
Corporation established pursuant to Subtitle A of Title IV of
ERISA, or any other governmental agency, department or
instrumentality succeeding to the functions thereof.
“
PCBs ” shall have the mean assigned to such term
within the definition of the term “Pollutant”
below.
“
Permitted Acquisition ” means any transaction, or any
series of related transactions, consummated on or after the date of
this Agreement by which the Parent or any Subsidiary thereof
(a) acquires any ongoing business or all or a substantially
all of the operations or assets of any Person, any division thereof
or operating unit thereof, whether through purchase of assets,
merger or otherwise or (b) directly or indirectly acquires (in
one transaction or in a series of transactions) all or
substantially all (in number of votes) of the equity interests of a
Person which have ordinary voting power for the election of
directors or constitute a majority (by percentage of voting power)
of the outstanding equity interests of another Person (any of the
foregoing an “ Acquisition ”); provided
that :
(i) such
Acquisition is made at a time when, after giving effect to such
Acquisition and the related financing thereof, no Default or Event
of Default exists;
(ii) after
giving effect to such Acquisition, no Default or Event of Default
exists or would occur based on a 12 month pro forma
good faith prospective calculation of the covenant set forth in
Section 7.3(A) (excluding any Acquisition as a Capital
Expenditure), giving effect to the EBITDA of the acquired
operations or Person and any higher levels of Indebtedness
associated with the acquired operations or Person;
(iii) the
acquired Person or post-merger Person (other than any Foreign
Subsidiary), if such Acquisition is of equity interests, guarantees
all obligations under this Agreement and grants to Agent, for the
benefit of Agent and Purchasers, a first Lien upon all of the
tangible and intangible personal property of such acquired Person,
whether then owned or thereafter acquired or arising, subject only
to Liens permitted by this Agreement;
10
(iv) if
the Acquisition is of equity interests, such Loan Party acquiring
such equity interests grants to Agent, for the benefit of Agent and
Purchasers, a Lien upon all such equity interests (or not less than
65% of such equity interests if a Foreign Subsidiary) pursuant to a
pledge agreement or joinder in form and substance satisfactory to
Agent;
(v) any
acquired assets become subject to Liens in favor of Agent, for the
benefit of Agent and Purchasers, pursuant to such agreements,
instruments and documents as shall be satisfactory in form and
substance to Agent, and are free and clear of all other Liens
except as permitted under this Agreement;
(vi) Parent delivers written notice to Agent of its or such
Subsidiary’s intention to make such Acquisition no less than
15 Business Days prior to the proposed closing date for such
Acquisition, together with a certificate that sets forth
(A) information regarding liabilities and obligations with
respect to tax, ERISA and environmental matters, if any, to be
incurred by such Person (including, without limitation, the
acquired Person in the event of an Acquisition of equity interests)
as a result of such Acquisition, any indemnities afforded under the
terms of such Acquisition and the scope and results of any tax,
ERISA or environmental review undertaken by the Parent or such
Subsidiary in connection therewith and (B) any available
financial statements of (1) such acquired Person if such
Acquisition of equity interests, and (2) operating unit or
division if such Acquisition is of assets;
(vii) on
the date of the closing of the Permitted Acquisition, all
representations and warranties under the Transaction Documents
shall be true and correct in all material respects as though made
on and as of such date, except to the extent that any such
representation or warranty expressly relates to an earlier
date;
(viii) such Acquisition is of or with a Person assembling and
selling specialty footwear, apparel and accessories or an industry
related thereto;
(ix) such
Acquisition shall have been approved by the board of directors of
such Person (or similar governing body if such Person is not a
corporation) that is the subject of such Acquisition, and such
Person shall not have announced that it will oppose such
Acquisition or shall not have commenced any action which alleges
that such Acquisition will violate any applicable law;
(x) the
consideration for the Permitted Acquisition shall have been paid
only (A) in cash, (B) in deferred installment payments,
provided that any indebtedness incurred in connection
therewith is permitted pursuant to Section 7.2(a) or equity
interests of the Parent or such Subsidiary making such Acquisition,
and the purchase price for any such Acquisition, including
(1) the original stated purchase price therefor, plus
(2) the reasonably estimated transaction costs associated with
such Acquisition, plus (3) the amount of Indebtedness for
borrowed money assumed (directly or indirectly) as a result
thereof, plus (4) all amounts payable of any nature
whatsoever, including cost of goods sold, to the seller or any
Affiliate of such seller following such Acquisition, shall
not
11
exceed the
amount set forth in Section 7.2(d) (excluding any portion of
any of the foregoing payable in common equity of the Parent or any
Subsidiary thereof); and
(xi) on
the funding date for any borrowing of any Loans for the purpose of
consummating a Permitted Acquisition, Agent shall have received a
certificate from an officer of Parent (A) certifying that
(1) such Acquisition meets the requirements of the definition
of Permitted Acquisition and (2) the liabilities assumed with
respect to such Permitted Acquisition do not or are not reasonably
likely to have a Material Adverse Effect, and (B) attaching
calculations of financial covenant set forth in
Section 7.3 , copies of the definitive purchase
agreement or most recent draft of the same, and copies of all
material, business and financial information relating to the
business purchased in the Permitted Acquisition, all as Agent may
reasonably request.
“
Permitted Encumbrances Schedule ” shall have the
meaning assigned to such term in Section 7.2(b) hereof.
“
Permitted Indebtedness Schedule ” shall have the
meaning assigned to such term in Section 7.2(a) hereof.
“
Permitted Investment ” shall have the meaning assigned
to such term in Section 7.2(h) hereof.
“
Permitted Liens ” shall have the meaning assigned to
such term in Section 7.2(b) hereof.
“
Permitted Sale/Leaseback ” means any transaction, or
any series of related transactions, consummated on or after the
date of this Agreement by which the Parent or any Subsidiary
thereof (a) sells any of its real property and equipment which
is subject to, as of the Closing Date, a Lien in favor of General
Electric Capital Business Asset Funding Corporation and,
substantially simultaneously therewith, (b) leases such real
property (or a portion thereof) from the purchaser thereof or an
Affiliate of such purchaser, or otherwise enters into a contractual
relationship pursuant to which such purchaser (or an Affiliate
thereof) provides logistic services for one or more of the Loan
Parties at such property; provided that :
(i) such
sale/leaseback is made at a time when, after giving effect thereto,
no Default or Event of Default exists;
(ii) the
entire balance of the mortgage secured by such real property is
paid in full from the sale proceeds thereof;
(iii) any
Net Cash Proceeds (as defined in the GMAC Credit Agreement) thereof
are remitted to GMAC Agent in accordance with the GMAC Credit
Agreement; and
(iv) any
non-cash proceeds thereof consisting of any notes or other evidence
of Indebtedness are delivered to the GMAC Agent as additional
Collateral, together with such Transaction Documents as Agent may
reasonable request in connection therewith.
12
“
Person ” shall mean any individual, partnership,
limited partnership, corporation, limited liability company,
association, joint stock company, trust, joint venture,
unincorporated organization or governmental entity or department,
agency or political subdivision thereof.
“
Plan ” shall mean any employee benefit plan (within
the meaning of Section 3(3) of ERISA), other than a
Multiemployer Plan, established or maintained by the Loan Parties
or any member of the Controlled Group.
“
Pledge Agreement ” shall have the meaning assigned to
such term in Section 4.1(c) hereof.
“
Pollutant ” shall include any “hazardous
substance” and any “pollutant or contaminant” as
those terms are defined in CERCLA; any “hazardous
waste” as that term is defined in RCRA; and any
“hazardous material” as that term is defined in the
Hazardous Materials Transportation Act (49 U.S.C. § 1801 et
seq.), as amended (including as those terms are further defined,
construed, or otherwise used in rules, regulations, or standards
promulgated pursuant to, or otherwise in implementation of, said
Environmental Laws); and including without limitation any petroleum
product or byproduct, solvent, flammable or explosive material,
radioactive material, asbestos, polychlorinated biphenyls (“
PCBs ”), dioxins, dibenzofurans, heavy metals, and
radon gas; and including any other substance or material that is
reasonably determined to present a threat, hazard or risk to human
health or the environment.
“
Prepayment Fee ” shall mean a non-refundable fee
payable pro rata to the Purchasers equal to the principal
amount of any Senior Term Note prepaid pursuant to Section 3.3
or 3.5, multiplied by (i) five percent (5%), if such
prepayment occurs during the period beginning with the first
anniversary of the Closing Date and ending with the day immediately
preceding the second anniversary of the Closing Date,
(ii) three percent (3%), if such prepayment occurs during the
period beginning with the second anniversary of the Closing Date
and ending with the day immediately preceding the third anniversary
of the Closing Date, (iii) one and one-half percent (1.5%) if
such prepayment occurs during the period beginning with the third
anniversary of the Closing Date and ending with the day immediately
preceding the fourth anniversary of the Closing Date, and
(iv) zero percent (0%) if such prepayment occurs at any time
thereafter.
“
Pro Forma Balance Sheet ” shall have the meaning
assigned to such term in Section 5.1(c)(iii).
“
Properties and Facilities ” shall have the meaning
assigned to such term in Section 5.1(q) hereof.
“
Properties Schedule ” shall have the meaning assigned
to such term in Section 5.1(q) hereof.
“
Proprietary Rights ” shall mean, collectively, whether
now owned or hereafter acquired or existing, (a) all right,
title and interest of the Loan Parties or any of their Subsidiaries
in or relating to intellectual property or industrial property,
whether arising under United States, multinational or foreign laws
or otherwise, including Copyrights, Copyright Licenses, Patents,
Patent Licenses, Trademarks, Trademark Licenses, trade secrets,
Internet domain names and
13
domain
name registrations, software and contract rights relating to
software, websites, advertising rights, rights in designs,
including registrations thereof, and rights in data, and (b) all
right to income, royalties, proceeds and damages now or hereafter
due and/or payable under and with respect thereto, including all
rights to sue and recover at law or in equity for any past, present
and future infringement, misappropriation, dilution, violation or
other impairment thereof.
“
Purchaser ” and “ Purchasers ”
shall have the meanings assigned to such terms in the preamble
hereto and in Section 6.2 hereof.
“
RCRA ” shall mean the Resource Conservation and
Recovery Act (42 U.S.C. § 6901 et seq.), as amended, and all
rules, regulations, standards, guidelines, and publications issued
thereunder.
“
Refinancing ” shall have the meaning assigned to such
term in the recitals hereto.
“
Removal ,” “ Remedial ” and “
Response ” actions shall include the types of
activities “covered” by CERCLA, RCRA, and other
comparable Environmental Laws, and whether the activities are those
that might be taken by a government entity or those that a
government entity or any other person might seek to require of
waste generators, handlers, distributors, processors, users,
storers, treaters, owners, operators, transporters, recyclers,
reusers, disposers, or other persons under “removal,”
“remedial,” or other “response”
actions.
“
Reportable Event ” shall mean any of the events that
are reportable under Section 4043 of ERISA and the regulations
promulgated thereunder, other than an occurrence for which the
thirty (30) day notice contained in 29 C.F.R. § 2615.3(a)
is waived.
“
Required Purchasers ” shall mean, at any time, the
Purchasers holding a pro rata percentage of the outstanding
principal amount of the Senior Term Notes aggregating at least
50.1% at such time.
“
Revolving Financing ” shall mean a secured revolving
line of credit facility pursuant to the GMAC Credit Agreement in an
aggregate principal amount not to exceed $100,000,000,
provided , however , that the outstanding principal
amount of Revolving Financing may be increased to $110,000,000, so
long as the advance rates and standards for determining the
eligible receivables and eligible inventory for inclusion in the
borrowing base under the GMAC Credit Agreement in effect on the
Closing Date support such increase and are satisfied.
“
S&P ” shall have the meaning assigned to such term
in Section 7.2(h) hereof.
“
Sarbanes Oxley ” shall mean the United States
Sarbanes-Oxley Act of 2002.
“
SEC ” shall mean the Securities and Exchange
Commission and any governmental body or agency succeeding to the
functions thereof.
“
Securities Act ” shall mean the Securities Act of
1933, as amended.
14
“
Securities Exchange Act ” shall mean the Securities
Exchange Act of 1934, as amended.
“
Securitization ” shall have the meaning assigned to
such term in Section 10.18 hereof.
“
Security Agreement ” shall have the meaning assigned
to such term in Section 4.1(c) hereof.
“
Security Documents ” shall mean the Security
Agreement, the Pledge Agreement, the Financing Statements, and all
other documents, instruments and other materials necessary to
create or perfect the security interests created pursuant to the
Security Agreement.
“
Senior Term Notes ” shall have the meaning assigned to
such term in Section 2.1 hereof.
“
Subsidiary ” of any corporation shall mean any other
corporation or limited liability company of which the outstanding
capital stock possessing a majority of voting power in the election
of directors (otherwise than as the result of a default) is owned
or controlled by such corporation directly or indirectly through
Subsidiaries.
“
Subsidiary Schedule ” shall have the meaning assigned
to such term in Section 5.1(e) hereof.
“
Taxes ” shall have the meaning assigned to such term
in Section 3.9 hereof.
“
Term Loan A ” shall have the meaning assigned to such
term in the recitals hereto.
“
Term Loan C ” shall have the meaning assigned to such
term in the recitals hereto.
“
Third Party Proprietary Rights ” means any right,
title or interest of any Person other than the Loan Parties or any
of their Subsidiaries under patent, copyright, trademark or trade
secret law or any other statutory provision or common law doctrine
relating to intellectual property or proprietary rights.
“
Trademark License ” means any agreement, whether
written or oral, providing for the grant by or to the Loan Parties
or any of their Subsidiaries of any right under any
Trademark.
“
Trademarks ” means (a) all trademarks, trade
names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, service marks, logos and
other source or business identifiers, and, in each case, all
goodwill associated therewith, whether now owned or hereafter
acquired or existing, all registrations and recordings thereof and
all applications in connection therewith, in each case whether in
the United States Patent and Trademark Office or in any similar
office or agency of any state thereof or any other country or
15
any
political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (b) the right to obtain all
renewals and extensions thereof.
“
Transaction Documents ” shall mean this Agreement, the
Senior Term Notes and the Security Documents and all other
agreements, instruments and documents delivered in connection
therewith as any or all of the foregoing may be supplemented or
amended from time to time.
“
Transactions ” shall mean the incurrence of debt and
the issuance of securities in connection therewith, as contemplated
by this Agreement, the Senior Term Notes, the consummation of the
Refinancing, and all other agreements contemplated hereby and
thereby.
“
UCC ” shall mean the New York Uniform Commercial
Code.
“
UST ” shall mean an underground storage tank,
including as that term is defined, construed and otherwise used in
RCRA and in rules, regulations, standards, guidelines and
publications issued pursuant to RCRA and comparable state and local
laws.
1.2
Accounting Principles . The character or amount of any asset,
liability, capital account or reserve and of any item of income or
expense to be determined, and any consolidation or other accounting
computation to be made, and the construction of any definition
containing a financial term, pursuant to this Agreement shall be
determined or made in accordance with generally accepted accounting
principles in the United States of America consistently applied
(“ GAAP ”), unless such principles are
inconsistent with the express requirements of this Agreement. In
the event any “Accounting Changes” (as defined below)
shall occur and such changes affect financial covenants, standards
or terms in this Agreement, then Loan Parties and Required
Purchasers agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such
Accounting Changes with the desired result that the criteria for
evaluating the financial condition of the Loan Parties shall be the
same after such Accounting Changes as if such Accounting Changes
had not been made, and until such time as such an amendment shall
have been executed and delivered by Loan Parties and Requisite
Lenders, (A) all financial covenants, standards and terms in
this Agreement shall be calculated and/or construed as if such
Accounting Changes had not been made, and (B) the Loan Parties
shall prepare footnotes to each compliance certificate and the
financial statements required to be delivered hereunder that show
the differences between the financial statements delivered (which
reflect such Accounting Changes) and the basis for calculating
financial covenant compliance (without reflecting such Accounting
Changes). “Accounting Changes” means: (a) changes
in accounting principles required by GAAP and implemented by Loan
Parties and (b) changes in accounting principles recommended
by Loan Parties’ accountants.
1.3
Other Definitional Provisions; Construction . Whenever the
context so requires, neuter gender includes the masculine and
feminine, the singular number includes the plural and vice versa.
The word “including” when used herein shall mean
“including without limitation” unless the context
states otherwise. The words “hereof,”
“herein” and “hereunder” and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and references to any section, article, annex, schedule,
exhibit or like references are references to this Agreement unless
16
otherwise specified. A Default or Event of Default shall
“continue” or be “continuing” until such
Default or Event of Default has been cured or waived by Agent and
the Required Purchasers or the Purchasers, as applicable, pursuant
to Section 10.2. References in this Agreement to any Persons
shall include such Persons, successors and permitted assigns. Other
terms contained in this Agreement (which are not otherwise
specifically defined herein) shall have the meanings provided to
such terms in Article 9 of the UCC on the date hereof to the
extent the same are used or defined therein.
ARTICLE 2
ISSUE AND SALE OF THE SENIOR TERM NOTES
2.1
Senior Term Notes . On the Closing Date, the Loan Parties duly
authorized the issuance to the Purchasers designated on Annex
A of $40,000,000 aggregate principal amount of the Loan
Parties’ Second Priority Senior Secured Notes due
May 25, 2012 (together with any promissory notes issued in
substitution therefor pursuant to Sections 6.3 and 6.4, the
“ Senior Term Notes ”) substantially in the form
of the promissory notes made by the Loan Parties in favor of the
Purchasers thereof in the form attached hereto as
Exhibit A .
2.2
Sale and Purchase . Subject to the terms and conditions and in
reliance upon the representations, warranties and agreements set
forth herein, the Loan Parties shall sell to the Purchasers, and
the Purchasers shall purchase from the Loan Parties, in amounts
designated in Annex B, the Senior Term Notes in the aggregate
principal amount set forth in Section 2.1 hereof.
2.3
The Closing . Delivery of and payment for the Senior Term Notes
(the “ Closing ”) shall be made at on
May 25, 2007, or at such other date as may be mutually
agreeable to the Loan Parties and the Purchasers. The date and time
of the Closing as finally determined pursuant to this Section 2.3
are referred to herein as the “ Closing Date .”
Delivery of the Senior Term Notes shall be made to the Purchasers
against payment of the purchase price therefor, less any amounts
payable pursuant to Section 4.1(g) hereof, by wire transfer of
immediately available funds in the manner agreed to by the Loan
Parties and the Purchasers. The Senior Term Notes shall be issued
in such name or names and in such permitted denomination or
denominations, numbers and amounts as set forth in Annex A
or as the Purchasers may request in writing not less than two
(2) Business Days before the Closing Date.
ARTICLE 3
REPAYMENT OF SENIOR TERM NOTES
3.1
Interest Rates and Interest Payments .
(a)
Senior Term Notes . The Loan Parties, jointly and severally,
covenant and agree to make payments to the Purchasers holding
Senior Term Notes, of accrued interest on the Senior Term Notes
semi-annually in arrears on the first Business Day of each June and
December, commencing on December 1, 2007, through the date of
repayment in full of the Senior Term Notes. The Senior Term Notes
shall bear interest on the outstanding principal thereof at a rate
equal to the fixed rate of eleven and one-half percent
(11.50%).
17
(b)
Computation of Interest . Interest on the Senior Term Notes
shall be computed on the basis of a year with three hundred sixty
(360) days and twelve 30-day months.
3.2
Repayment of Senior Term Notes . The Loan Parties, jointly and
severally, covenant and agree to repay any and all unpaid principal
on the Senior Term Notes, together with all accrued and unpaid
interest, fees and other amounts due in connection with the Senior
Term Notes upon maturity of the Senior Term Notes on May 25,
2012 (the “ Maturity Date ”).
3.3
Optional Prepayment of Senior Term Notes . At any time on or
after the first anniversary of the Closing Date, subject to the
terms of this Section 3.3, and in connection with any Equity
Prepayment pursuant to Section 3.9 (regardless of when such
event occurs), the Loan Parties may prepay to the Purchasers the
outstanding principal amount of the Senior Term Notes in whole or
in part in multiples of $500,000, or such lesser amount as is then
outstanding, plus accrued interest, if any, to the date set for
prepayment on the principal amount to be repaid. At the time of
each such prepayment made at any time prior to the fourth
anniversary of the Closing Date, the Loan Parties shall pay to the
Purchasers the applicable Prepayment Fee or Equity Prepayment
Premium. All such prepayments shall be so applied after application
of such prepayment to any accrued interest payable, if any, in
connection therewith and any applicable Prepayment Fee or Equity
Prepayment Premium.
3.4
Notice of Optional Prepayment . If the Loan Parties shall elect
to prepay any Senior Term Notes pursuant to Section 3.3
hereof, the Loan Parties shall give notice of such prepayment to
the Agent and the Purchasers not less than thirty (30) days or
more than ninety (90) days prior to the date fixed for
prepayment, specifying (i) the date on which such prepayment
is to be made, (ii) the principal amount of such Senior Term
Notes to be prepaid on such date and (iii) the applicable
Prepayment Fee or Equity Prepayment Premium, if any, and accrued
interest applicable to such prepayment. Such notice shall be
accompanied by a certificate of the Chief Executive Officer, the
Chief Financial Officer, or the Chief Operating Officer of Parent
that such prepayment is being made in compliance with
Section 3.3. Notice of prepayment having been so given, the
aggregate principal amount of the Senior Term Notes specified in
such notice, together with accrued interest thereon and the
premium, if any, shall become due and payable on the prepayment
date set forth in such notice.
3.5
Mandatory Prepayment : Change of Control; Event of
Default .
(a) Upon the occurrence of a
Change of Control, each Purchaser shall have the right to require
the Loan Parties to repurchase all or any part of such
Purchaser’s Senior Term Notes pursuant to the offer described
below (the “ Change of Control Offer ”) at an
offer price (the “ Change of Control Payment ”)
in cash equal to the outstanding principal amount of the applicable
Senior Term Notes, together with all accrued and unpaid interest,
fees, expenses and a premium for the ratable benefit of the
Purchasers equal to five percent (5%) of the aggregate outstanding
principal amounts of the Senior Term Notes being prepaid, in each
case as of the date of purchase (the “ Change of Control
Payment Date ”). The Loan Parties will make the Change of
Control Offer by delivering a written notice of such offer to the
Purchasers at least five (5) Business Days prior to the occurrence
of a Change of Control, specifying the Change of Control Payment
Date (which such date shall not be more than five (5) Business
Days following
18
such
Change of Control). A Purchaser may accept such Change of Control
Offer by delivering a written notice of acceptance to the Loan
Parties within five (5) Business Days after receipt of the
Change of Control Offer specifying the amount of the Senior Term
Notes to be redeemed.
(b) By 2:00 p.m.
(noon) Central Time on the Change of Control Payment Date, the
Loan Parties shall (1) accept for payment all Senior Term
Notes or portions thereof properly tendered pursuant to the Change
of Control Offer, and (2) pay via wire transfer in immediately
available funds an amount equal to the Change of Control Payment in
respect of all Senior Term Notes or portions thereof so tendered.
All payments under this Section 3.5 shall be applied first to
all costs, expenses, indemnities and other amounts payable
hereunder and under the applicable Senior Term Notes, then to
payment of default interest, if any, then to payment of premium, if
any, then to payment of accrued interest and thereafter to payment
of principal. The Loan Parties shall send to each Purchaser that
has tendered its Senior Term Notes the applicable Change of Control
Payment for such Senior Term Notes, and the Loan Parties shall
promptly execute and mail to each Purchaser a new Senior Term Note
equal in principal amount to any unpurchased portion of the Senior
Term Notes surrendered, if any.
(c) In addition, the Senior Term
Notes shall be prepaid in full, together with all accrued and
unpaid interest, fees, any applicable Prepayment Fee, for the
ratable benefit of the Purchasers, and expenses upon such Senior
Term Notes becoming due as a consequence of an Event of Default
(other than due to a Change of Control) pursuant to
Section 8.2. If the Senior Term Notes shall become due prior
to the first anniversary of the Closing Date as a result of an
Event of Default, the applicable Prepayment Fee shall be deemed to
be 5.0% of the aggregate principal amount of the Senior Term Notes
prepaid.
3.6
Equity Payment . In the event the Parent or any Subsidiary
shall at any time or from time to time issue any equity securities
to any Person other than the Parent or any Subsidiary thereof,
notwithstanding any provision of this Agreement, but subject to the
terms of this Section 3.6, the Loan Parties may prepay to the
Purchasers, on a ratable basis, from the net cash proceeds of any
such equity issuance, up to 35% of the aggregate outstanding
principal amount of the Senior Term Notes then outstanding (an
“ Equity Prepayment ”) in whole or in part in
multiples of $500,000, or such lesser amount as is then
outstanding, plus accrued interest, if any, to the date set for
prepayment on the principal amount to be repaid. If any such
prepayment or redemption is made at any time prior to the first
anniversary of the Closing Date, the Loan Parties shall pay to the
Purchasers a prepayment premium (an “ Equity Prepayment
Premium ”) (expressed as a percentage of principal
amount) equal to 11.50% of the aggregate principal amount of the
Senior Term Notes prepaid or redeemed with each Equity Prepayment.
If any such prepayment or redemption is made at any time on or
after the first anniversary of the Closing Date, the Loan Parties
shall pay to the Purchasers any applicable Prepayment Fee on the
Senior Term Notes prepaid or redeemed with each Equity Prepayment
to the extent applicable. In the event of any such prepayment from
the net cash proceeds of an equity issuance, at the election of the
Parent, and provided no Default or Event of Default then exists,
such Equity Prepayment Premium or Prepayment Fee may be paid,
subject to the terms of this Section 3.6, either in cash or in
equity securities of the Parent. If the Parent elects to pay such
Equity Prepayment Premium or Prepayment Fee in equity securities
rather than cash, such securities shall be paid in registered,
marketable, publicly traded equity securities of the Parent in
an
19
amount
equal to the Equity Equivalent (as defined below). If the Parent
elects to prepay any Senior Term Notes pursuant to this
Section 3.6 hereof, the Parent shall give notice of such
prepayment to Agent and the Purchasers not less than forty-five
(45) days or more than one hundred and five (105) days
prior to the date fixed for such Equity Prepayment, specifying
(i) the date on which such prepayment is to be made,
(ii) the principal amount of such Senior Term Notes to be
prepaid on such date, (iii) such Equity Prepayment Premium or
Prepayment Fee, if any, and accrued interest applicable to such
prepayment and (iv) whether such Equity Prepayment Premium or
Prepayment Fee will be paid in cash or equity securities. Such
notice shall be accompanied by a certificate of the Chief Executive
Officer, the Chief Financial Officer, or the Chief Operating
Officer of Parent that such prepayment is being made in compliance
with this Section 3.6. Notice of prepayment having been so
given, the aggregate principal amount of the Senior Term Notes
specified in such notice, together with accrued interest thereon
and the premium, if any, shall become due and payable on the
prepayment date set forth in such notice. “Equity
Equivalent” shall be determined by dividing (i) the cash
value of the applicable Equity Prepayment Premium or Prepayment Fee
by (ii) the per share average closing price of Parent’s
equity securities as reported on the exchange on which such equity
securities are then listed for the seven trading days prior to a
date that is three trading days prior to the date fixed for
prepayment or redemption.
3.7
Home Office Payment . The Loan Parties will pay all sums
becoming due on any Senior Term Note for principal, prepayment
penalty, if any, and interest to the respective Purchasers by the
method and at the address specified for such purpose in Annex
A , or by such other method or at such other address as the
Purchasers shall have from time to time specified to the Loan
Parties in writing for such purpose, without the presentation or
surrender of such Senior Term Note or the making of any notation
thereon, except that upon written request of the Loan Parties made
concurrently with or reasonably promptly after payment or
prepayment in full of any Senior Term Note, each holder of a Senior
Term Note shall surrender such Senior Term Note for cancellation,
reasonably promptly after such request, to the Loan Parties at
their principal executive office. Notwithstanding anything to the
contrary contained herein, all payments of principal and interest
due from the Loan Parties hereunder shall be made to the Purchasers
on an equal and ratable basis.
3.8
Maximum Lawful Rate . This Agreement, the Senior Term Notes and
the other Transaction Documents are hereby limited by this
Section 3.8. In no event, whether by reason of acceleration of
the maturity of the amounts due hereunder or otherwise, shall
interest and fees contracted for, charged, received, paid or agreed
to be paid to the Purchasers exceed the maximum amount permissible
under applicable Law. If, from any circumstance whatsoever,
interest and fees would otherwise be payable to Agent or the
Purchasers in excess of the maximum amount permissible under
applicable Law, the interest and fees shall be reduced to the
maximum amount permitted under such Law. If from any circumstance,
Agent or the Purchasers shall have received anything of value
deemed interest by applicable Law in excess of the maximum lawful
amount, an amount equal to any excess of interest shall be applied
to the reduction of the principal amount of the Senior Term Notes,
in such manner as may be determined by the Purchasers, and not to
the payment of fees or interest, or if such excess interest exceeds
the unpaid balance of the principal amount of the Senior Term
Notes, such excess shall be refunded to the Loan Parties.
20
3.9
Taxes . Any and all payments by the Loan Parties hereunder or
under the Senior Term Notes or other Transaction Documents that are
made to or for the benefit of the Purchasers shall be made free and
clear of and without deduction for any and all present or future
taxes, levies, imposts, deductions, charges or withholdings and
penalties, interests and all other liabilities with respect thereto
(collectively, “ Taxes ”), excluding taxes
imposed on Agent’s or the Purchasers’ net income or
capital and franchise taxes imposed on any of them by the
jurisdiction under the laws of which any of them is organized or
any political subdivision thereof (all such non-excluded Taxes
being hereinafter referred to as “ Covered Taxes
”). If any of the Loan Parties shall be required by Law to
deduct any Covered Taxes from or in respect of any sum payable
hereunder or under any Senior Term Notes or other Transaction
Documents to the Purchasers the sum payable shall be increased as
may be necessary so that after making all required deductions of
Covered Taxes (including deductions of Covered Taxes applicable to
additional sums payable under this paragraph), each Purchaser
receives an amount equal to the sum it would have received had no
such deductions been made. The Loan Parties shall make such
deductions and the Loan Parties shall pay the full amount so
deducted to the relevant taxation authority or other authority in
accordance with applicable law. In addition, the Loan Parties agree
to pay any present or future stamp, documentary, excise, privilege,
intangible or similar levies that arise at any time or from time to
time from any payment made under any and all Transaction Documents
or from the execution or delivery by the Loan Parties or from the
filing or recording or maintenance of, or otherwise with respect to
the exercise by Agent or the Purchasers of their respective rights
under any and all Transaction Documents (collectively, “
Other Taxes ”). The Loan Parties will indemnify Agent
and the Purchasers for the full amount of Covered Taxes imposed on
or with respect to amounts payable hereunder and Other Taxes, and
any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. Payment of this indemnification
shall be made within thirty (30) days from the date Agent or
the Purchasers provide the Loan Parties with a certificate
certifying and setting forth in reasonable detail the calculation
thereof as to the amount and type of such Taxes. Any such
certificates submitted by Agent or the Purchasers in good faith to
the Loan Parties shall, absent manifest error, be final, conclusive
and binding on all parties. The obligations of the Loan Parties
under this Section 3.9 shall survive the payment of the Senior
Term Notes and the termination of this Agreement. Within thirty
(30) days after the Loan Parties having received a receipt for
payment of Covered Taxes and/or Other Taxes, the Loan Parties shall
furnish to the Purchasers the original or certified copy of a
receipt evidencing payment thereof.
3.10 Capital Adequacy . If, after the date hereof, either
the introduction of or any change of the interpretation of any Law
or the compliance by the Purchasers with any guideline or request
from any Governmental Authority (whether or not having the force of
Law) has or would have the effect of reducing the rate of return on
the capital or assets of the Purchasers as a consequence of, as
determined by Agent or the Purchasers in their reasonable
discretion, the existence of any Purchaser’s obligations
under this Agreement or any other Transaction Documents, then, upon
demand by the Purchasers, the Loan Parties immediately shall pay to
the Purchasers, from the time as specified by Purchasers,
additional amounts sufficient to compensate the Purchaser in light
of such circumstances. The obligations of the Loan Parties under
this Section 3.10 shall survive the payments of the Senior
Term Notes and the termination of this Agreement.
21
3.11 Certain Waivers . The Loan Parties unconditionally
waive (i) any rights to presentment, demand, protest or
(except as expressly required hereby) notice of any kind, and
(ii) any rights of rescission, setoff, counterclaim or defense
to payment under the Senior Term Notes or otherwise that the Loan
Parties may have or claim against any Purchaser, Agent or any prior
Purchaser or Agent.
ARTICLE 4
CONDITIONS
4.1
Conditions to the Purchase of the Senior Term Notes . The
obligation of the Purchasers to purchase and pay for the Senior
Term Notes is subject to the satisfaction, prior to or at the
Closing, of the following conditions:
(a)
Representations and Warranties True . The representations
and warranties contained in Article 5 hereof shall be true and
correct at and as of the Closing Date as though then made, except
to the extent of changes caused by the transactions expressly
contemplated herein.
(b)
Material Adverse Change . There shall have been no Material
Adverse Change in the business, financial condition, assets,
Business or prospects of Parent on a Consolidated Basis (prior to
the effective date of the Transactions), or the capital markets
since December 31, 2006.
(c)
Security Agreement; Etc. The Loan Parties and Agent, for the
benefit of the Purchasers, shall have entered into (i) a
security agreement or security agreements with Agent, in form and
substance as set forth in Exhibit B attached hereto (as
the same may be amended, modified or supplemented from time to time
in accordance with the terms thereof, the “ Security
Agreement ”), (ii) security agreements for all
Patents, Patent Licenses, Trademarks, Trademark Licenses and
registered Copyrights of the Loan Parties in form and substance
reasonably acceptable to Agent for filing with the United States
Patent and Trademark Office and the United States Copyright Office
in the form set forth in Exhibit C attached hereto
(such security agreements set forth under the foregoing (ii), as
the same may be amended, modified or supplemented from time to time
in accordance with the terms thereof, the “ Intellectual
Property Agreements ”), (iii) a stock pledge and
security agreement in form and substance as set forth in
Exhibit D attached hereto (as the same may be amended,
modified or supplemented from time to time in accordance with the
terms thereof, the “ Pledge Agreement ”) and
(iv) if reasonably requested by GMAC Agent and Agent, the Loan
Parties and their depository banks shall have entered into deposit
account control agreements in form and substance satisfactory to
Agent (“ Deposit Account Control Agreements ”).
The Loan Parties shall have executed and delivered to Agent, for
the benefit of the Purchasers, an authorization to file such
financing statements and other instruments (collectively, “
Financing Statements ”), and shall have delivered to
Agent such certificates, instruments and documents, as Agent shall
reasonably require in order to perfect and maintain the continued
perfection of the security interests created by the agreements
described herein. Agent shall have received reports of filings with
appropriate government agencies showing that there are no Liens on
the assets of the Loan Parties other than Permitted Liens.
22
(d)
Intercreditor Agreement . Agent, GMAC Agent and Loan Parties
shall have executed the Intercreditor Agreement on terms reasonably
satisfactory to Agent and the Purchasers.
(e)
Charter and Bylaws . Each Loan Party shall have made such
amendments to its articles of incorporation, certificate of
incorporation, By-laws, membership agreement and such other
documents as the Purchasers shall reasonably request.
(f)
Closing Documents . The Loan Parties will have delivered or
caused to be delivered to Agent all of the following documents in
form and substance satisfactory to Agent:
(i) a
Senior Term Note for each Purchaser pursuant to Section 2.1
and Annex A hereof in the respective aggregate original
principal amounts as set forth herein, duly completed and executed
by the Loan Parties;
(ii)
certificates of good standing dated not more than thirty
(30) days prior to the Closing Date for the Loan Parties,
issued by their respective jurisdiction of organization and each
jurisdiction where a Loan Party is qualified to operate as a
foreign corporation, or its equivalent, except where the failure to
so qualify is not reasonably likely to have a Material Adverse
Effect;
(iii) a
copy of the Charter Documents of each of the Loan Parties,
certified by the appropriate governmental official of the
jurisdiction of its organization as of a date not more than thirty
(30) days prior to the Closing Date;
(iv) a
copy of the By-laws or members agreement of the Loan Parties,
certified as of the Closing Date by the secretary, assistant
secretary, manager or general partner, as applicable, of the Loan
Parties;
(v) a
certificate of the secretary or assistant secretary, manager or
general partner of the Loan Parties, certifying as to the names and
true signatures of the officers or other authorized person of the
Loan Parties authorized to sign this Agreement and the other
documents to be delivered by the Loan Parties hereunder;
(vi)
copies of the resolutions duly adopted by the board of directors,
general partners, board of managers or other governing body of the
Loan Parties, authorizing the execution, delivery and performance
by the Loan Parties of this Agreement and each of the other
agreements, instruments and documents contemplated hereby to which
each of the Loan Parties is a party to, and the consummation of all
of the other Transactions, certified as of the Closing Date by the
secretary, assistant secretary, manager or general partner of the
Loan Parties;
(vii) a
certificate dated as of the Closing Date from an officer, general
partner or manager of each of the Loan Parties stating that the
conditions specified in this Section 4.1 have been fully satisfied
or waived by Agent and the Purchasers;
23
(viii)
certificates of insurance evidencing the existence of all insurance
required to be maintained by the Loan Parties pursuant to
Section 7.1(c), and Agent and the Purchasers shall be
satisfied with the type and extent of such coverage;
(ix) an
opinion of Porter, Wright, Morris & Arthur LLP, counsel to
Parent, in form and substance satisfactory to Agent and the
Purchasers;
(x)
copies of all material leases and contracts to which each of the
Loan Parties is a party; and
(xi)
such other documents relating to the Transactions contemplated by
this Agreement as Agent, any Purchaser or their respective counsel
may reasonably request.
(g)
Purchaser’s Fees and Expenses.
(i)
Other Fees and Expenses . On the Closing Date, the Loan
Parties shall have paid the fees and expenses of Agent and the
Purchasers, payable by the Loan Parties pursuant to
Section 10.4 hereof (and the Loan Parties hereby authorize
each Purchaser to deduct all such applicable amounts from the
aggregate proceeds of the sale of the Senior Term Notes by the Loan
Parties).
(h)
Legal Investment . On the Closing Date, the
Purchasers’ purchases of the Senior Term Notes shall not be
prohibited by any applicable law, rule or regulation of any
Governmental Authority (including, without limitation, Regulations
T, U or X of the Board of Governors of the Federal Reserve System)
as a result of the promulgation or enactment thereof or any changes
therein, or change in the interpretation thereof by any
Governmental Authority, subsequent to the date of this
Agreement.
(i)
Proceedings . All proceedings taken or required to be taken
in connection with the transactions contemplated hereby to be
consummated at or prior to the Closing and all documents incident
thereto will be satisfactory in form and substance to Agent, each
Purchaser and their respective counsel.
(j)
Charter and Bylaw Amendments . The Loan Parties shall have
entered into such amendments to their respective articles of
incorporation or certificates of incorporation and Bylaws as the
Purchasers shall reasonably request.
(k)
Consummation of GMAC Financing and Refinancing . The GMAC
Financing shall have been consummated in form and substance
satisfactory to the Purchasers in the Purchasers’ sole
discretion and the Purchasers shall have been provided copies of
all agreements, instruments and documents in connection therewith.
The Refinancing shall have occurred and the Agent shall have
received payoff and lien release letters and/or other evidence
thereof satisfactory to the Agent.
4.2
Waiver . Any condition specified in this Article 4 may be
waived by Agent and the Purchasers; provided that no such
waiver will be effective unless it is set forth in a writing
executed by Agent and the Purchasers.
24
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
5.1
Representations and Warranties of the Loan Parties . As a
material inducement to Agent and the Purchasers to enter into this
Agreement and for the Purchasers to purchase the Senior Term Notes,
Parent for
|
