SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-1
Amendment No. 3
Tender Offer Statement
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
SCHEDULE 13D
Amendment No. 3
Under the Securities Exchange Act of 1934
---------------
Varsity Spirit Corporation
(Name of Subject Company)
Riddell Sports Inc.
Cheer Acquisition Corp.
(Bidders)
---------------
Common Stock, par value $.01 per share
(Title of Class of Securities)
---------------
922294 10 3
(CUSIP Number of Class of Securities)
---------------
Lisa Marroni, Esq.
General Counsel
Riddell Sports Inc.
900 Third Avenue
New York, New York 10022
(212) 826-4300
Copy to:
Sheldon S. Adler, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
(212) 735-3000
(Name, Address and Telephone Number of Person authorized to
Receive Notices and Communications on Behalf of Bidder)
Riddell Sports Inc., a Delaware corporation ("Parent"), and
Cheer Acquisition Corp., a wholly owned subsidiary of Parent and a
Tennessee corporation (the "Purchaser"), hereby amend and supplement (i)
their Tender Offer Statement on Schedule 14D-1 ("Schedule 14D-1"), filed
with the Securities and Exchange Commission (the "Commission") on May 12,
1997 with respect to the Purchaser's offer to purchase all outstanding
shares of common stock, par value $.01 per share (the "Shares"), of Varsity
Spirit Corporation, a Tennessee corporation (the "Company"), at a price of
$18.90 per Share, net to the seller in cash, without interest thereon and
(ii) their Statement on Schedule 13D filed with the Commission on May 12,
1997.
Unless otherwise indicated herein, each capitalized term
used but not defined herein shall have the meaning ascribed to such term in
the Schedule 14D-1 or in the Offer to Purchase referred to therein.
Item 4. Source and Amount of Funds or Other Consideration.
The information set forth in Item 4(a)-(b) the Schedule
14D-1 is hereby amended and supplemented by the following information:
Parent entered into a definitive Purchase Agreement on
Friday, June 13, 1997, with respect to the Rule 144A private placement
financing to be used to fund the purchase of Company Shares in the Offer.
Pursuant to the Purchase Agreement, the sale by Parent of $115 million of
its 10 1/2% Senior Notes due 2007 (the "Senior Notes") is presently
scheduled to close on Thursday, June 19, 1997. In addition, Parent intends
to enter into a Credit Agreement among Parent, as Borrower, the
Subsidiaries of Parent, as Guarantors, the Lenders identified therein, NBD
Bank, as Administrative Agent, and NationsBank, N.A., as Documentation
Agent (the "Credit Agreement"), providing Parent with a revolving line of
credit as described in the Offer to Purchase.
Copies of the forms of Indenture with respect to the Senior
Notes and the Credit Agreement are attached hereto as Exhibits (b)(4) and
(b)(5) and are incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
(b)(4) Form of Indenture by and among Parent, the Guarantors
named therein and Marine Midland Bank, as Trustee.
(b)(5) Form of Credit Agreement among Parent, as Borrower, the
Subsidiaries of Parent, as Guarantors, the Lenders
identified therein, NBD Bank, as Administrative Agent,
and NationsBank, N.A., as Documentation Agent.
SIGNATURE
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: June 18, 1997 CHEER ACQUISITION CORP.
By: /s/ David Groelinger
Name: David Groelinger
Title: Vice President
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Date: June 18, 1997 RIDDELL SPORTS INC.
By: /s/ David Groelinger
Name: David Groelinger
Title: Chief Financial Officer
INDEX TO EXHIBITS
Exhibit
Number Exhibit
(b)(4) Form of Indenture by and among Parent, the Guarantors
named therein and Marine Midland Bank, as Trustee.
(b)(5) Form of Credit Agreement among Parent, as Borrower, the
Subsidiaries of Parent, as Guarantors, the Lenders
identified therein, NBD Bank, as Administrative Agent,
and NationsBank, N.A., as Documentation Agent.
LW DRAFT 6/17/97
------------------------------------
-------------------------------------
RIDDELL SPORTS INC.
as Issuer
The Parties Listed
on Sechedule I hereto
as Guarantors
10 1/2% SENIOR NOTES DUE 2007
------------------------------------
INDENTURE
Dated as of June 19, 1997
------------------------------------
MARINE MIDLAND BANK
as Trustee
------------------------------------
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
310 (a)(1)............................................... 7.10
(a)(2).............................................. 7.10
(a)(3) ............................................. N.A.
(a)(4).............................................. N.A.
(a)(5).............................................. 7.10
(b) ................................................ 7.10
(c) ................................................ N.A.
311 (a) ................................................. 7.11
(b) ................................................ 7.11
(c) ................................................ N.A.
312 (a).................................................. 2.05
(b)................................................. 11.03
(c) ................................................ 11.03
313 (a) ................................................. 7.06
(b)(2) ............................................. 7.07
(c) ................................................ 7.06;11.02
(d)................................................. 7.06
314 (a) ................................................. 4.03;11.02
(c)(1) ............................................. 11.04
(c)(2) ............................................. 11.04
(c)(3) ............................................. N.A.
(e) ............................................... 11.05
(f)................................................. N.A.
315 (a).................................................. 7.01
(b)................................................. 7.05,11.02
(c) ............................................... 7.01
(d)................................................. 7.01
(e)................................................. 6.11
316 (a)(last sentence) .................................. 2.09
(a)(1)(A)........................................... 6.05
(a)(1)(B) .......................................... 6.04
(a)(2) ............................................. N.A.
(b) ................................................ 6.07
(c) ................................................ 2.12
317 (a)(1) .............................................. 6.08
(a)(2).............................................. 6.09
(b) ................................................ 2.04
318 (a).................................................. 11.01
(b)................................................. N.A.
(c)................................................. 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.........................................1
Section 1.02. Other Definitions..................................15
Section 1.03 Incorporation by Reference of Trust
Indenture Act....................................15
Section 1.04. Rules of Construction..............................16
ARTICLE 2 THE NOTES
Section 2.01. Form and Dating....................................16
Section 2.02. Execution and Authentication.......................17
Section 2.03. Registrar and Paying Agent.........................17
Section 2.04. Paying Agent to Hold Money in Trust................18
Section 2.05. Holder Lists.......................................18
Section 2.06. Transfer and Exchange..............................18
Section 2.07. Replacement Senior Notes...........................29
Section 2.08. Outstanding Senior Notes...........................29
Section 2.09. Treasury Senior Notes..............................30
Section 2.10. Temporary Senior Notes.............................30
Section 2.11. Cancellation.......................................30
Section 2.12. Defaulted Interest.................................30
ARTICLE 3 REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.................................31
Section 3.02. Selection of Senior Notes to Be Redeemed...........31
Section 3.03. Notice of Redemption...............................31
Section 3.04. Effect of Notice of Redemption.....................32
Section 3.05. Deposit of Redemption Price........................32
Section 3.06. Senior Notes Redeemed in Part......................32
Section 3.07. Optional Redemption................................32
Section 3.08. Mandatory Redemption...............................33
Section 3.09. Offer to Purchase by Application of Excess
Proceeds.........................................33
ARTICLE 4 COVENANTS
Section 4.01. Payment of Senior Notes............................35
Section 4.02. Maintenance of Office or Agency....................35
Section 4.03. Reports............................................36
Section 4.04. Compliance Certificate.............................36
Section 4.05. Taxes..............................................37
Section 4.06. Stay, Extension and Usury Laws.....................37
Section 4.07. Restricted Payments................................37
Section 4.08. Dividend and Other Payment Restrictions
Affecting Subsidiaries...........................40
Section 4.09. Incurrence of Indebtedness and Issuance
of Preferred Stock...............................41
Section 4.10. Asset Sales........................................43
Section 4.11. Transactions with Affiliates.......................43
Section 4.12. Liens..............................................44
Section 4.13. Line of Business...................................44
Section 4.14. Corporate Existence................................44
Section 4.15. Offer to Repurchase Upon Change of Control.........45
Section 4.16. No Senior Subordinated Debt........................45
Section 4.17. Limitation on Issuances and Sales of Capital
Stock of Wholly Owned Restricted Subsidiaries....46
Section 4.18. Additional Subsidiary Guarantees...................46
Section 4.19. Payments for Consent...............................46
ARTICLE 5 SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets...........46
Section 5.02. Successor Corporation Substituted..................46
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default..................................47
Section 6.02. Acceleration.......................................49
Section 6.03. Other Remedies.....................................49
Section 6.04. Waiver of Past Defaults............................50
Section 6.05. Control by Majority................................50
Section 6.06. Limitation on Suits................................50
Section 6.07. Rights of Holders of Senior Notes
to Receive Payment...............................51
Section 6.08. Collection Suit by Trustee.........................51
Section 6.09. Trustee May File Proofs of Claim...................51
Section 6.10. Priorities.........................................51
Section 6.11. Undertaking for Costs..............................52
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee..................................52
Section 7.02. Rights of Trustee..................................53
Section 7.03. Individual Rights of Trustee.......................54
Section 7.04. Trustee's Disclaimer...............................54
Section 7.05. Notice of Defaults.................................54
Section 7.06. Reports by Trustee to Holders of the
Senior Notes.....................................54
Section 7.07. Compensation and Indemnity.........................55
Section 7.08. Replacement of Trustee.............................55
Section 7.09. Successor Trustee by Merger, etc...................56
Section 7.10. Eligibility; Disqualification......................56
Section 7.11. Preferential Collection of Claims
Against Company..................................57
ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance
or Covenant Defeasance...........................57
Section 8.02. Legal Defeasance and Discharge.....................57
Section 8.03. Covenant Defeasance................................57
Section 8.04. Conditions to Legal or Covenant Defeasance.........58
Section 8.05. Deposited Money and Government
Securities to be Held in Trust; Other
Miscellaneous Provisions.........................59
Section 8.06. Repayment to Company...............................60
Section 8.07. Reinstatement......................................60
ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Notes.........60
Section 9.02. With Consent of Holders of Senior Notes............61
Section 9.03. Compliance with Trust Indenture Act................62
Section 9.04. Revocation and Effect of Consents..................63
Section 9.05. Notation on or Exchange of Senior Notes............63
Section 9.06. Trustee to Sign Amendments, etc....................63
ARTICLE 10 SUBSIDIARY GUARANTEES
Section 10.01. Subsidiary Guarantees..............................63
Section 10.03. Execution and Delivery of Subsidiary Guarantee.....64
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.65
Section 10.05. Releases Following Sale of Assets..................66
Section 10.06. "Trustee" to Include Paying Agent..................66
ARTICLE 11 MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.......................66
Section 11.02. Notices............................................66
Section 11.03. Communication by Holders of Senior Notes
with Other Holders of Senior Notes...............68
Section 11.04. Certificate and Opinion as to
Conditions Precedent.............................68
Section 11.05. Statements Required in Certificate or Opinion......68
Section 11.06. Rules by Trustee and Agents........................68
Section 11.07. No Personal Liability of Directors,
Officers, Employees and Stockholders.............69
Section 11.08. Governing Law......................................69
Section 11.09. No Adverse Interpretation of Other Agreements......69
Section 11.10. Successors.........................................69
Section 11.11. Severability.......................................69
Section 11.12. Counterpart Originals..............................69
Section 11.13. Table of Contents, Headings, etc...................69
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING
INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF NOTATION OF SUBSIDIARY GUARANTEE
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
INDENTURE dated as of June 19, 1997 between Riddell Sports Inc.,
a Delaware corporation (the "Company"), each domestic subsidiary of the
Company, listed on Schedule I attached hereto, as Guarantors (the
"Guarantors"), and Marine Midland Bank, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the
Holders of the 10 1/2% Senior Notes due 2007.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"144A Global Note" means a global Senior Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of
the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of the Senior Notes sold in reliance on
Rule 144A.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person,
including, without limitation, Indebtedness incurred in connection with, or
in contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a
Lien encumbering any asset acquired by such specified Person.
"Additional Senior Notes" means up to $25 million aggregate
principal amount of Senior Notes (other than the Initial Senior Notes)
issued under this Indenture in accordance with Sections 2.02 and 4.09
hereof, as part of the same series as the Initial Senior Notes.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting
securities, by agreement or otherwise; provided that beneficial ownership
of 10% or more of the voting securities of a Person shall be deemed to be
control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in any Global Note, the rules and
procedures of the Depositary, Euroclear and Cedel that apply to such
transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way
of a sale and leaseback) other than sales of inventory or other current
assets in the ordinary course of business consistent with past practices
(provided that transactions governed by Section 4.15 and/or Section 5.01
shall be governed by such provisions and not by Section 4.10), and (ii) the
issue or sale by the Company or any of its Subsidiaries of Equity Interests
of any of the Company's Subsidiaries, in the case of either clause (i) or
(ii), whether in a single transaction or a series of related transactions
that have a fair market value (as determined in good faith by the Board of
Directors) in excess of $1.0 million. Notwithstanding the foregoing: (i) a
transfer of assets by the Company to a Guarantor or by a Guarantor to the
Company or to another Guarantor, (ii) an issuance of Equity Interests by a
Guarantor to the Company or to another Guarantor, (iii) a dividend,
distribution, Restricted Payment or Investment that is permitted by Section
4.07 and (iv) the transfer of any royalty payment by the Company or any
Subsidiary as contemplated by the MOU, and as modified by the terms of any
definitive settlement agreement negotiated thereunder (provided that the
aggregate payouts made pursuant to the definitive settlement agreement are
not materially more expensive to the Company than the terms of the MOU),
shall not be deemed to be Asset Sales.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal
or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company,
or any authorized committee of the Board of Directors.
"Borrowing Base" means as of any date, an amount equal to the sum
of (a) 85% of the face amount of all accounts receivable owned by the
Company and its Restricted Subsidiaries as of such date that are not more
than 90 days past due, and (b) 60% of the book value of all inventory owned
by the Company and its Subsidiaries as of such date, all calculated on a
consolidated basis and in accordance with GAAP. To the extent that
information is not available as to the amount of accounts receivable or
inventory or trade payables as of a specific date, the Company may utilize
the most recent available information provided to the lenders under the
Credit Facilities for purposes of calculating the Borrowing Base.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or
limited liability company, partnership or membership interests (whether
general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses
of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the full
faith and credit of the United States government or any agency or
instrumentality thereof having maturities of not more than six months from
the date of acquisition, (iii) certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any lender party to the New
Credit Facility or with any domestic commercial bank having capital and
surplus in excess of $500.0 million and a Keefe Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting at the time of
purchase the qualifications specified in clause (iii) above and (v)
commercial paper of a domestic issuer having at the time of purchase a
rating of at least A-1 by Standard and Poor's Rating Group ("S&P") or P-1
by Moody's Investors Service, Inc. ("Moody's") maturing within six months
after the date of acquisition.
"Cedel" means Cedel Bank, S.A..
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of related
transactions, of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole to any "person" (as such term
is used in Section 13(d)(3) of the Exchange Act) other than the Principals
or their Related Parties, (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation)
the result of which is that any person (as defined above), other than the
Principals and their Related Parties, becomes the beneficial owner (as
defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or
indirectly, of 35% or more of the Voting Stock of the Company, (iv) the
first day on which a majority of the members of the Board of Directors of
the Company are not Continuing Directors or (v) the Company consolidates
with, or merges with or into, any Person or sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with, or merges with or
into, the Company, in any such event pursuant to a transaction in which any
of the outstanding Voting Stock of the Company is converted into or
exchanged for cash, securities or other property, other than any such
transaction where the Voting Stock of the Company outstanding immediately
prior to such transaction is converted into or exchanged for Voting Stock
(other than Disqualified Stock) of the surviving or transferee Person
constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to
such issuance).
"Company" means Riddell Sports Inc., and any and all successors
thereto.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus
(i) an amount equal to any extraordinary loss plus any net loss realized in
connection with an Asset Sale (to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes
based on income or profits of such Person and its Subsidiaries for such
period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, plus (iii) consolidated interest of
such Person and its Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization
of debt issuance costs and original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, net payments
(if any) pursuant to Hedging Obligations and any deferred financing fees
incurred, and other financing fees expensed, in connection with the
acquisition of Varsity), to the extent that any such expense was deducted
in computing such Consolidated Net Income, plus (iv) depreciation,
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) and other non-cash expenses (excluding any such non-cash expense to
the extent that it represents an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash expense that was paid
in a prior period) of such Person and its Subsidiaries for such period to
the extent that such depreciation, amortization and other non-cash expenses
were deducted in computing such Consolidated Net Income, plus (v) any other
fees or expenses expensed in connection with the acquisition of Varsity, in
each case, without duplications and on a consolidated basis and determined
in accordance with GAAP. Notwithstanding the foregoing, the provision for
taxes based on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Subsidiary of a Person shall
be added to Consolidated Net Income to compute Consolidated Cash Flow only
to the extent (and in the same proportion) that the Net Income of such
Subsidiary was included in calculating the Consolidated Net Income of such
Person and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Subsidiary without
prior approval (that has not been obtained), pursuant to the terms of its
charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to that Subsidiary
or its stockholders.
"Consolidated Net Income" means, with respect to any Person for
any period, the aggregate of the Net Income of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis,
determined in accordance with GAAP; provided that (i) the Net Income (but
not loss) of any Person that is not a Restricted Subsidiary or that is
accounted for by the equity method of accounting shall be included only to
the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of
any Restricted Subsidiary shall be excluded to the extent that the
declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has
not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or
its stockholders, (iii) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income (but not
loss) of any Unrestricted Subsidiary shall be excluded, whether or not
distributed to the Company or one of its Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of
such Board of Directors on the date of this Indenture or (ii) was nominated
for election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board at the
time of such nomination or election.
"Corporate Trust Office of the Trustee" shall be at the address
of the Trustee specified in Section 11.02 hereof or such other address as
to which the Trustee may give notice to the Company.
"Credit Facilities" means, with respect to the Company, one or
more debt facilities (including, without limitation, the New Credit
Facility) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables
financing (including through the sale of receivables to such lenders or to
special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part
from time to time. Indebtedness under Credit Facilities outstanding on the
date on which Senior Notes are first issued and authenticated under this
Indenture shall be deemed to have been incurred on such date in reliance on
the exception provided by clause (i) of the definition of Permitted Debt.
"Default" means any event that is or with the passage of time or
the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Senior Note registered in
the name of the Holder thereof and issued in accordance with Section 2.06
hereof, in the form of Exhibit A hereto except that such Senior Note shall
not bear the Global Note Legend and shall not have the "Schedule of
Exchanges of Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Senior Notes issuable or
issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depositary with respect to the Senior Notes, and any and
all successors thereto appointed as depositary hereunder and having become
such pursuant to the applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its terms
(or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or redeemable at the option of the Holder thereof, in whole or in part, on
or prior to the date that is 91 days after the date on which the Senior
Notes mature; provided, however, that a class of Capital Stock shall not be
Disqualified Stock hereunder solely as the result of any maturity or
redemption that is conditioned upon, and subject to, compliance with
Section 4.07.
"Equity Interests" means Capital Stock and all warrants, options
or other rights to acquire Capital Stock (but excluding any debt security
that is convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means a public or private offering of Capital
Stock (other than Disqualified Stock) of the Company.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the Senior Notes issued in the Exchange
Offer pursuant to Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration
Rights Agreement.
"Exchange Offer Registration Statement" has the meaning set forth
in the Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the New Credit Facility) in
existence on the date of this Indenture, until such amounts are repaid.
"Fixed Charges" means, with respect to any Person for any period,
the sum, without duplication, of (i) the consolidated interest expense of
such Person and its Restricted Subsidiaries for such period, whether paid
or accrued (including, without limitation amortization of original issue
discount, non-cash interest payments, the interest component of any
deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net payments (if any) pursuant to Hedging
Obligations but excluding amortization of debt issuance costs and excluding
any deferred financing fees incurred, and other financing fees expensed, in
connection with the acquisition of Varsity) and (ii) the consolidated
interest of such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of
its Restricted Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such Guarantee or
Lien is called upon) and (iv) the product of (a) all cash dividend payments
on any series of preferred stock of such Person or any of its Restricted
Subsidiaries, other than dividend payments on Equity Interests payable
solely in Equity Interests (other than Disqualified Stock) of the Company,
times (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state and local
statutory tax rate of such Person and its Restricted Subsidiaries,
expressed as a decimal, in each case, on a consolidated basis and in
accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person
for any period, the ratio of the Consolidated Cash Flow of such Person and
its Restricted Subsidiaries for such period to the Fixed Charges of such
Person and its Restricted Subsidiaries for such period. In the event that
the Company or any of its Restricted Subsidiaries incurs, assumes,
Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed
Charge Coverage Ratio shall be calculated giving pro forma effect to such
incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at
the beginning of the applicable four-quarter reference period. In addition,
for purposes of making the computation referred to above, (i) acquisitions
that have been made by the Company or any of its Restricted Subsidiaries,
including through mergers or consolidations and including any related
financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall
be calculated without giving effect to clause (iii) of the proviso set
forth in the definition of Consolidated Net Income, and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, and (iii) the Fixed
Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the
obligations giving rise to such Fixed Charges shall not be obligations of
the referent Person or any of its Restricted Subsidiaries following the
Calculation Date.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant
segment of the accounting profession, which are in effect as of the date of
this Indenture.
"Global Notes" means, individually and collectively, each of the
Restricted Global Notes and the Unrestricted Global Notes, substantially in
the form of Exhibit A hereto issued in accordance with Section 2.01,
2.06(b)(iv), 2.06(d)(ii)-(iii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii) hereof, which is required to be placed on all Global Notes
issued under this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment
for which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters
of credit and reimbursement agreements in respect thereof), of all or any
part of any Indebtedness.
"Guarantor" means any Subsidiary that executes a Subsidiary
Guarantee in accordance with the provisions of this Indenture, and its
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements,
interest rate cap agreements and interest rate collar agreements and (ii)
other agreements or arrangements designed to protect such Person against
fluctuations in interest rates or the value of foreign currencies purchased
or received by the Company in the ordinary course of business.
"Holder" means a Person in whose name a Senior Note is
registered.
"IAI Global Note" means the global Senior Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of, and registered in the name of,
the Depositary or its nominee that will be issued in a denomination equal
to the outstanding principal amount of the Senior Notes sold to
Institutional Accredited Investors.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations
or the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, in each case, except any amount that
constitutes an accrued expense or trade payable, if and to the extent any
of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other
Person. The amount of any Indebtedness outstanding as of any date shall be
(i) the accreted value thereof, in the case of any Indebtedness that does
not require current payments of interest, and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past
due, in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from
time to time.
"Indirect Participant" means entities that clear through or
maintain a custodial relationship with a Participant either directly or
indirectly.
"Initial Purchaser" means each of NationsBanc Capital Markets,
Inc. and First Chicago Capital Markets, Inc.
"Initial Senior Notes" means $115,000,000 aggregate principal
amount of Senior Notes issued under this Indenture on the Issue Date.
"Institutional Accredited Investor" means an institution that is
an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, who are not also QIBs.
"Investments" means, with respect to any Person, all investments
by such Person in other Persons (including Affiliates) in the forms of
direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission,
travel and similar advances to officers and employees made in the ordinary
course of business), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, together with all items
that are or would be classified as investments on a balance sheet prepared
in accordance with GAAP. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Company such that, after giving
effect to any such sale or disposition, such Person is no longer a
Restricted Subsidiary of the Company, the Company shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not
sold or disposed of in an amount determined as provided in the final
paragraph of Section 4.07 hereof.
"Issue Date" means the date of this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made
at that place on the next succeeding day that is not a Legal Holiday, and
no interest shall accrue on such payment for the intervening period.
"Letter of Transmittal" means the letter of transmittal to be
prepared by the Company and sent to all Holders of the Senior Notes for use
by such Holders in connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset, whether or not filed, recorded or otherwise perfected under
applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement
to sell or give a security interest in and any filing of or agreement to
give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" means all liquidated damages then owing
pursuant to Section 6 of the Registration Rights Agreement.
"MOU" means the Memorandum of Understanding entered into as of
the 3rd day of June, 1997, by and among the Company, RHC Licensing
Corporation, Riddell, Inc., Equilink Licensing Corporation, Ridmark
Corporation, MacMark Corporation, NBD Bank N.A., MLC Partners Limited
Partnership, Robert Nederlander, Leonard Toboroff, John McConnaughy, Jr.,
Fredric H. Brooks, Connecticut Economics Corporation, Robert Weisman, Bruce
H. Levitt, as Bankruptcy Trustee of M Holdings Corporation, Paul Swanson,
as Bankruptcy Trustee of MGS Acquisition, Inc., Official Unsecured
Creditors' Committee of MacGregor Sporting Goods, Inc., M Holdings
Corporation, f/k/a MacGregor Sporting Goods, Inc., Innovative Promotions,
Inc., Ernest Wood, Jr., Harry Wood, Pursuit Athletic Footwear, Inc., and
Riddell Athletic Footwear, Inc. in the form set forth on a Schedule 11.19
of the New Credit Facility.
"Net Income" means, with respect to any Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i)
any gain (but not loss), together with any related provision for taxes on
such gain (but not loss), realized in connection with (a) any Asset Sale
(including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or
any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries and (ii)
any extraordinary or nonrecurring gain (but not loss), together with any
related provision for taxes on such extraordinary or nonrecurring gain (but
not loss).
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof,
taxes paid or payable as a result thereof (after taking into account any
available tax credits or deductions and any tax sharing arrangements),
amounts required to be applied to the repayment of Indebtedness (other than
Indebtedness under the Credit Facilities) secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established
in accordance with GAAP.
"New Credit Facility" means that certain credit facility, dated
as of June 19, 1997, by and among the Company and NationsBank, N.A. and NBD
Bank, as agents and lenders, providing for up to $40.0 million of revolving
credit borrowings, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and
in each case as amended, extended, modified, renewed, refunded, replaced or
refinanced from time to time.
"Non Recourse Debt" means Indebtedness (i) as to which neither
the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument
that would constitute Indebtedness), (b) is directly or indirectly liable
(as a guarantor or otherwise), or (c) constitutes the lender; and (ii) no
default with respect to which (including any rights that the holders
thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of
any other Indebtedness of the Company or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Note Custodian" means the Trustee, as custodian with respect to
the Senior Notes in global form, or any successor entity thereto in such
capacity.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
under the documentation governing any Indebtedness.
"Offering" means the offering of the Senior Notes by the Company.
"Offering Memorandum" means the offering memorandum dated June
13, 1997 with respect to the Offering of the Senior Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant
Treasurer, the Controller, the Secretary, any Assistant Secretary or any
Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of
the Company by two Officers of the Company, one of whom must be the
principal executive officer, the principal financial officer, the treasurer
or the principal accounting officer of the Company, that meets the
requirements of Section 11.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of
Section 11.05 hereof. The counsel may be an employee of or counsel to the
Company, any Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or
Cedel, a Person who has an account with the Despositary, Euroclear or
Cedel, respectively (and, with respect to the Depositary, shall include
Euroclear and Cedel).
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Businesses" means (i) the lines of businesses that the
Company or any of the Guarantors were engaged in on the date of this
Indenture or that are contemplated by the Offering Memorandum, (ii) the
businesses engaged in by any acquired businesses, provided that a
substantial portion of their business at the time of acquisition was
related or ancillary to the Company's then existing lines of business,
(iii) extensions of the businesses referred to in clauses (i) and (ii),
including, without limitation, new products and services to its markets or
new distribution channels, (iv) any other lines of business or activities
that are related or ancillary to the businesses referred to in clauses
(i)-(iii), and (v) unrelated lines of business that individually are not
material to the Company and the Guarantors taken as a whole.
"Permitted Investments" means (a) any Investment in the Company
or in a Guarantor, (b) any continuing 50% equity Investment in MacMark
Corporation by the Company or any Guarantor; (c) any Investment in Cash
Equivalents; (d) any Investment by the Company or any Guarantor in a
Person, if as a result of such Investment (i) such Person becomes a
Guarantor or (ii) such Person is merged, consolidated or amalgamated with
or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Guarantor; (e) any Investment made as a
result of the receipt of non-cash consideration from an Asset Sale that was
made pursuant to and in compliance with Section 4.10; (f) any acquisition
of assets solely in exchange for the issuance of Equity Interests (other
than Disqualified Stock) of the Company; and (g) other Investments in any
Person having an aggregate fair market value (measured on the date each
such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to
this clause (g) that are at the time outstanding, not to exceed $5.0
million.
"Permitted Liens" means (i) Liens on assets of the Company and
its Subsidiaries securing Indebtedness under the Credit Facilities that was
permitted by the terms of this Indenture to be incurred; provided that such
Liens shall be permitted only to the extent they cover assets securing such
Indebtedness as of the date of this Indenture; (ii) Liens in favor of the
Company; (iii) Liens on property of a Person existing at the time such
Person is merged into or consolidated with the Company or any Subsidiary of
the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
Company or such Subsidiary; (iv) Liens on property existing at the time of
acquisition thereof by the Company or any Subsidiary of the Company,
provided that such Liens were in existence prior to the contemplation of
such acquisition; (v) Liens to secure the performance of statutory or
regulatory obligations, leases, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (vi) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the third paragraph of Section
4.09 covering only the assets acquired with such Indebtedness; (vii) Liens
existing on the date of this Indenture; (viii) Liens for taxes, assessments
or governmental charges or claims that are not yet delinquent or that are
being contested in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided that any reserve or other
appropriate provision as shall be required in conformity with GAAP shall
have been made therefor; (ix) Liens incurred in the ordinary course of
business of the Company or any Subsidiary of the Company with respect to
obligations that do not exceed $2.5 million at any one time outstanding and
that (a) are not incurred in connection with the borrowing of money or the
obtaining of advances or credit (other than trade credit in the ordinary
course of business) and (b) do not in the aggregate materially detract from
the value of the property or materially impair the use thereof in the
operation of business by the Company or such Subsidiary; (x) Liens on
assets of any Guarantor to secure Senior Indebtedness of such Guarantor
that is permitted to be incurred pursuant to the terms of Indenture; (xi)
Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt
of Unrestricted Subsidiaries; and (xii) Liens on Unrestricted Margin Stock.
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries issued in exchange for,
or the net proceeds of which are used to extend, refinance, renew, replace,
defease or refund Indebtedness of the Company or any of its Restricted
Subsidiaries; provided that: (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed
the principal amount of (or accreted value, if applicable), plus accrued
interest on, the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith including premiums paid, if any, to the holders
thereof); (ii) such Permitted Refinancing Indebtedness has a final maturity
date at or later than the final maturity date of, and has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life
to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in
right of payment to the Senior Notes, such Permitted Refinancing
Indebtedness has a final maturity date at or later than the final maturity
date of, and is subordinated in right of payment to, the Senior Notes on
terms at least as favorable to the Holders of Senior Notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Restricted
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or agency or political subdivision thereof
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or
business).
"Principals" means Robert E. Nederlander, Leonard Toboroff, John
McConnaughy, Jr., David Mauer, Dan Cougill or Jeffrey G. Webb.
"Private Placement Legend" means the legend set forth in Section
2.06(g)(i) to be placed on all Senior Notes issued under this Indenture
except where otherwise permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 19, 1997, by and among the Company and the
other parties named on the signature pages thereof, as such agreement may
be amended, modified or supplemented from time to time and, with respect to
any Additional Senior Notes, one or more registration rights agreements
between the Company and the other parties named on the signature pages
thereof, as such agreement(s) may be amended, modified or supplemented from
time to time, relating to rights given by the Company to the purchasers of
any Additional Senior Notes that may be issued pursuant to the provisions
of this Indenture to register such Additional Senior Notes under the
Securities Act.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Global Note bearing the
Private Placement Legend and deposited with or on behalf of the Depositary
and registered in the name of its nominee, issued in a denomination equal
to the outstanding principal amount of the Senior Notes initially sold in
reliance on Rule 903 of Regulation S.
"Related Party" with respect to any Principal means (A) any
spouse or former spouse or immediate family member of such Principal, (B)
the estate or any heir of such Principal, (C) any Subsidiary of any of the
Principals or any other Related Party or (D) any trust, the beneficiaries
of whom are Principals or Related Parties.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Administration of the Trustee
(or any successor group of the Trustee)with direct responsibility for the
administration of this Indenture and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Definitive Note" means a Definitive Note bearing the
Private Placement Legend.
"Restricted Global Note" means a global Senior Note bearing the
Private Placement Legend.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means any Indebtedness which by its terms
is not expressly subordinated in right of payment to the Senior Notes.
"Senior Notes" means the Company's 10 1/2% Senior Notes due 2007
issued pursuant to this Indenture.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Rights Agreement.
"Significant Restricted Subsidiary" means a subsidiary, including
its subsidiaries, which meets any of the following conditions:
(1) The Company's and its other subsidiaries' investments
in and advances to the subsidiary exceed 10 percent of the total
assets of the Company and its subsidiaries consolidated as of the
end of the most recently completed fiscal year (for a proposed
business combination to be accounted for as a pooling of
interests, this condition is also met when the number of common
shares exchanged or to be exchanged by the registrant exceeds 10
percent of its total common shares outstanding at the date the
combination is initiated); or
(2) The Company's and its other subsidiaries' proportionate
share of the total assets (after intercompany eliminations) of
the subsidiary exceeds 10 percent of the total assets of the
Company and its subsidiaries consolidated as of the end of the
most recently completed fiscal year; or
(3) The Company's and its other subsidiaries' equity in the
income from continuing operations before income taxes,
extraordinary items and cumulative effect of a change in
accounting principle of the subsidiary exceeds 10 percent of such
income of the Company and its subsidiaries consolidated for the
most recently completed fiscal year. For purposes of this
definition under this Indenture, a "significant subsidiary" shall
be determined in accordance with the Computational Senior Note
Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to
the Act, as such Regulation is in effect on the date hereof.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date of this Indenture.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any
contingent obligations to repay, redeem or repurchase any such interest or
principal prior to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard
to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly
or indirectly, by such Person or one or more of the other Subsidiaries of
that Person (or a combination thereof) and (ii) any partnership (a) the
sole general partner or the managing general partner of which is such
Person or a Subsidiary of such Person or (b) the only general partners of
which are such Person or of one or more Subsidiaries of such Person (or any
combination thereof).
"Subsidiary Guarantee" means the Guarantee by each Guarantor of
the Company's payment obligations under this Indenture and on the Senior
Notes, executed pursuant to the provisions of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the Trust Indenture Act of 1939; provided, however, that in the event
the Trust Indenture Act of 1939 is amended after such date, then "TIA"
means, to the extent required by such amendment, the Trust Indenture Act of
1939 as so amended.
"Trustee" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.
"Unrestricted Definitive Note" means one or more Definitive Notes
that do not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent Global Note in the
form of Exhibit A attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note"
attached thereto, and that is deposited with or on behalf of and registered
in the name of the Depositary, representing a series of Senior Notes that
do not bear the Private Placement Legend.
"Unrestricted Margin Stock" means the capital stock of Varsity
that constitutes "margin stock" (as defined in Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in effect),
if, and to the extent that the value of such margin stock exceeds 25% of
the total assets of the Company and its Subsidiaries, subject to the
restrictions contained in Sections 4.10 and 4.12 hereof; provided that it
is understood that upon completion of the merger pursuant to the Varsity
Merger Documents there shall be no Unrestricted Margin Stock outstanding.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than
Riddell, Inc. or Varsity or any successor to either of them) that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant
to a Board Resolution, but only to the extent that such Subsidiary: (a) has
no Indebtedness other than Non-Recourse Debt; (b) is not party to any
agreement, contract, arrangement or understanding with the Company or any
Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company (as
determined in good faith by the Board of Directors); (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries
has any direct or indirect obligation (x) to subscribe for additional
Equity Interests or (y) to maintain or preserve such Person's financial
condition or to cause such Person to achieve any specified levels of
operating results; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or
any of its Restricted Subsidiaries; and (e) has at least one director on
its board of directors that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the
Company or any of its Restricted Subsidiaries.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under
the Securities Act.
"Varsity" shall mean Varsity Spirit Corporation, an Illinois
corporation.
"Varsity Merger Documents" means the Agreement and Plan of Merger
by and among Riddell Sports Inc., Cheer Acquisition Corp. and Varsity
Spirit Corporation, dated as of May 5, 1997, and the several Stock Purchase
Agreements, dated as of May 5, 1997, between Riddell Sports Inc. and
certain employees of Varsity Spirit Corporation, in each case as amended
from to time.
"Voting Stock" means, with respect to any Person, the Capital
Stock of such Person that is at the time entitled to vote in the election
of the board of directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock
or other ownership interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or more Wholly
Owned Restricted Subsidiaries of such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"Affiliate Transaction"............................. 4.11
"Asset Sale Offer".................................. 3.09
"Authentication Order".............................. 2.02
"Change of Control Offer"........................... 4.15
"Change of Control Payment"......................... 4.15
"Change of Control Payment Date".................... 4.15
"Covenant Defeasance"............................... 8.03
"Event of Default".................................. 6.01
"Excess Proceeds"................................... 4.10
"incur"............................................. 4.09
"Legal Defeasance" ................................. 8.02
"Offer Amount"...................................... 3.09
"Offer Period"...................................... 3.09
"Paying Agent"...................................... 2.03
"Payment Default"................................... 6.01
"Permitted Debt".................................... 4.09
"Purchase Date"..................................... 3.09
"Registrar"......................................... 2.03
"Replacement Assets"................................ 4.10
"Restricted Payments"............................... 4.07
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"indenture securities" means the Senior Notes;
"indenture security Holder" means a Holder of a Senior Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
and
"obligor" on the Senior Notes and the Subsidiary Guarantees means
the Company and the Guarantors, respectively, and any successor obligor
upon the Senior Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA have the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act
shall be deemed to include substitute, replacement of successor
sections or rules adopted by the SEC from time to time.
ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A hereto. The Subsidiary
Guarantees shall be substantially in the form of Exhibit F attached hereto,
the terms of which are incorporated in and made a part of this Indenture.
The Senior Notes may have notations, legends or endorsements required by
law, stock exchange rule or usage. Each Senior Note shall be dated the date
of its authentication. The Senior Notes shall be in denominations of $1,000
and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of
this Indenture, expressly agree to such terms and provisions and to be
bound thereby. However, to the extent any provision of any Senior Note
conflicts with the express provisions of this Indenture, the provisions of
this Indenture shall govern and be controlling.
Senior Notes issued in global form shall be substantially in the
form of Exhibit A attached hereto (including the Global Note Legend affixed
thereon and the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Senior Notes issued in definitive form shall be
substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend affixed thereon and without the "Schedule of Exchanges
of Interests in the Global Note" attached thereto). Each Global Note shall
represent such of the outstanding Senior Notes as shall be specified
therein and each shall provide that it shall represent the aggregate
principal amount of outstanding Senior Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Senior Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a
Global Note to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Senior Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear
System" and "Terms and Conditions Governing Use of Euroclear" and the
"General Terms and Conditions of Cedel Bank" and "Customer Handbook" of
Cedel Bank shall be applicable to transfers of beneficial interests in the
Regulation S Global Note that is held by the Agent Members through
Euroclear or Cedel Bank.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Senior Notes for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on
the Senior Notes and may be in facsimile form.
If an Officer whose signature is on a Senior Note no longer holds
that office at the time a Senior Note is authenticated, the Senior Note
shall nevertheless be valid.
A Senior Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the Senior Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by
two Officers (an "Authentication Order"), authenticate Senior Notes for
original issue up to the aggregate principal amount stated in paragraph 4
of the Senior Notes plus Senior Notes issued to pay Liquidated Damages
pursuant to paragraph 2 of the Senior Notes. The aggregate principal amount
of Senior Notes outstanding at any time may not exceed $140,000,000 except
as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Notes. An authenticating agent may
authenticate Senior Notes whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal
with Holders or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior Notes
may be presented for registration of transfer or for exchange ("Registrar")
and an office or agency where Senior Notes may be presented for payment
("Paying Agent"). The Registrar shall keep a register of the Senior Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term
"Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or
any of its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for
the benefit of Holders or the Trustee all money held by the Paying Agent
for the payment of principal, premium or Liquidated Damages, if any, or
interest on the Senior Notes, and will notify the Trustee of any default by
the Company in making any such payment. While any such default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company at any time may require a Paying Agent to pay all
money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary) shall have no
further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon any
bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Senior Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of all Holders and shall otherwise comply with TIA ss. 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such
other times as the Trustee may request in writing, a list in such form and
as of such date as the Trustee may reasonably require of the names and
addresses of the Holders of Senior Notes and the Company shall otherwise
comply with TIA ss. 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. A Global Note may not
be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the
Company delivers to the Trustee notice from the Depositary that it is
unwilling or unable to continue to act as Depositary or that it is no
longer a clearing agency registered under the Exchange Act and, in either
case, a successor Depositary is not appointed by the Company within [90]
days after the date of such notice from the Depositary or (ii) the Company
in its sole discretion determines that the Global Notes (in whole but not
in part) should be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in
such names as the Depositary shall instruct the Trustee. Global Notes also
may be exchanged or replaced, in whole or in part, as provided in Sections
2.07 and 2.10 hereof. Every Senior Note authenticated and delivered in
exchange for, or in lieu of, a Global Note or any portion thereof, pursuant
to this Section 2.06, Section 2.07 or 2.10 hereof, shall be authenticated
and delivered in the form of, and shall be, a Global Note. A Global Note
may not be exchanged for another Senior Note other than as provided in this
Section 2.06(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global
Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial
interests in the Restricted Global Notes shall be subject to restrictions
on transfer comparable to those set forth herein to the extent required by
the Securities Act. Transfers of beneficial interests in the Global Notes
also shall require compliance with either subparagraph (i) or (ii) below,
as applicable, as well as one or more of the other following subparagraphs
as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred
to Persons who take delivery thereof in the form of a beneficial
interest in the same Restricted Global Note in accordance with the
transfer restrictions set forth in the Private Placement Legend;
provided, however, that beneficial interests in the IAI Global Note
may not under any circumstances be transferred to a Person who takes
delivery thereof in the form of a beneficial interest in the IAI
Global Note and, provided further, that prior to the expiration of
the Restricted Period transfers of beneficial interests in the
Regulation S Global Note may not be made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial
Purchaser). Beneficial interests in any Unrestricted Global Note may
be transferred only to Persons who take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of
beneficial interests (other than a transfer of a beneficial interest
in a Global Note to a Person who takes delivery thereof in the form
of a beneficial interest in the same Global Note), the transferor of
such beneficial interest must deliver to the Registrar either (A) (1)
a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures
directing the Depositary to credit or cause to be credited a
beneficial interest in another Global Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures
containing information regarding the Participant account to be
credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2)
instructions given by the Depositary to the Registrar containing
information regarding the Person in whose name such Definitive Note
shall be registered to effect the transfer or exchange referred to in
(1) above. Upon an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii)
shall be deemed to have been satisfied upon receipt by the Registrar
of the instructions contained in the Letter of Transmittal delivered
by the Holder of such beneficial interests in the Restricted Global
Notes. Upon satisfaction of all of the requirements for transfer or
exchange of beneficial interests in Global Notes contained in this
Indenture, the Senior Notes and otherwise applicable under the
Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted
Global Note. A beneficial interest in any Restricted Global Note may
be transferred to a Person who takes delivery thereof in the form of
a beneficial interest in the 144A Global Note or the Regulation S
Global Note if the transfer complies with the requirements of clause
(ii) above and the Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor
must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Global Note, then the
transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof.
A beneficial interest in the 144A Global Note or the Regulation S
Global Note may not be transferred to a Person who would be required
to take delivery thereof in the form of a beneficial interest in the
IAI Global Note.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in the Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may
be exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with
the requirements of clause (ii) above and:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of the beneficial interest to be
transferred, in the case of an exchange, or the transferee, in
the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a broker-dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a
Person who is an affiliate (as defined in Rule 144) of the
Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a beneficial interest in an Unrestricted Global
Note, a certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(a) thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to the
Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act.
If any such transfer is effected pursuant to subparagraph (B) or
(D) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, the
Trustee shall authenticate one or more Unrestricted Global Notes in
an aggregate principal amount equal to the principal amount of
beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be
exchanged for, or transferred to Persons who take delivery thereof in
the form of, a beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive
Notes.
(i) If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Definitive
Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of a Definitive Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note, a certificate from such holder in
the form of Exhibit C hereto, including, subject to Section
2.06(c)(ii) below, the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements of
the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such beneficial interest is being transferred
pursuant to an effective registration statement under the
Securities Act, a certificate to the effect set forth in Exhibit
B hereto, including the certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest in a Restricted
Global Note pursuant to this Section 2.06(c) shall be registered in
such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and
the Participant or Indirect Participant. The Trustee shall deliver
such Definitive Notes to the Persons in whose names such Senior Notes
are so registered. Any Definitive Note issued in exchange for a
beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c)(i) shall bear the Private Placement Legend and shall
be subject to all restrictions on transfer contained therein.
(ii) Notwithstanding 2.06(c)(i) hereof, a holder of a beneficial
interest in a Restricted Global Note may exchange such beneficial
interest for an Unrestricted Definitive Note or may transfer such
beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the holder of such beneficial interest, in the case
of an exchange, or the transferee, in the case of a transfer,
certifies in the applicable Letter of Transmittal that it is not
(1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an
affiliate (as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form of
Exhibit C hereto, including the certifications in item (1)(b)
thereof;
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the form
of a Definitive Note that does not bear the Private Placement
Legend, a certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to the
Company, to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act.
(iii) If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note or to transfer such beneficial interest to a Person
who takes delivery thereof in the form of a Definitive Note, then,
upon satisfaction of the conditions set forth in Section 2.06(b)(ii)
hereof, the Trustee shall cause the aggregate principal amount of the
applicable Global Note to be reduced accordingly pursuant to Section
2.06(h) hereof, and the Company shall execute and the Trustee shall
authenticate and deliver to the Person designated in the instructions
a Definitive Note in the appropriate principal amount. Any Definitive
Note issued in exchange for a beneficial interest pursuant to this
Section 2.06(c)(iii) shall be registered in such name or names and in
such authorized denomination or denominations as the holder of such
beneficial interest shall instruct the Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The
Trustee shall deliver such Definitive Notes to the Persons in whose
names such Senior Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section
2.06(c)(iii) shall not bear the Private Placement Legend. A
beneficial interest in an Unrestricted Global Note cannot be
exchanged for a Definitive Note bearing the Private Placement Legend
or transferred to a Person who takes delivery thereof in the form of
a Definitive Note bearing the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) If any Holder of a Restricted Definitive Note proposes to
exchange such Senior Note for a beneficial interest in a Restricted
Global Note or to transfer such Definitive Notes to a Person who
takes delivery thereof in the form of a beneficial interest in a
Restricted Global Note, then, upon receipt by the Registrar of the
following documentation:
(A) if the Holder of such Restricted Definitive Note
proposes to exchange such Senior Note for a beneficial interest
in a Restricted Global Note, a certificate from such Holder in
the form of Exhibit C hereto, including the certifications in
item (2)(b) thereof;
(B) if such Definitive Note is being transferred to a QIB
in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with
Rule 903 or Rule 904 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(a) thereof;
(E) if such Definitive Note is being transferred to an
Institutional Accredited Investor in reliance on an exemption
from the registration requirements of the Securities Act other
than those listed in subparagraphs (B) through (D) above, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable;
(F) if such Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof; or
(G) if such Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act,
a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Definitive Note, increase or cause to be
increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global Note, in the case of
clause (B) above, the 144A Global Note, in the case of clause (C)
above, the Regulation S Global Note, and in all other cases, the IAI
Global Note.
(ii) A Holder of a Restricted Definitive Note may exchange such
Senior Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes
delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Senior Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof;
(2) if the Holder of such Definitive Notes proposes to
transfer such Senior Notes to a Person who shall take delivery
thereof in the form of a beneficial interest in the Unrestricted
Global Note, a certificate from such Holder in the form of
Exhibit B hereto, including the certifications in item (4)
thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act, and such Definitive Notes are being exchanged or transferred
in compliance with any applicable blue sky securities laws of any
State of the United States.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive
Notes and increase or cause to be increased the aggregate principal
amount of the Unrestricted Global Note.
(iii) A Holder of an Unrestricted Definitive Note may exchange
such Senior Note for a beneficial interest in an Unrestricted Global
Note or transfer such Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted
Global Note at any time. Upon receipt of a request for such an
exchange or transfer, the Trustee shall cancel the applicable
Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global
Notes.
If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of beneficial interests
transferred pursuant to subparagraphs (ii)(B), (ii)(D) or (iii) above.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's
compliance with the provisions of this Section 2.06(e), the Registrar shall
register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present
or surrender to the Registrar the Definitive Notes duly endorsed or
accompanied by a written instruction of transfer in form satisfactory to
the Registrar duly executed by such Holder or by his attorney, duly
authorized in writing. In addition, the requesting Holder shall provide any
additional certifications, documents and information, as applicable,
pursuant to the provisions of this Section 2.06(e).
(i) Restricted Definitive Notes may be transferred to and
registered in the name of Persons who take delivery thereof if the
Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A
under the Securities Act, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or
Rule 904, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item
(2) thereof; and
(C) if the transfer will be made pursuant to any other
exemption from the registration requirements of the Securities
Act, then the transferor must deliver (x) a certificate in the
form of Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof,
if applicable.
(ii) Any Restricted Definitive Note may be exchanged by the
Holder thereof for an Unrestricted Definitive Note or transferred to
a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights
Agreement and the Holder, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the
applicable Letter of Transmittal that it is not (1) a
broker-dealer, (2) a Person participating in the distribution of
the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Participating
Broker-Dealer pursuant to the Exchange Offer Registration
Statement in accordance with the Registration Rights Agreement;
or
(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Senior Notes for an Unrestricted
Definitive Note, a certificate from such Holder in the form of
Exhibit C hereto, including the certifications in item (1)(a)
thereof;
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Senior Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive Note,
a certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof; and
(3) in each such case set forth in this subparagraph
(D), an Opinion of Counsel in form reasonably acceptable to the
Company to the effect that such exchange or transfer is in
compliance with the Securities Act, that the restrictions on
transfer contained herein and in the Private Placement Legend are
not required in order to maintain compliance with the Securities
Act, and such Restricted Definitive Note is being exchanged or
transferred in compliance with any applicable blue sky securities
laws of any State of the United States.
(iii) A Holder of Unrestricted Definitive Notes may transfer such
Senior Notes to a Person who takes delivery thereof in the form of an
Unrestricted Definitive Note. Upon receipt of a request to register
such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holder
thereof. Unrestricted Definitive Notes cannot be exchanged for or
transferred to Persons who take delivery thereof in the form of a
Restricted Definitive Note.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section
2.02, the Trustee shall authenticate (i) one or more Unrestricted Global
Notes in an aggregate principal amount equal to the principal amount of the
beneficial interests in the Restricted Global Notes tendered for acceptance
by Persons that certify in the applicable Letter of Transmittal that the
are not (x) broker-dealers, (y) Persons participating in the distribution
of the Exchange Notes or (z) Persons who are affiliates (as defined in Rule
144) of the Company and accepted for exchange in the exchange Offer and
(ii) Definitive Notes in an aggregate principal amount equal to the
principal amount of the Restricted Definitive Notes accepted for exchange
in the Exchange Offer. Concurrent with the issuance of such Senior Notes,
the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Company shall
execute and the Trustee shall authenticate and deliver to the Persons
designated by the Holders of Definitive Notes so accepted Definitive Notes
in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this
Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (b) below, each
Global Note and each Definitive Note (and all Senior Notes issued
in exchange therefor or substitution thereof) shall bear the
legend in substantially the following form:
"THIS SENIOR NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SENIOR
NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN
ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE IF ANY, REQUIRED
UNDER THE INDENTURE PURSUANT TO WHICH THIS SENIOR NOTE IS ISSUED)
AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(ii)-(iii), (d)(ii)-(iii), (e)(ii)-(iii) or (f) to this
Section 2.06 (and all Senior Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE
TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE
MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO
SECTION 2.06 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF
THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE
TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE
INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE
COMPANY."
(h) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note
shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note or for Definitive Notes, the principal amount of
Senior Notes represented by such Global Note shall be reduced accordingly
and an endorsement shall be made on such Global Note, by the Trustee or by
the Depositary at the direction of the Trustee, to reflect such reduction;
and if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased
accordingly and an endorsement shall be made on such Global Note, by the
Trustee or by the Depositary at the direction of the Trustee, to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax or similar
governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Senior Note selected for redemption in
whole or in part, except the unredeemed portion of any Senior Note
being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to register
the transfer of or to exchange any Senior Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Senior Notes for redemption under Section 3.02 hereof
and ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Senior Note so selected
for redemption in whole or in part, except the unredeemed portion of
any Senior Note being redeemed in part or (C) to register the
transfer of or to exchange a Senior Note between a record date and
the next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a transfer
of any Senior Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Senior Note is registered as
the absolute owner of such Senior Note for the purpose of receiving
payment of principal of and interest on such Senior Notes and for all
other purposes, and none of the Trustee, any Agent or the Company
shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and Definitive
Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
SECTION 2.07. REPLACEMENT SENIOR NOTES.
If any mutilated Senior Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Senior Note, the Company shall issue and
the Trustee, upon the written order of the Company signed by two Officers
of the Company, shall authenticate a replacement Senior Note if the
Trustee's requirements are met. If required by the Trustee or the Company,
an indemnity bond must be supplied by the Holder that is sufficient in the
judgment of the Trustee and the Company to protect the Company, the
Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Senior Note is replaced. The Company may charge for
its expenses in replacing a Senior Note.
Every replacement Senior Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other Senior Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING SENIOR NOTES.
The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those canceled by it, those
delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions
hereof, and those described in this Section as not outstanding. Except as
set forth in Section 2.09 hereof, a Senior Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Senior Note.
If a Senior Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Senior Note is held by a bona fide purchaser.
If the principal amount of any Senior Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date,
money sufficient to pay Senior Notes payable on that date, then on and
after that date such Senior Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY SENIOR NOTES.
In determining whether the Holders of the required principal
amount of Senior Notes have concurred in any direction, waiver or consent,
Senior Notes owned by the Company, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control
with the Company, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected
in relying on any such direction, waiver or consent, only Senior Notes that
a Responsible Officer of the Trustee knows are so owned shall be so
disregarded.
SECTION 2.10. TEMPORARY SENIOR NOTES.
Until certificates representing the Senior Notes are ready for
delivery, the Company may prepare and the Trustee shall authenticate
temporary Senior Notes upon a written order of the Company signed by two
Officers of the Company. Temporary Senior Notes shall be substantially in
the form of certificated Senior Notes but may have variations that the
Company considers appropriate for temporary Senior Notes and as shall be
reasonably acceptable to the Trustee. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate Definitive Notes
in exchange for temporary Senior Notes. Until so exchanged, Holders of
temporary Senior Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Notes to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Senior Notes surrendered to them for registration of transfer,
exchange or payment. The Trustee and no one else shall cancel all Senior
Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall destroy canceled Senior Notes
(subject to the record retention requirement of the Exchange Act) unless
the Company directs the Trustee to return such Senior Notes to the Company.
Certification of the destruction of all canceled Senior Notes shall be
delivered to the Company. The Company may not issue new Senior Notes to
replace Senior Notes that it has paid or that have been delivered to the
Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Senior
Notes, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, in each case
at the rate provided in the Senior Notes and in Section 4.01 hereof. The
Company shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Senior Note and the date of the
proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record
date shall be less than 10 days prior to the related payment date for such
defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the
name and at the expense of the Company) shall mail or cause to be mailed to
Holders a notice that states the special record date, the related payment
date and the amount of such interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to
the Trustee, at least 30 days but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the clause of this
Indenture pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Senior Notes to be redeemed and (iv)
the redemption price.
SECTION 3.02. SELECTION OF SENIOR NOTES TO BE REDEEMED.
If less than all of the Senior Notes are to be redeemed or
purchased in an offer to purchase at any time, selection of Senior Notes
for redemption or purchase shall be made by the Trustee in compliance with
the requirements of the principal national securities exchange, if any, on
which the Senior Notes are listed, or, if the Senior Notes are not so
listed, on a pro rata basis or (inasmuch as a precise pro rata selection
may not be possible in light of the last clause of this Section 3.02) by
such other method as the Trustee shall deem fair and appropriate; provided
that no Senior Notes of $1,000 or less shall be redeemed or purchased in
part.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall
mail or cause to be mailed, by first class mail, a notice of redemption to
each Holder whose Senior Notes are to be redeemed at its registered
address.
The notice shall identify the Senior Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Note is being redeemed in part, the portion of
the principal amount of such Senior Note to be redeemed and that,
after the redemption date upon surrender of such Senior Note, a new
Senior Note or Senior Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original
Senior Note;
(d) the name and address of the Paying Agent;
(e) that Senior Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption
payment, interest on Senior Notes called for redemption ceases to
accrue on and after the redemption date;
(g) the paragraph of the Senior Notes and/or Section of this
Indenture pursuant to which the Senior Notes called for redemption
are being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Senior Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however,
that the Company shall have delivered to the Trustee, at least 45 days
prior to the redemption date (unless the Trustee consents to a shorter
notice period), an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice
as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Senior Notes called for redemption become irrevocably due and
payable on the redemption date at the redemption price. A notice of
redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Senior Notes to be
redeemed on that date. The Trustee or the Paying Agent shall promptly
return to the Company any money deposited with the Trustee or the Paying
Agent by the Company in excess of the amounts necessary to pay the
redemption price of, and accrued interest on, all Senior Notes to be
redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue
on the Senior Notes or the portions of Senior Notes called for redemption.
If a Senior Note is redeemed on or after an interest record date but on or
prior to the related interest payment date, then any accrued and unpaid
interest shall be paid to the Person in whose name such Senior Note was
registered at the close of business on such record date. If any Senior Note
called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the
redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Senior Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART.
Upon surrender of a Senior Note that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee
shall authenticate for the Holder at the expense of the Company a new
Senior Note equal in principal amount to the unredeemed portion of the
Senior Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Senior Notes shall not be redeemable at the Company's option prior to July
15, 2002. Thereafter, the Senior Notes shall be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date,
if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
Year Percentage
2002....................................... 105.25%
2003....................................... 103.50%
2004....................................... 101.75%
2005 and thereafter ....................... 100.00%
(b) Notwithstanding the provisions of clause (a) of this Section
3.07, at any time on or before July 15, 2000, the Company may (but shall
not have the obligation to) redeem, on one or more occasions, up to 35% of
the aggregate principal amount of the Senior Notes at a redemption price
equal to 110 1/2% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more Equity Offerings; provided that
at least $75.0 million aggregate principal amount of Senior Notes remain
outstanding immediately after the occurrence of such redemption; and
provided further, that such redemption shall occur within 45 days of the
date of the closing of such Equity Offering.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory redemption payments or
sinking fund payments with respect to the Senior Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an offer to all Holders to purchase Senior
Notes (an "Asset Sale Offer"), it shall follow the procedures specified
below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the
extent that a longer period is required by applicable law (the "Offer
Period"). No later than five Business Days after the termination of the
Offer Period (the "Purchase Date"), the Company shall purchase the
principal amount of Senior Notes required to be purchased pursuant to
Section 4.10 hereof (the "Offer Amount") or, if less than the Offer Amount
has been tendered, all Senior Notes tendered in response to the Asset Sale
Offer. Payment for any Senior Notes so purchased shall be made in the same
manner as interest payments are made.
If the Purchase Date is on or after an interest record date and
on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Senior Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Senior Notes pursuant to
the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Senior Notes pursuant
to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
The notice, which shall govern the terms of the Asset Sale Offer, shall
state:
(a) that the Asset Sale Offer is being made pursuant to this
Section 3.09 and Section 4.10 hereof and the length of time the Asset
Sale Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Note not tendered or accepted for payment
shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior Note accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Senior Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such
Senior Note purchased and may not elect to have only a portion of
such Senior Note purchased;
(f) that Holders electing to have a Senior Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Senior Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Note completed, or transfer by
book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice
at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if
the Company, the depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a
telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Senior Note the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Senior Note purchased;
(h) that, if the aggregate principal amount of Senior Notes
surrendered by Holders exceeds the Offer Amount, the Company shall
select the Senior Notes to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that
only Senior Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose Senior Notes were purchased only in part
shall be issued new Senior Notes equal in principal amount to the
unpurchased portion of the Senior Notes surrendered (or transferred
by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary,
the Offer Amount of Senior Notes or portions thereof tendered pursuant to
the Asset Sale Offer, or if less than the Offer Amount has been tendered,
all Senior Notes tendered, and shall deliver to the Trustee an Officers'
Certificate stating that such Senior Notes or portions thereof were
accepted for payment by the Company in accordance with the terms of this
Section 3.09. The Company, the Depositary or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Senior Notes tendered by such Holder and accepted
by the Company for purchase, and the Company shall promptly issue a new
Senior Note, and the Trustee, upon written request from the Company, shall
authenticate and mail or deliver such new Senior Note to such Holder, in a
principal amount equal to any unpurchased portion of the Senior Note
surrendered. Any Senior Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR NOTES.
The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Senior Notes on the dates and in the
manner provided in the Senior Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if
other than the Company or a Subsidiary thereof, holds as of 10:00 a.m.
Eastern Time on the due date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal,
premium, if any, and interest then due. The Company shall pay all
Liquidated Damages, if any, in the same manner on the dates and in the
amounts set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest
in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the then applicable interest rate
on the Senior Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to
any applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City
of New York, an office or agency (which may be an office of the Trustee or
an Affiliate of the Trustee, Registrar or co-registrar) where Senior Notes
may be surrendered for registration of transfer or for exchange and where
notices and demands to or upon the Company in respect of the Senior Notes
and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Senior Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, the City of New
York for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the
SEC, so long as any Senior Notes are outstanding, the Company shall furnish
to the Holders of Senior Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC
on Forms 10-Q and 10-K if the Company were required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and
results of operations of the Company and its consolidated Subsidiaries
(showing in reasonable detail, either on the face of the financial
statements or in the footnotes thereto and in Management's Discussion and
Analysis of Financial Condition and Results of Operations, the financial
condition and results of operations of the Company and its Restricted
Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Company) and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would
be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports.
(b) Whether or not required by the rules and regulations of the
SEC, at any time after the Company files the Exchange Offer Registration
Statement, the Company shall file a copy of all such information and
reports with the SEC for public availability (unless the SEC shall not
accept such a filing) and make such information available to securities
analysts and prospective investors upon request.
(c) The Company and the Guarantors have agreed that, for so long
as any Senior Notes remain outstanding, they shall furnish to the Holders
and to securities analysts and prospective investors, upon their request,
the information required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company [and each Guarantor] shall deliver to the
Trustee, within 90 days after the end of each fiscal year, an Officers'
Certificate stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determining whether the
Company has kept, observed, performed and fulfilled its obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or
Events of Default of which he or she may have knowledge and what action the
Company is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence
by reason of which payments on account of the principal of or interest, if
any, on the Senior Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes
to take with respect thereto.
(b) So long as not contrary to the then current recommendations
of the American Institute of Certified Public Accountants, the year-end
financial statements delivered pursuant to Section 4.03(a) above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that
in making the examination necessary for certification of such financial
statements, nothing has come to their attention that would lead them to
believe that the Company has violated any provisions of Article 4 or
Article 5 hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries
to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Senior Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors covenants (to the extent
that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of
this Indenture; and each of the Company and the Guarantors (to the extent
that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to
any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every
such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any other payment or distribution on account of the Company's or any
of its Restricted Subsidiaries' Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation
involving the Company) or to the direct or indirect holders of the
Company's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company), provided that
each Restricted Subsidiary of the Company will be permitted to declare and
pay dividends to the holders of such Restricted Subsidiary's common Equity
Interests on a pro rata basis; (ii) purchase, redeem or otherwise acquire
or retire for value (including, without limitation, in connection with any
merger or consolidation involving the Company) any Equity Interests of the
Company, any Restricted Subsidiary of the Company or any Affiliate of the
Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company); (iii) make any payment on or with
respect to, or purchase, redeem, defease or otherwise acquire or retire for
value, any Indebtedness that is subordinated to the Senior Notes, except
(x) a payment of interest or principal at Stated Maturity or (y) pursuant
to a change of control provision applicable to such subordinated
Indebtedness, provided that the Company has complied with the terms of
Section 4.15 hereof and has paid, or has made adequate provision in the
reasonable judgment of the Board of Directors for the payment of, the
Senior Notes that have been or may be tendered in response to a Change of
Control Offer; or (iv) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Company and its Restricted
Subsidiaries after the date of this Indenture (including all Restricted
Payments permitted by the next succeeding paragraph but excluding
Restricted Payments permitted by clauses (ii), (iii) and (vi) of the next
succeeding paragraph), is less than the sum of (i) 50% of the Consolidated
Net Income of the Company for the period (taken as one accounting period)
from the beginning of the first fiscal quarter commencing after the date of
this Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus (ii) 100% of the
aggregate net cash proceeds received by the Company from the issue or sale
since the date of this Indenture of Equity Interests of the Company (other
than Disqualified Stock) or of Disqualified Stock or debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or Disqualified Stock or convertible debt securities)
sold to a Subsidiary of the Company and other than Disqualified Stock or
convertible debt securities that have been converted into Disqualified
Stock), plus (iii) to the extent that any Restricted Investment that was
made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition,
if any) and (B) the initial amount of such Restricted Investment and (C)
the amount resulting from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (in each case, such amount to be valued as provided
in the second succeeding paragraph) not to exceed the amount of Investments
previously made by the Company or any Restricted Subsidiary in such
Unrestricted Subsidiary and which was treated as a Restricted Payment under
this Indenture.
The foregoing provisions shall not prohibit (i) the payment of
any dividend within 60 days after the date of declaration thereof, if at
said date of declaration such payment would have complied with the
provisions of this Indenture; (ii) the redemption, repurchase, retirement,
defeasance or other acquisition of any subordinated Indebtedness or Equity
Interests of the Company in exchange for, or out of the net cash proceeds
of the substantially concurrent sale (other than to a Restricted Subsidiary
of the Company) of, other Equity Interests of the Company (other than any
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition shall be excluded from clause (c)(ii) of
the preceding paragraph; (iii) the defeasance, redemption, repurchase or
other acquisition of pari passu or subordinated Indebtedness with the net
cash proceeds from an incurrence of Permitted Refinancing Indebtedness;
(iv) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary
of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management, employees or consultants pursuant to
any management, employee or consultant equity subscription agreement or
stock option agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $500,000 in any twelve-month period and no Default or Event of
Default shall have occurred and be continuing immediately after such
transaction; (v) cash payments in lieu of fractional shares issuable as
dividends on preferred securities of the Company or any of its Restricted
Subsidiaries; provided that such cash payments shall not exceed $50,000 in
the aggregate in any twelve-month period and no Default or Event of Default
shall have occurred and be continuing immediately after such transaction;
and (vi) payments pursuant to the Varsity Merger Documents.
The Board of Directors may designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if such designation would not cause a
Default; provided that in no event shall the business currently operated by
Riddell, Inc. and Varsity be transferred to or held by an Unrestricted
Subsidiary. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the
extent repaid in cash) in the Subsidiary so designated shall be deemed to
be Restricted Payments at the time of such designation and shall reduce the
amount available for Restricted Payments under the first paragraph of this
Section 4.07 hereof. All such outstanding Investments shall be deemed to
constitute Investments in an amount equal to the greatest of (x) the net
book value of such Investments at the time of such designation and (y) the
fair market value of such Investments at the time of such designation. Such
designation shall only be permitted if such Restricted Payment would be
permitted at such time and if such Restricted Subsidiary otherwise meets
the definition of an Unrestricted Subsidiary. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions and was permitted by the provisions
of Section 4.07. If, at any time, any Unrestricted Subsidiary would fail to
meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of the Company as of such date (and, if
such Indebtedness is not permitted to be incurred as of such date under
Section 4.09 hereof the Company shall be in default of such covenant). The
Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of
such Unrestricted Subsidiary and such designation shall only be permitted
if (i) such Indebtedness is permitted under Section 4.09 hereof calculated
on a pro forma basis as if such designation had occurred at the beginning
of the four-quarter reference period, and (ii) no Default or Event of
Default would be in existence following such designation.
In computing the Consolidated Net Income of the Company under the
foregoing clause (c)(i), (i) the Company may use audited financial
statements for the portions of the relevant period for which audited
financial statements are available on the date of determination and
unaudited financial statements and other current financial data based on
the books and records of the Company for the remaining portion of such
period and (ii) the Company shall be permitted to rely in good faith on the
financial statements and other financial data derived from its books and
records that are available on the date of determination. If the Company
makes a Restricted Payment that, at the time of the making of such
Restricted Payment, would in the good faith determination of the Company be
permitted under the requirements of this Indenture, such Restricted Payment
shall be deemed to have been made in compliance with this Indenture
notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the
Company for any period.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any non-cash Restricted Payment shall be
determined by the Board of Directors whose resolution with respect thereto
shall be delivered to the Trustee, such determination to be based upon an
opinion or appraisal issued by an accounting, appraisal or investment
banking firm of national standing if such fair market value exceeds $5.0
million. Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by this Section 4.07 hereof were computed,
together with a copy of any fairness opinion or appraisal required by this
Indenture.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted Subsidiaries
(1) on its Capital Stock or (2) with respect to any other interest or
participation in, or measured by, its profits, or (b) pay any indebtedness
owed to the Company or any of its Restricted Subsidiaries, (ii) make loans
or advances to the Company or any of its Restricted Subsidiaries or (iii)
transfer any of its properties or assets to the Company or any of its
Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on
the date of this Indenture, (b) the New Credit Facility as in effect as of
the date of this Indenture, and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive with respect to such dividend and
other payment restrictions than those contained in the New Credit Facility
as in effect on the date of this Indenture, (c) this Indenture and the
Senior Notes, (d) applicable law, (e) any instrument governing Indebtedness
or Capital Stock of a Person acquired by the Company or any of its
Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such Indebtedness was incurred in connection with or
in contemplation of such acquisition), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so
acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (f) by reason of
customary non-assignment provisions in leases, licenses, encumbrances,
contracts or similar assets entered into or acquired in the ordinary course
of business and consistent with past practices, (g) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (iii) above on the
property so acquired, (h) Permitted Refinancing Indebtedness, provided that
the restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in
the agreements governing the Indebtedness being refinanced or (i)
restrictions contained in agreements for the sale or disposition of assets
or of all of the capital stock of Subsidiaries that are otherwise in
compliance with the terms of this Indenture to the extent such agreements
contain restrictions with respect to assets or the Subsidiary sold or
disposed of thereunder.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable, contingently
or otherwise, with respect to (collectively, "incur") any Indebtedness
(including Acquired Debt) and the Company shall not issue any Disqualified
Stock and shall not permit any of its Subsidiaries to issue any shares of
preferred stock (except that a Subsidiary of the Company may issue
preferred stock to the Company or to any Guarantor); provided, however,
that the Company or the Guarantors may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date on which such additional Indebtedness is incurred or
such Disqualified Stock is issued would have been at least 2.0 to 1, if
such incurrence or issuance is on or prior to September 30, 1999, or 2.25
to 1, if such incurrence or issuance is after September 30, 1999, in each
case, determined on a pro forma basis (including a pro forma application of
the net proceeds therefrom), as if the additional Indebtedness had been
incurred, or the Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The Company shall not incur any Indebtedness that is
contractually subordinated to any other Indebtedness of the Company unless
such Indebtedness is also contractually subordinated to the Senior Notes on
substantially identical terms; provided, however, that no Indebtedness of
the Company shall be deemed to be contractually subordinated to any other
Indebtedness of the Company solely by virtue of being unsecured.
The provisions of the first paragraph of this Section 4.09 shall
not apply to the incurrence of any of the following items of Indebtedness
(collectively, "Permitted Debt"):
(i) the incurrence by the Company and the Guarantors of
Indebtedness (including letters of credit) pursuant to the Credit
Facilities (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and the Guarantors
thereunder) outstanding under all Credit Facilities after giving effect to
such incurrence, including all Permitted Refinancing Indebtedness incurred
to refinance or replace any Indebtedness incurred pursuant to this clause
(i), does not exceed the greater of (a) $40.0 million or (b) the amount of
the Borrowing Base minus Indebtedness incurred pursuant to clause (iv) of
this Section 4.09;
(ii) the incurrence by the Company and the Guarantors of the
Existing Indebtedness;
(iii) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Senior Notes (other than any Additional
Senior Notes) and the Subsidiary Guarantees;
(iv) the incurrence by the Company or any of the Guarantors of
Indebtedness in an aggregate principal amount not to exceed $3.0 million at
any time outstanding (x) incurred in connection with the settlement of, or
the payment of any judgment with respect to, any outstanding litigation in
existence as of the date of this Indenture, which may include the payment
of legal fees and expenses relating to such litigation, or (y) represented
by Capital Lease Obligations, mortgage financings or purchase money
obligations, in each case incurred for the purpose of financing all or any
part of the purchase price or cost of construction or improvement of
property, plant or equipment used in the business of the Company or such
Guarantor; provided, however, that any indebtedness incurred pursuant to
clause (x) shall have been incurred no later than 18 months after the date
of this Indenture.
(v) the incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds of
which are used to refund, refinance or replace Indebtedness that was
permitted by this Indenture to be incurred;
(vi) the incurrence by the Company or any of the Guarantors of
intercompany Indebtedness between or among the Company and any of the
Guarantors; provided, however, that (A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by a
Person other than the Company or a Guarantor and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the
Company or a Guarantor shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Guarantor, as the
case may be;
(vii) the incurrence by the Company or any of the Guarantors of
Hedging Obligations that are incurred for the purpose of fixing or hedging
currency exchange risk or interest rate risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(viii) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt, provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such event
shall be deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company;
(ix) Indebtedness incurred in respect of performance, surety and
similar bonds provided by the Company in the ordinary course of business,
and refinancings thereof;
(x) Indebtedness arising from guarantees of Indebtedness of the
Company or any Subsidiary or other agreements of the Company or a
Subsidiary providing for indemnification, adjustment of purchase price or
similar obligations, in each case, incurred or assumed in connection with
the disposition of any business, assets or Subsidiary, other than
guarantees of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing
such acquisition, provided that the maximum aggregate liability in respect
of all such Indebtedness shall at no time exceed the gross proceeds
actually received by the Company and its Subsidiaries in connection with
such disposition;
(xi) the guarantee by any of the Guarantors of Indebtedness of
the Company or another Guarantor that was permitted to be incurred under
this Indenture; and
(xii) the incurrence by the Company or any of its Subsidiaries of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, not to exceed $10.0 million.
For purposes of determining compliance with this Section 4.09, in
the event that an item of Indebtedness meets the criteria of more than one
of the categories of Permitted Debt described in clauses (i) through (xii)
above or is entitled to be incurred pursuant to the first paragraph of this
Section 4.09, the Company shall, in its sole discretion, classify such item
of Indebtedness in any manner that complies with this Section 4.09 and such
item of Indebtedness shall be treated as having been incurred pursuant to
only one of such clauses or pursuant to the first paragraph hereof. Accrual
of interest and the accretion of accreted value shall not be deemed to be
an incurrence of Indebtedness for purposes of this Section 4.09.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced
by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee) of the assets or Equity Interests
issued or sold or otherwise disposed of and (ii) for any Asset Sale other
than an Asset Sale of Unrestricted Margin Stock at least 75% of the
consideration therefor received by the Company or such Restricted
Subsidiary is in the form of cash or Cash Equivalents; provided that the
amount of (x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Senior Notes or any guarantee thereof) that
are assumed by the transferee of any such assets pursuant to a customary
novation agreement that releases the Company or such Restricted Subsidiary
from further liability and (y) any securities, notes or other obligations
received by the Company or any such Restricted Subsidiary from such
transferee that are promptly converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed
to be cash for purposes of this provision.
Within 270 days after the receipt of any Net Proceeds from an
Asset Sale other than an Asset Sale of Unrestricted Margin Stock, the
Company may apply such Net Proceeds, at its option, (a) to permanently
reduce Indebtedness under the Credit Facilities (and correspondingly reduce
commitments thereunder) or to permanently reduce other Senior Indebtedness
of the Company or any Guarantor or (b) to the acquisition of a controlling
interest in a Permitted Business, the making of a capital expenditure or
the acquisition of other long-term assets (collectively "Replacement
Assets"). Pending the final application of any such Net Proceeds, the
Company may temporarily reduce revolving credit Indebtedness or otherwise
invest such Net Proceeds in any manner that is not prohibited by this
Indenture. Any Net Proceeds from Asset Sales, other than an Asset Sale of
Unrestricted Margin Stock, that are not applied or invested as provided in
the first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $5.0
million, the Company shall be required to make an Asset Sale Offer to all
Holders of Senior Notes and Additional Senior Notes to purchase the maximum
principal amount of Senior Notes and Additional Senior Notes that may be
purchased out of the Excess Proceeds, at an offer price in cash in an
amount equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages thereon, if any, to the date of
purchase, in accordance with the procedures set forth in Section 3.09 of
this Indenture. To the extent that the aggregate amount of Senior Notes and
Additional Senior Notes tendered pursuant to an Asset Sale Offer is less
than or equal to the Excess Proceeds, the Company (or such Subsidiary) may
use any remaining Excess Proceeds for general corporate purposes. If the
aggregate principal amount of Senior Notes and Additional Senior Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the Senior Notes and Additional Senior Notes to be
purchased on a pro rata basis. Upon completion of such offer to purchase,
the amount of Excess Proceeds shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any transaction, contract,
agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are
no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the
Company or such Restricted Subsidiary with an unrelated Person and (ii) the
Company delivers to the Trustee (a) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $500,000, a resolution of the Board of Directors
set forth in an Officers' Certificate certifying that such Affiliate
Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of
the Board of Directors and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration
in excess of $5.0 million, an opinion as to the fairness to the Holders of
such Affiliate Transaction from a financial point of view issued by an
accounting, appraisal or investment banking firm of national standing;
provided that (w) any employment agreement entered into by the Company or
any of its Restricted Subsidiaries consistent with the past practice of the
Company or such Restricted Subsidiary, or any employee benefit plan
available to employees or senior executives of the Company or any
Restricted Subsidiary generally, in each case in the ordinary course of
business, (x) transactions between or among the Company and/or its
Restricted Subsidiaries, (y) dividends, distributions, Restricted Payments
and Investments that are permitted by Section 4.07 hereof and (z) any
transactions pursuant to the Varsity Merger Documents, in each case, shall
not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien on any asset now owned or hereafter acquired, or any income
or profits therefrom or assign or convey any right to receive income
therefrom, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Company shall, and shall cause the Guarantors to, engage only
in Permitted Businesses.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence
of each of its Subsidiaries, in accordance with the respective organ-
izational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; provided,
however, that the Company shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of
any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business
of the Company and its Subsidiaries, taken as a whole, and that the loss
thereof is not adverse in any material respect to the Holders of the Senior
Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of
Senior Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Senior Notes pursuant to the offer described below (the "Change of
Control Offer") at an offer price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest and Liquidated
Damages thereon, if any, to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder describing the transaction or
transactions that constitute the Change of Control and offering to
repurchase Senior Notes on the date specified in such notice, which date
shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to
the procedures required by this Indenture and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange
Act and any other securities laws and regulations thereunder to the extent
such laws and regulations are applicable in connection with the repurchase
of the Senior Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall, to
the extent lawful, (1) accept for payment all Senior Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (2)
deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Senior Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Senior Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Senior Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Senior
Notes so tendered the Change of Control Payment for such Senior Notes, and
the Trustee shall promptly authenticate and mail (or cause to be
transferred by book entry) to each Holder a new Senior Note equal in
principal amount to any unpurchased portion of the Senior Notes
surrendered, if any; provided that each such new Senior Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.
(c) The Change of Control provisions described in subsections (a)
and (b) of this Section 4.15 shall be applicable whether or not any other
provisions of this Indenture are applicable.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Indenture applicable to a Change of Control
Offer made by the Company and purchases all Senior Notes validly tendered
and not withdrawn under such Change of Control Offer.
SECTION 4.16. LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY
OWNED RESTRICTED SUBSIDIARIES.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary of the Company to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Restricted Subsidiary of the Company to
any Person (other than the Company or a Wholly Owned Restricted Subsidiary
of the Company), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Restricted Subsidiary and
(b) the cash Net Proceeds from such transfer, conveyance, sale, lease or
other disposition are applied in accordance with Section 4.10 hereof and
(ii) shall not permit any Restricted Subsidiary of the Company to issue any
of its Equity Interests (other than, if necessary, shares of its Capital
Stock constituting directors' qualifying shares) to any Person other than
to the Company or a Guarantor.
SECTION 4.17. ADDITIONAL SUBSIDIARY GUARANTEES
If the Company or any of its Subsidiaries shall acquire or create
another Subsidiary after the date of this Indenture, then such newly
acquired or created Subsidiary shall execute a Subsidiary Guarantee in the
form of a Supplemental Indenture and deliver an opinion of counsel, in
accordance with the terms of this Indenture, except for (i) all
Subsidiaries that have properly been designated as Unrestricted
Subsidiaries in accordance with this Indenture for so long as they continue
to constitute Unrestricted Subsidiaries and (ii) all Subsidiaries organized
outside of the United States and its territories. The form of such
Subsidiary Guarantee is attached as Exhibit F hereto.
SECTION 4.18. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Senior Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Senior Notes unless such consideration
is offered to be paid or is paid to all Holders of the Senior Notes that
consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia; (ii) the
entity or Person formed by or surviving any such consolidation or merger
(if other than the Company) or the entity or Person to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of the Company under the Senior Notes
and this Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such
transaction no Default or Event of Default exists; (iv) except in the case
of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary of the Company, the Company or the entity or Person formed by or
surviving any such consolidation or merger (if other than the Company), or
to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred
at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of Section 4.09
hereof and (v) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or
other disposition and such supplemental indenture complies with this
Article and that all conditions precedent herein provided for relating to
such transaction have been complied with.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially
all of the assets of the Company in accordance with Section 5.01 hereof,
the successor corporation formed by such consolidation or into or with
which the Company is merged or to which such sale, assignment, transfer,
lease, conveyance or other disposition is made shall succeed to, and be
substituted for (so that from and after the date of such consolidation,
merger, sale, lease, conveyance or other disposition, the provisions of
this Indenture referring to the "Company" shall refer instead to the
successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; provided,
however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Senior Notes except
in the case of a sale of all of the Company's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults for 30 days in the payment when due of
interest on, or Liquidated Damages with respect to, the Senior Notes;
(b) the Company defaults in payment when due of the principal of
or premium, if any, on the Senior Notes;
(c) the Company fails to comply with Sections 4.07, 4.09, 4.10 or
4.15;
(d) the Company fails for 60 days after notice to the Company by
the Trustee or to the Company and the Trustee by the Holders of at least
25% of the Senior Notes (including Additional Senior Notes, if any) voting
as a single class, then outstanding to comply with any of its other
agreements in this Indenture or the Senior Notes;
(e) there is a default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of this Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more;
(f) the Company or any of its Restricted Subsidiaries fails to
pay final judgments aggregating in excess of $5.0 million, which judgments
are not paid, discharged or stayed for a period of 60 days;
(g) the Company or any of its Significant Restricted Subsidiaries
or any group of Subsidiaries that, taken as a whole, would constitute a
Significant Restricted Subsidiary pursuant to or within the meaning of
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it
in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Restricted Subsidiary in an involuntary case;
(ii) appoints a custodian of the Company or any of its
Significant Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Restricted Subsidiary or for all or
substantially all of the property of the Company or any of
its Significant Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Restricted Subsidiary; or
(iii) orders the liquidation of the Company or any of its
Significant Restricted Subsidiaries or any group of
Subsidiaries that, taken as a whole, would constitute a
Significant Restricted Subsidiary;
and the order or decree remains unstayed and in effect for
60 consecutive days; or
(i) except as permitted by this Indenture, any Subsidiary
Guarantee is held in any judicial proceeding to be unenforceable or invalid
or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding
Senior Notes and Additional Senior Notes, if any (voting as a single
class), may declare all the Senior Notes to be due and payable immediately,
by written notice to the Company (and to the Trustee if given by the
Holders). Notwithstanding the foregoing, in the case of an Event of Default
arising from certain events of bankruptcy or insolvency, with respect to
the Company or any Guarantor constituting a Significant Restricted
Subsidiary, all outstanding Senior Notes shall become due and payable
without further action or notice. Upon any such declaration, the Senior
Notes shall become due and payable immediately. Notwithstanding the
foregoing, if an Event of Default specified in clause (g) or (h) of Section
6.01 hereof occurs with respect to the Company, any of its Significant
Subsidiaries or any group of Subsidiaries that, taken as a whole, would
constitute a Significant Subsidiary, all outstanding Senior Notes shall be
due and payable immediately without further action or notice. The Holders
of a majority in aggregate principal amount of the then outstanding Senior
Notes by written notice to the Trustee may on behalf of all of the Holders
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default
(except nonpayment of principal, interest or premium that has become due
solely because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after July 15, 2002 by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of
the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Senior Notes pursuant to Section 3.07 hereof, then, upon acceleration of
the Senior Notes, an equivalent premium shall also become and be
immediately due and payable, to the extent permitted by law, anything in
this Indenture or in the Senior Notes to the contrary notwithstanding. If
an Event of Default occurs prior to July 15, 2002 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding the prohibition on redemption of the Senior
Notes prior to such date, then, upon acceleration of the Senior Notes, an
additional premium shall also become and be immediately due and payable in
an amount, for each of the years beginning on July 15 of the years set
forth below, as set forth below:
Year Percentage
1997........................................ 113.50%
1998........................................ 112.25%
1999........................................ 110.50%
2000........................................ 108.75%
2001........................................ 107.00%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium,
if any, and interest on the Senior Notes or to enforce the performance of
any provision of the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Senior Notes or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder of a Senior Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by
law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount
of the then outstanding Senior Notes (including any Additional Senior
Notes) by notice to the Trustee may on behalf of the Holders of all of the
Senior Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in
the payment of the principal of, premium and Liquidated Damages, if any, or
interest on, the Senior Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Senior Notes may rescind an
acceleration and its consequences, including any related payment default
that resulted from such acceleration). Upon any such waiver, such Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
Senior Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to
follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to the rights of other Holders
of Senior Notes or that may involve the Trustee in personal liability.
Notwithstanding any provision to the contrary in this Indenture, the
Trustee shall not be obligated to take any action with respect to the
provisions of the last paragraph of Section 6.02 hereof unless directed to
do so pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Note may pursue a remedy with respect to
this Indenture or the Senior Notes only if:
(a) the Holder of a Senior Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Senior Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Senior Note or Holders of Senior Notes offer
and, if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Senior Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Senior Note may not use this Indenture to prejudice the
rights of another Holder of a Senior Note or to obtain a preference or
priority over another Holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right
of any Holder of a Senior Note to receive payment of principal, premium and
Liquidated Damages, if any, and interest on the Senior Note, on or after
the respective due dates expressed in the Senior Note (including in
connection with an offer to purchase), or to bring suit for the enforcement
of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs
and is continuing, the Trustee is authorized to recover judgment in its own
name and as trustee of an express trust against the Company for the whole
amount of principal of, premium and Liquidated Damages, if any, and
interest remaining unpaid on the Senior Notes and interest on overdue
principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and the Holders of the Senior Notes allowed in any judicial
proceedings relative to the Company (or any other obligor upon the Senior
Notes), its creditors or its property and shall be entitled and empowered
to collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due
to it for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any
such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof out of the estate in any such proceeding, shall be denied for
any reason, payment of the same shall be secured by a Lien on, and shall be
paid out of, any and all distributions, dividends, money, securities and
other properties that the Holders may be entitled to receive in such
proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise. Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Senior Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due
under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the
costs and expenses of collection;
Second: to Holders of Senior Notes for amounts due and unpaid on
the Senior Notes for principal, premium and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Senior Notes for principal, premium and
Liquidated Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Senior Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a suit
by the Trustee, a suit by a Holder of a Senior Note pursuant to Section
6.07 hereof, or a suit by Holders of more than 10% in principal amount of
the then outstanding Senior Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform
only those duties that are specifically set forth in this Indenture
and no others, and no implied covenants or obligations shall be read
into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any of the Holders pursuant
to the provisions of this Indenture, including, without limitation, the
provisions of Section 6.05 hereof, unless such Holders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or documents, but the Trustee, in its
discretion may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company or any Guarantor, personally or
by agent or attorney.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in
good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the written advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient
if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities that might be incurred by it in compliance with such
request or direction.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Senior Notes and may otherwise deal with the
Company or any Affiliate of the Company with the same rights it would have
if it were not Trustee. However, in the event that the Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply
to the SEC for permission to continue as trustee or resign. Any Agent may
do the same with like rights and duties. The Trustee is also subject to
Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Senior Notes, it shall not be accountable for the Company's use of the
proceeds from the Senior Notes or any money paid to the Company or upon the
Company's direction under any provision of this Indenture, it shall not be
responsible for the use or application of any money received by any Paying
Agent other than the Trustee, and it shall not be responsible for any
statement or recital herein or any statement in the Senior Notes or any
other document in connection with the sale of the Senior Notes or pursuant
to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to Holders of Senior
Notes a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default or Event of Default in payment of
principal of, premium, if any, or interest on any Senior Note, the Trustee
may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of the Holders of the Senior Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Senior Notes
remain outstanding, the Trustee shall mail to the Holders of the Senior
Notes a brief report dated as of such reporting date that complies with TIA
ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within
the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA ss.
313(c).
A copy of each report at the time of its mailing to the Holders
of Senior Notes shall be mailed to the Company and filed with the SEC and
each stock exchange on which the Senior Notes are listed in accordance with
TIA ss. 313(d). The Company shall promptly notify the Trustee when the
Senior Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder.
The Trustee's compensation shall not be limited by any law on compensation
of a trustee of an express trust. The Company shall reimburse the Trustee
promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture
against the Company (including this Section 7.07) and defending itself
against any claim (whether asserted by the Company or any Holder or any
other Person) or liability in connection with the exercise or performance
of any of its powers or duties hereunder, except to the extent any such
loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the defense. The
Trustee may have separate counsel and the Company shall pay the reasonable
fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be
unreasonably withheld.
The obligations of the Company under this Section 7.07 shall
survive the resignation or removal of the Trustee and the satisfaction and
discharge of this Indenture.
To secure the Company's payment obligations in this Section, the
Trustee shall have a Lien prior to the Senior Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(g) or (h) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA ss. 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of
Senior Notes of a majority in principal amount of the then outstanding
Senior Notes may remove the Trustee by so notifying the Trustee and the
Company in writing. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the then
outstanding Senior Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of Senior Notes of at least 10% in principal amount
of the then outstanding Senior Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Senior
Note who has been a Holder of a Senior Note for at least six months, fails
to comply with Section 7.10, such Holder of a Senior Note may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders of the Senior Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor
Trustee, provided all sums owing to the Trustee hereunder have been paid
and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act
shall be the successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United
States of America or of any state thereof that is authorized under such
laws to exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital
and surplus of at least $100 million as set forth in its most recent
published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to
TIA ss. 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA ss. 311(a), excluding anY creditor
relationship listed in TIA ss. 311(b). A Trustee who haS resigned or been
removed shall be subject to TIA ss. 311(a) to thE extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any
time, elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Senior Notes upon compliance with the conditions set forth
below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed
to have been discharged from its obligations with respect to all
outstanding Senior Notes on the date the conditions set forth below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have paid and
discharged the entire Indebtedness represented by the outstanding Senior
Notes, which shall thereafter be deemed to be "outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (a)
the rights of Holders of outstanding Senior Notes to receive solely from
the trust fund described in Section 8.04 hereof, and as more fully set
forth in such Section, payments in respect of the principal of, premium, if
any, and interest on such Senior Notes when such payments are due, (b) the
Company's obligations with respect to such Senior Notes under Article 2 and
Section 4.02 hereof, (c) the rights, powers, trusts, duties and immunities
of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article Eight. Subject to compliance with this
Article Eight, the Company may exercise its option under this Section 8.02
notwithstanding the prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be
released from its obligations under the covenants contained in Sections
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16 and 4.17 hereof with
respect to the outstanding Senior Notes on and after the date the
conditions set forth in Section 8.04 below are satisfied (hereinafter,
"Covenant Defeasance"), and the Senior Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or
declaration or act of Holders (and the consequences of any thereof) in
connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that
such Senior Notes shall not be deemed outstanding for accounting purposes).
For this purpose, Covenant Defeasance means that, with respect to the
outstanding Senior Notes, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth
in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default
or an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Senior Notes shall be
unaffected thereby. In addition, upon the Company's exercise under Section
8.01 hereof of the option applicable to this Section 8.03 hereof, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(d) through 6.01(f) hereof shall not constitute Events of
Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Senior Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the Senior Notes,
cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium, if any, and
interest and Liquidated Damages on the outstanding Senior Notes
on the stated maturity or on the applicable redemption date, as
the case may be, and the Company must specify whether the Senior
Notes are being defeased to maturity or to a particular
redemption date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of
Counsel in the United States reasonably acceptable to the Trustee
confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B)
since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such opinion of counsel shall confirm
that, the Holders of the outstanding Senior Notes shall not
recognize income, gain or loss for federal income tax purposes as
a result of such Legal Defeasance and shall be subject to federal
income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance
had not occurred;
(c) in the case of an election under Section 8.03 hereof,
the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee
confirming that the Holders of the outstanding Senior Notes shall
not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and shall be
subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default
or Event of Default resulting from the incurrence of Indebtedness
all or a portion of the proceeds of which will be used to defease
the Senior Notes pursuant to this Article Eight concurrently with
such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof
is concerned, at any time in the period ending on the 91st day
after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default
under, any material agreement or instrument (other than this
Indenture) to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that on the 91st day following
the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders over any
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the
Company; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance have been complied
with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of
the outstanding Senior Notes shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Senior Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as Paying Agent) as the Trustee may
determine, to the Holders of such Senior Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest,
but such money need not be segregated from other funds except to the extent
required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the
principal and interest received in respect thereof other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Senior Notes.
Anything in this Article Eight to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held
by it as provided in Section 8.04 hereof which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium,
if any, or interest on any Senior Note and remaining unclaimed for two
years after such principal, and premium, if any, or interest has become due
and payable shall be paid to the Company on its request or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Senior Note shall thereafter, as a secured creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make any such
repayment, may at the expense of the Company cause to be published once, in
the New York Times and The Wall Street Journal (national edition), notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such money then remaining will be
repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with
Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, then the Company's obligations
under this Indenture and the Senior Notes shall be revived and reinstated
as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof
until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 8.02 or 8.03 hereof, as the case may
be; provided, however, that, if the Company makes any payment of principal
of, premium, if any, or interest on any Senior Note following the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Senior Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees or the Senior Notes without the consent of any Holder
of a Senior Note:
(a) to cure any ambiguity, defect or inconsistency,
(b) to provide for uncertificated Senior Notes in addition to or
in place of certificated Senior Notes;
(c) to provide for the assumption of the Company's or a
Guarantor's obligations to Holders of Senior Notes in the case of a
merger or consolidation pursuant to Article 5 or Article 10 hereof;
(d) to provide for the issuance of Additional Senior Notes in
accordance with the limitations set forth in this Indenture on the
Issue Date;
(e) to make any change that would provide any additional rights
or benefits to the Holders of Senior Notes or that does not adversely
affect the legal rights under this Indenture of any such Holder;
(f) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the Trust
Indenture Act; or
(g) to allow any Guarantor to execute a supplemental indenture
and/or a Subsidiary Guarantee with respect to the Senior Notes.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company
and the Guarantors in the execution of any amended or supplemental
Indenture authorized or permitted by the terms of this Indenture and to
make any further appropriate agreements and stipulations that may be
therein contained, but the Trustee shall not be obligated to enter into
such amended or supplemental Indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Sections
3.09, 4.10 and 4.15 hereof) and the Senior Notes may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Senior Notes (including Additional Senior Notes, if
any) then outstanding voting as a single class (including, without
limitation, consents obtained in connection with a purchase of or a tender
offer or exchange offer for the Senior Notes), and, subject to Sections
6.04 and 6.07 hereof, any existing Default or Event of Default (other than
a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Senior Notes, except a payment default resulting
from an acceleration that has been rescinded) or compliance with any
provision of this Indenture, the Subsidiary Guarantees or the Senior Notes
may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Senior Notes (including Additional Senior
Notes, if any) voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for the Senior Notes).
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Senior Notes
as aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the
execution of such amended or supplemental Indenture unless such amended or
supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may
in its discretion, but shall not be obligated to, enter into such amended
or supplemental Indenture.
It shall not be necessary for the consent of the Holders of
Senior Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Senior Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of
any such amended or supplemental Indenture or waiver. Subject to Sections
6.04 and 6.07 hereof, the Holders of a majority in aggregate principal
amount of the Senior Notes (including Additional Senior Notes, if any) then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Senior
Notes. However, without the consent of each Holder affected, an amendment
or waiver may not (with respect to any Senior Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Senior Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Note or alter the provisions with respect to the redemption of
the Senior Notes (other than provisions relating to Section 4.10 or
4.15 hereof);
(c) reduce the rate of or change the time for payment of interest
on any Senior Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Senior Notes
(except a rescission of acceleration of the Senior Notes by the
Holders of at least a majority in aggregate principal amount of the
Senior Notes (including Additional Senior Notes, if any) and a waiver
of the payment default that resulted from such acceleration);
(e) make any Senior Note payable in money other than that stated
in the Senior Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Senior Notes
to receive payments of principal of or premium, if any, or interest
on the Senior Notes;
(g) waive a redemption payment with respect to any Senior Note
(other than a payment required by Section 4.10 or 4.15 hereof);
(h) release any Guarantor from any of its obligations under its
Subsidiary Guarantee or this Indenture, except in accordance with the
terms of this Indenture; or
(i) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Senior
Notes shall be set forth in a amended or supplemental Indenture that
complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Senior Note is a continuing consent by the
Holder of a Senior Note and every subsequent Holder of a Senior Note or
portion of a Senior Note that evidences the same debt as the consenting
Holder's Senior Note, even if notation of the consent is not made on any
Senior Note. However, any such Holder of a Senior Note or subsequent Holder
of a Senior Note may revoke the consent as to its Senior Note if the
Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or
waiver becomes effective in accordance with its terms and thereafter binds
every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Note thereafter authenticated. The
Company in exchange for all Senior Notes may issue and the Trustee shall,
upon receipt of an Authentication Order, authenticate new Senior Notes that
reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Note shall not affect the validity and effect of such amendment, supplement
or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article 9 if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or supplemental Indenture
until the Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive and
(subject to Section 7.01 hereof) shall be fully protected in relying upon,
in addition to the documents required by Section 11.04, an Officer's
Certificate and an Opinion of Counsel stating that the execution of such
amended or supplemental indenture is authorized or permitted by this
Indenture.
ARTICLE 10
SUBSIDIARY GUARANTEES
Section 10.01. SUBSIDIARY GUARANTEES.
Subject to this Article 10, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a
Senior Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Senior Notes or the obligations of
the Company hereunder or thereunder, that: (a) the principal of and
interest on the Senior Notes will be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Senior Notes, if any, if
lawful, and all other obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed,
all in accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Senior Notes or any of such
other obligations, that same will be promptly paid in full when due or
performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. Failing payment when due
of any amount so guaranteed or any performance so guaranteed for whatever
reason, the Guarantors shall be jointly and severally obligated to pay the
same immediately.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Senior Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the
Senior Notes with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and all demands
whatsoever and covenant that this Subsidiary Guarantee shall not be
discharged except by complete performance of the obligations contained in
the Senior Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right
of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby. Each Guarantor further agrees that, as between the Guarantors, on
the one hand, and the Holders and the Trustee, on the other hand, (x) the
maturity of the obligations guaranteed hereby may be accelerated as
provided in Article 6 hereof for the purposes of this Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as
provided in Article 6 hereof, such obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for the
purpose of this Subsidiary Guarantee. The Guarantors shall have the right
to seek contribution from any non-paying Guarantor so long as the exercise
of such right does not impair the rights of the Holders under the
Guarantee.
Section 10.02 LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Senior Notes, each
Holder, hereby confirms that it is the intention of all such parties that
the Subsidiary Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any
similar federal or state law to the extent applicable to any Subsidiary
Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under
such laws, and after giving effect to any collections from, rights to
receive contribution from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under this
Article 10, result in the obligations of such Guarantor under its
Subsidiary Guarantee not constituting a fraudulent transfer or conveyance.
Section 10.03. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 10.01,
each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit E shall be endorsed by an
officer of such Guarantor on each Senior Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of such
Guarantor by its President or one of its Vice Presidents and attested to by
an Officer.
Each Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 10.01 shall remain in full force and effect
notwithstanding any failure to endorse on each Senior Note a notation of
such Subsidiary Guarantee.
If an officer or Officer whose signature is on this Indenture or
on the Subsidiary Guarantee no longer holds that office at the time the
Trustee authenticates the Senior Note on which a Subsidiary Guarantee is
endorsed, the Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Senior Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the
Guarantors.
In the event that the Company creates or acquires any new
Subsidiaries subsequent to the date of this Indenture, if required by
Section 4.17 hereof, the Company shall cause such Subsidiaries to execute
supplemental indentures to this Indenture and Subsidiary Guarantees in
accordance with Section 4.17 hereof and this Article 10, to the extent
applicable.
Section 10.04. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether
or not such Guarantor is the surviving Person) another corporation, Person
or entity whether or not affiliated with such Guarantor unless:
(a) subject to Section 10.05 hereof, the Person formed by or
surviving any such consolidation or merger (if other than a Guarantor
or the Company) unconditionally assumes all the obligations of such
Guarantor, pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee, under the Senior Notes, the
Indenture and the Subsidiary Guarantee on the terms set forth herein
or therein; and
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form
to the Trustee, of the Subsidiary Guarantee endorsed upon the Notes and the
due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor corporation
shall succeed to and be substituted for the Guarantor with the same effect
as if it had been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary Guarantees to
be endorsed upon all of the Notes issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee. All
the Subsidiary Guarantees so issued shall in all respects have the same
legal rank and benefit under this Indenture as the Subsidiary Guarantees
theretofore and thereafter issued in accordance with the terms of this
Indenture as though all of such Subsidiary Guarantees had been issued at
the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this
Indenture or in any of the Senior Notes shall prevent any consolidation or
merger of a Guarantor with or into the Company or another Guarantor, or
shall prevent any sale or conveyance of the property of a Guarantor as an
entirety or substantially as an entirety to the Company or another
Guarantor.
Section 10.05. RELEASES FOLLOWING SALE OF ASSETS.
In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor, then
such Guarantor (in the event of a sale or other disposition, by way of
merger, consolidation or otherwise, of all of the capital stock of such
Guarantor) or the corporation acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its
Subsidiary Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of
this Indenture, including without limitation Section 4.10 hereof. Upon
delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of this Indenture,
including without limitation Section 4.10 hereof, the Trustee shall execute
any documents reasonably required in order to evidence the release of any
Guarantor from its obligations under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal
of and interest on the Senior Notes and for the other obligations of any
Guarantor under this Indenture as provided in this Article 10.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties imposed by TIA ss.318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Riddell Sports Inc.
900 Third Avenue, 27th Floor
New York, NY 10022
Telecopier No.: (212) 826-5006
Attention: David Groelinger, Chief Financial Officer
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 735-2000
Attention: Sheldon Adler
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Department
The Company, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent
notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and
the next Business Day after timely delivery to the courier, if sent by
overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown
on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA ss. 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER
HOLDERS OF SENIOR NOTES.
Holders may communicate pursuant to TIA ss. 312(b) witH other
Holders with respect to their rights under this Indenture or the Senior
Notes. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of the
signers, all conditions precedent and covenants, if any, provided for
in this Indenture relating to the proposed action have been
satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.05 hereof) stating that, in the opinion of such
counsel, all such conditions precedent and covenants have been
satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the
provisions of TIA ss. 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall
have any liability for any obligations of the Company or the Guarantors
under the Senior Notes, the Subsidiary Guarantees or this Indenture or for
any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Senior Note waives and releases
all such liability. The waiver and release are part of the consideration
for issuance of the Senior Notes.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE SENIOR NOTES AND THE SUBSIDIARY
GUARANTEES BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS
OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior
Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the Senior Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and
shall in no way modify or restrict any of the terms or provisions hereof.
SECTION 11.14. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article 10, shall in such case (unless the
context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully and for all intents and
purposes as if such Paying Agent were named in this Article 10, in place of
the Trustee.
[Signatures on following page]
SIGNATURES
Dated as of June 19, 1997
RIDDELL SPORTS INC.
By: ________________________________
Name:
Title:
RIDDELL GUARANTORS:
RIDDELL, INC.
ALL AMERICAN SPORTS CORPORATION
EQUILINK LICENSING CORP.
PROACQ CORPORATION
RHC LICENSING CORP.
RIDMARK CORPORATION
CHEER ACQUISITION CORP.
By: _____________________________
Name:
Title:
VARSITY GUARANTORS:
VARSITY SPIRIT CORPORATION
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
VARSITY USA, INC.
VARSITY/INTROPA TOURS, INC.
INTERNATIONAL LOGOS, INC.
By: ________________________________
Name:
Title:
MARINE MIDLAND BANK
By:_____________________________________
Name:
Title:
EXHIBIT A
(Face of Senior Note)
CUSIP/CINS ____________
10 1/2% Senior Notes due 2007
No. ___ $__________
RIDDELL SPORTS INC., a Delaware corporation
promises to pay to _________________________________________________
or registered assigns,
the principal sum of ________________________________________________
Dollars on July 15, 2007.
Interest Payment Dates: January 15, and July 15
Record Dates: January 1, and July 1 (whether or not a Business Day)
Reference is hereby made to the further provisions of this Senior Note
set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Dated: _______________
RIDDELL SPORTS INC.
By:____________________
Name:
Title:
(SEAL)
This is one of the [Global]
Senior Notes referred to in the
within-mentioned Indenture:
MARINE MIDLAND BANK,
as Trustee
By:______________________________
Authorized Signatory
(Back of Senior Note)
10 1/2% Senior Notes due 2007
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO
ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY
MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06
OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT
NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT
OF THE COMPANY.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Riddell Sports Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Senior
Note at 10 1/2% per annum from June 19, 1997 until maturity and shall pay
the Liquidated Damages payable pursuant to Section 5 of the Registration
Rights Agreement referred to below. The Company will pay interest and
Liquidated Damages, if any, semi-annually in arrears on January 15 and
July 15 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Senior Notes will accrue from the most recent date to which interest has
been paid or, if no interest has been paid, from the date of issuance;
provided that if there is no existing Default in the payment of interest,
and if this Senior Note is authenticated between a record date referred to
on the face hereof and the next succeeding Interest Payment Date, interest
shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be January 15, 1998.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess
of the rate then in effect; it shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to
the extent lawful. Interest will be computed on the basis of a 360-day year
of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Senior
Notes (except defaulted interest) and Liquidated Damages, if any, to the
Persons who are registered Holders of Senior Notes at the close of business
on the January 1 or July 1 next preceding the Interest Payment Date, even
if such Senior Notes are canceled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the
Indenture with respect to defaulted interest. The Senior Notes will be
payable as to principal, premium and Liquidated Damages, if any, and
interest at the office or agency of the Company maintained for such purpose
within or without the City and State of New York, or, at the option of the
Company, payment of interest and Liquidated Damages may be made by check
mailed to the Holders at their addresses set forth in the register of
Holders, and provided that payment by wire transfer of immediately
available/next day funds will be required with respect to principal of and
interest, premium and Liquidated Damages on, all Global Notes and all other
Senior Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent. Such payment shall be in
such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, will act as Paying Agent and Registrar. The
Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. INDENTURE. The Company issued the Senior Notes under an Indenture
dated as of June 19, 1997 ("Indenture") between the Company, the Guarantors
and the Trustee. The terms of the Senior Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code ss.ss. 77aaa-77bbbb). The
Senior Notes are subject to all such terms, and Holders are referred to the
Indenture and such Act for a statement of such terms. To the extent any
provision of this Senior Note conflicts with the express provisions of the
Indenture, the provisions of the indenture shall govern and be controlling.
The Senior Notes are obligations of the Company limited to $140 million in
aggregate principal amount, and will mature on July 15, 2007.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 5, the
Senior Notes shall not be redeemable at the Company's option prior to July
15, 2002. Thereafter, the Senior Notes shall be subject to redemption at
any time at the option of the Company, in whole or in part, upon not less
than 30 nor more than 60 days' notice, at the redemption prices (expressed
as percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages thereon to the applicable redemption date,
if redeemed during the twelve-month period beginning on July 15 of the
years indicated below:
Year Percentage
2002......................................... 105.25%
2003......................................... 103.50%
2004......................................... 101.75%
2005 and thereafter ......................... 100.00%
(b) Notwithstanding the provisions of clause (a) of this Section
5, at any time on or before July 15, 2000, the Company may (but shall not
have the obligation to) redeem, on one or more occasions, up to 35% of the
aggregate principal amount of the Senior Notes at a redemption price equal
to 110 1/2% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages thereon, if any, to the redemption date,
with the net cash proceeds of one or more Equity Offerings; provided that
at least $75.0 million aggregate principal amount of Senior Notes remain
outstanding immediately after the occurrence of such redemption; and
provided further, that such redemption shall occur within 45 days of the
date of the closing of such Equity Offering.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption payments with respect to the Senior
Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be required to
make an offer (a "Change of Control Offer") to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of each Holder's Senior
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of purchase the "Change of Control Payment"). Within 30 days
following any Change of Control, the Company shall mail a notice to each
Holder setting forth the procedures governing the Change of Control Offer
as required by the Indenture.
(b) If the Company or a Subsidiary consummates any Asset Sales, within
five days of each date on which the aggregate amount of Excess Proceeds
exceeds $5 million, the Company shall commence an offer to all Holders of
Senior Notes (as "Asset Sale Offer") pursuant to Section 3.09 of the
Indenture to purchase the maximum principal amount of Senior Notes
(including any Additional Senior Notes) that may be purchased out of the
Excess Proceeds at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Senior Notes
(including any Additional Senior Notes) tendered pursuant to an Asset Sale
Offer is less than the Excess Proceeds, the Company (or such Subsidiary)
may use such any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of Senior Notes (including any Additional
Senior Notes) surrendered by Holders thereof exceeds the amount of Excess
Proceeds, the Trustee shall select the Senior Notes (including any
Additional Senior Notes) to be purchased on a pro rata basis. Holders of
Senior Notes and Additioinal Senior Notes that are the subject of an offer
to purchase will receive an Asset Sale Offer from the Company prior to any
related purchase date and may elect to have such Senior Notes and
Additional Senior Notes purchased by completing the form entitled "Option
of Holder to Elect Purchase" on the reverse of the Senior Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least
30 days but not more than 60 days before the redemption date to each Holder
whose Senior Notes are to be redeemed at its registered address. Senior
Notes in denominations larger than $1,000 may be redeemed in part but only
in whole multiples of $1,000, unless all of the Senior Notes held by a
Holder are to be redeemed. On and after the redemption date, interest
ceases to accrue on Senior Notes or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Notes may be registered and
Senior Notes may be exchanged as provided in the Indenture. The Registrar
and the Trustee may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company may require
a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company need not exchange or register the transfer of any
Senior Note or portion of a Senior Note selected for redemption, except for
the unredeemed portion of any Senior Note being redeemed in part. Also, the
Company need not exchange or register the transfer of any Senior Notes for
a period of 15 days before a selection of Senior Notes to be redeemed or
during the period between a record date and the corresponding Interest
Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Senior Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions,
the Indenture or the Senior Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the
then outstanding Senior Notes and Additional Senior Notes, if any, voting
as a single class (including consents obtained in connection with a tender
offer or exchange offer for the Senior Notes), and any existing default or
compliance with any provision of the Indenture, the Subsidiary Guarantees
or the Senior Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Notes and
Additional Senior Notes, if any, voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for
the Senior Notes). Without the consent of any Holder of a Senior Note, the
Indenture or the Senior Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Senior
Notes in addition to or in place of certificated Senior Notes, to provide
for the assumption of the Company's or Guarantor's obligations to Holders
of the Senior Notes in case of a merger or consolidation pursuant to
Article 5 of the Indenture, to provide for the Issuance of Additional
Senior Notes, in accordance with the limitations set forth in the
Indenture, to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes or that does not adversely
affect the legal rights under the Indenture of any such Holder, to comply
with the requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act or to allow
any Guarantor to execute a supplemental indenture and/or a Subsidiary
Guarantee with respect to the Senior Notes.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for
30 days in the payment when due of interest on, or Liquidated Damages with
respect to, the Senior Notes; (ii) default in payment when due of the
principal of or premium, if any, on the Senior Notes; (iii) failure by the
Company to comply with the provisions described under the captions 4.07,
4.09, 4.10 or 4.15; (iv) failure by the Company for 60 days after notice
from the Trustee or the Holders of at least 25% of the Senior Notes
(including Additional Senior Notes, if any) voting as a single class, then
outstanding to comply with any of its other agreements in the Indenture or
the Senior Notes; (v) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any,
or interest on such Indebtedness prior to the expiration of the grace
period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount of
any such Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (vi)
failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $5.0 million, which judgments are not
paid, discharged or stayed for a period of 60 days; (vii) except as
permitted by the Indenture, any Subsidiary Guarantee shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person
acting on behalf of any Guarantor, shall deny or disaffirm its obligations
under its Subsidiary Guarantee; and (viii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Restricted
Subsidiaries.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company or any of the Guarantors, as
such, shall not have any liability for any obligations of the Company or
such Guarantors under the Senior Notes, the Subsidiary Guarantee or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a Senior Note
waives and releases all such liability. The waiver and release are part of
the consideration for the issuance of the Senior Notes.
15. AUTHENTICATION. This Senior Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of
a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF RESTRICTED GLOBAL NOTES AND
RESTRICTED DEFINITIVE Notes. In addition to the rights provided to Holders
of Senior Notes under the Indenture, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in the
Registration Rights Agreement dated as of June 19, 1997, between the
Company and the parties named on the signature pages thereof or, in the
case of Additional Senior Notes, Holders of Restricted Global Notes and
Restricted Definitive Notes shall have all the rights set forth in one or
more registration rights agreements between the Company and the other
parties named on the signature pages thereto, relating to rights given by
the Company to the purchasers of any Additional Senior Notes (collectively,
the "Registration Rights Agreement").
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Senior Notes and the Trustee may
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed
on the Senior Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:
Riddell Sports Inc.
900 Third Avenue
27th Floor
New York, NY 10022
Attention: Secretary
ASSIGNMENT FORM
To assign this Senior Note, fill in the form below: (I) or (we)
assign and transfer this Senior Note to
____________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________________________________
to transfer this Senior Note on the books of the Company. The agent may
substitute another to act for him.
____________________________________________________________________________
Date: ______________________________________________________________________
Your Signature:_______________________________
(Sign exactly as your name appears on the face of this Senior Note)
Signature Guarantee:* ________________________________________________
* Participant is a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the
appropriate box below:
( ) Section 4.10 ( ) Section 4.15
If you want to elect to have only part of the Senior Note
purchased by the Company pursuant to Section 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased: $___________
Date: ___________________ Your Signature:______________________
(Sign exactly as your name
appears on the Senior Note)
Tax Identification No.:______________
Signature Guarantee:* ________________________________________________
* Participant is a recognized Signature Guarantee Medallion Program (or
other signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a
part of another Global Note or Definitive Note for an interest in this
Global Note, have been made:
<TABLE>
Signature of
Amount of Principal Amount of authorized officer
decrease in Amount of increase in this Global Note of Trustee or
Principal Amount of Principal Amount of following such decrease Senior Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- ---------------------- ------------------------ ------------------
<S> <C> <C> <C> <C>
</TABLE>
EXHIHBIT B
FORM OF CERTIFICATE OF TRANSFER
Riddell Sports Inc.
900 Third Avenue, 27th Floor
New York, NY 10022
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Attn: _____________
Re: 10 1/2% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of June 19,
1997 (the "Indenture"), between Riddell Sports Inc., as issuer (the
"Company"), the parties listed in Schedule I thereto, as Guarantors and
Marine Midland Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer
the Senior Note[s] or interest in such Senior Note[s] specified in Annex A
hereto, in the principal amount of $___________ in such Senior Note[s] or
interests (the "Transfer"), to __________ (the "Transferee"), as further
specified in Annex A hereto. In connection with the Transfer, the
Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in
the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The
Transfer is being effected pursuant to and in accordance with Rule 144A
under the United States Securities Act of 1933, as amended (the "Securities
Act"), and, accordingly, the Transferor hereby further certifies that the
beneficial interest or Definitive Note is being transferred to a Person
that the Transferor reasonably believed and believes is purchasing the
beneficial interest or Definitive Note for its own account, or for one or
more accounts with respect to which such Person exercises sole investment
discretion, and such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A in a transaction
meeting the requirements of Rule 144A and such Transfer is in compliance
with any applicable blue sky securities laws of any state of the United
States. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the 144A Global Note and/or the
Definitive Note and in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in
the Regulation S Global Note or a Definitive Note pursuant to Regulation S.
The Transfer is being effected pursuant to and in accordance with Rule 903
or Rule 904 under the Securities Act and, accordingly, the Transferor
hereby further certifies that (i) the Transfer is not being made to a
person in the United States and (x) at the time the buy order was
originated, the Transferee was outside the United States or such Transferor
and any Person acting on its behalf reasonably believed and believes that
the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore
securities market and neither such Transferor nor any Person acting on its
behalf knows that the transaction was prearranged with a buyer in the
United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S under the Securities Act, (iii) the transaction is not part of
a plan or scheme to evade the registration requirements of the Securities
Act and (iv) if the proposed transfer is being made prior to the expiration
of the Restricted Period, the transfer is not being made to a U.S. Person
or for the account or benefit of a U.S. Person (other than an Initial
Purchaser). Upon consummation of the proposed transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or
Definitive Note will be subject to the restrictions on Transfer enumerated
in the Private Placement Legend printed on the Regulation S Global Note
and/or the Definitive Note and in the Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Global Note or a Definitive Note pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act and any applicable blue sky securities laws of any state of
the United States, and accordingly the Transferor hereby further certifies
that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof;
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of
the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the
Transferor hereby further certifies that the Transfer complies with the
transfer restrictions applicable to beneficial interests in a Restricted
Global Note or Restricted Definitive Notes and the requirements of the
exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee in the form of Exhibit D to the Indenture and
(2) [if such Transfer is in respect of a principal amount of Senior Notes
at the time of transfer of less than $250,000,] an Opinion of Counsel
provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such
Transfer is in compliance with the Securities Act. Upon consummation of the
proposed transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed
on the IAI Global Note and/or the Definitive Notes and in the Indenture and
the Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in
an Unrestricted Global Note or of an Unrestricted Definitive Note.
(a) |_| Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the
Securities Act and in compliance with the transfer restrictions contained
in the Indenture and any applicable blue sky securities laws of any state
of the United States and (ii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the
transferred beneficial interest or Definitive Note will no longer be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Global Notes, on Restricted Definitive
Notes and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904
under the Securities Act and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of
any state of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will no
longer be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption
from the registration requirements of the Securities Act other than Rule
144, Rule 903 or Rule 904 and in compliance with the transfer restrictions
contained in the Indenture and any applicable blue sky securities laws of
any State of the United States and (ii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act. Upon
consummation of the proposed Transfer in accordance with the terms of the
Indenture, the transferred beneficial interest or Definitive Note will not
be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Global Notes or Restricted
Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
______________________________
[Insert Name of Transferor]
By:___________________________
Name:
Title:
Dated: _________________, _______
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| IAI Global Note (CUSIP ); or
(b) |_| a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ), or
(ii) |_| Regulation S Global Note (CUSIP ), or
(iii) |_| IAI Global Note (CUSIP ); or
(iv) |_| Unrestricted Global Note (CUSIP ); or
(b) |_| a Restricted Definitive Note; or
(c) |_| an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Riddell Sports Inc.
900 Third Avenue, 27th Floor
New York, NY 10022
Attn: _____________
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Attn: _____________
Re: 10 1/2% Senior Notes due 2007
(CUSIP )
Reference is hereby made to the Indenture, dated as of June 19,
1997 (the "Indenture"), among Riddell Sports Inc., as issuer (the
"Company"), the parties listed in Schedule I thereto, as Guarantors, and
Marine Midland Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
_________________, (the "Owner") owns and proposes to exchange
the Senior Note[s] or interest in such Senior Note[s] specified herein, in
the principal amount of $____________ in such Senior Note[s] or interests
(the "Exchange"). In connection with the Exchange, the Owner hereby
certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial
Interests in a Restricted Global Note for Unrestricted Definitive Notes or
Beneficial Interests in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to beneficial interest in an Unrestricted Global
Note. In connection with the Exchange of the Owner's beneficial interest in
a Restricted Global Note for a beneficial interest in an Unrestricted
Global Note in an equal principal amount, the Owner hereby certifies (i)
the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with
the transfer restrictions applicable to the Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended
(the "Securities Act"), (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
(b) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Unrestricted Definitive Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note
for an Unrestricted Definitive Note, the Owner hereby certifies (i) the
Definitive Note is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United
States.
(c) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in an Unrestricted Global Note. In connection with the
Owner's Exchange of a Restricted Definitive Note for a beneficial interest
in an Unrestricted Global Note, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act and (iv) the beneficial interest is being acquired in
compliance with any applicable blue sky securities laws of any state of the
United States.
(d) |_| Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner
hereby certifies (i) the Unrestricted Definitive Note is being acquired for
the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to
maintain compliance with the Securities Act and (iv) the Unrestricted
Definitive Note is being acquired in compliance with any applicable blue
sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Notes or Beneficial
Interests in Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a
Restricted Global Note to Restricted Definitive Note. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a Restricted Definitive Note with an equal principal amount, the Owner
hereby certifies that the Restricted Definitive Note is being acquired for
the Owner's own account without transfer. Upon consummation of the proposed
Exchange in accordance with the terms of the Indenture, the Restricted
Definitive Note issued will continue to be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the
Restricted Definitive Note and in the Indenture and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the
Exchange of the Owner's Restricted Definitive Note for a beneficial
interest in the [CHECK ONE] |_| 144A Global Note, |_| Regulation S Global
Note, |_| IAI Global Note with an equal principal amount, the Owner hereby
certifies (i) the beneficial interest is being acquired for the Owner's own
account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted
Global Notes and pursuant to and in accordance with the Securities Act, and
in compliance with any applicable blue sky securities laws of any state of
the United States. Upon consummation of the proposed Exchange in accordance
with the terms of the Indenture, the beneficial interest issued will be
subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the relevant Restricted Global Note and in the Indenture
and the Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company.
_______________________________
[Insert Name of Owner]
By:_____________________________
Name:
Title:
Dated: _________________, ______
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Riddell Sports Inc.
900 Third Avenue, 27th Floor
New York, NY 10022
Attn: ____________
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Attn: ____________
Re: 10 1/2% Senior Notes due 2007
Reference is hereby made to the Indenture, dated as of June 19,
1997 (the "Indenture"), between Riddell Sports Inc., as issuer (the
"Company"), the parties listed in Schedule I thereto, as Guarantors and
Marine Midland Bank, as trustee. Capitalized terms used but not defined
herein shall have the meanings given to them in the Indenture.
In connection with our proposed purchase of $____________
aggregate principal amount of:
(a) |_| a beneficial interest in a Global Note, or
(b) |_| a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Senior Notes
or any interest therein is subject to certain restrictions and conditions
set forth in the Indenture and the undersigned agrees to be bound by, and
not to resell, pledge or otherwise transfer the Senior Notes or any
interest therein except in compliance with, such restrictions and
conditions and the United States Securities Act of 1933, as amended (the
"Securities Act").
2. We understand that the offer and sale of the Senior Notes have
not been registered under the Securities Act, and that the Senior Notes and
any interest therein may not be offered or sold except as permitted in the
following sentence. We agree, on our own behalf and on behalf of any
accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Notes or any interest therein, we will do so only (A) to
the Company or any subsidiary thereof, (B) in accordance with Rule 144A
under the Securities Act to a "qualified institutional buyer" (as defined
therein), (C) to an institutional "accredited investor" (as defined below)
that is purchasing at least $250,000 principal amount of Senior Notes and
that, prior to such transfer, furnishes (or has furnished on its behalf by
a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and an Opinion of Counsel in form
reasonably acceptable to the Company to the effect that such transfer is in
compliance with the Securities Act, (D) outside the United States in
accordance with Rule 904 of Regulation S under the Securities Act, (E)
pursuant to the provisions of Rule 144 under the Securities Act or (F)
pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive
Note or beneficial interest in a Global Note from us in a transaction
meeting the requirements of clauses (A) through (E) of this paragraph a
notice advising such purchaser that resales thereof are restricted as
stated herein.
3. We understand that, on any proposed resale of the Senior Notes
or beneficial interest therein, we will be required to furnish to you and
the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. We further understand that
the Senior Notes purchased by us will bear a legend to the foregoing
effect. We further understand that any subsequent transfer by us of the
Senior Notes or beneficial interest therein acquired by us must be effected
through one of the Placement Agents.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act)
and have such knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of our investment in the
Senior Notes, and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
5. We are acquiring the Senior Notes or beneficial interest
therein purchased by us for our own account or for one or more accounts
(each of which is an institutional "accredited investor") as to each of
which we exercise sole investment discretion, and are so acquiring or
purchasing at least $250,000 principal amount of Senior Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby.
______________________________________
[Insert Name of Accredited Investor]
By: _________________________________
Name:
Title:
Dated: _________________, ______
EXHIBIT E
FORM OF NOTATION OF SECURITY
RELATING TO SUBSIDIARY GUARANTEE
For value received, each Guarantor (which term includes any
successor Person under the Indenture) has, jointly and severally,
unconditionally guaranteed, to the extent set forth in the Indenture and
subject to the provisions in the Indenture dated as of June 19, 1997 (the
"Indenture") among Riddell Sports Inc., the Guarantors listed on Schedule I
thereto and Marine Midland Bank, as trustee (the "Trustee"), (a) the due
and punctual payment of the principal of, premium, if any, and interest on
the Senior Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of
interest on overdue principal and premium, and, to the extent permitted by
law, interest, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance
with the terms of the Indenture and (b) in case of any extension of time of
payment or renewal of any Senior Notes or any of such other obligations,
that the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. The obligations of the Guarantors
to the Holders of Senior Notes and to the Trustee pursuant to the
Subsidiary Guarantee and the Indenture are expressly set forth in Article
10 of the Indenture and reference is hereby made to the Indenture for the
precise terms of the Subsidiary Guarantee. Each Holder of a Senior Note, by
accepting the same, (a) agrees to and shall be bound by such provisions,
(b) authorizes and directs the Trustee, on behalf of such Holder, to take
such action as may be necessary or appropriate to effectuate the
subordination as provided in the Indenture and (c) appoints the Trustee
attorney-in-fact of such Holder for such purpose; provided, however, that
the Indebtedness evidenced by this Subsidiary Guarantee shall cease to be
so subordinated and subject in right of payment upon any defeasance of this
Senior Note in accordance with the provisions of the Indenture.
RIDDELL GUARANTORS:
RIDDELL, INC.
ALL AMERICAN SPORTS CORPORATION
EQUILINK LICENSING CORP.
PROACQ CORPORATION
RHC LICENSING CORP.
RIDMARK CORPORATION
CHEER ACQUISITION CORP.
By: ________________________________
Name:
Title:
VARSITY GUARANTORS:
VARSITY SPIRIT CORPORATION
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
VARSITY USA, INC.
VARSITY/INTROPA TOURS, INC.
INTERNATIONAL LOGOS, INC.
By: ________________________________
Name:
Title:
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE TO BE DELIVERED BY GUARANTEEING SUBSIDIARY
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as
of ________________, among __________________ (the "Guaranteeing
Subsidiary"), a subsidiary of Riddell Sports Inc. (or its permitted
successor), a Delaware corporation (the "Company"), the Company, the other
parties listed on Schedule I hereto as Guarantors and Marine Midland Bank,
as trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an indenture (the "Indenture"), dated as of June 19, 1997 providing
for the issuance of an aggregate principal amount of up to $140,000,000 of
10 1/2% Senior Notes due 2007 (the "Senior Notes");
WHEREAS, the Indenture provides that under certain circumstances
the Guaranteeing Subsidiary shall execute and deliver to the Trustee a
supplemental indenture pursuant to which the Guaranteeing Subsidiary shall
unconditionally guarantee all of the Company's Obligations under the Senior
Notes and the Indenture on the terms and conditions set forth herein (the
"Subsidiary Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee
is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant
and agree for the equal and ratable benefit of the Holders of the Senior
Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees
as follows:
(a) Along with all Guarantors named in the Indenture, to jointly
and severally Guarantee to each Holder of a Senior Note
authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the
validity and enforceability of the Indenture, the Senior
Notes or the obligations of the Company hereunder or
thereunder, that:
(i) the principal of and interest on the Senior Notes will
be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the
overdue principal of and interest on the Senior Notes, if
any, if lawful, and all other obligations of the Company to
the Holders or the Trustee hereunder or thereunder will be
promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(ii) in case of any extension of time of payment or renewal
of any Senior Notes or any of such other obligations, that
same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay
the same immediately.
(b) The obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability
of the Senior Notes or the Indenture, the absence of any
action to enforce the same, any waiver or consent by any
Holder of the Senior Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived:diligence presentment, demand
of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest,
notice and all demands whatsoever.
(d) This Subsidiary Guarantee shall not be discharged except
by complete performance of the obligations contained in the
Senior Notes and the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any
Custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors,
any amount paid by either to the Trustee or such Holder,
this Subsidiary Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any
right of subrogation in relation to the Holders in respect
of any obligations guaranteed hereby until payment in full
of all obligations guaranteed hereby.
(g) As between the Guarantors, on the one hand, and the Holders
and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided
in Article 6 of the Indenture for the purposes of this
Subsidiary Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration in respect
of the obligations guaranteed hereby, and (y) in the event
of any declaration of acceleration of such obligations as
provided in Article 6 of the Indenture, such obligations
(whether or not due and payable) shall forthwith become due
and payable by the Guarantors for the purpose of this
Subsidiary Guarantee.
(h) The Guarantors shall have the right to seek contribution
from any non-paying Guarantor so long as the exercise of
such right does not impair the rights of the Holders under
the Guarantee.
(i) Pursuant to Section 10.02 of the Indenture, after giving
effect to any maximum amount and any other contingent and
fixed liabilities that are relevant under any applicable
Bankruptcy or fraudulent conveyance laws, and after giving
effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other
Guarantor under Article 10 of the Indenture shall result in
the obligations of such Guarantor under its Subsidiary
Guarantee not constituting a fraudulent transfer or
conveyance.
3. EXECUTION AND DELIVERY. Each Guaranteeing Subsidiary agrees that the
Subsidiary Guarantees shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Note a notation of such Subsidiary
Guarantee.
4. GUARANTEEING SUBSIDIARY MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving
Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(i) subject to Section 10.05 of the Indenture, the Person formed
by or surviving any such consolidation or merger (if other
than a Guarantor or the Company) unconditionally assumes all
the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably
satisfactory to the Trustee, under the Senior Notes, the
Indenture and the Subsidiary Guarantee on the terms set
forth herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory
in form to the Trustee, of the Subsidiary Guarantee endorsed upon
the Notes and the due and punctual performance of all of the
covenants and conditions of the Indenture to be performed by the
Guarantor, such successor corporation shall succeed to and be
substituted for the Guarantor with the same effect as if it had
been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Subsidiary
Guarantees to be endorsed upon all of the Notes issuable hereunder
which theretofore shall not have been signed by the Company and
delivered to the Trustee. All the Subsidiary Guarantees so issued
shall in all respects have the same legal rank and benefit under
the Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as
though all of such Subsidiary Guarantees had been issued at the
date of the execution hereof.
(c) Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) and (b) above, nothing contained in
the Indenture or in any of the Senior Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or
another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
5. RELEASES.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or
a sale or other disposition of all to the capital stock of any
Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation
acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under
its Subsidiary Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the
applicable provisions of the Indenture, including without
limitation Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel to the effect that such sale or other disposition was
made by the Company in accordance with the provisions of the
Indenture, including without limitation Section 4.10 of the
Indenture, the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from
its obligations under its Subsidiary Guarantee.
(b) Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of
principal of and interest on the Senior Notes and for the other
obligations of any Guarantor under the Indenture as provided in
Article 10 of the Indenture.
6. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the
Company or any Guaranteeing Subsidiary under the Senior Notes, any
Subsidiary Guarantees, the Indenture or this Supplemental Indenture or for
any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of the Senior Notes by accepting a Senior Note
waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Senior Notes. Such waiver may not be
effective to waive liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
8. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement.
9. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained
herein, all of which recitals are made solely by the Guaranteeing
Subsidiary and the Company.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed and attested, all as of the date
first above written.
Dated: ____________ ___, ____ [GUARANTEEING SUBSIDIARY]
By: _______________________________
Name:
Title:
RIDDELL GUARANTORS:
RIDDELL, INC.
ALL AMERICAN SPORTS CORPORATION
EQUILINK LICENSING CORP.
PROACQ CORPORATION
RHC LICENSING CORP.
RIDMARK CORPORATION
CHEER ACQUISITION CORP.
By: _______________________________
Name:
Title:
VARSITY GUARANTORS:
VARSITY SPIRIT CORPORATION
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
VARSITY USA, INC.
VARSITY/INTROPA TOURS, INC.
INTERNATIONAL LOGOS, INC.
By: ________________________________
Name:
Title:
MARINE MIDLAND BANK
as Trustee
By: ___________________________
Name:
Title:
Schedule I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture
as of the Issue Date:
All American Sports Corporation
Riddell, Inc.
RHC Licensing Corporation
Ridmark Corporation
Equilink Licensing Corporation
Proacq Corp.
Cheer Acquisition Corp.
Varsity Spirit Corporation
Varsity Spirit Fashions & Supplies, Inc.
International Logos, Inc.
Varsity/Intropa Tours, Inc.
Varsity USA, Inc.
CREDIT AGREEMENT
among
RIDDELL SPORTS INC.
as Borrower,
AND
THE SUBSIDIARIES OF RIDDELL SPORTS INC.
as Guarantors,
AND
THE LENDERS IDENTIFIED HEREIN,
AND
NBD BANK,
as Administrative Agent
AND
NATIONSBANK, N.A.,
as Documentation Agent
DATED AS OF JUNE 19, 1997
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ACCOUNTING TERMS...............................1
1.1 Definitions..................................................1
1.2 Computation of Time Periods and Other
Definitional Provisions...................................21
1.3 Accounting Terms............................................22
SECTION 2 CREDIT FACILITIES.............................................22
2.1 Revolving Loans.............................................22
2.2 Letter of Credit Subfacility................................24
SECTION 3 GENERAL PROVISIONS APPLICABLE TO LOANS
AND LETTERS OF CREDIT.........................................30
3.1 Interest. ................................................. 30
3.2 Place and Manner of Payments................................30
3.3 Prepayments.................................................31
3.4 Fees........................................................31
3.5 Payment in full at Maturity.................................32
3.6 Computations of Interest and Fees...........................32
3.7 Pro Rata Treatment..........................................33
3.8 Sharing of Payments.........................................34
3.9 Capital Adequacy............................................35
3.10 Inability To Determine Interest Rate.......................35
3.11 Illegality.................................................36
3.12 Requirements of Law........................................36
3.13 Taxes......................................................37
3.14 Compensation...............................................39
3.15 Substitution of Lender.....................................40
SECTION 4 GUARANTY......................................................40
4.1 Guaranty of Payment.........................................40
4.2 Obligations Unconditional...................................41
4.3 Modifications...............................................42
4.4 Waiver of Rights............................................42
4.5 Reinstatement...............................................42
4.6 Remedies. .................................................43
4.7 Limitation of Guaranty......................................43
4.8 Rights of Contribution......................................43
SECTION 5 CONDITIONS PRECEDENT..........................................43
5.1 Closing Conditions..........................................43
5.2 Conditions to All Extensions of Credit......................47
SECTION 6 REPRESENTATIONS AND WARRANTIES................................48
6.1 Financial Condition.........................................48
6.2 No Material Change..........................................48
6.3 Organization and Good Standing..............................48
6.4 Due Authorization...........................................49
6.5 No Conflicts................................................49
6.6 Consents. .................................................49
6.7 Enforceable Obligations.....................................49
6.8 No Default..................................................49
6.9 Ownership. .................................................50
6.10 Indebtedness...............................................50
6.11 Litigation.................................................50
6.12 Taxes. .................................................50
6.13 Compliance with Law........................................50
6.14 ERISA. ...................................................51
6.15 Subsidiaries...............................................52
6.16 Use of Proceeds; Margin Stock..............................52
6.17 Government Regulation......................................52
6.18 Environmental Matters......................................53
6.19 Intellectual Property......................................54
6.20 Solvency. .................................................54
6.21 Investments................................................55
6.22 Location of Collateral.....................................55
6.23 Disclosure.................................................55
6.24 Licenses, etc..............................................55
6.25 No Burdensome Restrictions.................................55
6.26 Collateral Documents.......................................55
SECTION 7 AFFIRMATIVE COVENANTS.........................................56
7.1 Information Covenants.......................................56
7.2 Financial Covenants.........................................59
7.3 Preservation of Existence and Franchises....................61
7.4 Books and Records...........................................61
7.5 Compliance with Law.........................................61
7.6 Payment of Taxes and Other Indebtedness.....................61
7.7 Insurance. .................................................61
7.8 Maintenance of Property.....................................62
7.9 Performance of Obligations..................................63
7.10 Collateral.................................................63
7.11 Use of Proceeds............................................63
7.12 Audits/Inspections.........................................63
7.13 Additional Credit Parties..................................64
7.14 Material License Agreements................................64
7.15 Merger. ..................................................64
7.16 Further Assurances Regarding Real Estate
Collateral...............................................65
SECTION 8 NEGATIVE COVENANTS............................................66
8.1 Indebtedness................................................66
8.2 Liens. ....................................................67
8.3 Nature of Business..........................................67
8.4 Consolidation and Merger....................................67
8.5 Sale or Lease of Assets.....................................68
8.6 Sale Leasebacks.............................................68
8.7 Advances, Investments and Loans.............................68
8.8 Restricted Payments.........................................69
8.9 Transactions with Affiliates................................69
8.10 Fiscal Year; Organizational Documents......................69
8.11 Senior Notes/Subordinated Debt.............................69
8.12 No Limitations.............................................69
8.13 No Other Negative Pledges..................................70
SECTION 9 EVENTS OF DEFAULT.............................................70
9.1 Events of Default...........................................70
9.2 Acceleration; Remedies......................................73
9.3 Allocation of Payments After Event of Default...............74
SECTION 10 AGENCY PROVISIONS............................................75
10.1 Appointment................................................75
10.2 Delegation of Duties.......................................76
10.3 Exculpatory Provisions.....................................76
10.4 Reliance on Communications.................................76
10.5 Notice of Default..........................................77
10.6 Non-Reliance on Agents and Other Lenders...................77
10.7 Indemnification............................................78
10.8 Agents in Their Individual Capacity........................78
10.9 Successor Agent............................................78
SECTION 11 MISCELLANEOUS................................................79
11.1 Notices. .................................................79
11.2 Right of Set-Off...........................................79
11.3 Benefit of Agreement.......................................79
11.4 No Waiver; Remedies Cumulative.............................82
11.5 Payment of Expenses; Indemnification.......................82
11.6 Amendments, Waivers and Consents...........................83
11.7 Counterparts...............................................84
11.8 Headings. .................................................84
11.9 Defaulting Lender..........................................84
11.10 Survival of Indemnification and Representations
and Warranties..........................................84
11.11 Governing Law; Jurisdiction...............................84
11.12 Waiver of Jury Trial......................................85
11.13 Time. ...................................................85
11.14 Severability..............................................85
11.15 Further Assurances........................................85
11.16 Confidentiality...........................................86
11.17 Entirety..................................................86
11.18 Binding Effect............................................86
11.19 Release of Collateral.....................................86
11.20 Consent to M.O.U..........................................87
SCHEDULES
Schedule 1.1(a) Commitment Percentages
Schedule 5.1(f) Mortgaged Properties
Schedule 6.10 Indebtedness
Schedule 6.15 Subsidiaries
Schedule 6.18 Environmental Matters
Schedule 6.19 Intellectual Property
Schedule 6.21 Investments
Schedule 6.22(a) Real Property Locations
Schedule 6.22(b) Personal Property Locations
Schedule 6.22(c) Chief Executive Offices
Schedule 6.24 Material License Agreements
Schedule 7.7 Insurance
Schedule 7.11 Use of Proceeds
Schedule 8.2 Liens
Schedule 11.1 Notices
Schedule 11.20 M.O.U.
EXHIBITS
Exhibit 2.1(b) Form of Notice of Borrowing
Exhibit 2.1(e) Form of Notice of Continuation/Conversion
Exhibit 2.1(g) Form of Revolving Note
Exhibit 7.1(c) Form of Borrowing Base Certificate
Exhibit 7.1(d) Form of Officer's Certificate
Exhibit 7.13 Form of Joinder Agreement
Exhibit 11.3 Form of Assignment Agreement
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Credit Agreement"), is entered into
as of June 19, 1997 among RIDDELL SPORTS INC., a Delaware corporation
("Borrower"), each of Borrower's Material Subsidiaries (individually a
"Guarantor" and collectively the "Guarantors"), the Lenders (as defined
herein), NBD BANK, as Administrative Agent for the Lenders and
NATIONSBANK, N.A., as Documentation Agent for the Lenders.
RECITALS
WHEREAS, the Borrower and the Guarantors have requested the
Lenders to provide a senior secured revolving credit facility in an
amount up to $40 million; and
WHEREAS, the Lenders party hereto have agreed to make the
requested senior secured revolving credit facility available to the
Borrower on the terms and conditions hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION of the premises and other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITIONS AND ACCOUNTING TERMS
1.1 Definitions.
As used herein, the following terms shall have the meanings
herein specified unless the context otherwise requires. Defined terms
herein shall include in the singular number the plural and in the plural
the singular:
"Additional Credit Party" means each Person that
becomes a Guarantor after the Closing Date, as provided in
Section 7.13.
"Adjusted Base Rate" means the Base Rate plus the
Applicable Percentage.
"Adjusted Eurodollar Rate" means the Eurodollar Rate
plus the Applicable Percentage.
"Administrative Agent" means NBD Bank (or any successor
thereto) or any successor administrative agent appointed
pursuant to Section 10.9.
"Agents" mean the Administrative Agent, the
Documentation Agent and the Collateral Agent and any successors
and assigns in such capacity.
"Affiliate" means, with respect to any Person, any
other Person directly or indirectly controlling (including but
not limited to all directors and officers of such Person),
controlled by or under direct or indirect common control with
such Person. A Person shall be deemed to control a corporation
if such Person possesses, directly or indirectly, the power (i)
to vote 10% or more of the securities having ordinary voting
power for the election of directors of such corporation or (ii)
to direct or cause direction of the management and policies of
such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Applicable Percentage" means the appropriate
applicable percentages corresponding to the Leverage Ratio in
effect as of the most recent Calculation Date as shown below:
<TABLE>
<CAPTION>
============================================================================================================
Applicable
Applicable Applicable Percentage for Applicable
Pricing Percentage For Percentage For Letter of Credit Percentage For
Level Leverage Ratio Eurodollar Loans Base Rate Loans Fees Commitment Fees
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
I 3.5 to 1.0 1.50 0% 1.50% .40%
- ------------------------------------------------------------------------------------------------------------
II 4.0 to 1.0 but 1.75% .25% 1.75% .50%
3.5 to 1.0
- ------------------------------------------------------------------------------------------------------------
III 4.5 to 1.0 but 2.00% .50% 2.00% .50%
4.0 to 1.0
- ------------------------------------------------------------------------------------------------------------
IV 5.0 to 1.0 but 2.25% .75% 2.25% .50%
4.5% to 1.0
- ------------------------------------------------------------------------------------------------------------
V 5.0 to 1.0 2.50% 1.00% 2.50% .50%
============================================================================================================
</TABLE>
The Applicable Percentage for Revolving Loans, the
Letter of Credit Fees and the Commitment Fees shall, in each
case, be determined and adjusted quarterly on the date (each a
"Calculation Date") five Business Days after the date by which
the Borrower is required to provide the officer's certificate in
accordance with the provisions of Section 7.1(d); provided that
the initial Applicable Percentage for Revolving Loans, the
Letter of Credit Fees and the Commitment Fees shall be based on
Pricing Level IV (as shown above) and shall remain at Pricing
Level IV until June 30, 1998 and, thereafter, the Pricing Level
shall be determined by the then current Leverage Ratio; and
provided further that if the Borrower fails to provide the
officer's certificate required by Section 7.1(d) on or before
the most recent Calculation Date, the Applicable Percentage for
Revolving Loans, the Letter of Credit Fees and the Commitment
Fees from such Calculation Date shall be based on Pricing Level
V until such time that an appropriate officer's certificate is
provided whereupon the Pricing Level shall be determined by the
then current Leverage Ratio. Each Applicable Percentage shall be
effective from one Calculation Date until the next Calculation
Date. Any adjustment in the Applicable Percentage shall be
applicable to all existing Loans and Letters of Credit as well
as any new Loans made or Letters of Credit issued.
"Bankruptcy Code" means the Bankruptcy Code in Title 11
of the United States Code, as amended, modified, succeeded or
replaced from time to time.
"Base Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest whole multiple of
1/100 of 1%) equal to the greater of (a) the Federal Funds Rate
in effect on such day plus 1/2 of 1% or (b) the Prime Rate in
effect on such day. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive
absent manifest error) that it is unable after due inquiry to
ascertain the Federal Funds Rate for any reason, including the
inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the
Base Rate shall be determined without regard to clause (a) of
the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the
Base Rate due to a change in the Prime Rate or the Federal Funds
Rate shall be effective on the effective date of such change in
the Prime Rate or the Federal Funds Rate, respectively.
"Base Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Base Rate.
"Beginning Net Worth" means 80% of the Net Worth
determined as of September 30, 1997.
"Borrower" means Riddell Sports Inc., a Delaware
corporation, together with any successors and permitted assigns.
"Borrowing Base Assets" means, at any date of
determination, the sum of (a) 80% of Eligible Accounts
Receivable plus (b) 50% of Eligible Inventory plus (c) 35% of
Eligible Work in Process plus (d) at the request of the
Borrower, for any one period of 90 consecutive days ending prior
to December 31, 1998, $5,000,000 (the "Overadvance"); provided
that the Borrower must provide written notice to the Agents of
the commencement of such 90 day period (and forward to the
Agents the fee set forth in Section 3.4(d)), and the Borrower
may only choose one 90 day period for such Overadvance.
"Business Day" means any day other than a Saturday, a
Sunday, a legal holiday or a day on which banking institutions
are authorized or required by law or other governmental action
to close in Detroit, Michigan, Charlotte, North Carolina or New
York, New York; provided that in the case of Eurodollar Loans,
such day is also a day on which dealings between banks are
carried on in U.S. dollar deposits in the London interbank
market.
"Calculation Date" has the meaning set forth in the
definition of Applicable Percentage.
"Capital Expenditures" means all expenditures of the
Credit Parties and their Subsidiaries which, in accordance with
GAAP, would be classified as capital expenditures, including,
without limitation, Capital Leases.
"Capital Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by that
Person as lessee which, in accordance with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that
Person.
"Cash Equivalents" means (a) securities issued or
directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is
pledged in support thereof) having maturities of not more than
twelve months from the date of acquisition, (b) U.S. dollar
denominated time and demand deposits and certificates of deposit
of (i) any Lender, (ii) any domestic commercial bank having
capital and surplus in excess of $500,000,000 or (iii) any bank
whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Moody's is at least P-1 or
the equivalent thereof (any such bank being an "Approved Bank"),
in each case with maturities of not more than 270 days from the
date of acquisition, (c) commercial paper and variable or fixed
rate notes issued by any Approved Bank (or by the parent company
thereof) or any variable rate notes issued by, or guaranteed by,
any domestic corporation rated A-1 (or the equivalent thereof)
or better by S&P or P-1 (or the equivalent thereof) or better by
Moody's and maturing within six months of the date of
acquisition, (d) repurchase agreements with a bank or trust
company (including any of the Lenders) or recognized securities
dealer having capital and surplus in excess of $500,000,000 for
direct obligations issued by or fully guaranteed by the United
States of America in which the Borrower shall have a perfected
first priority security interest (subject to no other Liens) and
having, on the date of purchase thereof, a fair market value of
at least 100% of the amount of the repurchase obligations and
(e) Investments, classified in accordance with GAAP as current
assets, in money market investment programs registered under the
Investment Company Act of 1940, as amended, which are
administered by reputable financial institutions having capital
of at least $500,000,000 and the portfolios of which are limited
to Investments of the character described in the foregoing
subdivisions (a) through (d).
"Change of Control" means either of the following
events: (a) any "person" or "group" (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), in each case, other
than the Principals and the Related Parties has become, directly
or indirectly, the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any
such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), by
way of merger, consolidation or otherwise, of 35% or more of the
voting power of the Voting Stock of the Borrower on a
fully-diluted basis, after giving effect to the conversion and
exercise of all outstanding warrants, options and other
securities of the Borrower (whether or not such securities are
then currently convertible or exercisable) or (b) a change in
control (as defined in the documentation evidencing the Senior
Notes or the Subordinated Debt) occurs.
"Closing Date" means the date hereof.
"Code" means the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, as amended,
modified, succeeded or replaced from time to time.
"Collateral" means all collateral described in and
covered by the Collateral Documents.
"Collateral Agent" means NBD Bank (or any successor
thereto) or any successor collateral agent appointed pursuant to
Section 10.9.
"Collateral Assignments of License Agreements" means
any collateral assignment of a Material License Agreement
executed and delivered by a Credit Party in favor of the
Collateral Agent, for the benefit of the Lenders, to secure its
obligations under the Credit Documents, as such may be amended,
modified, extended, renewed, restated or replaced from time to
time.
"Collateral Documents" means the Security Agreements,
the Pledge Agreements, the Mortgage Documents, the Collateral
Assignments of License Agreements and such other documents
executed and delivered in connection with the attachment and
perfection of the Lenders' security interests in the assets of
the Credit Parties, including without limitation, the Mortgage
Policies, UCC financing statements and collateral assignments of
certain license agreements and intellectual property.
"Commitment Fees" means the fees payable to the Lenders
pursuant to Section 3.4(a).
"Commitments" means the commitment of each Lender with
respect to the Revolving Committed Amount.
"Coverage Ratio" means, for the applicable period, the
ratio of (a) EBITDA minus Capital Expenditures to (b) cash
Interest Expense.
"Credit Documents" means this Credit Agreement, the
Notes, any Joinder Agreement, the Collateral Documents, the LOC
Documents, and all other related agreements and documents issued
or delivered hereunder or thereunder or pursuant hereto or
thereto.
"Credit Parties" means the Borrower and the Guarantors
and "Credit Party" means any one of them.
"Credit Party Obligations" means, without duplication,
(a) all of the obligations of the Credit Parties to the Lenders
(including the Issuing Lender) and the Agents, whenever arising,
under this Credit Agreement, the Notes, the Collateral Documents
or any of the other Credit Documents to which the Borrower or
any other Credit Party is a party and (b) all liabilities and
obligations owing from such Credit Party to any Lender, or any
Affiliate of a Lender, arising under Hedging Agreements.
"Default" means any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"Defaulting Lender" means, at any time, any Lender
that, (a) has failed to make a Loan or purchase a Participation
Interest required pursuant to the terms of this Credit Agreement
(but only for so long as such Loan is not made or such
Participation Interest is not purchased), (b) has failed to pay
to the Agents or any Lender an amount owed by such Lender
pursuant to the terms of this Credit Agreement (but only for so
long as such amount has not been repaid) or (c) has been deemed
insolvent or has become subject to a bankruptcy or insolvency
proceeding or to a receiver, trustee or similar official.
"Documentation Agent" means NationsBank, N.A. (or any
successor thereto) or any successor documentation agent
appointed pursuant to Section 10.9.
"Dollars" and "$" means dollars in lawful currency of
the United States of America.
"EBITDA" means, for any period, with respect to the
Credit Parties and their Subsidiaries on a consolidated basis,
the sum of (a) Net Income for such period (excluding the effect
of any extraordinary or other non-recurring gains (including any
gain from the sale of property) or non-cash losses) plus (b) an
amount which, in the determination of Net Income for such period
has been deducted for (i) Interest Expense for such period, (ii)
total Federal, state, foreign or other income taxes for such
period, (iii) all depreciation and amortization for such period,
all as determined in accordance with GAAP, (iv) Transaction
Costs and any amounts paid in connection with or pursuant to the
M.O.U. or the transactions contemplated thereby, including,
without limitation, reasonable attorneys fees and disbursements
and (v) without duplication, any write down of intangible assets
not to exceed $5,000,000, in the aggregate.
"Effective Date" means the date on which the conditions
set forth in Section 5.1 shall have been fulfilled (or waived in
the sole discretion of the Lenders) and on which the initial
Loans shall have been made and/or the initial Letters of Credit
shall have been issued.
"Eligible Assignee" means (a) any Lender or Affiliate
or subsidiary of a Lender and (b) any other commercial bank,
financial institution, institutional lender or "accredited
investor" (as defined in Regulation D of the Securities and
Exchange Commission).
"Eligible Accounts Receivable" means, as of any date of
determination, and without duplication, the aggregate book value
of all accounts receivable, receivables, and obligations for
payment created or arising from the sale or shipment (if such
shipment is pursuant to a purchase order to Varsity Spirit
Corporation or All American Sports Corporation) of inventory or
the rendering of services in the ordinary course of business
(collectively, the "Receivables"), owned by or owing to the
Credit Parties and in which the Lenders have a first priority
perfected security interest, net of any service charges included
in such aggregate value and sales adjustments consistent with a
Credit Party's internal policies and in any event in accordance
with GAAP, but excluding in any event (i) Receivables subject to
any Lien, other than any Lien described in clauses (a) through
(d) of the definition of Permitted Liens, (ii) Receivables which
are (A) if owing to a Credit Party other than Varsity Spirit
Corporation, more than 90 days past due and (B) if owing to
Varsity Spirit Corporation, more than 120 days past due; it
being understood that, for purposes of this clause (ii), any
Receivables owing from schools which are stated to have a due
date between April 1 and October 1 of any year shall be deemed
to have a due date of October 1 of such year, and Receivables
supported by a valid, existing and enforceable irrevocable
letter of credit or performance bond acceptable to the Agents
shall not be deemed to have a due date, (iii) Receivables
evidenced by notes, chattel paper or other instruments, unless
such notes, chattel paper or instruments have been delivered to
and are in the possession of the Collateral Agent, (iv)
Receivables owing by an account debtor which is subject to any
bankruptcy or insolvency proceeding of any kind, (v) Receivables
owing by an account debtor located outside of the United States
or Canada (unless (A) payment for the goods shipped is secured
by an irrevocable letter of credit or (B) export insurance is
obtained, in each case in a form and from an institution
acceptable to the Agents), (vi) Receivables which are contingent
or subject to offset, deduction, counterclaim, dispute or other
defense to payment, in each case to the extent of such offset,
deduction, counterclaim, dispute or other defense, (vii)
Receivables for which any direct or indirect Subsidiary of the
Borrower or any Affiliate of the Borrower is the account debtor,
(viii) Receivables representing a sale to the government of the
United States of America or any subdivision thereof, but not
including any state, county or municipal government as long as
there are no restrictions as to the assignability or collection
as to such Receivables, (ix) Receivables owing from any National
Football League team subject to the Promotional Rights Agreement
dated June 1, 1990 between Riddell, Inc. and NFL Properties,
Inc. or any replacement or substitution agreement thereof or any
similar agreement entered into by the Borrower or any of its
Subsidiaries, (x) all Receivables from an account debtor who has
more than 50% of its Receivables owing to the Credit Parties
that are more than 90 days past due and (xi) Receivables which
fail to meet such other specifications and requirements as may
from time to time be established by the Agents in their
reasonable discretion.
"Eligible Inventory" means, as of any date of
determination and without duplication, the lower of the
aggregate book value (based on a FIFO or a moving average cost
valuation, consistently applied) or fair market value (provided
that the value of any inventory sold between Credit Parties
shall be calculated using the value of the inventory prior to
any such sale between Credit Parties) of all raw materials and
finished goods inventory owned by any Credit Party and in which
the Lenders have a first priority perfected security interest
less appropriate reserves determined in accordance with GAAP,
but excluding in any event (i) inventory subject to any Lien,
other than any Lien described in clauses (a) through (d) of the
definition of Permitted Liens, (ii) inventory which is not in
good condition or fails to meet standards for sale or use
imposed by governmental agencies, departments or divisions
having regulatory authority over such goods, (iii) inventory
which is discontinued or not useable or saleable at prices
approximating their cost in the ordinary course of the
applicable Credit Party's business (including without
duplication the amount of any reserves for obsolescence,
unsalability or decline in value), (iv) inventory located
outside of the United States or Canada, (v) subsequent to the
date 90 days after the Closing Date, inventory located at a
location not owned or leased by the applicable Credit Party
unless the Agents have received a waiver and estoppel agreement,
reasonably satisfactory to the Agents, from the owner/operator
of such location, and, if deemed appropriate by the Collateral
Agent, a UCC financing statement has been filed with respect to
such location, (vi) subsequent to the date 90 days after the
Closing Date, inventory located at a location leased by the
applicable Credit Party with respect to which the Collateral
Agent shall not have received a landlord's waiver and estoppel
agreement reasonably satisfactory to the Agents, (vii) inventory
which is subject to a Material License Agreement unless (A) the
Material License Agreement is in full force and effect and (B)
the Agents have received (x) a Collateral Assignment of License
Agreement for such Material License Agreement and (y) a consent
to such Collateral Assignment of License Agreement from all
other parties to such Material License Agreement, in a form
reasonably satisfactory to the Agents, (viii) inventory which is
leased or on consignment, (ix) inventory which constitutes
supplies and packaging, letter inventory, parade inventory or
screws or washers and (x) inventory which fails to meet such
other specifications and requirements as may from time to time
be established by the Agents in their reasonable discretion; it
being agreed that the value of Eligible Inventory shall not
include any capitalized procurement costs other than shipping
costs and customs duty and other landing costs for imported
goods.
"Eligible Work in Process" means the book value of all
work in process of Riddell, Inc. (and only Riddell, Inc.) in
which the Lenders have a first priority perfected security
interest, as such work in process relates to materials but
specifically excluding any labor or overhead attributed to such
work in process.
"Environmental Claim" means any investigation, written
notice, violation, written demand, written allegation, action,
suit, injunction, judgment, order, consent decree, penalty,
fine, lien, proceeding, or written claim whether administrative,
judicial, or private in nature arising (a) pursuant to, or in
connection with, an actual or alleged violation of, any
Environmental Law, (b) in connection with any Hazardous
Material, (c) from any assessment, abatement, removal, remedial,
corrective, or other response action in connection with an
Environmental Law or other order of a Governmental Authority or
(d) from any actual or alleged damage, injury, threat, or harm
to health, safety, natural resources, or the environment.
"Environmental Laws" means any current or future legal
requirement of any Governmental Authority pertaining to (a) the
protection of health, safety, and the indoor or outdoor
environment, (b) the conservation, management, or use of natural
resources and wildlife, (c) the protection or use of surface
water and groundwater or (d) the management, manufacture,
possession, presence, use, generation, transportation,
treatment, storage, disposal, release, threatened release,
abatement, removal, remediation or handling of, or exposure to,
any hazardous or toxic substance or material or (e) pollution
(including any release to land surface water and groundwater)
and includes, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act
of 1986, 42 USC 9601 et seq., Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendment of 1984, 42 USC 6901 et
seq., Federal Water Pollution Control Act, as amended by the
Clean Water Act of 1977, 33 USC 1251 et seq., Clean Air Act of
1966, as amended, 42 USC 7401 et seq., Toxic Substances Control
Act of 1976, 15 USC 2601 et seq., Hazardous Materials
Transportation Act, 49 USC App. 1801 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 USC 651 et seq.,
Oil Pollution Act of 1990, 33 USC 2701 et seq., Emergency
Planning and Community Right-to-Know Act of 1986, 42 USC 11001
et seq., National Environmental Policy Act of 1969, 42 USC 4321
et seq., Safe Drinking Water Act of 1974, as amended, 42 USC
300(f) et seq., any analogous implementing or successor law, and
any amendment, rule, regulation, order, or directive issued
thereunder.
"Equity Issuance" means any issuance by the Borrower to
any Person of (a) shares of its capital stock or other equity
interests, (b) any shares of its capital stock or other equity
interests pursuant to the exercise of options or warrants or (c)
any shares of its capital stock or other equity interests
pursuant to the conversion of any debt securities to equity.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute thereto, as
interpreted by the rules and regulations thereunder, all as the
same may be in effect from time to time. References to sections
of ERISA shall be construed also to refer to any successor
sections.
"ERISA Affiliate" means an entity, whether or not
incorporated, which is under common control with any Credit
Party or any of its Subsidiaries within the meaning of Section
4001(a)(14) of ERISA, or is a member of a group which includes
any Credit Party or any of its Subsidiaries and which is treated
as a single employer under Sections 414(b), (c), (m), or (o) of
the Code.
"Eurodollar Loan" means a Loan bearing interest based
at a rate determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for the Interest Period for
each Eurodollar Loan comprising part of the same borrowing
(including conversions, extensions and renewals), a per annum
interest rate determined pursuant to the following formula:
Eurodollar Rate = London Interbank Offered Rate
------------------------------
1 - Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means for any day, that
percentage (expressed as a decimal) which is in effect from time
to time under Regulation D of the Board of Governors of the
Federal Reserve System (or any successor), as such regulation
may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special, or marginal
reserves) applicable with respect to Eurocurrency liabilities as
that term is defined in Regulation D (or against any other
category of liabilities that includes deposits by reference to
which the interest rate of Eurodollar Loans is determined),
whether or not Lender has any Eurocurrency liabilities subject
to such reserve requirement at that time. Eurodollar Loans shall
be deemed to constitute Eurocurrency liabilities and as such
shall be deemed subject to reserve requirements without benefits
of credits for proration, exceptions or offsets that may be
available from time to time to a Lender. The Eurodollar Rate
shall be adjusted automatically on and as of the effective date
of any change in the Eurodollar Reserve Percentage.
"Event of Default" means any of the events or
circumstances described in Section 9.1.
"Exchange Act" means the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder, as amended, modified, succeeded or replaced from
time to time.
"Extension of Credit" means, as to any Lender, the
making of a Loan by such Lender (or a participation therein by a
Lender) or the issuance of, or participation in, a Letter of
Credit by such Lender.
"Federal Funds Rate" means for any day the rate per
annum (rounded upward, if necessary, to the nearest 1/100th of
1%) 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 by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day
shall be such rate on such transactions on the next preceding
Business Day and (b) if no such rate is so published on such
next preceding Business Day, the Federal Funds Rate for such day
shall be the average rate quoted to the Administrative Agent on
such day on such transactions as determined by the
Administrative Agent.
"Fee Letter" means that certain letter agreement
between the Borrower and the Agents dated as of the Closing
Date.
"Funded Debt" means, without duplication, the sum of
(a) all Indebtedness of the Credit Parties and their
Subsidiaries for borrowed money, (b) all purchase money
Indebtedness of the Credit Parties and their Subsidiaries, (c)
the principal portion of all obligations of the Borrower and its
Subsidiaries under Capital Leases, (d) all obligations,
contingent or otherwise, relative to the face amount of all
letters of credit (other than letters of credit supporting trade
payables in the ordinary course of business), whether or not
drawn, and banker's acceptances issued for the account of such
Person (it being understood that, to the extent an undrawn
letter of credit supports another obligation consisting of
Indebtedness, in calculating aggregated Indebtedness only such
other obligation shall be included), (e) all Guaranty
Obligations of the Credit Parties and their Subsidiaries with
respect to Funded Debt of another Person, (f) all Funded Debt of
another entity secured by a Lien on any property of the Credit
Parties and their Subsidiaries whether or not such Funded Debt
has been assumed by a Credit Party or any of its Subsidiaries,
(g) all Funded Debt of any partnership or unincorporated joint
venture to the extent a Credit Party or one of its Subsidiaries
is legally obligated or has a reasonable expectation of being
liable with respect thereto, net of any assets of such
partnership or joint venture and (h) the principal balance
outstanding under any synthetic lease, tax retention operating
lease, off-balance sheet loan or similar off-balance sheet
financing product where such transaction is considered borrowed
money indebtedness for tax purposes but is classified as an
operating lease in accordance with GAAP.
"GAAP" means generally accepted accounting principles
in the United States applied on a consistent basis and subject
to Section 1.3.
"Governmental Authority" means any Federal, state,
local, provincial or foreign court or governmental agency,
authority, instrumentality or regulatory body.
"Guarantor" means each of the Material Subsidiaries of
the Borrower and each Additional Credit Party which has executed
a Joinder Agreement, together with their successors and assigns.
"Guaranty Obligations" means, with respect to any
Person, without duplication, any obligations (other than
endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) guaranteeing any
Indebtedness of any other Person in any manner, whether direct
or indirect, and including without limitation any obligation,
whether or not contingent, (a) to purchase any such Indebtedness
or other obligation or any property constituting security
therefor, (b) to advance or provide funds or other support for
the payment or purchase of such indebtedness or obligation or to
maintain working capital, solvency or other balance sheet
condition of such other Person (including, without limitation,
maintenance agreements, comfort letters, take or pay
arrangements, put agreements or similar agreements or
arrangements) for the benefit of the holder of Indebtedness of
such other Person, (c) to lease or purchase property, securities
or services primarily for the purpose of assuring the owner of
such Indebtedness or (d) to otherwise assure or hold harmless
the owner of such Indebtedness or obligation against loss in
respect thereof. The amount of any Guaranty Obligation hereunder
shall (subject to any limitations set forth therein) be deemed
to be an amount equal to the outstanding principal amount (or
maximum principal amount, if larger) of the Indebtedness in
respect of which such Guaranty Obligation is made.
"Hazardous Materials" means any substance, material or
waste defined or regulated in or under any Environmental Laws.
"Hedging Agreements" means, collectively, interest rate
protection agreements, foreign currency exchange agreements,
commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements, in each
case, entered into or purchased by a Credit Party.
"Indebtedness" of any Person means, without
duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, or upon which interest
payments are customarily made (c) all obligations of such Person
under conditional sale or other title retention agreements
relating to property purchased by such Person to the extent of
the value of such property (other than customary reservations or
retentions of title under agreements with suppliers entered into
in the ordinary course of business), (d) all obligations, other
than intercompany items, of such Person issued or assumed as the
deferred purchase price of property or services purchased by
such Person which would appear as liabilities on a balance sheet
of such Person, (e) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, property owned
or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (f) all Guaranty Obligations
of such Person, (g) the principal portion of all obligations of
such Person under (i) Capital Leases and (ii) any synthetic
lease, tax retention operating lease, off-balance sheet loan or
similar off-balance sheet financing product of such Person where
such transaction is considered borrowed money indebtedness for
tax purposes but is classified as an operating lease in
accordance with GAAP, (h) all net obligations of such Person in
respect of Hedging Agreements, (i) the maximum amount of all
performance and standby letters of credit issued or bankers'
acceptances facilities created for the account of such Person
and, without duplication, all drafts drawn thereunder (to the
extent unreimbursed), (j) all preferred stock issued by such
Person and required by the terms thereof to be redeemed, or for
which mandatory sinking fund payments are due within one year of
the date of determination and (k) the aggregate amount of
uncollected accounts receivable of such Person subject at such
time to a sale of receivables (or similar transaction)
regardless of whether such transaction is effected without
recourse to such Person or in a manner that would not be
reflected on the balance sheet of such Person in accordance with
GAAP. The Indebtedness of any Person shall include the
Indebtedness of any partnership or unincorporated joint venture
in which such Person is legally obligated.
"Interest Expense" means, for any period, with respect
to the Credit Parties and their Subsidiaries on a consolidated
basis, all net interest expense, including the interest
component under Capital Leases, as determined in accordance with
GAAP.
"Interest Payment Date" means (a) as to Base Rate
Loans, the tenth day of each month and the Revolving Loan
Maturity Date and (b) as to Eurodollar Loans, the last day of
each applicable Interest Period and the Revolving Loan Maturity
Date and in addition where the applicable Interest Period for a
Eurodollar Loan is greater than three months, then also the date
three months from the beginning of the Interest Period and each
three months thereafter.
"Interest Period" means, as to Eurodollar Loans, a
period of one, two, three or six months' duration, as the
Borrower may elect, commencing, in each case, on the date of the
borrowing (including continuations and conversions thereof);
provided, however, (a) if any Interest Period would end on a day
which is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day (except that where
the next succeeding Business Day falls in the next succeeding
calendar month, then on the next preceding Business Day), (b) no
Interest Period shall extend beyond the Revolving Loan Maturity
Date and (c) where an Interest Period begins on a day for which
there is no numerically corresponding day in the calendar month
in which the Interest Period is to end, such Interest Period
shall end on the last Business Day of such calendar month.
"Investment" in any Person means (a) the acquisition
(whether for cash, property, services, assumption of
Indebtedness, securities or otherwise) of assets, shares of
capital stock, bonds, notes, debentures, partnership, joint
ventures or other ownership interests or other securities of
such other Person or (b) any deposit with, or advance, loan or
other extension of credit to, such Person (other than deposits
made in connection with the purchase of equipment or other
assets in the ordinary course of business) or (c) any other
capital contribution to or investment in such Person, including,
without limitation, any Guaranty Obligation (including any
support for a Letter of Credit issued on behalf of such Person)
incurred for the benefit of such Person.
"Issuing Lender" means NBD Bank or any successor
Administrative Agent.
"Issuing Lender Fees" has the meaning set forth in
Section 3.4(b).
"Joinder Agreement" means a Joinder Agreement
substantially in the form of Exhibit 7.13.
"Lender" means any of the Persons identified as a
"Lender" on the signature pages hereto, and any Person which may
become a Lender by way of assignment in accordance with the
terms hereof, together with their successors and permitted
assigns.
"Letter of Credit" means a Letter of Credit issued for
the account of a Credit Party by the Issuing Lender pursuant to
Section 2.2, as such Letter of Credit may be amended, modified,
extended, renewed or replaced.
"Letter of Credit Fees" has the meaning assigned to
such term in Section 3.4(b).
"Leverage Ratio" means, as of the end of each fiscal
quarter, the ratio of (a) total Funded Debt on such date to (b)
EBITDA for the twelve month period ending on such date.
"Lien" means any mortgage, pledge, hypothecation,
assignment, deposit arrangement, security interest, encumbrance,
lien (statutory or otherwise), preference, priority or charge of
any kind, including, without limitation, any agreement to give
any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof.
"Loan" or "Loans" means the Revolving Loans (or a
portion of any Revolving Loan), individually or collectively, as
appropriate.
"LOC Documents" means, with respect to any Letter of
Credit, such Letter of Credit, any amendments thereto, any
documents delivered in connection therewith, any application
therefor, and any agreements, instruments, guarantees or other
documents (whether general in application or applicable only to
such Letter of Credit) governing or providing for (a) the rights
and obligations of the parties concerned or at risk or (b) any
collateral security for such obligations.
"LOC Obligations" means, at any time, the sum of (a)
the maximum amount which is, or at any time thereafter may
become, available to be drawn under Letters of Credit then
outstanding, assuming compliance with all requirements for
drawings referred to in such Letters of Credit plus (b) the
aggregate amount of all drawings under Letters of Credit honored
by an Issuing Lender but not theretofore reimbursed.
"LOC Participants" means the Lenders.
"London Interbank Offered Rate" means, with respect to
any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or
any successor page) as the London interbank offered rate for
deposits in Dollars at approximately 11:00 A.M. (London time)
two Business Days prior to the first day of such Interest Period
for a term comparable to such Interest Period; provided,
however, if more than one rate is specified on Telerate Page
3750, the applicable rate shall be the arithmetic mean of all
such rates. If, for any reason, such rate is not available, the
term "London Interbank Offered Rate" shall mean, with respect to
any Eurodollar Loan for the Interest Period applicable thereto,
the rate of interest per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 A.M. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Mandatory Borrowing" has the meaning set forth in
Section 2.2(e).
"Material Adverse Effect" means a material adverse
effect on (a) the operations, financial condition, business or
prospects of the Credit Parties and their Subsidiaries taken as
a whole, (b) the ability of the Borrower or the Credit Parties,
taken as a whole, to perform its or their respective obligations
under this Credit Agreement or any of the other Credit
Documents, or (c) the validity or enforceability of this Credit
Agreement, any of the other Credit Documents, or the rights and
remedies of the Lenders hereunder or thereunder taken as a
whole.
"Material License Agreements" means (a) all License
Agreements set forth on Schedule 6.24 and (b) all other License
Agreements entered into by a Credit Party in which such Credit
Party either guaranties or actually pays royalties to the
licensor party to such License Agreement in an amount equal to
or greater than $100,000 per year.
"Material Subsidiary" means, as of any date of
determination, all Subsidiaries, direct or indirect, of the
Borrower that, together with its Subsidiaries on a consolidated
basis, owns assets equal to or greater than five percent (5%) of
the total assets of the Borrower and its Subsidiaries on a
consolidated basis; provided that at no time shall the then
Credit Parties, in the aggregate, own less than ninety percent
(90%) of the total assets of the Borrower and its Subsidiaries
on a consolidated basis. As of the Effective Date, the Material
Subsidiaries are Riddell, Inc., Equilink Licensing Corporation,
RHC Licensing Corporation, Ridmark Corporation, All American
Sports Corporation, Cheer Acquisition Corp., Varsity Spirit
Corporation, Varsity Spirit Fashions & Supplies, Inc.,
International Logos, Inc., Varsity/Intropa Tours, Inc., and
Varsity USA, Inc.
"M.O.U." means the Memorandum of Understanding entered
into as of the 3rd day of June, 1997, by and among Riddell
Sports Inc., RHC Licensing Corporation, Riddell, Inc., Equilink
Licensing Corporation, Ridmark Corporation, MacMark Corporation,
NBD Bank N.A., MLC Partners Limited Partnership, Robert
Nederlander, Leonard Toboroff, John McConnaughy, Jr., Frederic
H. Brooks, Connecticut Economics Corporation, Robert Weisman,
Bruce H. Levitt, as Bankruptcy Trustee of M Holdings
Corporation, Paul Swanson, as Bankruptcy Trustee of MGS
Acquisition, Inc., Official Unsecured Creditors Committee of
MacGregor Sporting Goods, Inc. and MacGregor Sports, Inc.,
Official Unsecured Creditors' Committee of MacGregor Sporting
Goods, Inc., M Holdings Corporation, f/k/a MacGregor Sporting
Goods, Inc., Innovative Promotions, Inc., Ernest Wood, Jr.,
Harry Wood, Pursuit Athletic Footwear, Inc., and Riddell
Athletic Footwear, Inc. in the form set forth on Schedule 11.20
and any non-material modifications or amendments thereto.
"Moody's" means Moody's Investors Service, Inc., or any
successor or assignee of the business of such company in the
business of rating securities.
"Mortgage Documents" means the Mortgages, the Mortgage
Policies and such other documents and agreements executed or
delivered in connection with the Real Properties.
"Mortgage Policies" has the meaning set forth in
Section 5.1(f).
"Mortgages" has the meaning set forth in Section
5.1(f).
"Mortgaged Properties" has the meaning set forth in
Section 5.1(f).
"Multiemployer Plan" means a Plan covered by Title IV
of ERISA which is a multiemployer plan as defined in Section
3(37) or 4001(a)(3) of ERISA.
"Multiple Employer Plan" means a Plan covered by Title
IV of ERISA, other than a Multiemployer Plan, which any Credit
Party or any of its Subsidiaries or any ERISA Affiliate and at
least one employer other than a Credit Party or any of its
Subsidiaries or any ERISA Affiliate are contributing sponsors.
"Net Cash Proceeds" means the gross cash proceeds
received from an Equity Issuance net of (a) transaction costs
payable to third parties and (b) a good faith estimate of the
taxes payable with respect to such proceeds.
"Net Income" means, for any period, the net income
after taxes for such period of the Credit Parties and their
Subsidiaries on a consolidated basis, as determined in
accordance with GAAP.
"Net Worth" means, as of any date, shareholders' equity
or net worth of the Credit Parties and their Subsidiaries on a
consolidated basis, as determined in accordance with GAAP plus,
without duplication, any reduction in Net Worth as a result of
(a) a write down in the value of intangibles not to exceed $5
million in the aggregate, (b) the sum of all amounts paid
pursuant to or in connection with the M.O.U. or the transactions
contemplated thereby and (c) Transaction Costs.
"Non-Excluded Taxes" has the meaning set forth in
Section 3.13.
"Non-Material Subsidiary" means, as of any date of
determination, all Subsidiaries of the Borrower, direct or
indirect, other than Material Subsidiaries.
"Note" or "Notes" means the Revolving Loan Notes,
individually or collectively, as appropriate.
"Notice of Borrowing" means a request by the Borrower
for a Revolving Loan, in the form of Exhibit 2.1(b).
"Notice of Continuation/Conversion" means a request by
the Borrower to continue an existing Eurodollar Loan to a new
Interest Period or to convert a Eurodollar Loan to a Base Rate
Loan or a Base Rate Loan to a Eurodollar Loan, in the form of
Exhibit 2.1(e).
"Overadvance" has the meaning set forth in the
definition of Borrowing Base Assets.
"Participation Interest" means the Extension of Credit
by a Lender by way of a purchase of a participation in Letters
of Credit or LOC Obligations as provided in Section 2.2 or in
any Loans as provided in Section 3.8.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA and any
successor thereto.
"Permitted Investments" means Investments which are (a)
cash or Cash Equivalents, (b) accounts receivable created,
acquired or made in the ordinary course of business and payable
or dischargeable in accordance with customary trade terms, (c)
inventory, raw materials and general intangibles (to the extent
such general intangible is not a Capital Expenditure) acquired
in the ordinary course of business, (d) Investments by one
Credit Party in another Credit Party, (e) Investments by a
Credit Party in a Non-Material Subsidiary, not to exceed
$250,000, in the aggregate, at any one time, (f) loans to
directors, officers or employees in the ordinary course of
business for reasonable business expenses, not to exceed, in the
aggregate, $250,000 at any one time; (g) Investments in Capital
Expenditures and (g) other Investments not to exceed, in the
aggregate, $2,500,000 at any one time.
"Permitted Liens" means (a) Liens securing Credit Party
Obligations, (b) Liens for taxes not yet due or Liens for taxes
being contested in good faith by appropriate proceedings for
which adequate reserves determined in accordance with GAAP have
been established (and as to which the property subject to any
such Lien is not yet subject to foreclosure, sale, collection,
levy or loss on account thereof), (c) Liens in respect of
property imposed by law arising in the ordinary course of
business such as materialmen's, mechanics', warehousemen's,
carrier's, landlords' and other nonconsensual statutory Liens
which are not yet due and payable or which are being contested
in good faith by appropriate proceedings for which adequate
reserves determined in accordance with GAAP have been
established (and as to which the property subject to any such
Lien is not yet subject to foreclosure, sale or loss on account
thereof), (d) pledges or deposits made in the ordinary course of
business to secure payment of worker's compensation insurance,
unemployment insurance, pensions or social security programs,
(e) Liens arising from good faith deposits in connection with or
to secure performance of tenders, bids, leases, government
contracts, performance and return-of-money bonds and other
similar obligations incurred in the ordinary course of business
(other than obligations in respect of the payment of borrowed
money), (f) Liens arising from good faith deposits in connection
with or to secure performance of statutory obligations and
surety and appeal bonds, (g) easements, rights-of-way,
restrictions (including zoning restrictions), matters of plat,
minor defects or irregularities in title and other similar
charges or encumbrances not, in any material respect, impairing
the use of the encumbered property for its intended purposes,
(h) judgment Liens that would not constitute an Event of
Default, (i) Liens in connection with Indebtedness permitted by
Section 8.1(g), (j) Liens arising by virtue of any statutory or
common law provision relating to banker's liens, rights of
setoff or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution, (k) Liens
existing on the date hereof and identified on Schedule 8.2;
provided that no such Lien shall extend to any property other
than the property subject thereto on the Closing Date (l)
Permitted Encumbrances (as defined in any Mortgage Document) and
(m) Liens on Unrestricted Margin Stock.
"Person" means any individual, partnership, joint
venture, firm, corporation, limited liability company,
association, trust or other enterprise (whether or not
incorporated), or any Governmental Authority.
"Plan" means any employee benefit plan (as defined in
Section 3(3) of ERISA) which is covered by ERISA and with
respect to which any Credit Party or any of its Subsidiaries or
any ERISA Affiliate is (or, if such plan were terminated at such
time, would under Section 4069 of ERISA be deemed to be) an
"employer" within the meaning of Section 3(5) of ERISA.
"Pledge Agreements" means any Pledge Agreement executed
and delivered by a Credit Party in favor of the Collateral
Agent, for the benefit of the Lenders, to secure its obligations
under the Credit Documents, as amended, modified, extended,
renewed or replaced from time to time.
"Prime Rate" means the per annum rate of interest
established from time to time by the Administrative Agent at its
principal office in Detroit, Michigan (or such other principal
office of the Administrative Agent as communicated in writing to
the Borrower and the Lenders) as its Prime Rate. Any change in
the interest rate resulting from a change in the Prime Rate
shall become effective as of 12:01 a.m. of the Business Day on
which each change in the Prime Rate is announced by the
Administrative Agent. The Prime Rate is a reference rate used by
the Administrative Agent in determining interest rates on
certain loans and is not intended to be the lowest rate of
interest charged on any extension of credit to any debtor.
"Principals" means Robert E. Nederlander, Leonard
Toboroff, John McConnaughy, Jr., David Mauer, Dan Cougill, David
Groelinger or Jeffrey G. Webb.
"Real Properties" means the Mortgaged Properties and
such other real properties as the Credit Parties may lease from
third parties from time to time.
"Regulation D, G, U, or X" means Regulation D, G, U or
X, respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor
to all or a portion thereof.
"Related Party" with respect to any Principal means (a)
any spouse or former spouse or immediate family member of such
Principal, (b) the estate or any heir of such Principal, (c) any
Subsidiary of any of the Principals or any other Related Party
or (d) any trust, the beneficiaries of whom are Principals or
Related Parties.
"Reportable Event" means a "reportable event" as
defined in Section 4043 of ERISA with respect to which the
notice requirements to the PBGC have not been waived.
"Required Lenders" means Lenders whose aggregate Credit
Exposure (as hereinafter defined) constitutes at least 51% of
the Credit Exposure of all Lenders at such time; provided,
however, that if any Lender shall be a Defaulting Lender at such
time then there shall be excluded from the determination of
Required Lenders the aggregate principal amount of Credit
Exposure of such Lender at such time. For purposes of the
preceding sentence, the term "Credit Exposure" as applied to
each Lender shall mean (a) at any time prior to the termination
of the Commitments, the sum of the Revolving Commitment
Percentage of such Lender multiplied by the Revolving Committed
Amount and (b) at any time after the termination of the
Commitments, the sum of (i) the principal balance of the
outstanding Loans of such Lender plus (ii) such Lender's
Participation Interests in the face amount of the outstanding
Letters of Credit.
"Requirement of Law" means, as to any Person, the
articles or certificate of incorporation and by-laws or other
organizational or governing documents of such Person, and any
law, treaty, rule or regulation or final, non-appealable
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such
Person or to which any of its material property is subject.
"Responsible Officer" means the Chief Executive
Officer, the Chief Financial Officer, the Treasurer, the Chief
Accounting Officer or the General Counsel of the Borrower and
such other officers of the Borrower who may be involved in
administrating and complying with the Credit Documents and
communicating with the Agents with respect thereto.
"Revolving Loan Commitment Percentage" means, for each
Lender, the percentage identified as its Revolving Commitment
Percentage on Schedule 1.1(a), as such percentage may be
modified in connection with any assignment made in accordance
with the provisions of Section 11.3.
"Revolving Committed Amount" means (a) from the Closing
Date to September 30, 1997, FORTY MILLION DOLLARS ($40,000,000)
and (b) from October 1, 1997 to the Revolving Loan Maturity
Date, THIRTY FIVE MILLION DOLLARS ($35,000,000) or such lesser
amount as the Revolving Committed Amount may be reduced pursuant
to Section 2.1(d).
"Revolving Loan Maturity Date" means June 30, 2002.
"Revolving Loans" means the Revolving Loans made to the
Borrower pursuant to Section 2.1.
"Revolving Note" or "Revolving Notes" means the
promissory notes of the Borrower in favor of each of the Lenders
evidencing the Revolving Loans provided pursuant to Section 2.1,
individually or collectively, as appropriate, as such promissory
notes may be amended, modified, supplemented, extended, renewed
or replaced from time to time and as evidenced in the form of
Exhibit 2.1(g).
"S&P" means Standard & Poor's Ratings Group, a division
of McGraw Hill, Inc., or any successor or assignee of the
business of such division in the business of rating securities.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Security Agreements" means any security agreement
executed and delivered by a Credit Party in favor of the
Collateral Agent for the benefit of the Lenders to secure its
obligations under the Credit Documents, as such may be amended,
modified, extended, renewed, restated or replaced from time to
time.
"Senior Notes" means those certain notes issued by the
Borrower pursuant to that certain Indenture dated June 19, 1997,
in the amount of $115 million and maturing July 15, 2007, the
terms of which are acceptable to the Agents.
"Single Employer Plan" means any Plan which is covered
by Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" means, with respect to any Person as of a
particular date, that on such date (a) such Person is able to
pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the normal course of
business, (b) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature in
their ordinary course, (c) such Person is not engaged in a
business or a transaction, and is not about to engage in a
business or a transaction, for which such Person's assets would
constitute unreasonably small capital after giving due
consideration to the prevailing practice in the industry in
which such Person is engaged or is to engage, (d) the fair value
of the assets of such Person is greater than the total amount of
liabilities, including, without limitation, contingent
liabilities, of such Person and (e) the present fair saleable
value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured. In
computing the amount of contingent liabilities at any time, it
is intended that such liabilities will be computed at the amount
which, in light of all the facts and circumstances existing at
such time, represents the amount that can reasonably be expected
to become an actual or matured liability.
"Subordinated Debt" means those certain convertible
subordinated notes issued by the Borrower, in the aggregate
amount of $7.5 million, and maturing November 1, 2004.
"Subordinated Secured Note" means that certain
Subordinated Secured Note dated as of November 30, 1995 in the
original face amount of $2,950,000 executed by Riddell Sports
Inc. and Riddell, Inc. in favor of James R. Arnold, Perry Arnold
and Martha Arnold.
"Subsidiary" means, as to any Person, (a) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time, any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such
Person directly or indirectly through Subsidiaries, and (b) any
partnership, association, joint venture or other entity in which
such person directly or indirectly through Subsidiaries has more
than a 50% equity interest at any time.
"Termination Event" means (a) with respect to any
Single Employer Plan, the occurrence of a Reportable Event or
the substantial cessation of operations (within the meaning of
Section 4062(e) of ERISA); (b) the withdrawal of any Credit
Party or any of its Subsidiaries or any ERISA Affiliate from a
Multiple Employer Plan during a plan year in which it was a
substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer
Plan; (c) the distribution of a notice of intent to terminate or
the actual termination of a Plan pursuant to Section 4041(a)(2)
or 4041A of ERISA; (d) the institution of proceedings to
terminate or the actual termination of a Plan by the PBGC under
Section 4042 of ERISA; (e) any event or condition which might
reasonably constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to
administer, any Plan; or (f) the complete or partial withdrawal
of any Credit Party or any of its Subsidiaries or any ERISA
Affiliate from a Multiemployer Plan.
"Transaction Costs" means all usual and necessary
legal, administrative and contractual obligations incurred by
the Borrower in connection with the consummation of (a) the
acquisition of Varsity Spirit Corporation, (b) the issuance of
the Senior Notes and (c) the Credit Documents.
"Unrestricted Margin Stock" means the capital stock of
Varsity Spirit Corporation that constitutes "margin stock" (as
defined in Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect), if, and to the
extent that the value of such margin stock exceeds 25% of the
total assets of the Borrower and its Subsidiaries; provided that
it is understood that upon completion of the merger of Cheer
Acquisition Corp. into Varsity Spirit Corporation there shall be
no Unrestricted Margin Stock outstanding.
"Unused Commitment" means, for any period, the amount
by which (a) the then applicable aggregate Revolving Committed
Amount exceeds (b) the daily average sum for such period of the
outstanding aggregate principal amount of all Revolving Loans
plus the aggregate amount of LOC Obligations outstanding.
"Voting Stock" of a corporation means all classes of
the capital stock of such corporation then outstanding and
normally entitled to vote in the election of directors.
1.2 Computation of Time Periods and Other Definitional
Provisions.
For purposes of computation of periods of time hereunder, the
word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding." References in this Agreement to "Articles",
"Sections", "Schedules" or "Exhibits" shall be to Articles, Sections,
Schedules or Exhibits of or to this Agreement unless otherwise
specifically provided.
1.3 Accounting Terms.
Except as otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered
to the Lenders hereunder shall be prepared, in accordance with GAAP as of
the Closing Date.
SECTION 2
CREDIT FACILITIES
2.1 Revolving Loans.
(a) Revolving Loan Commitment. Subject to the terms and
conditions set forth herein, each Lender severally agrees to
make revolving loans (each a "Revolving Loan" and collectively
the "Revolving Loans") to the Borrower, in Dollars, at any time
and from time to time, during the period from and including the
Effective Date to but not including the Revolving Loan Maturity
Date (or such earlier date if the Revolving Committed Amount has
been terminated as provided herein); provided, however, that (i)
the sum of the aggregate amount of Revolving Loans outstanding
plus the aggregate amount of LOC Obligations outstanding shall
not exceed the Revolving Committed Amount and (ii) with respect
to each individual Lender, the Lender's pro rata share of
outstanding Revolving Loans plus such Lender's pro rata share of
outstanding LOC Obligations shall not exceed such Lender's
Revolving Loan Commitment Percentage of the Revolving Committed
Amount. Subject to the terms of this Credit Agreement (including
Section 3.3), the Borrower may borrow, repay and reborrow
Revolving Loans.
(b) Method of Borrowing for Revolving Loans. By no
later than 11:00 a.m. (i) on the date of the requested borrowing
of Revolving Loans that will be Base Rate Loans or (ii) three
Business Days prior to the date of the requested borrowing of
Revolving Loans that will be Eurodollar Loans, the Borrower
shall submit a written Notice of Borrowing in the form of
Exhibit 2.1(b) to the Administrative Agent setting forth (A) the
amount requested, (B) whether such Revolving Loans shall accrue
interest at the Adjusted Base Rate or the Adjusted Eurodollar
Rate, (C) with respect to Revolving Loans that will be
Eurodollar Loans, the Interest Period applicable thereto and (D)
certification that the Borrower has complied in all respects
with Section 5.2.
(c) Funding of Revolving Loans. Upon receipt of a
Notice of Borrowing, the Administrative Agent shall promptly
inform the Lenders as to the terms thereof. Each Lender shall
make its Revolving Loan Commitment Percentage of the requested
Revolving Loans available to the Administrative Agent by 1:00
p.m. on the date specified in the Notice of Borrowing by
deposit, in Dollars, of immediately available funds at the
offices of the Administrative Agent at its principal office in
Detroit, Michigan or at such other address as the Administrative
Agent may designate in writing. The amount of the requested
Revolving Loans will then be made available to the Borrower by
the Administrative Agent by crediting the account of the
Borrower on the books of such office of the Administrative
Agent, to the extent the amount of such Revolving Loans are made
available to the Administrative Agent.
No Lender shall be responsible for the failure or delay
by any other Lender in its obligation to make Revolving Loans
hereunder; provided, however, that the failure of any Lender to
fulfill its obligations hereunder shall not relieve any other
Lender of its obligations hereunder. Unless the Administrative
Agent shall have been notified by any Lender prior to the date
of any such Revolving Loan that such Lender does not intend to
make available to the Administrative Agent its portion of the
Revolving Loans to be made on such date, the Administrative
Agent may assume that such Lender has made such amount available
to the Administrative Agent on the date of such Revolving Loans,
and the Administrative Agent in reliance upon such assumption,
may (in its sole discretion but without any obligation to do so)
make available to the Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the
Administrative Agent, the Administrative Agent shall be able to
recover such corresponding amount from such Lender. If such
Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent
will promptly notify the Borrower, and the Borrower shall
immediately pay such corresponding amount to the Administrative
Agent. The Administrative Agent shall also be entitled to
recover from the Lender or the Borrower, as the case may be,
interest on such corresponding amount in respect of each day
from the date such corresponding amount was made available by
the Administrative Agent to the Borrower to the date such
corresponding amount is recovered by the Administrative Agent at
a per annum rate equal to (i) from the Borrower at the
applicable rate for such Revolving Loan pursuant to the Notice
of Borrowing and (ii) from a Lender at the Federal Funds Rate.
(d) Reductions of Revolving Committed Amount. Upon at
least three Business Days' notice, the Borrower shall have the
right to permanently reduce all or part of the aggregate unused
amount of the Revolving Committed Amount at any time or from
time to time; provided that (i) each partial reduction shall be
in an aggregate amount at least equal to $5,000,000 and in
integral multiples of $1,000,000 above such amount and (ii) no
reduction shall be made which would reduce the Revolving
Committed Amount to an amount less than the aggregate amount of
outstanding Revolving Loans plus the aggregate amount of
outstanding LOC Obligations. Any reduction in (or termination
of) the Revolving Committed Amount shall be permanent and may
not be reinstated. The Administrative Agent shall immediately
notify the Lenders of any reduction in the Revolving Committed
Amount.
(e) Continuations and Conversions. Subject to the terms
of Section 5.2, the Borrower shall have the option, on any
Business Day, to continue existing Eurodollar Loans for a
subsequent Interest Period, to convert Base Rate Loans into
Eurodollar Loans or to convert Eurodollar Loans into Base Rate
Loans; provided, however, that (i) each such continuation or
conversion must be requested by the Borrower pursuant to a
written Notice of Continuation/Conversion, in the form of
Exhibit 2.1(e), in compliance with the terms set forth below,
(ii) except as provided in Section 3.11, Eurodollar Loans may
only be continued or converted into Base Rate Loans on the last
day of the Interest Period applicable thereto, (iii) Eurodollar
Loans may not be continued nor may Base Rate Loans be converted
into Eurodollar Loans during the existence and continuation of
an Event of Default and (iv) any request to continue a
Eurodollar Loan that fails to comply with the terms hereof or
any failure to request a continuation of a Eurodollar Loan at
the end of an Interest Period shall constitute a conversion to a
Base Rate Loan on the last day of the applicable Interest
Period. Each continuation or conversion must be requested by the
Borrower no later than 11:00 a.m. (A) on the date for a
requested conversion of a Eurodollar Loan to a Base Rate Loan or
(B) three Business Days prior to the date for a requested
continuation of a Eurodollar Loan or conversion of a Base Rate
Loan to a Eurodollar Loan, in each case pursuant to a written
Notice of Continuation/Conversion submitted to the
Administrative Agent which shall set forth (x) whether the
Borrower wishes to continue or convert such Loans and (y) if the
request is to continue a Eurodollar Loan or convert a Base Rate
Loan to a Eurodollar Loan, the Interest Period applicable
thereto.
(f) Minimum Amounts. Each request for a borrowing,
conversion or continuation shall be subject to the requirements
that (i) each Eurodollar Loan shall be in a minimum amount of
$1,000,000 and in integral multiples of $100,000 in excess
thereof, (ii) each Base Rate Loan shall be in a minimum amount
of the lesser of $100,000 (and integral multiples of $50,000 in
excess thereof) or the remaining amount available under the
Revolving Committed Amount and (iii) no more than ten Eurodollar
Loans shall be outstanding hereunder at any one time. For the
purposes of this Section, all Eurodollar Loans with the same
Interest Periods that begin and end on the same date shall be
considered as one Eurodollar Loan, but Eurodollar Loans with
different Interest Periods, even if they begin on the same date,
shall be considered as separate Eurodollar Loans.
(g) Notes. The Revolving Loans made by each Lender
shall be evidenced by a duly executed promissory note of the
Borrower to each applicable Lender in the face amount of its
Revolving Loan Commitment Percentage of the Revolving Committed
Amount in substantially the form of Exhibit 2.1(g).
2.2 Letter of Credit Subfacility.
(a) Issuance. Subject to the terms and conditions
hereof and of the LOC Documents, if any, and any other terms and
conditions which the Issuing Lender may reasonably require (so
long as such terms and conditions do not impose any financial
obligation on or require any Lien (not otherwise contemplated by
this Agreement) to be given by any Credit Party or conflict with
any obligation of, or detract from any action which may be taken
by, any Credit Party or their Subsidiaries under this
Agreement), the Issuing Lender shall from time to time upon
request issue (from the Effective Date to the Revolving Loan
Maturity Date and in a form reasonably acceptable to the Issuing
Lender), in Dollars, and the LOC Participants shall participate
in, letters of credit (the "Letters of Credit") for the account
of the Borrower; provided, however, that (i) the aggregate
amount of LOC Obligations shall not at any time exceed FIVE
MILLION DOLLARS ($5,000,000), (ii) the sum of the aggregate
amount of LOC Obligations outstanding plus Revolving Loans
outstanding shall not exceed the Revolving Committed Amount and
(iii) with respect to each individual LOC Participant, the LOC
Participant's pro rata share of outstanding Revolving Loans plus
its pro rata share of outstanding LOC Obligations shall not
exceed such LOC Participant's Revolving Loan Commitment
Percentage of the Revolving Committed Amount. The issuance and
expiry date of each Letter of Credit shall be a Business Day.
Except as otherwise expressly agreed upon by all the LOC
Participants, no Letter of Credit shall have an original expiry
date more than one year from the date of issuance, or as
extended, shall have an expiry date extending beyond the
Revolving Loan Maturity Date. Each Letter of Credit shall be
either (x) a standby letter of credit issued to support the
obligations (including pension or insurance obligations),
contingent or otherwise, of the Borrower or any of its
Subsidiaries, or (y) a commercial letter of credit in respect of
the purchase of goods or services by the Borrower or any of its
Subsidiaries in the ordinary course of business. Each Letter of
Credit shall comply with the related LOC Documents.
(b) Notice and Reports. The request for the issuance of
a Letter of Credit shall be submitted to the Issuing Lender at
least three Business Days prior to the requested date of
issuance. The Issuing Lender will, at least quarterly and more
frequently upon request, provide to the Administrative Agent for
dissemination to the Lenders a detailed report specifying the
Letters of Credit which are then issued and outstanding and any
activity with respect thereto which may have occurred since the
date of the prior report, and including therein, among other
things, the account party, the beneficiary, the face amount, and
the expiry date as well as any payments or expirations which may
have occurred. The Issuing Lender will further provide to the
Administrative Agent, promptly upon request, copies of the
Letters of Credit and the other LOC Documents.
(c) Participations. Each LOC Participant, upon issuance
of a Letter of Credit, shall be deemed to have purchased without
recourse a risk participation from the Issuing Lender in such
Letter of Credit and each LOC Document related thereto and the
rights and obligations arising thereunder and any collateral
relating thereto, in each case in an amount equal to its
Revolving Loan Commitment Percentage of the obligations under
such Letter of Credit, and shall absolutely, unconditionally and
irrevocably assume, as primary obligor and not as surety, and be
obligated to pay to the Issuing Lender therefor and discharge
when due, its Revolving Loan Commitment Percentage of the
obligations arising under such Letter of Credit. Without
limiting the scope and nature of each LOC Participant's
participation in any Letter of Credit, to the extent that the
Issuing Lender has not been reimbursed as required hereunder or
under any such Letter of Credit, each such LOC Participant shall
pay to the Issuing Lender its Revolving Loan Commitment
Percentage of such unreimbursed drawing in same day funds on the
day of notification by the Issuing Lender of an unreimbursed
drawing pursuant to the provisions of subsection (d) hereof. The
obligation of each LOC Participant to so reimburse the Issuing
Lender shall be absolute and unconditional and shall not be
affected by the occurrence of a Default, an Event of Default or
any other occurrence or event. Any such reimbursement shall not
relieve or otherwise impair the obligation of the Borrower or
any other Credit Party to reimburse the Issuing Lender under any
Letter of Credit, together with interest as hereinafter
provided.
(d) Reimbursement. In the event of any drawing under
any Letter of Credit, the Issuing Lender will promptly notify
the Borrower. Unless the Borrower shall immediately notify the
Issuing Lender of its intent to otherwise reimburse the Issuing
Lender, the Borrower shall be deemed to have requested a
Revolving Loan at the Adjusted Base Rate in the amount of the
drawing as provided in subsection (e) hereof, the proceeds of
which will be used to satisfy the reimbursement obligations. The
Borrower shall reimburse the Issuing Lender on the day of
drawing under any Letter of Credit either with the proceeds of a
Revolving Loan obtained hereunder or otherwise in same day funds
as provided herein or in the LOC Documents. If the Borrower
shall fail to reimburse the Issuing Lender as provided
hereinabove, the unreimbursed amount of such drawing shall bear
interest at a per annum rate equal to the Base Rate plus the
Applicable Percentage for the Base Rate Loans that are Revolving
Loans plus two percent (2%). The Borrower's reimbursement
obligations hereunder shall be absolute and unconditional under
all circumstances irrespective of (but without waiver of) any
rights of set-off, counterclaim or defense to payment the
applicable account party or the Borrower may claim or have
against the Issuing Lender, the Agent, the Lenders, the
beneficiary of the Letter of Credit drawn upon or any other
Person, including without limitation, any defense based on any
failure of the applicable account party, the Borrower or any
other Credit Party to receive consideration or the legality,
validity, regularity or unenforceability of the Letter of
Credit. The Issuing Lender will promptly notify the LOC
Participants of the amount of any unreimbursed drawing and each
LOC Participant shall promptly pay to the Administrative Agent
for the account of the Issuing Lender, in Dollars and in
immediately available funds, the amount of such LOC
Participant's Revolving Loan Commitment Percentage of such
unreimbursed drawing. Such payment shall be made on the day such
notice is received by such Lender from the Issuing Lender if
such notice is received at or before 2:00 p.m., otherwise such
payment shall be made at or before 12:00 Noon on the Business
Day next succeeding the day such notice is received. If such LOC
Participant does not pay such amount to the Issuing Lender in
full upon such request, such LOC Participant shall, on demand,
pay to the Administrative Agent for the account of the Issuing
Lender interest on the unpaid amount during the period from the
date the LOC Participant received the notice regarding the
unreimbursed drawing until such LOC Participant pays such amount
to the Issuing Lender in full at a rate per annum equal to, if
paid within two Business Days of the date of drawing, the
Federal Funds Rate and thereafter at a rate equal to the Base
Rate. Each LOC Participant's obligation to make such payment to
the Issuing Lender, and the right of the Issuing Lender to
receive the same, shall be absolute and unconditional, shall not
be affected by any circumstance whatsoever and without regard to
the termination of this Credit Agreement or the Commitments
hereunder, the existence of a Default or Event of Default or the
acceleration of the obligations hereunder and shall be made
without any offset, abatement, withholding or reduction
whatsoever. Simultaneously with the making of each such payment
by a LOC Participant to the Issuing Lender, such LOC Participant
shall, automatically and without any further action on the part
of the Issuing Lender or such LOC Participant, acquire a
participation in an amount equal to such payment (excluding the
portion of such payment constituting interest owing to the
Issuing Lender) in the related unreimbursed drawing portion of
the LOC Obligation and in the interest thereon and in the
related LOC Documents, and shall have a claim against the
Borrower and the other Credit Parties with respect thereto.
(e) Repayment with Revolving Loans. On any day on which
the Borrower shall have requested, or been deemed to have
requested, a Revolving Loan borrowing to reimburse a drawing
under a Letter of Credit, the Administrative Agent shall give
notice to the applicable Lenders that a Revolving Loan has been
requested or deemed requested in connection with a drawing under
a Letter of Credit, in which case a Revolving Loan borrowing
comprised solely of Base Rate Loans (each such borrowing, a
"Mandatory Borrowing") shall be immediately made from all
applicable Lenders (without giving effect to any termination of
the Commitments pursuant to Section 9.2) pro rata based on each
Lender's respective Revolving Loan Commitment Percentage and the
proceeds thereof shall be paid directly to the Issuing Lender
for application to the respective LOC Obligations. Each such
Lender hereby irrevocably agrees to make such Revolving Loans
immediately upon any such request or deemed request on account
of each such Mandatory Borrowing in the amount and in the manner
specified in the preceding sentence and on the same such date
notwithstanding (i) the amount of Mandatory Borrowing may not
comply with the minimum amount for borrowings of Revolving Loans
otherwise required hereunder, (ii) whether any conditions
specified in Section 5 are then satisfied, (iii) whether a
Default or Event of Default then exists, (iv) failure of any
such request or deemed request for Revolving Loans to be made by
the time otherwise required hereunder, (v) the date of such
Mandatory Borrowing, or (vi) any reduction in the Revolving
Committed Amount or any termination of the Commitments. In the
event that any Mandatory Borrowing cannot for any reason be made
on the date otherwise required above (including, without
limitation, as a result of the commencement of a proceeding
under the Bankruptcy Code with respect to the Borrower or any
other Credit Party), then each such Lender hereby agrees that it
shall forthwith fund (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any payments
received from the Borrower on or after such date and prior to
such purchase) its Participation Interest in the outstanding LOC
Obligations; provided, further, that in the event any Lender
shall fail to fund its Participation Interest on the day the
Mandatory Borrowing would otherwise have occurred, then the
amount of such Lender's unfunded Participation Interest therein
shall bear interest payable to the Issuing Lender upon demand,
at the rate equal to, if paid within two Business Days of such
date, the Federal Funds Rate, and thereafter at a rate equal to
the Base Rate.
(f) Modification and Extension. The issuance of any
supplement, modification, amendment, renewal, or extensions to
any Letter of Credit shall, for purposes hereof, be treated in
all respects the same as the issuance of a new Letter of Credit
hereunder.
(g) Uniform Customs and Practices. The Issuing Lender
may have the Letters of Credit be subject to The Uniform Customs
and Practice for Documentary Credits, as published as of the
date of issue by the International Chamber of Commerce
(Publication No. 500 or the most recent publication, the "UCP"),
in which case the UCP may be incorporated therein and deemed in
all respects to be a part thereof.
(h) Responsibility of Issuing Lender. It is expressly
understood and agreed as between the Lenders that the
obligations of the Issuing Lender hereunder to the LOC
Participants are only those expressly set forth in this Credit
Agreement and that the Issuing Lender shall be entitled to
assume that the conditions precedent set forth in Section 5 have
been satisfied unless it shall have acquired actual knowledge
that any such condition precedent has not been satisfied;
provided, however, that nothing set forth in this Section 2.2
shall be deemed to prejudice the right of any LOC Participant to
recover from the Issuing Lender any amounts made available by
such LOC Participant to the Issuing Lender pursuant to this
Section 2.2 in the event that it is determined by a court of
competent jurisdiction that the payment with respect to a Letter
of Credit constituted gross negligence or willful misconduct on
the part of the Issuing Lender.
(i) Conflict with LOC Documents. In the event of any
conflict between this Credit Agreement and any LOC Document,
this Credit Agreement shall govern.
(j) Indemnification of Issuing Lender.
(i) In addition to its other obligations under
this Credit Agreement, the Borrower hereby agrees to
protect, indemnify, pay and save the Issuing Lender
harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) that
the Issuing Lender may incur or be subject to as a
consequence, direct or indirect, of (A) the issuance of
any Letter of Credit or (B) the failure of the Issuing
Lender to honor a drawing under a Letter of Credit as a
result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or
omissions, herein called "Government Acts").
(ii) As between the Borrower and the Issuing
Lender, the Borrower shall assume all risks of the
acts, omissions or misuse of any Letter of Credit by
the beneficiary thereof. The Issuing Lender shall not
be responsible for (except in the case of (A), (B) and
(C) below if the Issuing Lender has actual knowledge to
the contrary): (A) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the
application for and issuance of any Letter of Credit,
even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent
or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or
in part, that may prove to be invalid or ineffective
for any reason; (C) failure of the beneficiary of a
Letter of Credit to comply fully with conditions
required in order to draw upon a Letter of Credit; (D)
errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not
they be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in
order to make a drawing under a Letter of Credit or of
the proceeds thereof; and (G) any consequences arising
from causes beyond the control of the Issuing Lender,
including, without limitation, any Government Acts.
None of the above shall affect, impair, or prevent the
vesting of the Issuing Lender's rights or powers
hereunder.
(iii) In furtherance and extension and not in
limitation of the specific provisions hereinabove set
forth, any action taken or omitted by the Issuing
Lender, under or in connection with any Letter of
Credit or the related certificates, if taken or omitted
in good faith, shall not put the Issuing Lender under
any resulting liability to the Borrower or any other
Credit Party. It is the intention of the parties that
this Credit Agreement shall be construed and applied to
protect and indemnify the Issuing Lender against any
and all risks involved in the issuance of the Letters
of Credit, all of which risks are hereby assumed by the
Borrower, including, without limitation, any and all
risks of the acts or omissions, whether rightful or
wrongful, of any present or future Government Acts. The
Issuing Lender shall not, in any way, be liable for any
failure by the Issuing Lender or anyone else to pay any
drawing under any Letter of Credit as a result of any
Government Acts or any other cause beyond the control
of the Issuing Lender.
(iv) Nothing in this subsection (j) is
intended to limit the reimbursement obligation of the
Borrower contained in this Section 2.2. The obligations
of the Borrower under this subsection (j) shall survive
the termination of this Credit Agreement. No act or
omission of any current or prior beneficiary of a
Letter of Credit shall in any way affect or impair the
rights of the Issuing Lender to enforce any right,
power or benefit under this Credit Agreement.
(v) Notwithstanding anything to the contrary
contained in this subsection (j), the Borrower shall
have no obligation to indemnify the Issuing Lender in
respect of any liability incurred by the Issuing Lender
arising solely out of the gross negligence or willful
misconduct of the Issuing Lender, as determined by a
court of competent jurisdiction. Nothing in this
Agreement shall relieve the Issuing Lender of any
liability to the Borrower in respect of any action
taken by the Issuing Lender which action constitutes
gross negligence or willful misconduct of the Issuing
Lender or a violation of the UCP or Uniform Commercial
Code (as applicable), as determined by a court of
competent jurisdiction.
SECTION 3
GENERAL PROVISIONS APPLICABLE TO LOANS AND LETTERS OF CREDIT
3.1 Interest.
(a) Interest Rate. All Base Rate Loans shall accrue
interest at the Adjusted Base Rate and all Eurodollar Loans
shall accrue interest at the Adjusted Eurodollar Rate.
(b) Default Rate of Interest. Upon the occurrence, and
during the continuance, of an Event of Default, the principal of
and, to the extent permitted by law, interest on the Loans and
any other amounts owing hereunder or under the other Credit
Documents (including without limitation fees and expenses) shall
bear interest, payable on demand, at a per annum rate equal to
2% plus the rate which would otherwise be applicable (or if no
rate is applicable, then the rate for Revolving Loans that are
Base Rate Loans plus two percent (2%) per annum).
(c) Interest Payments. Interest on Loans shall be due
and payable in arrears on each Interest Payment Date. If an
Interest Payment Date falls on a date which is not a Business
Day, such Interest Payment Date shall be deemed to be the next
succeeding Business Day, except that in the case of Eurodollar
Loans where the next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding day.
3.2 Place and Manner of Payments.
All payments of principal, interest, fees, expenses and other
amounts to be made by a Credit Party under this Agreement shall be
received not later than 2:00 p.m. on the date when due, in Dollars and in
immediately available funds, by the Administrative Agent at its offices
in Detroit, Michigan. Payments received after such time shall be deemed
to have been received on the next Business Day. The Borrower shall, at
the time it makes any payment under this Agreement, specify to the
Administrative Agent, the Loans, Letters of Credit, fees or other amounts
payable by the Borrower hereunder to which such payment is to be applied
(and in the event that it fails to specify, or if such application would
be inconsistent with the terms hereof, the Administrative Agent shall,
subject to Section 3.7, distribute such payment to the Lenders in such
manner as the Administrative Agent may deem appropriate). The
Administrative Agent will distribute such payments to the applicable
Lenders if any such payment is received prior to 2:00 p.m.; otherwise the
Administrative Agent will distribute such payment to the applicable
Lenders on the next succeeding Business Day. Whenever any payment
hereunder shall be stated to be due on a day which is not a Business Day,
the due date thereof shall be extended to the next succeeding Business
Day (subject to accrual of interest and fees for the period of such
extension), except that in the case of Eurodollar Loans, if the extension
would cause the payment to be made in the next following calendar month,
then such payment shall instead be made on the next preceding Business
Day.
3.3 Prepayments.
(a) Voluntary Prepayments. The Borrower shall have the
right to prepay Loans in whole or in part from time to time
without premium or penalty; provided, however, that (i)
Eurodollar Loans may only be prepaid on three Business Days'
prior written notice to the Administrative Agent and any
prepayment of Eurodollar Loans will be subject to Section 3.14
and (ii) each such partial prepayment of Loans shall be in the
minimum principal amount of $1,000,000 and integral multiples of
$100,000 in excess thereof.
(b) Mandatory Prepayments.
(i) Revolving Committed Amount. If at any time
the sum of the aggregate amount of Revolving Loans
outstanding plus LOC Obligations outstanding exceeds
the Revolving Committed Amount, the Borrower shall
immediately make a principal payment to the
Administrative Agent in the manner and in an amount
necessary to be in compliance with Section 2.1.
(ii) Application of Prepayments. All amounts
required to be paid pursuant to Section 3.3(b)(i) shall
be applied first to Revolving Loans and second to a
cash collateral account in respect of LOC Obligations.
Within the parameters of the application set forth
above, prepayments shall be applied first to Base Rate
Loans and then to Eurodollar Loans in direct order of
Interest Period maturities. All prepayments hereunder
shall be subject to Section 3.14.
3.4 Fees.
(a) Commitment Fees. In consideration of the Revolving
Committed Amount being made available by the Lenders hereunder,
the Borrower agrees to pay to the Administrative Agent, for the
pro rata benefit of each applicable Lender (based on each
Lender's Revolving Loan Commitment Percentage of the Revolving
Committed Amount), a fee equal to the Applicable Percentage for
Commitment Fees multiplied by the Unused Commitment (the
"Commitment Fees"). The Commitment Fees accrued prior to the
Closing Date shall be paid on the Closing Date and future
Commitment Fees shall commence to accrue on the Effective Date
and shall be due and payable in arrears on the last day of each
fiscal quarter of the Borrower (as well as on the Revolving Loan
Maturity Date and on any date that the Revolving Committed
Amount is reduced) for the immediately preceding fiscal quarter
(or portion thereof), beginning with the first of such dates to
occur after the Closing Date.
(b) Letter of Credit Fees.
(i) Letter of Credit Fees. In consideration of
the issuance of Letters of Credit hereunder, the
Borrower agrees to pay to the Issuing Lender for the
pro rata benefit of the applicable Lenders (based on
each Lender's Revolving Loan Commitment Percentage of
the Revolving Committed Amount), a fee (the "Letter of
Credit Fees") equal to the Applicable Percentage for
the Letter of Credit Fees on the average daily maximum
amount available to be drawn under each such Letter of
Credit from the date of issuance to the date of
expiration. The Letter of Credit Fees will be payable
in arrears on the last day of each fiscal quarter of
the Borrower (as well as on the Revolving Loan Maturity
Date) for the immediately preceding fiscal quarter (or
portion thereof), beginning with the first of such
dates to occur after the Closing Date.
(ii) Issuing Lender Fees. In addition to the
Letter of Credit Fees payable pursuant to subsection
(i) above, the Borrower shall pay to the Issuing Lender
for its own account, without sharing by the other
Lenders, (A) a fee equal to one-fourth of one percent
(.25%) per annum on the total sum of all Letters of
Credit issued by the Issuing Lender, such fee to be
paid in arrears on the last day of each fiscal quarter
of the Borrower (as well as on the Revolving Loan
Maturity Date) and (B) the customary charges from time
to time to the Issuing Lender for its services in
connection with the issuance, amendment, payment,
transfer, administration, cancellation and conversion
of, and drawings under, such Letters of Credit
(collectively, the "Issuing Lender Fees").
(c) Administrative Fees. The Borrower agrees to pay to
the Administrative Agent, for its own account, an annual fee in
accordance with the terms of the Fee Letter.
(d) Overadvance Fee. If the Borrower provides to the
Agents written notice that it desires to commence the 90 day
period for the Overadvance (as set forth in the definition of
Borrowing Base Assets), the Borrower shall simultaneous with
such notice pay to the Lenders a nonrefundable fee of $12,500 to
be shared pro rata by the Lenders (based on each Lender's
Revolving Loan Commitment Percentage of the Revolving Committed
Amount).
3.5 Payment in full at Maturity.
On the Revolving Loan Maturity Date, the entire outstanding
principal balance of all Revolving Loans and all LOC Obligations,
together with accrued but unpaid interest and all other sums owing with
respect thereto, shall be due and payable in full, unless accelerated
sooner pursuant to Section 9.
3.6 Computations of Interest and Fees.
(a) All computations of interest and fees hereunder
shall be made on the basis of the actual number of days elapsed
over a year of 360 days. Interest shall accrue from and include
the date of borrowing (or continuation or conversion) but
exclude the date of payment.
(b) It is the intent of the Lenders and the Credit
Parties to conform to and contract in strict compliance with
applicable usury law from time to time in effect. All agreements
between the Lenders and the Borrower are hereby limited by the
provisions of this paragraph which shall override and control
all such agreements, whether now existing or hereafter arising
and whether written or oral. In no way, nor in any event or
contingency (including but not limited to prepayment or
acceleration of the maturity of any obligation), shall the
interest taken, reserved, contracted for, charged, or received
under this Credit Agreement, under the Notes or otherwise,
exceed the maximum nonusurious amount permissible under
applicable law. If, from any possible construction of any of the
Credit Documents or any other document, interest would otherwise
be payable in excess of the maximum nonusurious amount, any such
construction shall be subject to the provisions of this
paragraph and such documents shall be automatically reduced to
the maximum nonusurious amount permitted under applicable law,
without the necessity of execution of any amendment or new
document. If any Lender shall ever receive anything of value
which is characterized as interest on the Loans under applicable
law and which would, apart from this provision, be in excess of
the maximum lawful amount, an amount equal to the amount which
would have been excessive interest shall, without penalty, be
applied to the reduction of the principal amount owing on the
Loans and not to the payment of interest, or refunded to the
Borrower or the other payor thereof if and to the extent such
amount which would have been excessive exceeds such unpaid
principal amount of the Loans. The right to demand payment of
the Loans or any other indebtedness evidenced by any of the
Credit Documents does not include the right to accelerate the
payment of any interest which has not otherwise accrued on the
date of such demand, and the Lenders do not intend to charge or
receive any unearned interest in the event of such demand. All
interest paid or agreed to be paid to the Lenders with respect
to the Loans shall, to the extent permitted by applicable law,
be amortized, prorated, allocated, and spread throughout the
full stated term (including any renewal or extension) of the
Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount
permitted by applicable law.
3.7 Pro Rata Treatment.
Except to the extent otherwise provided herein:
(a) Loans. Each Revolving Loan borrowing (including,
without limitation, each Mandatory Borrowing), each payment or
prepayment of principal of any Loan, each payment of fees (other
than the Issuing Lender Fees retained by the Issuing Lender for
its own account and the Administrative Fees retained by the
Administrative Agent for its own account), each reduction of the
Revolving Committed Amount, and each conversion or continuation
of any Loan, shall (except as otherwise provided in Section
3.11) be allocated pro rata among the relevant Lenders in
accordance with the respective Revolving Loan Commitment
Percentages of such Lenders (or, if the Commitments of such
Lenders have expired or been terminated, in accordance with the
respective principal amounts of the outstanding Loans and
Participation Interests of such Lenders); provided that, if any
Lender shall have failed to pay its applicable pro rata share of
any Revolving Loan, then any amount to which such Lender would
otherwise be entitled pursuant to this subsection (a) shall
instead be payable to the Administrative Agent until the share
of such Loan not funded by such Lender has been repaid; provided
further, that in the event any amount paid to any Lender
pursuant to this subsection (a) is rescinded or must otherwise
be returned by the Administrative Agent, each Lender shall, upon
the request of the Administrative Agent, repay to the
Administrative Agent the amount so paid to such Lender, with
interest for the period commencing on the date such payment is
returned by the Administrative Agent until the date the
Administrative Agent receives such repayment at a rate per annum
equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum; and
(b) Letters of Credit. Each payment of unreimbursed
drawings in respect of LOC Obligations shall be allocated to
each LOC Participant pro rata in accordance with its Revolving
Loan Commitment Percentage; provided that, if any LOC
Participant shall have failed to pay its applicable pro rata
share of any drawing under any Letter of Credit, then any amount
to which such LOC Participant would otherwise be entitled
pursuant to this subsection (b) shall instead be payable to the
Issuing Lender until the share of such unreimbursed drawing not
funded by such Lender has been repaid; provided further, that in
the event any amount paid to any LOC Participant pursuant to
this subsection (b) is rescinded or must otherwise be returned
by the Issuing Lender, each LOC Participant shall, upon the
request of the Issuing Lender, repay to the Administrative Agent
for the account of the Issuing Lender the amount so paid to such
LOC Participant, with interest for the period commencing on the
date such payment is returned by the Issuing Lender until the
date the Issuing Lender receives such repayment at a rate per
annum equal to, during the period to but excluding the date two
Business Days after such request, the Federal Funds Rate, and
thereafter, the Base Rate plus two percent (2%) per annum.
3.8 Sharing of Payments.
The Lenders agree among themselves that, except to the extent
otherwise provided herein, in the event that any Lender shall obtain
payment in respect of any Loan, unreimbursed drawing with respect to any
LOC Obligations or any other obligation owing to such Lender under this
Credit Agreement through the exercise of a right of setoff, banker's lien
or counterclaim, or pursuant to a secured claim under Section 506 of the
Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, in excess of its pro rata share of such payment as provided for in
this Credit Agreement, such Lender shall promptly pay in cash or purchase
from the other Lenders a participation in such Loans, LOC Obligations,
and other obligations in such amounts, and make such other adjustments
from time to time, as shall be equitable to the end that all Lenders
share such payment in accordance with their respective ratable shares as
provided for in this Credit Agreement. The Lenders further agree among
themselves that if payment to a Lender obtained by such Lender through
the exercise of a right of setoff, banker's lien, counterclaim or other
event as aforesaid shall be rescinded or must otherwise be restored, each
Lender which shall have shared the benefit of such payment shall, by
payment in cash or a repurchase of a participation theretofore sold,
return its share of that benefit (together with its share of any accrued
interest payable with respect thereto) to each Lender whose payment shall
have been rescinded or otherwise restored. The Borrower agrees that any
Lender so purchasing such a participation may, to the fullest extent
permitted by law, exercise all rights of payment, including setoff,
banker's lien or counterclaim, with respect to such participation as
fully as if such Lender were a holder of such Loan, LOC Obligation or
other obligation in the amount of such participation. Except as otherwise
expressly provided in this Credit Agreement, if any Lender or an Agent
shall fail to remit to an Agent or any other Lender an amount payable by
such Lender or such Agent to such Agent or such other Lender pursuant to
this Credit Agreement on the date when such amount is due, such payments
shall be made together with interest thereon for each date from the date
such amount is due until the date such amount is paid to such Agent or
such other Lender at a rate per annum equal to the Federal Funds Rate. If
under any applicable bankruptcy, insolvency or other similar law, any
Lender receives a secured claim in lieu of a setoff to which this Section
3.8 applies, such Lender shall, to the extent practicable, exercise its
rights in respect of such secured claim in a manner consistent with the
rights of the Lenders under this Section 3.8 to share in the benefits of
any recovery on such secured claim.
3.9 Capital Adequacy.
If, after the date hereof, any Lender has determined that the
adoption or the becoming effective of, or any change in, or any change by
any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof in the interpretation
or administration of, any applicable law, rule or regulation regarding
capital adequacy, or compliance by such Lender, or its parent
corporation, with any request or directive regarding capital adequacy
(whether or not having the force of law) of any such authority, central
bank or comparable agency, has or would have the effect of reducing the
rate of return on such Lender's (or parent corporation's) capital or
assets as a consequence of its commitments or obligations hereunder to a
level below that which such Lender, or its parent corporation, could have
achieved but for such adoption, effectiveness, change or compliance
(taking into consideration such Lender's (or parent corporation's)
policies with respect to capital adequacy), then, upon notice from such
Lender to the Borrower, the Borrower shall be obligated to pay to such
Lender such additional amount or amounts as will compensate such Lender
on an after-tax basis (after taking into account applicable deductions
and credits in respect of the amount indemnified) for such reduction.
Each determination by any such Lender of amounts owing under this Section
shall, absent manifest error, be conclusive and binding on the parties
hereto. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.10 Inability To Determine Interest Rate.
If prior to the first day of any Interest Period, the
Administrative Agent shall have determined in good faith (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the relevant market, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as
practicable thereafter, and will also give prompt written notice to the
Borrower when such conditions no longer exist. If such notice is given
(a) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Base Rate Loans, (b) any Loans that were
to have been converted on the first day of such Interest Period to or
continued as Eurodollar Loans shall be converted to or continued as Base
Rate Loans and (c) any outstanding Eurodollar Loans shall be converted,
on the first day of such Interest Period, to Base Rate Loans. Until such
notice has been withdrawn by the Agent, no further Eurodollar Loans shall
be made or continued as such, nor shall the Borrower have the right to
convert Base Rate Loans to Eurodollar Loans.
3.11 Illegality.
Notwithstanding any other provision herein, if the adoption of
or any change in any Requirement of Law or in the interpretation or
application thereof occurring after the Closing Date shall make it
unlawful for any Lender to make or maintain Eurodollar Loans as
contemplated by this Credit Agreement, (a) such Lender shall promptly
give written notice of such circumstances to the Borrower and the
Administrative Agent (which notice shall be withdrawn whenever such
circumstances no longer exist), (b) the commitment of such Lender
hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert a Base Rate Loan to Eurodollar Loans shall forthwith be canceled
and, until such time as it shall no longer be unlawful for such Lender to
make or maintain Eurodollar Loans, such Lender shall then have a
commitment only to make a Base Rate Loan when a Eurodollar Loan is
requested and (c) such Lender's Loans then outstanding as Eurodollar
Loans, if any, shall be converted automatically to Base Rate Loans on the
respective last days or the then current Interest Periods with respect to
such Loans or within such earlier period as required by law. If any such
conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Borrower
shall pay to such Lender such amounts, if any, as may be required
pursuant to Section 3.14.
3.12 Requirements of Law.
If the adoption of or any change in any Requirement of Law or in
the interpretation or application thereof applicable to any Lender, or
compliance by any Lender with any request or directive (whether or not
having the force of law) from any central bank or other Governmental
Authority, in each case made subsequent to the Closing Date (or, if
later, the date on which such Lender becomes a Lender):
(a) shall subject such Lender to any tax of any kind
whatsoever with respect to any Letter of Credit, any Eurodollar
Loans made by it or its obligation to make Eurodollar Loans, or
change the basis of taxation of payments to such Lender in
respect thereof (except for Non-Excluded Taxes covered by
Section 3.13 (including Non-Excluded Taxes imposed solely by
reason of any failure of such Lender to comply with its
obligations under Section 3.13(b)) and changes in taxes measured
by or imposed upon the overall net income, or franchise tax
(imposed in lieu of such net income tax), of such Lender or its
applicable lending office, branch, or any affiliate thereof);
(b) shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, deposits or other liabilities in or for
the account of, advances, loans or other extensions of credit
by, or any other acquisition of funds by, any office of such
Lender which is not otherwise included in the determination of
the Eurodollar Rate hereunder; or
(c) shall impose on such Lender any other condition
(excluding any tax of any kind whatsoever);
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, upon notice to the
Borrower from such Lender, through the Administrative Agent, in
accordance herewith, the Borrower shall be obligated to promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate
such Lender on an after-tax basis (after taking into account applicable
deductions and credits in respect of the amount indemnified) for such
increased cost or reduced amount receivable, provided that, in any such
case, the Borrower may elect to convert the Eurodollar Loans made by such
Lender hereunder to Base Rate Loans by giving the Administrative Agent at
least one Business Day's notice of such election, in which case the
Borrower shall promptly pay to such Lender, upon demand, without
duplication, such amounts, if any, as may be required pursuant to Section
3.14. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 3.12, it shall provide prompt notice thereof to
the Borrower, through the Administrative Agent, certifying (x) that one
of the events described in this Section 3.12 has occurred and describing
in reasonable detail the nature of such event, (y) as to the increased
cost or reduced amount resulting from such event and (z) as to the
additional amount demanded by such Lender and a reasonably detailed
explanation of the calculation thereof. Such a certificate as to any
additional amounts payable pursuant to this Section 3.12 submitted by
such Lender, through the Administrative Agent, to the Borrower shall be
conclusive and binding on the parties hereto in the absence of manifest
error. This covenant shall survive the termination of this Credit
Agreement and the payment of the Loans and all other amounts payable
hereunder.
3.13 Taxes.
(a) Except as provided below in this Section 3.13, all
payments made by the Borrower under this Credit Agreement and
any Notes shall be made free and clear of, and without deduction
or withholding for or on account of, any present or future
income, stamp or other taxes, levies, imposts, duties, charges,
fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any court, or
governmental body, agency or other official, excluding taxes
measured by or imposed upon the overall net income of any Lender
or its applicable lending office, or any branch or affiliate
thereof, and all franchise taxes, branch taxes, taxes on doing
business or taxes on the overall capital or net worth of any
Lender or its applicable lending office, or any branch or
affiliate thereof, in each case imposed in lieu of net income
taxes: (i) by the jurisdiction under the laws of which such
Lender, applicable lending office, branch or affiliate is
organized or is located, or in which its principal executive
office is located, or any nation within which such jurisdiction
is located or any political subdivision thereof; or (ii) by
reason of any connection between the jurisdiction imposing such
tax and such Lender, applicable lending office, branch or
affiliate other than a connection arising solely from such
Lender having executed, delivered or performed its obligations,
or received payment under or enforced, this Credit Agreement or
any Notes. If any such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") are required to be withheld from any amounts payable to
an Agent or any Lender hereunder or under any Notes, (A) the
amounts so payable to an Agent or such Lender shall be increased
to the extent necessary to yield to an Agent or such Lender
(after payment of all Non-Excluded Taxes) interest or any such
other amounts payable hereunder at the rates or in the amounts
specified in this Credit Agreement and any Notes, provided,
however, that the Borrower shall be entitled to deduct and
withhold any Non-Excluded Taxes and shall not be required to
increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a
state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this Section 3.13 whenever any
Non-Excluded Taxes are payable by the Borrower, and (B) as
promptly as possible after requested the Borrower shall send to
such Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original
official receipt received by the Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit
to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the
Agents and any Lender for any incremental taxes, interest or
penalties that may become payable by an Agent or any Lender as a
result of any such failure. The agreements in this subsection
shall survive the termination of this Credit Agreement and the
payment of the Loans and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) (A) on or before the date of any payment
by the Borrower under this Credit Agreement or Notes to
such Lender, deliver to the Borrower and the
Administrative Agent (x) two duly completed copies of
United States Internal Revenue Service Form 1001 or
4224, or successor applicable form, as the case may be,
certifying that it is entitled to receive payments
under this Credit Agreement and any Notes without
deduction or withholding of any United States federal
income taxes and (y) an Internal Revenue Service Form
W-8 or W-9, or successor applicable form, as the case
may be, certifying that it is entitled to an exemption
from United States backup withholding tax;
(B) deliver to the Borrower and the
Administrative Agent two further copies of any such
form or certification on or before the date that any
such form or certification expires or becomes obsolete
and after the occurrence of any event requiring a
change in the most recent form previously delivered by
it to the Borrower; and
(C) obtain such extensions of time for
filing and complete such forms or certifications as may
reasonably be requested by the Borrower or the
Administrative Agent; or
(ii) in the case of any such Lender that is
not a "bank" within the meaning of Section 881(c)(3)(A)
of the Internal Revenue Code, (A) represent to the
Borrower (for the benefit of the Borrower and the
Agents) that it is not a bank within the meaning of
Section 881(c)(3)(A) of the Internal Revenue Code, (B)
agree to furnish to the Borrower, on or before the date
of any payment by the Borrower, with a copy to the
Administrative Agent, two accurate and complete
original signed copies of Internal Revenue Service Form
W-8, or successor applicable form certifying to such
Lender's legal entitlement at the date of such
certificate to an exemption from U.S. withholding tax
under the provisions of Section 881(c) of the Internal
Revenue Code with respect to payments to be made under
this Credit Agreement and any Notes (and to deliver to
the Borrower and the Administrative Agent two further
copies of such form on or before the date it expires or
becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form
and, if necessary, obtain any extensions of time
reasonably requested by the Borrower or the
Administrative Agent for filing and completing such
forms), and (C) agree, to the extent legally entitled
to do so, upon reasonable request by the Borrower, to
provide to the Borrower (for the benefit of the
Borrower and the Agents) such other forms as may be
reasonably required in order to establish the legal
entitlement of such Lender to an exemption from
withholding with respect to payments under this Credit
Agreement and any Notes.
Notwithstanding the above, if any change in treaty, law or
regulation has occurred after the date such Person becomes a
Lender hereunder which renders all such forms inapplicable or
which would prevent such Lender from duly completing and
delivering any such form with respect to it and such Lender so
advises the Borrower and the Administrative Agent then such
Lender shall be exempt from such requirements. Each Person that
shall become a Lender or a participant of a Lender pursuant to
Section 11.3 shall, upon the effectiveness of the related
transfer, be required to provide all of the forms,
certifications and statements required pursuant to this
subsection (b); provided that in the case of a participant of a
Lender, the obligations of such participant of a Lender pursuant
to this subsection (b) shall be determined as if the participant
of a Lender were a Lender except that such participant of a
Lender shall furnish all such required forms, certifications and
statements to the Lender from which the related participation
shall have been purchased.
3.14 Compensation.
The Borrower promises to indemnify each Lender and to hold each
Lender harmless from any loss or expense which such Lender may sustain or
incur as a consequence of (a) default by the Borrower in making a
borrowing of, conversion into or continuation of Eurodollar Loans after
the Borrower has given a notice requesting the same in accordance with
the provisions of this Credit Agreement, (b) default by the Borrower in
making any prepayment of a Eurodollar Loan after the Borrower has given a
notice thereof in accordance with the provisions of this Credit Agreement
and (c) the making of a prepayment of Eurodollar Loans on a day which is
not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to (i) the amount of interest
which would have accrued on the amount so prepaid, or not so borrowed,
converted or continued, for the period from the date of such prepayment
or of such failure to borrow, convert or continue to the last day of the
applicable Interest Period (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have commenced on the
date of such failure) in each case at the applicable rate of interest for
such Eurodollar Loans provided for herein (excluding, however, the
Applicable Percentage included therein, if any) minus (ii) the amount of
interest (as reasonably determined by such Lender) which would have
accrued to such Lender on such amount by placing such amount on deposit
for a comparable period with leading banks in the interbank Eurodollar
market. The agreements in this Section shall survive the termination of
this Credit Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.15 Substitution of Lender.
If (a) the obligation of any Lender to make Eurodollar Loans has
been suspended pursuant to Section 3.11 or (b) any Lender has demanded
compensation under Section 3.9, 3.11, 3.12, 3.13 or 3.14, the Borrower
shall have the right, with the assistance of the Administrative Agent, to
seek a mutually satisfactory substitute lender or lenders. Any
substitution under this Section 3.15 may be accomplished, at the
Borrower's option, either (i) by the replaced Lender assigning its rights
and obligations hereunder to a replacement lender or lenders pursuant to
Section 11.3(b) at a mutually agreeable price or (ii) by the Borrower
prepaying all outstanding Loans and LOC Obligations from the replaced
Lender and terminating such Lender's Commitment on a date specified in a
notice delivered to the Administrative Agent and the replaced Lender at
least three Business Days before the date so specified (and compensating
such Lender for any resulting funding losses as provided in Section 3.14)
and concurrently a replacement Lender or Lenders assuming a Commitment in
an amount equal to the Commitment being terminated and making Loans in
the same aggregate amount and having the same maturity date or dates,
respectively, as the Loans being prepaid, all pursuant to documents
reasonably satisfactory to the Administrative Agent (and in the case of
any document to be signed by the replaced Lender, reasonably satisfactory
to such Lender). No such substitution shall relieve the Borrower of its
obligations to compensate and/or indemnify the replaced Lender as
required by Section 3.9, 3.11, 3.12, 3.13 or 3.14 with respect to the
period before it is replaced and to pay all accrued interest, accrued
fees and other amounts owing to the replaced Lender hereunder.
SECTION 4
GUARANTY
4.1 Guaranty of Payment.
Subject to Section 4.7 below, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Lender, each
Affiliate of Lender that enters into a Hedging Agreement and the Agents
the prompt payment of the Credit Party Obligations in full when due
(whether at stated maturity, as a mandatory prepayment, by acceleration
or otherwise). The Guarantors additionally, jointly and severally,
unconditionally guarantee to each Lender, each Affiliate of a Lender that
enters into a Hedging Agreement and the Agents the timely performance of
all other obligations under the Credit Documents and such Hedging
Agreements. This Guaranty is a guaranty of payment and not of collection
and is a continuing guaranty and shall apply to all Credit Party
Obligations whenever arising.
4.2 Obligations Unconditional.
The obligations of the Guarantors hereunder are absolute and
unconditional, irrespective of the value, genuineness, validity,
regularity or enforceability of any of the Credit Documents or the
Hedging Agreements, or any other agreement or instrument referred to
therein, to the fullest extent permitted by applicable law, irrespective
of any other circumstance whatsoever which might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor. Each
Guarantor agrees that this Guaranty may be enforced by the Lenders
without the necessity at any time of resorting to or exhausting any other
security or collateral and without the necessity at any time of having
recourse to the Notes or any other of the Credit Documents or any
collateral, if any, hereafter securing the Credit Party Obligations or
otherwise and each Guarantor hereby waives the right to require the
Lenders to proceed against the Borrower or any other Person (including a
co-guarantor) or to require the Lenders to pursue any other remedy or
enforce any other right. Each Guarantor further agrees that it shall have
no right of subrogation, indemnity, reimbursement or contribution against
the Borrower or any other Guarantor of the Credit Party Obligations for
amounts paid under this Guaranty until such time as the Lenders (and any
Affiliates of Lenders entering into Hedging Agreements) have been paid in
full, all Commitments under the Credit Agreement have been terminated and
no Person or Governmental Authority shall have any right to request any
return or reimbursement of funds from the Lenders in connection with
monies received under the Credit Documents. Each Guarantor further agrees
that nothing contained herein shall prevent the Lenders from suing on the
Notes or any of the other Credit Documents or any of the Hedging
Agreements or foreclosing its security interest in or Lien on any
collateral, if any, securing the Credit Party Obligations or from
exercising any other rights available to it under this Credit Agreement,
the Notes, any other of the Credit Documents, or any other instrument of
security, if any, and the exercise of any of the aforesaid rights and the
completion of any foreclosure proceedings shall not constitute a
discharge of any of any Guarantor's obligations hereunder; it being the
purpose and intent of each Guarantor that its obligations hereunder shall
be absolute, independent and unconditional under any and all
circumstances. Neither any Guarantor's obligations under this Guaranty
nor any remedy for the enforcement thereof shall be impaired, modified,
changed or released in any manner whatsoever by an impairment,
modification, change, release or limitation of the liability of the
Borrower or by reason of the bankruptcy or insolvency of the Borrower.
Each Guarantor waives any and all notice of the creation, renewal,
extension or accrual of any of the Credit Party Obligations and notice of
or proof of reliance of by any Agent or any Lender upon this Guarantee or
acceptance of this Guarantee. The Credit Party Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee. All dealings between the Borrower and any of the Guarantors,
on the one hand, and the Agents and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated
in reliance upon this Guarantee.
4.3 Modifications.
Each Guarantor agrees that (a) all or any part of the security
now or hereafter held for the Credit Party Obligations, if any, may be
exchanged, compromised or surrendered from time to time; (b) the Lenders
shall not have any obligation to protect, perfect, secure or insure any
such security interests, liens or encumbrances now or hereafter held, if
any, for the Credit Party Obligations or the properties subject thereto;
(c) the time or place of payment of the Credit Party Obligations may be
changed or extended, in whole or in part, to a time certain or otherwise,
and may be renewed or accelerated, in whole or in part; (d) the Borrower
and any other party liable for payment under the Credit Documents may be
granted indulgences generally; (e) any of the provisions of the Notes or
any of the other Credit Documents may be modified, amended or waived; (f)
any party (including any co-guarantor) liable for the payment thereof may
be granted indulgences or be released; and (g) any deposit balance for
the credit of the Borrower or any other party liable for the payment of
the Credit Party Obligations or liable upon any security therefor may be
released, in whole or in part, at, before or after the stated, extended
or accelerated maturity of the Credit Party Obligations, all without
notice to or further assent by such Guarantor, which shall remain bound
thereon, notwithstanding any such exchange, compromise, surrender,
extension, renewal, acceleration, modification, indulgence or release.
4.4 Waiver of Rights.
Each Guarantor expressly waives to the fullest extent permitted
by applicable law: (a) notice of acceptance of this Guaranty by the
Lenders and of all extensions of credit to the Borrower by the Lenders;
(b) presentment and demand for payment or performance of any of the
Credit Party Obligations; (c) protest and notice of dishonor or of
default (except as specifically required in the Credit Agreement) with
respect to the Credit Party Obligations or with respect to any security
therefor; (d) notice of the Lenders obtaining, amending, substituting
for, releasing, waiving or modifying any security interest, lien or
encumbrance, if any, hereafter securing the Credit Party Obligations, or
the Lenders' subordinating, compromising, discharging or releasing such
security interests, liens or encumbrances, if any; (e) all other notices
to which such Guarantor might otherwise be entitled; and (f) demand for
payment under this Guaranty.
4.5 Reinstatement.
The obligations of the Guarantors under this Section 4 shall be
automatically reinstated if and to the extent that for any reason any
payment by or on behalf of any Person in respect of the Credit Party
Obligations is rescinded or must be otherwise restored by any holder of
any of the Credit Party Obligations, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and each
Guarantor agrees that it will indemnify the Agents and each Lender on
demand for all reasonable costs and expenses (including, without
limitation, reasonable fees of counsel) incurred by an Agent or such
Lender in connection with such rescission or restoration, including any
such costs and expenses incurred in defending against any claim alleging
that such payment constituted a preference, fraudulent transfer or
similar payment under any bankruptcy, insolvency or similar law.
4.6 Remedies.
The Guarantors agree that, as between the Guarantors, on the one
hand, and the Agents and the Lenders, on the other hand, the Credit Party
Obligations may be declared to be forthwith due and payable as provided
in Section 9 (and shall be deemed to have become automatically due and
payable in the circumstances provided in Section 9) notwithstanding any
stay, injunction or other prohibition preventing such declaration (or
preventing such Credit Party Obligations from becoming automatically due
and payable) as against any other Person and that, in the event of such
declaration (or such Credit Party Obligations being deemed to have become
automatically due and payable), such Credit Party Obligations (whether or
not due and payable by any other Person) shall forthwith become due and
payable by the Guarantors. The Guarantors acknowledge and agree that
their obligations hereunder are secured in accordance with the terms of
the Security Agreements and the other Collateral Documents and that the
Lenders may exercise their remedies thereunder in accordance with the
terms thereof.
4.7 Limitation of Guaranty.
Notwithstanding any provision to the contrary contained herein
or in any of the other Credit Documents, to the extent the obligations of
any Guarantor shall be adjudicated to be invalid or unenforceable for any
reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers) then the
obligations of such Guarantor hereunder shall be limited to the maximum
amount that is permissible under applicable law (whether federal or state
and including, without limitation, the Bankruptcy Code).
4.8 Rights of Contribution.
The Credit Parties agree among themselves that, in connection
with payments made hereunder, each Credit Party shall have contribution
rights against the other Credit Parties as permitted under applicable
law. Such contribution rights shall be subordinate and subject in right
of payment to the obligations of the Credit Parties under the Credit
Documents and no Credit Party shall exercise such rights of contribution
until all Credit Party Obligations have been paid in full and the
Commitments terminated.
SECTION 5
CONDITIONS PRECEDENT
5.1 Closing Conditions.
The obligation of the Lenders to enter into this Credit
Agreement and make the initial Extension of Credit is subject to
satisfaction of the following conditions:
(a) Executed Credit Documents. Receipt by the Agents of
duly executed copies of: (i) this Credit Agreement; (ii) the
Notes; (iii) the Collateral Documents; and (iv) all other Credit
Documents, each in form and substance reasonably acceptable to
the Agents in their sole discretion.
(b) Corporate Documents. Receipt by the Agents of the
following:
(i) Charter Documents. Copies of the articles
or certificates of incorporation or other charter
documents of each Credit Party certified to be true and
complete as of a recent date by the appropriate
Governmental Authority of the state or other
jurisdiction of its incorporation and certified by a
secretary or assistant secretary of such Credit Party
to be true and correct as of the Effective Date.
(ii) Bylaws. A copy of the bylaws of each
Credit Party certified by a secretary or assistant
secretary of such Credit Party to be true and correct
as of the Effective Date.
(iii) Resolutions. Copies of resolutions of
the Board of Directors of each Credit Party approving
and adopting the Credit Documents to which it is a
party, the transactions contemplated therein and
authorizing execution and delivery thereof, certified
by a secretary or assistant secretary of such Credit
Party to be true and correct and in force and effect as
of the Effective Date.
(iv) Good Standing. Copies of (A) certificates
of good standing, existence or its equivalent with
respect to each Credit Party certified as of a recent
date by the appropriate Governmental Authorities of the
state or other jurisdiction of incorporation and each
other jurisdiction in which the failure to so qualify
and be in good standing would have a Material Adverse
Effect on the business or operations of a Credit Party
in such jurisdiction and (B) to the extent available, a
certificate indicating payment of all corporate
franchise taxes certified as of a recent date by the
appropriate governmental taxing authorities.
(v) Incumbency. An incumbency certificate of
each Credit Party certified by a secretary or assistant
secretary to be true and correct as of the Effective
Date.
(c) Opinion of Counsel. Receipt by the Agents of an
opinion, or opinions (which shall cover, among other things,
authority, legality, validity, binding effect, enforceability
and attachment and perfection of liens), reasonably satisfactory
to the Agents, addressed to the Agents on behalf of the Lenders
and dated as of the Effective Date, from legal counsel to the
Credit Parties.
(d) Acquisition. Receipt by the Agents of evidence that
the Borrower, through a wholly owned Subsidiary, has acquired,
on terms acceptable to the Agents, at least 51% of the shares of
Varsity Spirit Corporation for a price not to exceed $18.90 per
share.
(e) Personal Property Collateral. The Collateral Agent
shall have received, in form and substance reasonably
satisfactory to the Collateral Agent:
(i) searches of Uniform Commercial Code
("UCC") filings in the jurisdiction of the chief
executive office of each Credit Party and each
jurisdiction where any Collateral is located or where a
filing would need to be made in order to perfect the
Lenders' security interest in the Collateral, copies of
the financing statements on file in such jurisdictions
and evidence that no Liens exist other than Permitted
Liens;
(ii) duly executed UCC financing statements
for each appropriate jurisdiction as is necessary, in
the Collateral Agent's sole discretion, to perfect the
Lenders' security interest in the Collateral;
(iii) searches of ownership of intellectual
property in the appropriate governmental offices as
requested by the Collateral Agent; and
(iv) all stock certificates evidencing the
stock pledged to the Collateral Agent pursuant to the
Pledge Agreements, together with duly executed in blank
undated stock powers attached thereto.
(f) Real Property Collateral. The Collateral Agent
shall have received, in form and substance reasonably
satisfactory to the Collateral Agent:
(i) fully executed and notarized mortgages,
deeds of trust or deeds to secure debt (each a
"Mortgage" and collectively the "Mortgages")
encumbering the fee interest of the Credit Parties in
each real property asset owned by a Credit Party set
forth on Schedule 5.1(f) (each a "Mortgaged Property"
and collectively the "Mortgaged Properties"), together
with such UCC-1 financing statements as the Collateral
Agent shall deem appropriate with respect to each such
Mortgaged Property; and
(ii) an opinion of counsel in the state in
which each Mortgaged Property is located with respect
to the enforceability of the form of Mortgage, standard
remedies with respect thereto and sufficiency of the
form of UCC-1 financing statements to be recorded or
filed in such state and such other matters as the
Collateral Agent may request, in form and substance
reasonably satisfactory to the Collateral Agent.
(g) Evidence of Insurance. Receipt by the Agents of
copies of insurance policies or certificates of insurance of the
Credit Parties evidencing liability and casualty insurance
meeting the requirements set forth in the Credit Documents,
including, but not limited to, naming the Collateral Agent as
additional insured on behalf of the Lenders.
(h) Senior Notes. Receipt by the Agents of evidence
that the Senior Notes have been issued, on terms acceptable to
the Agents, and that the Borrower shall have received at least
$115 million less Transactions Costs incurred in connection
therewith.
(i) Government Consent. Receipt by the Agents of
evidence that all governmental, shareholder and third party
consents and approvals necessary or desireable in connection
with the acquisition of Varsity Spirit Corporation and the
related financings and other transactions contemplated hereby
have been received and no condition or Requirement of Law exists
which could reasonably be likely to restrain, prevent or impose
any material adverse conditions on the acquisition or ownership
of Varsity Spirit Corporation or the financings or other
transactions contemplated hereby.
(j) Litigation. There shall not exist any pending or
threatened action, suit, investigation or proceeding against a
Credit Party or any of their Subsidiaries that would have or
would reasonably be expected to have a Material Adverse Effect.
(k) Officer's Certificates. The Agents shall have
received a certificate or certificates executed by the chief
financial officer of the Borrower on behalf of the Borrower as
of the Effective Date stating that (i) the Borrower and each of
the Borrower's Subsidiaries are in compliance with all existing
material financial obligations, (ii) no action, suit,
investigation or proceeding is pending or threatened in any
court or before any arbitrator or governmental instrumentality
that purports to effect the Borrower, any of the Borrower's
Subsidiaries or any transaction contemplated by the Credit
Documents, if such action, suit, investigation or proceeding
could have or could be reasonably expected to have a Material
Adverse Effect, (iii) the financial statements and information
delivered to the Agents on or before the Effective Date were
prepared in good faith and using reasonable assumptions and (iv)
immediately after giving effect to this Credit Agreement, the
other Credit Documents and all the transactions contemplated
therein to occur on such date, (A) the Borrower and each of the
Borrower's Subsidiaries is Solvent, (B) no Default or Event of
Default exists, (C) all representations and warranties contained
herein and in the other Credit Documents are true and correct in
all material respects, and (D) the Credit Parties are in
compliance with each of the financial covenants set forth in
Section 7.2.
(l) Fees and Expenses. Payment by the Credit Parties of
(i) an upfront fee in accordance with the terms of the Fee
Letter and (ii) all other fees and expenses owed by them to the
Lenders and the Agents, including, without limitation, any
accrued Commitment Fees.
(m) Borrowing Base Report. A Borrowing Base Report, in
the form of Exhibit 7.1(c), dated as of May 31, 1997.
(n) Other. Receipt by the Lenders of such other
documents, instruments, agreements or information as reasonably
and timely requested by any Lender, including, but not limited
to, information regarding litigation, tax, accounting, labor,
insurance, pension liabilities (actual or contingent), real
estate leases, material contracts, debt agreements, property
ownership and contingent liabilities of the Borrower and its
Subsidiaries.
5.2 Conditions to All Extensions of Credit.
In addition to the conditions precedent stated elsewhere herein,
the Lenders shall not be obligated to make Loans nor shall an Issuing
Lender be required to issue or extend a Letter of Credit unless:
(a) Notice. The Borrower shall have delivered (i) in
the case of any new Revolving Loan, a Notice of Borrowing, duly
executed and completed, by the time specified in Section 2.1 and
(ii) in the case of any Letter of Credit, the Issuing Lender
shall have received an appropriate request for issuance in
accordance with the provisions of Section 2.2;
(b) Representations and Warranties. The representations
and warranties made by the Credit Parties in any Credit Document
are true and correct in all material respects at and as if made
as of such date except to the extent they expressly relate to an
earlier date;
(c) No Default. No Default or Event of Default shall
exist or be continuing either prior to or after giving effect
thereto;
(d) No Material Adverse Effect. Since the Effective
Date, there shall not have occurred any Material Adverse Effect;
and
(e) Availability. Immediately after giving effect to
the making of a Revolving Loan (and the application of the
proceeds thereof) or to the issuance of a Letter of Credit, as
the case may be, the sum of the Revolving Loans outstanding plus
LOC Obligations outstanding shall not exceed the Revolving
Commitment Amount.
The delivery of each Notice of Borrowing and each request for a Letter of
Credit shall constitute a representation and warranty by the Borrower of
the correctness of the matters specified in subsections (b), (c), (d) and
(e) above.
SECTION 6
REPRESENTATIONS AND WARRANTIES
The Credit Parties hereby represent to the Agents and each
Lender that:
6.1 Financial Condition.
(a) The financial statements delivered to the Lenders
prior to the Effective Date and pursuant to Section 7.1(a) and
(b): (i) have been prepared in accordance with GAAP and (ii)
present fairly the consolidated and consolidating (as
applicable) financial condition, results of operations and cash
flows of the Credit Parties and their Subsidiaries as of such
date and for such periods.
(b) The financial statements delivered to the Lenders
prior to the Effective Date with respect to Varsity Spirit
Corporation (i) have been prepared in accordance with GAAP and
(ii) present fairly the financial condition, results of
operations and cash flows of Varsity Spirit Corporation as of
such dates and for such periods.
(c) Since December 31, 1996, there has been no sale,
transfer or other disposition by any Credit Party or any of
their Subsidiaries of any material part of the business or
property of the Credit Parties, taken as a whole, and no
purchase or other acquisition by any of them of any business or
property (including any capital stock of any other Person)
material in relation to the consolidated financial condition of
the Credit Parties, taken as a whole, in each case, which, is
not (i) reflected in the most recent financial statements
delivered to the Lenders pursuant to Section 7.1 or in the notes
thereto or (ii) otherwise permitted by the terms of this Credit
Agreement and communicated to the Administrative Agent.
6.2 No Material Change.
Since the Effective Date, there has been no development or event
relating to or affecting a Credit Party or any of their Subsidiaries
which has had or would be reasonably expected to have a Material Adverse
Effect.
6.3 Organization and Good Standing.
Each Credit Party (a) is a corporation duly incorporated,
validly existing and in good standing under the laws of the State (or
other jurisdiction) of its incorporation, (b) is duly qualified and in
good standing as a foreign corporation and authorized to do business in
every jurisdiction unless the failure to be so qualified, in good
standing or authorized would have a Material Adverse Effect and (c) has
the requisite corporate power and authority to own its properties and to
carry on its business as now conducted and as proposed to be conducted.
6.4 Due Authorization.
Each Credit Party (a) has the requisite corporate power and
authority to execute, deliver and perform this Credit Agreement and the
other Credit Documents to which it is a party and to incur the
obligations herein and therein provided for and (b) is duly authorized
to, and has been authorized by all necessary corporate action, to
execute, deliver and perform this Credit Agreement and the other Credit
Documents to which it is a party.
6.5 No Conflicts.
Neither the execution and delivery of the Credit Documents, nor
the consummation of the transactions contemplated therein, nor
performance of and compliance with the terms and provisions thereof by
such Credit Party will (a) violate or conflict with any provision of its
articles or certificate of incorporation or bylaws, (b) violate,
contravene or materially conflict with any Requirement of Law or any
other law, regulation (including, without limitation, Regulation U or
Regulation X), order, writ, judgment, injunction, decree or permit
applicable to it, (c) violate, contravene or conflict with contractual
provisions of, or cause an event of default under, any indenture, loan
agreement, mortgage, deed of trust, contract or other agreement or
instrument to which it is a party or by which it may be bound, the
violation of which could have or might be reasonably expected to have a
Material Adverse Effect, or (d) result in or require the creation of any
Lien (other than those contemplated in or created in connection with the
Credit Documents) upon or with respect to its properties.
6.6 Consents.
Except for consents, approvals and authorizations which have
been obtained, no consent, approval, authorization or order of, or
filing, registration or qualification with, any court or Governmental
Authority or third party in respect of any Credit Party is required in
connection with the execution, delivery or performance of this Credit
Agreement or any of the other Credit Documents by such Credit Party.
6.7 Enforceable Obligations.
This Credit Agreement and the other Credit Documents have been
duly executed and delivered and constitute legal, valid and binding
obligations of each Credit Party enforceable against such Credit Party in
accordance with their respective terms, except as may be limited by
bankruptcy or insolvency laws or similar laws affecting creditors' rights
generally or by general equitable principles.
6.8 No Default.
No Credit Party, nor any of their Subsidiaries, is in default in
any respect under any contract, lease, loan agreement, indenture,
mortgage, security agreement or other agreement or obligation to which it
is a party or by which any of its properties is bound which default would
have or would be reasonably expected to have a Material Adverse Effect.
No Default or Event of Default has occurred or exists except as
previously disclosed in writing to the Lenders.
6.9 Ownership.
Each Credit Party, and each of its Subsidiaries, is the owner
of, and has good and marketable title to, all of its respective assets
and none of such assets is subject to any Lien other than Permitted
Liens.
6.10 Indebtedness.
The Credit Parties and their Subsidiaries have no Indebtedness
except (a) as disclosed in the financial statements referenced in Section
6.1, (b) as set forth on Schedule 6.10 and (c) as otherwise permitted by
this Credit Agreement. There are no mandatory principal payments due with
respect to the Senior Notes or the Subordinated Debt prior to the
Revolving Loan Maturity Date.
6.11 Litigation.
Except for any litigation outstanding as set forth in the
M.O.U., there are no actions, suits or legal, equitable, arbitration or
administrative proceedings, pending or, to the knowledge of any Credit
Party, threatened against, the Borrower or any of its Subsidiaries which
could have or might be reasonably expected to have a Material Adverse
Effect; provided that the Credit Parties do not, as of the Closing Date,
believe that the litigation set forth in the M.O.U. would have or be
reasonably expected to have a Material Adverse Effect.
6.12 Taxes.
Each Credit Party, and each of its Subsidiaries, has filed, or
caused to be filed, all material tax returns (federal, state, local and
foreign) required to be filed and paid (a) all material amounts of taxes
shown thereon to be due (including interest and penalties) and (b) all
material other taxes, fees, assessments and other governmental charges
(including mortgage recording taxes, documentary stamp taxes and
intangibles taxes) owing by it, except for such taxes (i) which are not
yet delinquent or (ii) that are being contested in good faith and by
proper proceedings, and against which adequate reserves are being
maintained in accordance with GAAP. No Credit Party is aware of any
material proposed tax assessments against it.
6.13 Compliance with Law.
Each Credit Party, and each of its Subsidiaries, is in
compliance with all Requirements of Law and all other laws, rules,
regulations, orders and decrees (including without limitation
Environmental Laws) applicable to it, or to its properties, unless such
failure to comply would not have or would not be reasonably expected to
have a Material Adverse Effect. No Requirement of Law would be reasonably
expected to cause a Material Adverse Effect.
6.14 ERISA.
Except as would not result or be reasonably expected to result
in a Material Adverse Effect:
(a) During the five-year period prior to the date on
which this representation is made or deemed made: (i) no
Termination Event has occurred, and, to the best knowledge of
the Credit Parties, no event or condition has occurred or exists
as a result of which any Termination Event could reasonably be
expected to occur, with respect to any Plan; (ii) no
"accumulated funding deficiency," as such term is defined in
Section 302 of ERISA and Section 412 of the Code, whether or not
waived, has occurred with respect to any Plan; (iii) each Plan
has been maintained, operated, and funded in compliance with its
own terms and in material compliance with the provisions of
ERISA, the Code, and any other applicable federal or state laws;
and (iv) no lien in favor or the PBGC or a Plan has arisen or is
reasonably likely to arise on account of any Plan.
(b) The actuarial present value of all "benefit
liabilities" under each Single Employer Plan (determined within
the meaning of Section 401(a)(2) of the Code, utilizing the
actuarial assumptions used to fund such Plans), whether or not
vested, did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made,
exceed the current value of the assets of such Plan allocable to
such accrued liabilities.
(c) Neither the Borrower, nor any of its Subsidiaries
nor any ERISA Affiliate has incurred, or, to the best knowledge
of the Credit Parties, are reasonably expected to incur, any
withdrawal liability under ERISA to any Multiemployer Plan or
Multiple Employer Plan. Neither the Borrower, any of its
Subsidiaries nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization
(within the meaning of Section 4241 of ERISA), is insolvent
(within the meaning of Section 4245 of ERISA), or has been
terminated (within the meaning of Title IV of ERISA), and no
Multiemployer Plan is, to the best knowledge of the Credit
Parties, reasonably expected to be in reorganization, insolvent,
or terminated.
(d) No prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) or breach of
fiduciary responsibility has occurred with respect to a Plan
which has subjected or is reasonably likely to subject the
Borrower or any of its Subsidiaries or any ERISA Affiliate to
any liability under Sections 406, 409, 502(i), or 502(l) of
ERISA or Section 4975 of the Code, or under any agreement or
other instrument pursuant to which the Borrower or any of its
Subsidiaries or any ERISA Affiliate has agreed or is required to
indemnify any person against any such liability.
(e) The present value (determined using actuarial and
other assumptions which are reasonable with respect to the
benefits provided and the employees participating) of the
liability of the Borrower and its Subsidiaries and each ERISA
Affiliate for post-retirement welfare benefits to be provided to
their current and former employees under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA), net of all
assets under all such Plans allocable to such benefits, are
reflected on the Financial Statements in accordance with FASB
106.
(f) Each Plan which is a welfare plan (as defined in
Section 3(1) of ERISA) to which Sections 601-609 of ERISA and
Section 4980B of the Code apply has been administered in
compliance in all material respects with such sections.
6.15 Subsidiaries.
Set forth on Schedule 6.15 is a complete and accurate list of
all Subsidiaries of each Credit Party. Information on Schedule 6.15
includes jurisdiction of incorporation, the number of shares of each
class of capital stock or other equity interests outstanding, the number
and percentage of outstanding shares of each class owned (directly or
indirectly) by such Credit Party; and the number and effect, if
exercised, of all outstanding options, warrants, rights of conversion or
purchase and all other similar rights with respect thereto. The
outstanding capital stock and other equity interests of all such
Subsidiaries is validly issued, fully paid and non-assessable and is
owned by each such Credit Party, directly or indirectly, free and clear
of all Liens (other than those arising under or contemplated in
connection with the Credit Documents). Other than as set forth in
Schedule 6.15, neither any Credit Party nor any Subsidiary thereof has
outstanding any securities convertible into or exchangeable for its
capital stock nor does any such Person have outstanding any rights to
subscribe for or to purchase or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or
any calls, commitments or claims of any character relating to its capital
stock. Schedule 6.15 may be updated from time to time by the Borrower by
giving written notice thereof to the Administrative Agent.
6.16 Use of Proceeds; Margin Stock.
The proceeds of the Loans hereunder will be used solely for the
purposes specified in Section 7.11. None of the proceeds of the Loans
will be used for the purpose of purchasing or carrying any "margin stock"
as defined in Regulation U, Regulation X or Regulation G, or for the
purpose of reducing or retiring any Indebtedness which was originally
incurred to purchase or carry "margin stock" or any "margin security" or
for any other purpose which might constitute this transaction a "purpose
credit" within the meaning of Regulation U, Regulation X, Regulation G or
Regulation T. None of the Credit Parties owns any "margin stock".
6.17 Government Regulation.
No Credit Party, nor any of its Subsidiaries, is subject to
regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Investment Company Act of 1940 or the Interstate
Commerce Act, each as amended. In addition, no Credit Party is an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, or controlled by such a
company, or a "holding company," or a "Subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "Subsidiary"
or a "holding company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended. No director, executive officer or
principal shareholder of the Borrower or any of its Subsidiaries is a
director, executive officer or principal shareholder of any Lender. For
the purposes hereof the terms "director", "executive officer" and
"principal shareholder" (when used with reference to any Lender) have the
respective meanings assigned thereto in Regulation O issued by the Board
of Governors of the Federal Reserve System.
6.18 Environmental Matters.
(a) Except as set forth on Schedule 6.18:
(i) Each of the Real Properties and all
operations at the Real Properties are in compliance
with all applicable Environmental Laws, and there is no
violation of any Environmental Law with respect to the
Real Properties or the businesses operated by the
Borrower or any of their Subsidiaries (the
"Businesses"), and there are no conditions relating to
the Businesses or Real Properties that would be
reasonably expected to give rise to liability under any
applicable Environmental Laws.
(ii) No Credit Party has received any written
notice of, or inquiry from any Governmental Authority
regarding, any violation, alleged violation,
non-compliance, liability or potential liability
regarding Hazardous Materials or compliance with
Environmental Laws with regard to any of the Real
Properties or the Businesses, nor does the Borrower or
any of its Subsidiaries have knowledge or reason to
believe that any such notice is being threatened.
(iii) Hazardous Materials have not been
transported or disposed of from the Real Properties, or
generated, treated, stored or disposed of at, on or
under any of the Real Properties or any other location,
in each case by, or on behalf or with the permission
of, the Borrower or any of its Subsidiaries in a manner
that would reasonably be expected to give rise to a
Material Adverse Effect.
(iv) No judicial proceeding or governmental or
administrative action is pending or, to the knowledge
of the Borrower or any of its Subsidiaries, threatened,
under any Environmental Law to which the Borrower or
any of its Subsidiaries is or will be named as a party,
nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders,
or other administrative or judicial requirements
outstanding under any Environmental Law with respect to
the Borrower or any of its Subsidiaries, the Real
Properties or the Businesses, in any amount reportable
under the federal Comprehensive Environmental Response,
Compensation and Liability Act or any analogous state
law, except releases in compliance with any
Environmental Laws.
(v) There has been no release or threat of
release of Hazardous Materials at or from the Real
Properties, or arising from or related to the
operations (including, without limitation, disposal) of
the Borrower or any of its Subsidiaries in connection
with the Real Properties or otherwise in connection
with the Businesses.
(vi) None of the Real Properties contains, or
has previously contained, any Hazardous Materials at,
on or under the Real Properties in amounts or
concentrations that, if released, constitute or
constituted a violation of, or could give rise to
liability under, Environmental Laws and could
reasonably be expected to have a Material Adverse
Effect.
(vii) No Credit Party, nor any of its
Subsidiaries, has assumed any liability of any Person
(other than another Credit Party, or one of its
Subsidiaries) under any Environmental Law.
(b) The Borrower has adopted procedures that are
designed to (i) ensure that each Credit Party, any of its
operations and each of the properties owned or leased by each
Credit Party remains in compliance with applicable Environmental
Laws and (ii) minimize any liabilities or potential liabilities
that each Credit Party, any of its operations and each of the
properties owned or leased by each Credit Party may have under
applicable Environmental Laws.
6.19 Intellectual Property.
Each Credit Party owns, or has the legal right to use, all
patents, trademarks, tradenames, copyrights, technology, know-how and
processes (the "Intellectual Property") necessary for each of them to
conduct its business as currently conducted except for those the failure
to own or have such legal right to use would not have or be reasonably
expected to have a Material Adverse Effect. Set forth on Schedule 6.19 is
a list of all Intellectual Property owned by each Credit Party or that
any Credit Party has the right to use. Except as provided on Schedule
6.19, no claim has been asserted and is pending by any Person challenging
or questioning the use of any such Intellectual Property or the validity
or effectiveness of any such Intellectual Property, nor does any Credit
Party know of any such claim, and to the Credit Parties' knowledge the
use of such Intellectual Property by the Borrower or any of their
Subsidiaries does not infringe on the rights of any Person, except for
such claims and infringements that in the aggregate, would not have or be
reasonably expected to have a Material Adverse Effect. Schedule 6.19 may
be updated from time to time by the Borrower by giving written notice
thereof to the Administrative Agent.
6.20 Solvency.
Each Credit Party is and, after consummation of the transactions
contemplated by this Credit Agreement, will be Solvent.
6.21 Investments.
All Investments of each Credit Party and its Subsidiaries are
(a) as set forth on Schedule 6.21, (b) Permitted Investments or (c)
otherwise permitted by the terms of this Credit Agreement.
6.22 Location of Collateral.
Set forth on Schedule 6.22(a) is a list of all Mortgaged
Properties with street address, county and state where located. Set forth
on Schedule 6.22(b) is a list of all locations where any personal
property of a Credit Party is located, including county and state where
located. Set forth on Schedule 6.22(c) is the chief executive office and
principal place of business of each Credit Party. Schedule 6.22(a),
6.22(b) and 6.22(c) may be updated from time to time by the Borrower by
giving written notice thereof to the Administrative Agent.
6.23 Disclosure.
Neither this Agreement nor any financial statements delivered to
the Lenders nor any other document, certificate or statement furnished to
the Lenders by or on behalf of any Credit Party in connection with the
transactions contemplated hereby contains any untrue statement of a
material fact or omits to state a material fact necessary in order to
make the statements contained therein or herein, taken as a whole, not
misleading.
6.24 Licenses, etc.
The Credit Parties have obtained and hold in full force and
effect, all franchises, licenses, permits, certificates, authorizations,
qualifications, accreditations, easements, rights of way and other
rights, consents and approvals which are necessary for the operation of
their respective businesses as presently conducted, except where the
failure to obtain same would not have a Material Adverse Effect. Set
forth on Schedule 6.24 is a list of all Material License Agreements to
which a Credit Party is a party, as such schedule may be updated from
time to time by the Borrower giving written notice thereof to the
Administrative Agent.
6.25 No Burdensome Restrictions.
No Credit Party, nor any of their Subsidiaries, is a party to
any agreement or instrument or subject to any other obligation or any
charter or corporate restriction or any provision of any applicable law,
rule or regulation which, individually or in the aggregate, would have or
be reasonably expected to have a Material Adverse Effect.
6.26 Collateral Documents.
The Collateral Documents create valid security interests in, and
Liens on, the Collateral purported to be covered thereby, which security
interests and Liens are and will remain perfected security interests and
Liens, prior to all other Liens other than Permitted Liens. Each of the
representations and warranties made by the Borrower and its Subsidiaries
in the Collateral Documents is true and correct in all material respects.
SECTION 7
AFFIRMATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as
this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest and fees and other obligations
hereunder, have been paid in full and the Commitments and Letters of
Credit hereunder shall have terminated:
7.1 Information Covenants.
The Borrower will furnish, or cause to be furnished, to the
Administrative Agent and each of the Lenders:
(a) Annual Financial Statements. As soon as available,
and in any event within 120 days after the close of each fiscal
year of the Borrower, a consolidated and consolidating balance
sheet and income statement of the Borrower and its Subsidiaries,
as of the end of such fiscal year, together with related
consolidated and consolidating statements of operations and
consolidated statements of retained earnings and of cash flows
for such fiscal year, setting forth in comparative form
consolidated and consolidating figures for the preceding fiscal
year, all such consolidated financial information described
above to be in reasonable form and detail and audited by
independent certified public accountants of recognized national
standing reasonably acceptable to the Agents and whose opinion
shall be to the effect that such financial statements have been
prepared in accordance with GAAP (except for changes with which
such accountants concur) and shall not be limited as to the
scope of the audit or qualified in any manner.
(b) Quarterly Financial Statements. As soon as
available, and in any event within 60 days after the close of
each of the first three fiscal quarter of the Borrower, (i) a
consolidated and consolidating balance sheet and income
statement of the Borrower and its Subsidiaries, as of the end of
such fiscal quarter, together with related consolidated and
consolidating statements of operations and consolidated
statements of retained earnings and of cash flows for such
fiscal quarter in each case setting forth in comparative form
consolidated and consolidating figures for (A) the corresponding
period of the preceding fiscal year and (B) management's
proposed budget for such period, all such financial information
described above to be in reasonable form and detail and
reasonably acceptable to the Agent, and accompanied by a
certificate of the chief financial officer or the chief
accounting officer of the Borrower to the effect that such
quarterly financial statements fairly present in all material
respects the financial condition of the Borrower and its
Subsidiaries and have been prepared in accordance with GAAP,
subject to changes resulting from audit and normal year-end
audit adjustments and (ii) a management discussion and analysis
of operating results for such fiscal quarter.
(c) Borrowing Base Report. (i) on the 15th day of each
month, a Borrowing Base Report, as of the end of the immediately
preceding month and (ii) on the last day of each month a
Borrowing Base Report, as of the 15th day of such month with
respect to Eligible Receivables and as of the end of the
immediately preceding month with respect to Eligible Inventory
and Eligible Work in Process, in each case in substantially in
the form of Exhibit 7.1(c) and certified by the chief financial
officer of the Borrower to be true and correct as of the date
thereof. Notwithstanding the above, the Borrowing Base Report
delivered on June 30, 1997 shall reflect Eligible Receivables as
of June 19, 1997.
(d) Officer's Certificate. At the time of delivery of
the financial statements provided for in Sections 7.1(a) and
7.1(b) above, a certificate of the chief financial officer of
the Borrower substantially in the form of Exhibit 7.1(d), (i)
demonstrating compliance with the financial covenants contained
in Section 7.2 by calculation thereof as of the end of each such
fiscal period, (ii) demonstrating compliance with any other
terms of the Credit Agreement as requested by the Agents and
(iii) stating that no Default or Event of Default exists, or if
any Default or Event of Default does exist, specifying the
nature and extent thereof and what action the Borrower proposes
to take with respect thereto.
(e) Annual Business Plan and Budgets. Within 90 days
after the end of each fiscal year of the Borrower, an annual
business plan and budget of the Borrower and its Subsidiaries on
a consolidated basis containing, among other things, pro forma
financial projections for the next fiscal year.
(f) Accountant's Certificate. Within the period for
delivery of the annual financial statements provided in Section
7.1(a), a certificate of the accountants conducting the annual
audit stating that they have reviewed this Credit Agreement and
stating further whether, in the course of their audit, they have
(based on the financial statements prepared in accordance with
then existing GAAP) become aware of any Default or Event of
Default and, if any such Default or Event of Default exists,
specifying the nature and extent thereof.
(g) Auditor's Reports. Promptly upon receipt thereof, a
copy of any "management letter" submitted by independent
accountants to the Borrower or any of its Subsidiaries in
connection with any annual, interim or special audit of the
books of the Borrower or any of its Subsidiaries.
(h) Reports. Promptly upon transmission or receipt
thereof, (a) copies of any filings and registrations with, and
reports to or from, the Securities and Exchange Commission, or
any successor agency, and copies of all financial statements,
proxy statements, notices and reports as the Borrower or any of
its Subsidiaries shall send to its shareholders generally or to
a holder of the Subordinated Debt in its capacity as such a
holder and (b) upon the written request of an Agent, all reports
and written information to and from the United States
Environmental Protection Agency, or any state or local agency
responsible for environmental matters, the United States
Occupational Health and Safety Administration, or any state or
local agency responsible for health and safety matters, or any
successor agencies or authorities concerning environmental,
health or safety matters.
(i) Notices. Upon a Responsible Officer obtaining
knowledge thereof, the Borrower will give written notice to the
Administrative Agent immediately of (a) the occurrence of an
event or condition consisting of a Default or Event of Default,
specifying the nature and existence thereof and what action the
Borrower proposes to take with respect thereto, and (b) the
occurrence of any of the following with respect to the Borrower
or any of its Subsidiaries (i) the pendency or commencement of
any litigation, arbitral or governmental proceeding against the
Borrower or any of its Subsidiaries which if adversely
determined would have or would be reasonably expected to have a
Material Adverse Effect, or (ii) the institution of any
proceedings against the Borrower or any of its Subsidiaries with
respect to, or the receipt of notice by such Person of potential
liability or responsibility for violation, or alleged violation
of any federal, state or local law, rule or regulation,
including but not limited to, Environmental Laws, the violation
of which would have or would be reasonably expected to have a
Material Adverse Effect.
(j) ERISA. Upon any of the Credit Parties or any ERISA
Affiliate obtaining knowledge thereof, Borrower will give
written notice to the Administrative Agent and each of the
Lenders promptly (and in any event within five Business Days)
of: (i) any event or condition, including, but not limited to,
any Reportable Event, that constitutes, or might reasonably lead
to, a Termination Event; (ii) with respect to any Multiemployer
Plan, the receipt of notice as prescribed in ERISA or otherwise
of any withdrawal liability assessed against the Borrowers or
any of their ERISA Affiliates, or of a determination that any
Multiemployer Plan is in reorganization or insolvent (both
within the meaning of Title IV of ERISA); (iii) the failure to
make full payment on or before the due date (including
extensions) thereof of all amounts which the Borrower or any of
its Subsidiaries or ERISA Affiliates is required to contribute
to each Plan pursuant to its terms and as required to meet the
minimum funding standard set forth in ERISA and the Code with
respect thereto; or (iv) any change in the funding status of any
Plan that could have a Material Adverse Effect; together, with a
description of any such event or condition or a copy of any such
notice and a statement by the principal financial officer of the
Borrower briefly setting forth the details regarding such event,
condition, or notice, and the action, if any, which has been or
is being taken or is proposed to be taken by the Credit Parties
with respect thereto. Promptly upon request, the Borrower shall
furnish the Administrative Agent and each of the Lenders with
such additional information concerning any Plan as may be
reasonably requested, including, but not limited to, copies of
each annual report/return (Form 5500 series), as well as all
schedules and attachments thereto required to be filed with the
Department of Labor and/or the Internal Revenue Service pursuant
to ERISA and the Code, respectively, for each "plan year"
(within the meaning of Section 3(39) of ERISA).
(k) Environmental.
(i) Subsequent to a notice from any
Governmental Authority that would reasonably cause
concern or during the existence of an Event of Default,
and upon the written request of an Agent, the Borrower
will furnish or cause to be furnished to the
Administrative Agent, at the Borrower's expense, a
report of an environmental assessment of reasonable
scope, form and depth, including, where appropriate,
invasive soil or groundwater sampling, by a consultant
reasonably acceptable to the Agents as to the nature
and extent of the presence of any Hazardous Materials
on any property owned, leased or operated by a Credit
Party and as to the compliance by the Credit Parties
with Environmental Laws. If the Borrower fails to
deliver such an environmental report within
seventy-five (75) days after receipt of such written
request then the Agents may arrange for same, and the
Borrower hereby grants to the Agents and their
representatives access to the Real Properties and a
license of a scope reasonably necessary to undertake
such an assessment (including, where appropriate,
invasive soil or groundwater sampling). The reasonable
cost of any assessment arranged for by the Agents
pursuant to this provision will be payable by the
Borrower on demand and added to the obligations secured
by the Collateral Documents.
(ii) Each Credit Party will conduct and
complete all investigations, studies, sampling, and
testing and all remedial, removal, and other actions
necessary to address all Hazardous Materials on, from,
or affecting any real property owned or leased by a
Credit Party to the extent necessary to be in
compliance with all Environmental Laws and all other
applicable federal, state, and local laws, regulations,
rules and policies and with the orders and directives
of all Governmental Authorities exercising jurisdiction
over such real property to the extent any failure would
have or be reasonably expected to have a Material
Adverse Effect.
(l) Other Information. With reasonable promptness upon
any such request, such other information regarding the business,
properties or financial condition of the Credit Parties and
their Subsidiaries as an Agent may reasonably request.
7.2 Financial Covenants.
(a) Leverage Ratio. The Leverage Ratio shall be less
than or equal to the ratios set forth below for the last day of
each fiscal quarter within the period set forth below:
(i) From the Effective Date to June 30, 1997,
8.0 to 1.0;
(ii) From July 1, 1997 to September 30, 1997,
7.40 to 1.0;
(iii) From October 1, 1997 to June 30, 1998,
6.50 to 1.0;
(iv) From July 1, 1998 to September 30, 1999,
5.50 to 1.0;
(v) From October 1, 1999 to September 30,
2000, 4.50 to 1.0;
(vi) From October 1, 2000 to September 30,
2001, 3.50 to 1.0; and
(vii) From October 1, 2001 thereafter, 3.0 to
1.0.
(b) Coverage Ratio. The Coverage Ratio, for the twelve
month period ending on such date, shall be greater than or equal
to the ratios set forth below for the last day of each fiscal
quarter within the period set forth below:
(i) From the Effective Date to September 30,
1998, 1.25 to 1.0;
(ii) From October 1, 1998 to September 30,
1999, 1.50 to 1.0;
(iii) From October 1, 1999 to September 30,
2000, 2.0 to 1.0; and
(iv) From October 1, 2000 thereafter, 2.5 to
1.0.
(c) Net Worth. For the dates set forth below, Net Worth
shall be greater than or equal to the sum of (i) 75% of the Net
Cash Proceeds from each Equity Issuance subsequent to the
Effective Date plus (ii) the amount set forth below:
Date Amount
December 31, 1997 Beginning Net Worth
March 31, 1998 Beginning Net Worth minus $4 million
June 30, 1998 Beginning Net Worth minus $1 million
September 30, 1998 Beginning Net Worth plus $5 million
December 31, 1998 Beginning Net Worth plus $1 million
March 31, 1999 Beginning Net Worth minus $2 million
June 30, 1999 Beginning Net Worth plus $1 million
September 30, 1999 Beginning Net Worth plus $7.5 million
December 31, 1999 Beginning Net Worth plus $4.5 million
March 31, 2000 Beginning Net Worth plus $1.5 million
June 30, 2000 Beginning Net Worth plus $4.5 million
September 30, 2000 Beginning Net Worth plus $10.5 million
December 31, 2000 Beginning Net Worth plus $7.5 million
March 31, 2001 Beginning Net Worth plus $4.5 million
June 30, 2001 Beginning Net Worth plus $8 million
September 30, 2001 Beginning Net Worth plus $14 million
December 31, 2001 Beginning Net Worth plus $11 million
March 31, 2002 Beginning Net Worth plus $8 million
June 30, 2002 Beginning Net Worth plus $12 million
(d) Net Income. For the fiscal quarters ending June 30,
1997 and September 30, 1997, the sum of Net Income plus (i) any
amounts deducted in determining Net Income representing any
amounts paid pursuant to or in connection with the M.O.U. or the
transactions contemplated thereby and (ii) Transaction Costs
shall be greater than zero.
7.3 Preservation of Existence and Franchises.
Each of the Credit Parties will do all things necessary to
preserve and keep in full force and effect its existence, rights,
franchises and authority except as permitted by Section 8.4.
7.4 Books and Records.
Each of the Credit Parties will keep complete and accurate books
and records of its transactions in accordance with good accounting
practices on the basis of GAAP (including the establishment and
maintenance of appropriate reserves).
7.5 Compliance with Law.
Each of the Credit Parties will comply with all material laws,
rules, regulations and orders, and all applicable material restrictions
imposed by all Governmental Authorities, applicable to it and its
property (including, without limitation, Environmental Laws).
7.6 Payment of Taxes and Other Indebtedness.
Each of the Credit Parties will pay, settle or discharge (a) all
taxes, assessments and governmental charges or levies imposed upon it, or
upon its income or profits, or upon any of its properties, before they
shall become delinquent, (b) all lawful claims (including claims for
labor, materials and supplies) which, if unpaid, might give rise to a
Lien upon any of its properties, and (c) all of its other Indebtedness as
it shall become due, including, without limitation, the Subordinated
Secured Note; provided, however, that a Credit Party shall not be
required to pay any such tax, assessment, charge, levy, claim or
Indebtedness which is being contested in good faith by appropriate
proceedings and as to which adequate reserves therefor have been
established in accordance with GAAP, unless the failure to make any such
payment (i) would give rise to an immediate right to foreclose or collect
on a Lien securing such amounts or (ii) would have a Material Adverse
Effect.
7.7 Insurance.
Each of the Credit Parties will at all times maintain in full
force and effect insurance (including worker's compensation insurance,
liability insurance, casualty insurance and business interruption
insurance) in such amounts, covering such risks and liabilities and with
such deductibles or self-insurance retentions as are in accordance with
normal industry practice. All policies shall have the Collateral Agent,
on behalf of the Lenders, as an additional insured.
In the event there occurs any material loss, damage to or destruction of
the Collateral of any Credit Party or any part thereof, such Credit Party
shall promptly give written notice thereof to the Administrative Agent
generally describing the nature and extent of such damage or destruction.
Subsequent to any loss, damage to or destruction of the Collateral of any
Credit Party or any part thereof, such Credit Party, whether or not the
insurance proceeds, if any, received on account of such damage or
destruction shall be sufficient for that purpose, at such Credit Party's
cost and expense, will promptly repair or replace the Collateral of such
Credit Party so lost, damaged or destroyed; provided, however, that such
Credit Party need not repair or replace the Collateral of such Credit
Party so lost, damaged or destroyed to the extent the failure to make
such repair or replacement (a) is desirable to the proper conduct of the
business of such Credit Party in the ordinary course and otherwise is in
the best interest of such Credit Party and (b) would not materially
impair the rights and benefits of the Agents or the Lenders under this
Credit Agreement or any other Credit Document. In the event a Credit
Party shall receive any insurance proceeds, as a result of any loss,
damage or destruction of Collateral, in a net amount in excess of
$1,000,000, such Credit Party will immediately pay over such proceeds to
the Administrative Agent as cash collateral for the Credit Party
Obligations. The Administrative Agent agrees to release such insurance
proceeds to such Credit Party for replacement or restoration of the
portion of the Collateral of such Credit Party lost, damaged or destroyed
if (A) within 15 days from the date the Administrative Agent receives
such insurance proceeds, the Administrative Agent has received written
application for such release from such Credit Party together with
evidence reasonably satisfactory to it that the Collateral lost, damaged
or destroyed has been or will be replaced or restored to its condition
(or by Collateral having a value at least equal to the condition of the
asset subject to the loss, damage or destruction) immediately prior to
the loss, destruction or other event giving rise to the payment of such
insurance proceeds and (B) on the date of such release no Default or
Event of Default exists. If the conditions in the preceding sentence are
not met, the Administrative Agent may or, upon the request of the
Required Lenders, shall at any time after the first Business Day
subsequent to the date 30 days after it received such insurance proceeds,
apply such insurance proceeds as a mandatory prepayment of the Credit
Party Obligations for application in accordance with the terms of Section
3.3(b)(ii). All insurance proceeds shall be subject to the security
interest of the Lenders under the Collateral Documents.
The present insurance coverage of the Borrower and its Subsidiaries is
outlined as to carrier, policy number, expiration date, type and amount
on Schedule 7.7, as Schedule 7.7 may be amended from time to time by
written notice to the Administrative Agent.
7.8 Maintenance of Property.
Each of the Credit Parties will maintain and preserve its
properties and equipment in good repair, working order and condition,
normal wear and tear excepted, and will make, or cause to be made, in
such properties and equipment from time to time all repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto
as may be needed or proper, to the extent and in the manner customary for
companies in similar businesses.
7.9 Performance of Obligations.
Each of the Credit Parties will perform in all material respects
all of its obligations under the terms of all material agreements,
indentures, mortgages, security agreements or other debt instruments to
which it is a party or by which it is bound.
7.10 Collateral.
If, subsequent to the Closing Date, a Credit Party shall (a)
acquire any real property or (b) acquire any intellectual property or any
securities or other personal property required to be delivered to the
Collateral Agent as Collateral hereunder or under any of the Collateral
Documents, or (c) enter into any Material License Agreement, the Borrower
shall immediately notify the Collateral Agent of same. Each Credit Party
shall take such action (including, but not limited to, the actions set
forth in Sections 5.1(e) and (f)), as requested by the Collateral Agent
and at its own expense, to ensure that (i) the Lenders have a perfected
Lien in all owned real property (unless the Borrower has exercised its
rights pursuant to Section 11.19) and such personal property of the
Credit Parties as set forth in the Security Agreements (whether now owned
or hereafter acquired), subject only to Permitted Liens and (ii) the
Lenders have collateral assignments of all Material License Agreements
and the right to use all intellectual property of the Credit Parties as
set forth in the Security Agreements. Each Credit Party shall adhere to
the covenants regarding the location of personal property as set forth in
the Security Agreements.
7.11 Use of Proceeds.
The Credit Parties will use the proceeds of the Loans solely (a)
to refinance or repay existing Indebtedness owing from the Credit Parties
to NBD Bank, NationsBank, N.A. and the other creditors set forth on
Schedule 7.11 (together with the amounts owed to each), (b) to assist in
financing the acquisition of Varsity Spirit Corporation (to the extent
the proceeds of the Senior Notes are insufficient with respect thereto),
(c) to pay related fees and expenses in connection with the foregoing,
(d) to provide working capital, (e) to make Capital Expenditures
permitted under this Credit Agreement and (f) for general corporate
purposes. The Credit Parties will use the Letters of Credit solely for
the purposes set forth in Section 2.2(a).
7.12 Audits/Inspections.
Upon reasonable notice and during normal business hours, each
Credit Party will permit representatives appointed by an Agent,
including, without limitation, independent accountants, agents, attorneys
and appraisers to visit and inspect such Credit Party's property,
including its books and records, its accounts receivable and inventory,
its facilities and its other business assets, and to make photocopies or
photographs thereof and to write down and record any information such
representative obtains and shall permit an Agent or its representatives
to investigate and verify the accuracy of information provided to the
Lenders, including, without limitation, the performance of collateral
valuation reviews from time to time to assess the composition of the
Borrowing Base Assets, and to discuss all such matters with the officers,
employees and representatives of the Credit Parties. The Borrower agrees
that the Collateral Agent may conduct such collateral reviews, at the
Borrower's expense, as it reasonably deems appropriate; provided that
absent an Event of Default such reviews shall not occur more frequently
than twice a year.
7.13 Additional Credit Parties.
At the time any Person becomes a Material Subsidiary of a Credit
Party, the Borrower shall so notify the Administrative Agent and promptly
thereafter (but in any event within 30 days after the date thereof) shall
cause such Person to execute a Joinder Agreement in substantially the
same form as Exhibit 7.13, (b) cause all of the capital stock of such
Person to be delivered to the Collateral Agent (together with undated
stock powers signed in blank) and pledged to the Collateral Agent
pursuant to an appropriate pledge agreement in substantially the form of
the Pledge Agreements and otherwise in a form reasonably acceptable to
the Collateral Agent, (c) pledge such of its assets to the Lenders
pursuant to a security agreement in substantially the form of the
Security Agreements and otherwise in a form reasonably acceptable to the
Collateral Agent, and collaterally assign any Material License Agreements
to which it is a party, (d) if such Person has any Subsidiaries, (i)
deliver all of the capital stock of such Subsidiaries (together with
undated stock powers signed in blank) to the Collateral Agent and (ii)
execute a pledge agreement in substantially the form of the Pledge
Agreements and otherwise in a form reasonably acceptable to the
Collateral Agent, (e) if such Person owns any real property, execute any
and all necessary mortgages, deeds of trust, deeds to secure debt or
other appropriate real estate collateral documentation in a form
substantially similar to the Mortgages, with appropriate covenants as
necessary unless the Borrower has previously exercised its rights
pursuant to Section 11.19 and (f) deliver such other documentation as the
Collateral Agent may reasonably request in connection with the foregoing,
including, without limitation, appropriate UCC-1 financing statements,
real estate title insurance policies, environmental reports, certified
resolutions and other organizational and authorizing documents of such
Person and favorable opinions of counsel to such Person (which shall
cover, among other things, the legality, validity, binding effect and
enforceability of the documentation referred to above), all in form,
content and scope reasonably satisfactory to the Agents.
7.14 Material License Agreements.
The Credit Parties will notify the Agents promptly regarding (a)
failure to comply with the terms of any Material License Agreement, (b)
failure to keep each Material License Agreement in full force and effect
and (c) any modification or amendment to any Material License Agreement
other than royalty rate increases or minimum guaranteed amounts
thereunder.
7.15 Merger.
As soon as practicable after the Closing Date, cause the merger
of Cheer Acquisition Corp. with and into Varsity Spirit Corporation, and
deliver to the Agents such evidence of same as the Agents may reasonably
request, including, without limitation, a legal opinion from counsel to
the Credit Parties.
7.16 Further Assurances Regarding Real Estate Collateral.
As soon as possible after the Effective Date but in any event no
later than July 31, 1997, the Credit Parties shall provide, or cause to
be delivered, to the Collateral Agent:
(a) ALTA or other appropriate form mortgagee title
insurance policies (the "Mortgage Policies") issued by a title
insurer reasonably satisfactory to the Collateral Agent (the
"Title Insurance Company"), in an amount reasonably satisfactory
to the Collateral Agent with respect to each Mortgaged Property,
assuring the Collateral Agent that the applicable Mortgages
create valid and enforceable mortgage liens on the respective
Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Liens which Mortgage Policies
shall be in form and substance reasonably satisfactory to the
Collateral Agent and containing such endorsements as shall be
reasonably satisfactory to the Collateral Agent and for any
other matters that the Collateral Agent may request, and
providing affirmative insurance and such reinsurance as the
Collateral Agent may request, all of the foregoing in form and
substance reasonably satisfactory to the Agents;
(b) Surveys. Maps or plats of an as-built survey of the
sites of the Mortgaged Properties certified to the Collateral
Agent and the Title Insurance Company in a manner reasonably
satisfactory to them, dated a date satisfactory to the
Collateral Agent and the Title Insurance Company by an
independent professional licensed land surveyor reasonably
satisfactory to the Collateral Agent and the Title Insurance
Company, which maps or plats and the surveys on which they are
based shall be sufficient to delete any standard printed survey
exception contained in the applicable title policy and be made
in accordance with the Minimum Standard Detail Requirements for
Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on
Surveying and Mapping in 1992, and, without limiting the
generality of the foregoing, there shall be surveyed and shown
on such maps, plats or surveys the following: (A) the locations
on such sites of all the buildings, structures and other
improvements and the established building setback lines; (B) the
lines of streets abutting the sites and width thereof; (C) all
access and other easements appurtenant to the sites necessary to
use the sites; (D) all roadways, paths, driveways, easements,
encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from
a physical inspection of the sites or otherwise known to the
surveyor; (E) any encroachments on any adjoining property by the
building structures and improvements on the sites; and (F) if
the site is described as being on a filed map, a legend relating
the survey to said map;
(c) Flood Certificates. Certification from a registered
engineer or land surveyor or other evidence reasonably
acceptable to the Collateral Agent that none of the improvements
on the Mortgaged Properties are located within any area
designated by the Director of the Federal Emergency Management
Agency as a "special flood hazard" area or if any improvements
on the Mortgaged Properties are located within a "special flood
hazard" area, evidence of a flood insurance policy from a
company and in an amount reasonably satisfactory to the
Collateral Agent for the applicable portion of the premises,
naming the Collateral Agent, for the benefit of the Lenders, as
mortgagee; and
(d) Environmental Reports. If requested by the Agents,
environmental assessment reports and related documents with
respect to all Mortgaged Properties.
SECTION 8
NEGATIVE COVENANTS
Each Credit Party hereby covenants and agrees that so long as
this Credit Agreement is in effect and until the Loans and LOC
Obligations, together with interest, fees and other obligations
hereunder, have been paid in full and the Commitments and Letters of
Credit hereunder shall have terminated:
8.1 Indebtedness.
No Credit Party will, nor will it permit any of its Subsidiaries
to, contract, create, incur, assume or permit to exist any Indebtedness,
except:
(a) Indebtedness arising under this Credit Agreement
and the other Credit Documents;
(b) the Senior Notes;
(c) the Subordinated Debt;
(d) Indebtedness existing as of the Closing Date (other
than the Senior Notes or the Subordinated Debt) as referenced in
Section 6.10 (and renewals, refinancings, replacements or
extensions thereof on terms and conditions no more favorable, in
the aggregate, to such Person than such existing Indebtedness
and in a principal amount not in excess of that outstanding as
of the date of such renewal, refinancing, replacement or
extension);
(e) Indebtedness in respect of current accounts payable
and accrued expenses incurred in the ordinary course of business
and to the extent not current, accounts payable and accrued
expenses that are subject to bona fide dispute;
(f) Indebtedness owing by one Credit Party to another
Credit Party or from a Non-Material Subsidiary to a Credit
Party;
(g) purchase money Indebtedness (including Capital
Leases) incurred by the Borrower or any of its Subsidiaries to
finance the purchase of fixed assets (including equipment);
provided that (i) the total of all such Indebtedness for all
such Persons taken together shall not exceed an aggregate
principal amount of $2,000,000 at any one time outstanding
(including any such Indebtedness referred to in subsection (c)
above); (ii) such Indebtedness when incurred shall not exceed
the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in
excess of the principal balance outstanding thereon at the time
of such refinancing;
(h) Indebtedness arising from Hedging Agreements
entered into in the ordinary course and not for speculative
purposes;
(i) Indebtedness incurred in connection with the
settlement of product liability litigation not to exceed $3
million, in the aggregate;
(j) from the Closing Date to September 30, 1999, other
unsecured Indebtedness not to exceed $2,000,000 at any one time;
and
(k) from October 1, 1999 and thereafter, other
unsecured Indebtedness if the incurrence of such Indebtedness
would not cause a violation of Section 7.2(a).
8.2 Liens.
No Credit Party will, nor will it permit its Subsidiaries to
contract, create, incur, assume or permit to exist any Lien with respect
to any of its property or assets of any kind (whether real or personal,
tangible or intangible), whether now owned or after acquired, except for
Permitted Liens.
8.3 Nature of Business.
No Credit Party will, nor will it permit its Subsidiaries to,
alter the character of its business from (a) the lines of businesses that
any Credit Party or one of its Subsidiaries was engaged in on the date
hereof, (b) the businesses engaged in by an acquired businesses; provided
that a substantial portion of their business at the time of acquisition
was related or ancillary to a Credit Party or one of its Subsidiaries
then existing lines of businesses, (c) reasonable extensions of the
businesses referred to in clause (a) and (b) above, including, without
limitation, new products and services to its markets or new distribution
channels, (d) any other lines of business or activities that are related
or ancillary to the businesses referred to in clauses (a) - (c) above,
and (e) other unrelated lines of business; provided that the Credit
Parties and their Subsidiaries may not engage in lines of business
unrelated to those engaged in on the Closing Date (including, without
limitation, the opening of retail locations by a Credit Party that does
not currently operate retail locations) that, in the aggregate, exceed
any of the following (i) 20% of total assets of the Credit Parties and
their Subsidiaries, (ii) 15% of total revenues of the Credit Parties and
their Subsidiaries or (iii) 25% total Net Income of the Credit Parties
and their Subsidiaries.
8.4 Consolidation and Merger.
No Credit Party will enter into any transaction of merger or
consolidation or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); provided that notwithstanding the foregoing
provisions of this Section 8.4, any Credit Party may be merged or
consolidated with or into the Borrower or any other Credit Party if (a)
such transaction is between the Borrower and another Credit Party, the
Borrower is the continuing or surviving corporation; (b) the
Administrative Agent is given prior written notice of such action, and
the Credit Parties execute and deliver such documents, instruments and
certificates as the Collateral Agent may request in order to maintain the
perfection and priority of the Liens on the assets of the Credit Parties;
and (c) after giving effect thereto no Default or Event of Default
exists.
8.5 Sale or Lease of Assets.
No Credit Party will, nor will it permit its Subsidiaries to,
convey, sell, lease, transfer or otherwise dispose of, in one transaction
or a series of transactions, all or any part of its business or assets
whether now owned or hereafter acquired, including, without limitation,
inventory, receivables, equipment, real property interests (whether owned
or leasehold), and securities, other than (a) any inventory sold or
otherwise disposed of in the ordinary course of business; (b) the sale,
lease, transfer or other disposal by a Credit Party (other than the
Borrower) of any or all of its assets to the Borrower or to another
Credit Party; (c) obsolete, slow-moving, idle or worn-out assets no
longer used or useful in its business; (d) the transfer of assets which
constitute a Permitted Investment; (e) the issuance of capital stock by
the Borrower; (f) sales of Unrestricted Margin Stock for fair market
value in cash (provided that notwithstanding Section 8.7, the proceeds of
such sales may only be invested in cash and Cash Equivalents) and (g)
other sales of assets not to exceed $1,000,000, in the aggregate, during
the term of this Agreement.
Upon a sale of assets permitted by this Section 8.5(c) or (g),
the Collateral Agent shall promptly deliver to the Borrower, upon the
Borrower's request and at the Borrower's expense, such documentation as
is reasonably necessary to evidence the release of the Lenders' security
interest in such assets, including, without limitation, amendments or
terminations of UCC financing statements.
8.6 Sale Leasebacks.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly become or remain liable as lessee or as guarantor
or other surety with respect to any lease of any property (whether real
or personal or mixed), whether now owned or hereafter acquired, (a) which
such Credit Party has sold or transferred or is to sell or transfer to
any other Person other than a Credit Party or (b) which such Credit Party
intends to use for substantially the same purpose as any other property
which has been sold or is to be sold or transferred by such Credit Party
to any Person in connection with such lease.
8.7 Advances, Investments and Loans.
No Credit Party will, nor will it permit its Subsidiaries to,
make any Investments except for Permitted Investments.
8.8 Restricted Payments.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly, (a) declare or pay any dividends or make any
other distribution upon any shares of its capital stock of any class or
(b) purchase, redeem or otherwise acquire or retire or make any
provisions for redemption, acquisition or retirement of any shares of its
capital stock of any class or any warrants or options to purchase any
such shares; provided that (i) any Subsidiary of the Borrower may pay
dividends to its parent and (ii) as long as no Event of Default exists or
is caused as a result thereof, the Borrower may make purchases of (A) its
capital stock from former or departing employees and (B) its warrants
from NBD Bank and M.L.C. Partners Limited Partnership.
8.9 Transactions with Affiliates.
Other than (a) transactions between Credit Parties or (b)
non-material transactions between Credit Parties and their Subsidiaries
otherwise permitted by 8.7, no Credit Party will, nor will it permit its
Subsidiaries to, enter into any transaction or series of transactions,
whether or not in the ordinary course of business, with any officer,
director, shareholder, Subsidiary or Affiliate other than on terms and
conditions substantially as favorable as would be obtainable in a
comparable arm's-length transaction with a Person other than an officer,
director, shareholder, Subsidiary or Affiliate.
8.10 Fiscal Year; Organizational Documents.
No Credit Party will, nor will it permit its Subsidiaries to,
(a) change its fiscal year or (b) in any manner that would reasonably be
likely to adversely affect the rights of the Lenders, change its articles
or certificate of incorporation or its bylaws.
8.11 Senior Notes/Subordinated Debt.
No Credit Party will, nor will it permit its Subsidiaries to,
(a) make or offer to make any voluntary or optional principal payments
with respect to the Senior Notes or Subordinated Debt, (b) redeem or
offer to redeem any of the Senior Notes or Subordinated Debt, or (c)
deposit any funds intended to discharge or defease any or all of the
Senior Notes or Subordinated Debt. Neither the terms of the Senior Notes
nor the Subordinated Debt shall be amended or modified in any manner
without the prior written consent of the Required Lenders.
8.12 No Limitations.
No Credit Party will, nor will it permit its Subsidiaries to,
directly or indirectly, create or otherwise cause, incur, assume, suffer
or permit to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Person to (a) pay
dividends or make any other distribution on any of such Person's capital
stock, (b) pay any Indebtedness owed to the Borrower or any other Credit
Party, (c) make loans or advances to any other Credit Party or (d)
transfer any of its property to any other Credit Party, except for
encumbrances or restrictions existing under or by reason of (i) customary
non-assignment or net worth provisions in any lease governing a leasehold
interest, (ii) any agreement or other instrument of a Person existing at
the time it becomes a Subsidiary of the Borrower; provided that such
encumbrance or restriction is not applicable to any other Person, or any
property of any other Person, other than such Person becoming a
Subsidiary of the Borrower and was not entered into in contemplation of
such Person becoming a Subsidiary of the Borrower, and (iii) this Credit
Agreement and the other Credit Documents.
8.13 No Other Negative Pledges.
No Credit Party will, nor will it permit its Subsidiaries to,
enter into, assume or become subject to any agreement prohibiting or
otherwise restricting the creation or assumption of any Lien upon its
properties or assets, whether now owned or hereafter acquired, or
requiring the grant of any security for such obligation if security is
given for some other obligation.
SECTION 9
EVENTS OF DEFAULT
9.1 Events of Default.
An Event of Default shall exist upon the occurrence of any of
the following specified events (each an "Event of Default"):
(a) Payment. Any Credit Party shall default in the
payment (i) when due of any principal of any of the Loans or any
reimbursement obligation arising from drawings under Letters of
Credit or (ii) within three Business Days of when due of any
interest on the Loans or any fees or other amounts owing
hereunder, under any of the other Credit Documents or in
connection herewith.
(b) Representations. Any representation, warranty or
statement made or deemed to be made by any Credit Party herein,
in any of the other Credit Documents, or in any statement or
certificate delivered or required to be delivered pursuant
hereto or thereto shall prove untrue in any material respect on
the date as of which it was made or deemed to have been made.
(c) Covenants. Any Credit Party shall:
(i) default in the due performance or
observance of any term, covenant or agreement contained
in Sections 7.2, 7.11, 7.12, or 8.1 through 8.13
inclusive; or
(ii) default in the due performance or
observance by it of any term, covenant or agreement
contained in Sections 7.1 (other than Section 7.1(c))
and such default shall continue unremedied for a period
of ten days after notice thereof is given by an Agent;
or
(iii) default in the due performance or
observance by it of any term, covenant or agreement
contained in Section 7.1(c) and such default shall
continue unremedied for a period of two Business Days
after notice thereof is given by an Agent; or
(iv) default in the due performance or
observance by it of any term, covenant or agreement
(other than those referred to in subsections (a), (b)
or (c)(i), (ii) or (iii) of this Section 9.1) contained
in this Credit Agreement and such default shall
continue unremedied for a period of at least 30 days
after the earlier of a Responsible Officer becoming
aware of such default or notice thereof given by an
Agent.
(d) Other Credit Documents. (i) Any Credit Party shall
default in the due performance or observance of any term,
covenant or agreement in any of the other Credit Documents and
such default shall continue unremedied for a period of at least
30 days after the earlier of a Responsible Officer becoming
aware of such default or notice thereof given by the Agent, or
(ii) any Credit Document shall fail to be in full force and
effect or any Credit Party shall so assert or any Credit
Document shall fail to give the Agents and/or the Lenders the
security interests, liens, rights, powers and privileges
purported to be created thereby.
(e) Guaranties. The guaranty given by the Credit
Parties hereunder or by any Additional Credit Party hereafter or
any provision thereof shall cease to be in full force and
effect, or any guarantor thereunder or any Person acting by or
on behalf of such guarantor shall deny or disaffirm such
Guarantor's obligations under such guaranty.
(f) Bankruptcy, etc. The occurrence of any of the
following with respect to the Borrower or any of its
Subsidiaries (i) a court or governmental agency having
jurisdiction in the premises shall enter a decree or order for
relief in respect of the Borrower or any of its Subsidiaries in
an involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or appoint a
receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Borrower or any of its Subsidiaries
or for any substantial part of its property or ordering the
winding up or liquidation of its affairs; or (ii) an involuntary
case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect is commenced against the
Borrower or any of its Subsidiaries and such petition remains
unstayed and in effect for a period of 60 consecutive days; or
(iii) the Borrower or any of its Subsidiaries shall commence a
voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or consent to the
entry of an order for relief in an involuntary case under any
such law, or consent to the appointment or taking possession by
a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or any
substantial part of its property or make any general assignment
for the benefit of creditors; or (iv) the Borrower or any of its
Subsidiaries shall admit in writing its inability to pay its
debts generally as they become due or any action shall be taken
by such Person in furtherance of any of the aforesaid purposes.
(g) Defaults under Other Agreements. With respect to
any Indebtedness (other than Indebtedness outstanding under this
Credit Agreement) of the Borrower or any of its Subsidiaries in
an aggregate principal amount in excess of $2,000,000,
including, without limitation, the Senior Notes or the
Subordinated Debt (i) a Credit Party shall (A) default in any
payment (beyond the applicable grace period with respect
thereto, if any) with respect to any such Indebtedness, or (B)
default (after giving effect to any applicable grace period) in
the observance or performance relating to such Indebtedness or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event or condition shall occur or
condition exist, the effect of which default or other event or
condition is to cause, or permit, the holder or holders of such
Indebtedness (or trustee or agent on behalf of such holders) to
cause (determined without regard to whether any notice or lapse
of time is required) any such Indebtedness to become due prior
to its stated maturity; or (ii) any such Indebtedness shall be
declared due and payable, or required to be prepaid other than
by a regularly scheduled required prepayment prior to the stated
maturity thereof; or (iii) any such Indebtedness shall mature
and remain unpaid.
(h) Judgments. One or more judgments, orders, or
decrees shall be entered against any one or more of the Credit
Parties and its Subsidiaries involving a liability of $1,000,000
or more, in the aggregate, (to the extent not paid or covered by
insurance provided by a carrier who has acknowledged coverage)
and such judgments, orders or decrees (i) are the subject of any
enforcement proceeding commenced by any creditor or (ii) shall
continue unsatisfied, undischarged and unstayed for a period
ending on the first to occur of (A) the last day on which such
judgment, order or decree becomes final and unappealable or (B)
60 days.
(i) ERISA. The occurrence of any of the following
events or conditions: (A) any "accumulated funding deficiency,"
as such term is defined in Section 302 of ERISA and Section 412
of the Code, whether or not waived, shall exist with respect to
any Plan, or any lien shall arise on the assets of the Borrower
or any of its Subsidiaries or any ERISA Affiliate in favor of
the PBGC or a Plan; (B) a Termination Event shall occur with
respect to a Single Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; (C)
a Termination Event shall occur with respect to a Multiemployer
Plan or Multiple Employer Plan, which is, in the reasonable
opinion of the Administrative Agent, likely to result in (i) the
termination of such Plan for purposes of Title IV of ERISA, or
(ii) the Borrower or any of its Subsidiaries or any ERISA
Affiliate incurring any liability in connection with a
withdrawal from, reorganization of (within the meaning of
Section 4241 of ERISA), or insolvency (within the meaning of
Section 4245 of ERISA) of such Plan; or (D) any prohibited
transaction (within the meaning of Section 406 of ERISA or
Section 4975 of the Code) or breach of fiduciary responsibility
shall occur which may subject the Borrower or any of its
Subsidiaries or any ERISA Affiliate to any liability under
Sections 406, 409, 502(i), or 502(l) of ERISA or Section 4975 of
the Code, or under any agreement or other instrument pursuant to
which the Borrower or any of its Subsidiaries or any ERISA
Affiliate has agreed or is required to indemnify any person
against any such liability.
(j) Ownership. There shall occur a Change of Control.
(k) Subordinated Debt. (i) Any Governmental Authority
with applicable jurisdiction determines that the Lenders are not
holders of Senior Indebtedness (as defined in the documentation
evidencing the Subordinated Debt) or Senior Debt (as defined in
the Subordinated Secured Note) or (ii) the subordination
provisions creating the Subordinated Debt or the Subordinated
Secured Note shall, in whole or in part, terminate, cease to be
effective or cease to be legally valid, binding and enforceable
as to any holder of the Subordinated Debt or the Subordinated
Secured Note.
(l) Borrowing Base Assets. The sum of the amount of
Revolving Loans outstanding plus LOC Obligations outstanding, as
of the date of the Borrowing Base Report, shall exceed the
Borrowing Base Assets, as determined on two consecutive
Borrowing Base Reports delivered by the Borrower.
9.2 Acceleration; Remedies.
Upon the occurrence of an Event of Default, and at any time
thereafter unless and until such Event of Default has been waived in
writing by the Required Lenders (or the Lenders as may be required
hereunder), the Administrative Agent shall, (x) upon the request and
direction of the Required Lenders or (y) on the day after an Event of
Default has occurred and been continuing for 90 days, unless otherwise
consented to by all Lenders, by written notice to the Borrower, take the
following actions without prejudice to the rights of the Agents or any
Lender to enforce its claims against the Credit Parties, except as
otherwise specifically provided for herein:
(a) Termination of Commitments. Declare the Commitments
terminated whereupon the Commitments shall be immediately
terminated.
(b) Acceleration of Loans. Declare the unpaid principal
of and any accrued interest in respect of all Loans, any
reimbursement obligations arising from drawings under Letters of
Credit and any and all other indebtedness or obligations of any
and every kind owing by a Credit Party to any of the Lenders
hereunder to be due whereupon the same shall be immediately due
and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Credit
Parties.
(c) Cash Collateral. Direct the Borrower to pay (and
the Borrower agrees that upon receipt of such notice, or upon
the occurrence of an Event of Default under Section 9.1(f), they
will immediately pay) to the Administrative Agent additional
cash, to be held by the Administrative Agent, for the benefit of
the Lenders, in a cash collateral account as additional security
for the LOC Obligations in respect of subsequent drawings under
all then outstanding Letters of Credit in an amount equal to the
maximum aggregate amount which may be drawn under all Letters of
Credits then outstanding.
(d) Enforcement of Rights. Enforce any and all rights
and interests created and existing under the Credit Documents,
including, without limitation, all rights and remedies existing
under the Collateral Documents, all rights and remedies against
a Guarantor and all rights of set-off.
Notwithstanding the foregoing, if an Event of Default specified in
Section 9.1(f) shall occur, then the Commitments shall automatically
terminate and all Loans, all reimbursement obligations under Letters of
Credit, all accrued interest in respect thereof, all accrued and unpaid
fees and other indebtedness or obligations owing to the Lenders hereunder
shall immediately become due and payable without the giving of any notice
or other action by the Agents or the Lenders, which notice or other
action is expressly waived by the Credit Parties.
Notwithstanding the fact that enforcement powers reside primarily with
the Administrative Agent, each Lender has, to the extent permitted by
law, a separate right of payment and shall be considered a separate
"creditor" holding a separate "claim" within the meaning of Section
101(5) of the Bankruptcy Code or any other insolvency statute.
9.3 Allocation of Payments After Event of Default.
Notwithstanding any other provisions of this Credit Agreement,
after the occurrence and during the continuance of an Event of Default,
all amounts collected or received by an Agent or any Lender on account of
amounts outstanding under any of the Credit Documents or in respect of
the Collateral shall be paid over or delivered as follows:
FIRST, to the payment of all reasonable out-of-pocket
costs and expenses (including without limitation reasonable
attorneys' fees) of the Agents in connection with enforcing the
rights of the Lenders under the Credit Documents and any
protective advances made by the Agents with respect to the
Collateral under or pursuant to the terms of the Collateral
Documents;
SECOND, to payment of any fees owed to an Agent or a
Issuing Lender;
THIRD, to the payment of all reasonable out-of-pocket
costs and expenses, (including, without limitation, reasonable
attorneys' fees) of each of the Lenders in connection with
enforcing its rights under the Credit Documents;
FOURTH, to the payment of all accrued fees and interest
payable to the Lenders hereunder;
FIFTH, to the payment of the outstanding principal
amount of the Loans and unreimbursed drawings under Letters of
Credit, to the payment or cash collateralization of the
outstanding LOC Obligations, pro rata as set forth below;
SIXTH, to any principal amounts outstanding under
Hedging Agreements, pro rata, as set forth below;
SEVENTH, to all other obligations which shall have
become due and payable under the Credit Documents and not repaid
pursuant to clauses "FIRST" through "SIXTH" above; and
EIGHTH, to the payment of the surplus, if any, to
whoever may be lawfully entitled to receive such surplus.
In carrying out the foregoing, (a) amounts received shall be applied in
the numerical order provided until exhausted prior to application to the
next succeeding category; (b) each of the Lenders shall receive an amount
equal to its pro rata share (based on the proportion that the then
outstanding Loans, LOC Obligations and obligations under Hedging
Agreements held by such Lender bears to the aggregate then outstanding
Loans, LOC Obligations and obligations under Hedging Agreements) of
amounts available to be applied pursuant to clauses "THIRD", "FOURTH,"
"FIFTH," "SIXTH" and "SEVENTH" above; and (c) to the extent that any
amounts available for distribution pursuant to clause "FIFTH" above are
attributable to the issued but undrawn amount of outstanding Letters of
Credit, such amounts shall be held by the Collateral Agent in a cash
collateral account and applied (x) first, to reimburse the Issuing Lender
from time to time for any drawings under such Letters of Credit and (y)
then, following the expiration of all Letters of Credit, to all other
obligations of the types described in clauses "FIFTH," "SIXTH" and
"SEVENTH" above in the manner provided in this Section 9.3.
SECTION 10
AGENCY PROVISIONS
10.1 Appointment.
Each Lender hereby designates and appoints NBD Bank as
Administrative Agent and Collateral Agent and NationsBank, N.A. as
Documentation Agent of such Lender to act as specified herein and the
other Credit Documents, and each such Lender hereby authorizes the
Agents, as the agents for such Lender, to take such action on its behalf
under the provisions of this Credit Agreement and the other Credit
Documents and to exercise such powers and perform such duties as are
expressly delegated by the terms hereof and of the other Credit
Documents, together with such other powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary elsewhere herein
and in the other Credit Documents, the Agents shall not have any duties
or responsibilities, except those expressly set forth herein and therein,
or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be
read into this Credit Agreement or any of the other Credit Documents, or
shall otherwise exist against the Agents. The provisions of this Section
are solely for the benefit of the Agents and the Lenders and none of the
Credit Parties shall have any rights as a third party beneficiary of the
provisions hereof. In performing its functions and duties under this
Credit Agreement and the other Credit Documents, each Agent shall act
solely as an agent of the Lenders and does not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust
with or for any Credit Party.
10.2 Delegation of Duties.
An Agent may execute any of its duties hereunder or under the
other Credit Documents by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining
to such duties. An Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
10.3 Exculpatory Provisions.
Neither the Agents nor any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates shall be liable for
any action lawfully taken or omitted to be taken by it or such Person
under or in connection herewith or in connection with any of the other
Credit Documents (except for its or such Person's own gross negligence or
willful misconduct) or responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by any
of the Credit Parties contained herein or in any of the other Credit
Documents or in any certificate, report, document, financial statement or
other written or oral statement referred to or provided for in, or
received by an Agent under or in connection herewith or in connection
with the other Credit Documents, or enforceability or sufficiency
therefor of any of the other Credit Documents, or for any failure of the
Borrower to perform its obligations hereunder or thereunder. The Agents
shall not be responsible to any Lender for the effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of
this Credit Agreement, or any of the other Credit Documents or for any
representations, warranties, recitals or statements made herein or
therein or made by the Borrower or any Credit Party in any written or
oral statement or in any financial or other statements, instruments,
reports, certificates or any other documents in connection herewith or
therewith furnished or made by an Agent to the Lenders or by or on behalf
of the Credit Parties to the Agents or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements contained herein
or therein or as to the use of the proceeds of the Loans or the use of
the Letters of Credit or of the existence or possible existence of any
Default or Event of Default or to inspect the properties, books or
records of the Credit Parties. The Agents are not trustees for the
Lenders and owe no fiduciary duty to the Lenders.
10.4 Reliance on Communications.
The Agents shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, telecopy,
telex or teletype message, statement, order or other document or
conversation 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 (including, without limitation, counsel to
any of the Credit Parties, independent accountants and other experts
selected by the Agents with reasonable care). The Agents may deem and
treat the Lenders as the owner of its interests hereunder for all
purposes unless a written notice of assignment, negotiation or transfer
thereof shall have been filed with the Administrative Agent in accordance
with Section 11.3(b). The Agents shall be fully justified in failing or
refusing to take any action under this Credit Agreement or under any of
the other Credit Documents unless it shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall
first be indemnified to its 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. The Agents shall in all cases be
fully protected in acting, or in refraining from acting, hereunder or
under any of the other Credit Documents in accordance with a request of
the Required Lenders (or to the extent specifically provided in Section
11.6, all the Lenders) and such request and any action taken or failure
to act pursuant thereto shall be binding upon all the Lenders (including
their successors and assigns).
10.5 Notice of Default.
An Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default hereunder unless such Agent
has received notice from a Lender or a Credit Party referring to the
Credit Document, describing such Default or Event of Default and stating
that such notice is a "notice of default." In the event that the
Administrative Agent receives such a notice, the Administrative Agent
shall give prompt notice thereof to the Lenders. The Administrative Agent
shall take such action with respect to such Default or Event of Default
as shall be reasonably directed by the Required Lenders.
10.6 Non-Reliance on Agents and Other Lenders.
Each Lender expressly acknowledges that neither the Agents nor
any of their officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no
act by the Agents or any affiliate thereof hereinafter taken, including
any review of the affairs of any Credit Party, shall be deemed to
constitute any representation or warranty by the Agents to any Lender.
Each Lender represents to the Agents that it has, independently and
without reliance upon the Agents or any other Lender, and based on such
documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Credit Parties and made its own decision to make its Loans
hereunder and enter into this Credit Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Agents or any other Lender, and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Credit Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, assets, operations,
property, financial and other conditions, prospects and creditworthiness
of the Credit Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Agents shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, operations, assets, property, financial or other conditions,
prospects or creditworthiness of the Credit Parties which may come into
the possession of the Agents or any of their officers, directors,
employees, agents, attorneys-in-fact or affiliates.
10.7 Indemnification.
The Lenders agree to indemnify each Agent in its capacity as
such (to the extent not reimbursed by the Borrower and without limiting
the obligation of the Borrower to do so), ratably according to their
respective Commitments (or if the Commitments have expired or been
terminated, in accordance with the respective principal amounts of
outstanding Loans and Participation Interest of the Lenders), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including without limitation at any
time following payment in full of the Credit Party Obligations) be
imposed on, incurred by or asserted against an Agent in its capacity as
such in any way relating to or arising out of this Credit Agreement or
the other Credit Documents or any documents contemplated by or referred
to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by an Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the gross negligence or willful misconduct of an Agent. If
any indemnity furnished to an Agent for any purpose shall, in the opinion
of such Agent, be insufficient or become impaired, such Agent may call
for additional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is furnished. The
agreements in this Section shall survive the payment of the Credit Party
Obligations and all other amounts payable hereunder and under the other
Credit Documents.
10.8 Agents in Their Individual Capacity.
Each Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Borrower or
any other Credit Party as though such Agent were not an Agent hereunder.
With respect to the Loans made and Letters of Credit issued and all
obligations owing to it, an Agent shall have the same rights and powers
under this Credit Agreement as any Lender and may exercise the same as
though they were not an Agent, and the terms "Lender" and "Lenders" shall
include each Agent in its individual capacity.
10.9 Successor Agent.
Any Agent may, at any time, resign upon 20 days written notice
to the Lenders. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor Agent. If no successor Agent shall
have been so appointed by the Required Lenders, and shall have accepted
such appointment, within 45 days after the notice of resignation, then
the retiring Agent shall select a successor Agent provided such successor
is a Lender hereunder or a commercial bank organized under the laws of
the United States of America or of any State thereof and has a combined
capital and surplus of at least $400,000,000. Upon the acceptance of any
appointment as an Agent hereunder by a successor, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations as an Agent, as
appropriate, under this Credit Agreement and the other Credit Documents
and the provisions of this Section 10.9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was an Agent
under this Credit Agreement.
SECTION 11
MISCELLANEOUS
11.1 Notices.
Except as otherwise expressly provided herein, all notices and
other communications shall have been duly given and shall be effective
(a) when delivered, (b) when transmitted via telecopy (or other facsimile
device) to the number set out below, (c) the Business Day following the
day on which the same has been delivered prepaid to a reputable national
overnight air courier service, or (d) the third Business Day following
the day on which the same is sent by certified or registered mail,
postage prepaid, in each case to the respective parties at the address or
telecopy numbers set forth on Schedule 11.1, or at such other address as
such party may specify by written notice to the other parties hereto.
11.2 Right of Set-Off.
In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such
rights, upon the occurrence of an Event of Default and the commencement
of remedies described in Section 9.2, each Lender is authorized at any
time and from time to time, without presentment, demand, protest or other
notice of any kind (all of which rights being hereby expressly waived),
to set-off and to appropriate and apply any and all deposits (general or
special) and any other indebtedness at any time held or owing by such
Lender (including, without limitation, branches, agencies or Affiliates
of such Lender wherever located) to or for the credit or the account of
any Credit Party against obligations and liabilities of such Credit Party
to the Lenders hereunder, under the Notes, the other Credit Documents or
otherwise, irrespective of whether the Administrative Agent or the
Lenders shall have made any demand hereunder and although such
obligations, liabilities or claims, or any of them, may be contingent or
unmatured, and any such set-off shall be deemed to have been made
immediately upon the occurrence of an Event of Default even though such
charge is made or entered on the books of such Lender subsequent thereto.
The Credit Parties hereby agree that any Person purchasing a
participation in the Loans and Commitments hereunder pursuant to Section
11.3(c) or 3.8 may exercise all rights of set-off with respect to its
participation interest as fully as if such Person were a Lender
hereunder.
11.3 Benefit of Agreement.
(a) Generally. This Credit Agreement shall be binding
upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto;
provided that none of the Credit Parties may assign and transfer
any of its interests (except as permitted by Section 8.4 or 8.5)
without the prior written consent of the Lenders; and provided
further that the rights of each Lender to transfer, assign or
grant participations in its rights and/or obligations hereunder
shall be limited as set forth below in subsections (b) and (c)
of this Section 11.3. Notwithstanding the above (including
anything set forth in subsections (b) and (c) of this Section
11.3), nothing herein shall restrict, prevent or prohibit any
Lender from (A) pledging its Loans hereunder to a Federal
Reserve Bank in support of borrowings made by such Lender from
such Federal Reserve Bank, or (B) granting assignments or
participations in such Lender's Loans and/or Commitments
hereunder to its parent company and/or to any Affiliate of such
Lender or to any existing Lender or Affiliate thereof.
(b) Assignments. Each Lender may, with the prior
written consent of the Borrower and the Agents (provided that no
consent of the Borrower shall be required during the existence
and continuation of an Event of Default), which consent shall
not be unreasonably withheld or delayed, assign all or a portion
of its rights and obligations hereunder pursuant to an
assignment agreement substantially in the form of Exhibit 11.3
to one or more Eligible Assignees; provided that (i) any such
assignment shall be in a minimum aggregate amount of $5,000,000
of the Commitments and in integral multiples of $1,000,000 above
such amount (or the remaining amount of Commitments held by such
Lender), (ii) each such assignment shall be of a constant, not
varying, percentage of all of the assigning Lender's rights and
obligations under the Commitment being assigned and (iii) an
Agent may not, in the aggregate, (unless there exists an Event
of Default) assign more than 50% of its original Commitment as
of the Closing Date. Any assignment hereunder shall be effective
upon satisfaction of the conditions set forth above and delivery
to the Administrative Agent of a duly executed assignment
agreement together with a transfer fee of $3,500 payable to the
Administrative Agent for its own account. Upon the effectiveness
of any such assignment, the assignee shall become a "Lender" for
all purposes of this Credit Agreement and the other Credit
Documents and, to the extent of such assignment, the assigning
Lender shall be relieved of its obligations hereunder to the
extent of the Loans and Commitment components being assigned.
Along such lines the Borrower agrees that upon notice of any
such assignment and surrender of the appropriate Note or Notes,
it will promptly provide to the assigning Lender and to the
assignee separate promissory notes in the amount of their
respective interests substantially in the form of the original
Note or Notes (but with notation thereon that it is given in
substitution for and replacement of the original Note or Notes
or any replacement notes thereof).
By executing and delivering an assignment agreement in
accordance with this Section 11.3(b), the assigning Lender
thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties
hereto as follows: (i) such assigning Lender warrants that it is
the legal and beneficial owner of the interest being assigned
thereby free and clear of any adverse claim and the assignee
warrants that it is an Eligible Assignee; (ii) except as set
forth in clause (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Credit Agreement, any of the other
Credit Documents or any other instrument or document furnished
pursuant hereto or thereto, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Credit Agreement, any of the other Credit Documents or any
other instrument or document furnished pursuant hereto or
thereto or the financial condition of any Credit Party or the
performance or observance by any Credit Party of any of its
obligations under this Credit Agreement, any of the other Credit
Documents or any other instrument or document furnished pursuant
hereto or thereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such assignment
agreement; (iv) such assignee confirms that it has received a
copy of this Credit Agreement, the other Credit Documents and
such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to
enter into such assignment agreement; (v) such assignee will
independently and without reliance upon the Agents, such
assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Credit Agreement and the other Credit
Documents; (vi) such assignee appoints and authorizes the Agents
to take such action on its behalf and to exercise such powers
under this Credit Agreement or any other Credit Document as are
delegated to the Agents by the terms hereof or thereof, together
with such powers as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with
their terms all the obligations which by the terms of this
Credit Agreement and the other Credit Documents are required to
be performed by it as a Lender.
(c) Participations. Each Lender may sell, transfer,
grant or assign participations in all or any part of such
Lender's interests and obligations hereunder; provided that (i)
such selling Lender shall remain a "Lender" for all purposes
under this Credit Agreement (such selling Lender's obligations
under the Credit Documents remaining unchanged) and the
participant shall not constitute a Lender hereunder, (ii) no
such participant shall have, or be granted, rights to approve
any amendment or waiver relating to this Credit Agreement or the
other Credit Documents except to the extent any such amendment
or waiver would (A) reduce the principal of or rate of interest
on or fees in respect of any Loans in which the participant is
participating or increase any Commitments with respect thereto,
(B) postpone the date fixed for any payment of principal
(including the extension of the final maturity of any Loan or
the date of any mandatory prepayment), interest or fees in which
the participant is participating, or (C) release all or
substantially all of the collateral or guaranties (except as
expressly provided in the Credit Documents) supporting any of
the Loans or Commitments in which the participant is
participating, (iii) sub-participations by the participant
(except to an Affiliate, parent company or Affiliate of a parent
company of the participant) shall be prohibited and (iv) any
such participations shall be in a minimum aggregate amount of
$5,000,000 of the Commitments and in integral multiples of
$1,000,000 in excess thereof. In the case of any such
participation, the participant shall not have any rights under
this Credit Agreement or the other Credit Documents (the
participant's rights against the selling Lender in respect of
such participation to be those set forth in the participation
agreement with such Lender creating such participation) and all
amounts payable by the Borrower hereunder shall be determined as
if such Lender had not sold such participation; provided,
however, that such participant shall be entitled to receive
additional amounts under Sections 3.9, 3.12, 3.13 and 3.14 to
the same extent that the Lender from which such participant
acquired its participation would be entitled to the benefit of
such cost protection provisions.
11.4 No Waiver; Remedies Cumulative.
No failure or delay on the part of an Agent or any Lender in
exercising any right, power or privilege hereunder or under any other
Credit Document and no course of dealing between the Borrower or any
Credit Party and the Agents or any Lender shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Credit Document preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder or thereunder. The rights and remedies provided
herein are cumulative and not exclusive of any rights or remedies which
the Agents or any Lender would otherwise have. No notice to or demand on
any Credit Party in any case shall entitle any Credit Party to any other
or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agents or the Lenders to any
other or further action in any circumstances without notice or demand.
11.5 Payment of Expenses; Indemnification.
The Credit Parties agree to: (a) pay all reasonable
out-of-pocket costs and expenses of (i) the Documentation Agent in
connection with (A) the negotiation, preparation, execution and delivery
and administration of this Credit Agreement and the other Credit
Documents and the documents and instruments referred to therein
(including, without limitation, the reasonable fees and expenses of Moore
& Van Allen, special counsel to the Documentation Agent and the fees and
expenses of counsel for the Documentation Agent in connection with
collateral issues), and (B) any amendment, waiver or consent relating
hereto and thereto including, but not limited to, any such amendments,
waivers or consents resulting from or related to any work-out,
renegotiation or restructure relating to the performance by the Credit
Parties under this Credit Agreement and (ii) the Agents and the Lenders
in connection with (A) enforcement of the Credit Documents and the
documents and instruments referred to therein, including, without
limitation, in connection with any such enforcement, the reasonable fees
and disbursements of counsel for the Agents and each of the Lenders, and
(B) any bankruptcy or insolvency proceeding of a Credit Party of any of
its Subsidiaries and (b) indemnify each Agent, and each Lender, its
officers, directors, employees, representatives and agents from and hold
each of them harmless against any and all losses, liabilities, claims,
damages or expenses incurred by any of them as a result of, or arising
out of, or in any way related to, or by reason of, any investigation,
litigation or other proceeding (whether or not any Agent, or Lender is a
party thereto) related to (i) the entering into and/or performance of any
Credit Document or the use of proceeds of any Loans (including other
extensions of credit) hereunder or the consummation of any other
transactions contemplated in any Credit Document, including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding
(but excluding any such losses, liabilities, claims, damages or expenses
to the extent incurred by reason of gross negligence or willful
misconduct on the part of the Person to be indemnified), (ii) any
Environmental Claim and (iii) any claims for Non-Excluded Taxes.
11.6 Amendments, Waivers and Consents.
Neither this Credit Agreement nor any other Credit Document nor
any of the terms hereof or thereof may be amended, changed, waived,
discharged or terminated unless such amendment, change, waiver, discharge
or termination is in writing and signed by the Required Lenders and the
then Credit Parties; provided that no such amendment, change, waiver,
discharge or termination shall without the consent of each Lender:
(a) extend the Revolving Loan Maturity Date or postpone
or extend the time for any payment or prepayment of principal;
(b) reduce the rate or extend the time of payment of
interest (other than as a result of waiving the applicability of
any post-default increase in interest rates) thereon or fees
hereunder;
(c) reduce or waive the principal amount of any Loan;
(d) increase or extend the Commitment of a Lender or
the total Commitments over the amount thereof in effect (it
being understood and agreed that a waiver of any Default or
Event of Default or a waiver of any mandatory reduction in the
Commitments shall not constitute a change in the terms of any
Commitment of any Lender);
(e) release all or substantially all of the Collateral
securing the Credit Party Obligations hereunder (provided that
the Collateral Agent may, without consent from any other Lender,
release any Collateral that is sold or transferred by a Credit
Party in conformance with Section 8.5);
(f) release the Borrower from its obligations or
release all or substantially all of the other Credit Parties
from their respective obligations under the Credit Documents;
(g) amend, modify or waive any provision of this
Section or Section 3.4(a), 3.4(b)(i), 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 9.1(a), 9.1(l), 11.2, 11.3 or 11.5;
(h) reduce any percentage specified in, or otherwise
modify, the definition of Required Lenders; or
(i) consent to the assignment or transfer by the
Borrower of any of its rights and obligations under (or in
respect of) the Credit Documents.
Notwithstanding the fact that the consent of all the Lenders is required
in certain circumstances as set forth above, (x) each Lender is entitled
to vote as such Lender sees fit on any reorganization plan that affects
the Loans or the Letters of Credit, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersedes the
unanimous consent provisions set forth herein and (y) the Required
Lenders may consent to allow a Credit Party to use cash collateral in the
context of a bankruptcy or insolvency proceeding.
11.7 Counterparts.
This Credit Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
It shall not be necessary in making proof of this Credit Agreement to
produce or account for more than one such counterpart. Delivery of
executed counterparts by telecopy shall be as effective as an original
and shall constitute a representation that an original will be delivered.
11.8 Headings.
The headings of the sections and subsections hereof are provided
for convenience only and shall not in any way affect the meaning or
construction of any provision of this Credit Agreement.
11.9 Defaulting Lender.
Each Lender understands and agrees that if such Lender is a
Defaulting Lender then notwithstanding the provisions of Section 11.6 it
shall not be entitled to vote on any matter requiring the consent of the
Required Lenders or to object to any matter requiring the consent of all
the Lenders; provided, however, that all other benefits and obligations
under the Credit Documents shall apply to such Defaulting Lender.
11.10 Survival of Indemnification and Representations and
Warranties.
All indemnities set forth herein and all representations and
warranties made herein shall survive the execution and delivery of this
Credit Agreement, the making of the Loans, the issuance of the Letters of
Credit and the repayment of the Loans, LOC Obligations and other
obligations and the termination of the Commitments hereunder.
11.11 Governing Law; Jurisdiction.
(a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND
THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal
action or proceeding with respect to this Agreement or any other
Credit Document may be brought in the courts of the State of
Michigan or of the United States for the Eastern District of
Michigan, and, by execution and delivery of this Credit
Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and
unconditionally, the jurisdiction of such courts. Each Credit
Party further irrevocably consents to the service of process out
of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to it at the address for
notices pursuant to Section 11.1, such service to become
effective 15 days after such mailing. Nothing herein shall
affect the right of a Lender to serve process in any other
manner permitted by law or to commence legal proceedings or to
otherwise proceed against a Credit Party in any other
jurisdiction. Each Credit Party agrees that a final judgment in
any action or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other
manner provided by law; provided that nothing in this Section
11.11(a) is intended to impair a Credit Party's right under
applicable law to appeal or seek a stay of any judgment.
(b) Each Credit Party hereby irrevocably waives any
objection which it may now or hereafter have to the laying of
venue of any of the aforesaid actions or proceedings arising out
of or in connection with this Agreement or any other Credit
Document brought in the courts referred to in subsection (a)
hereof and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an
inconvenient forum.
11.12 Waiver of Jury Trial.
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES
ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER
CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.13 Time.
All references to time herein shall be references to Eastern
Standard Time or Eastern Daylight time, as the case may be, unless
specified otherwise.
11.14 Severability.
If any provision of any of the Credit Documents is determined to
be illegal, invalid or unenforceable, such provision shall be fully
severable and the remaining provisions shall remain in full force and
effect and shall be construed without giving effect to the illegal,
invalid or unenforceable provisions.
11.15 Further Assurances.
The Credit Parties agree, upon the request of the Agents, to
promptly take such actions, as reasonably requested, as is necessary to
carry out the intent of this Credit Agreement and the other Credit
Documents, including, but not limited to, such actions as are necessary
to ensure that the Lenders have a perfected security interest in the
Collateral subject to no Liens other than Permitted Liens.
11.16 Confidentiality.
Each Lender agrees that it will use its reasonable best efforts
to keep confidential and to cause any representative designated under
Section 7.12 to keep confidential any non-public information from time to
time supplied to it under any Credit Document; provided, however, that
nothing herein shall prevent the disclosure of any such information to
(a) the extent a Lender in good faith believes such disclosure is
required by Requirement of Law, (b) counsel for a Lender or to its
accountants, (c) bank examiners or auditors or comparable Persons, (d)
any affiliate of a Lender, (e) any other Lender, or any assignee,
transferee or participant, or any potential assignee, transferee or
participant, of all or any portion of any Lender's rights under this
Agreement who is notified of the confidential nature of the information
or (f) any other Person in connection with any litigation to which any
one or more of the Lenders is a party; and provided further that no
Lender shall have any obligation under this Section 11.16 to the extent
any such information becomes available on a non-confidential basis from a
source other than a Credit Party or that any information becomes publicly
available other than by a breach of this Section 11.16.
11.17 Entirety.
This Credit Agreement together with the other Credit Documents
represent the entire agreement of the parties hereto and thereto, and
supersede all prior agreements and understandings, oral or written, if
any, including any commitment letters or correspondence relating to the
Credit Documents or the transactions contemplated herein and therein.
11.18 Binding Effect.
This Credit Agreement shall become effective at such time when
all of the conditions set forth in Section 5.1 have been satisfied or
waived by the Lenders and it shall have been executed by the Borrower,
the Guarantors and the Agents, and the Agents shall have received copies
hereof (telefaxed or otherwise) which, when taken together, bear the
signatures of each Lender, and thereafter this Credit Agreement shall be
binding upon and inure to the benefit of the Borrower, the Guarantors,
the Agents and each Lender and their respective successors and assigns.
11.19 Release of Collateral.
Subsequent to the date that the Overadvance is no longer
available (whether as a result of the Overadvance being requested and the
90 day period thereafter having occurred or the time period available to
use the Overadvance has expired), the Lenders agree, upon the request and
at the expense of the Borrower, and so long as (a) the sum of the
aggregate amount of Revolving Loans outstanding plus LOC Obligations
outstanding exceeds the Borrowing Base Assets and (b) no Default or Event
of Default exists and is continuing, to take such action as is necessary
to release any real property Collateral or Collateral consisting of
equipment. The Lenders hereby authorize the Collateral Agent to execute
and deliver such documentation or to take such other action as is
necessary to give effect to this Section 11.19.
11.20 Consent to M.O.U.
Notwithstanding anything to the contrary contained in this
Agreement, each of the Credit Parties may execute, deliver, and perform
its obligations under the M.O.U. including, without limitation, the
execution, delivery, and performance of the definitive documents
contemplated thereby; provided that such definitive documents will be
submitted to each Lender prior to the execution of any such document (or,
if such prior submission is not practicable, contemporaneously with the
execution of such document) for confirmation by such Lender that such
definitive document conforms with the M.O.U., such confirmation not to be
unreasonably withheld.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Each of the parties hereto has caused a counterpart of this
Credit Agreement to be duly executed and delivered as of the date first
above written.
BORROWER:
- --------
RIDDELL SPORTS INC.,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
GUARANTORS:
- ----------
RIDDELL, INC.,
a Illinois corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
EQUILINK LICENSING CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RHC LICENSING CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
RIDMARK CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
ALL AMERICAN SPORTS CORPORATION,
a Delaware corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY SPIRIT CORPORATION,
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
CHEER ACQUISITION CORP.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY SPIRIT FASHIONS & SUPPLIES, INC.
a Minnesota corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
INTERNATIONAL LOGOS, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY/INTROPA TOURS, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
VARSITY USA, INC.
a Tennessee corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
LENDERS:
- -------
NBD BANK
individually in its capacity as a Lender
and in its capacity as Administrative
Agent and Collateral Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
NATIONSBANK, N.A.,
individually in its capacity as a Lender
and in its capacity as Documentation
Agent
By:_____________________________________
Name:___________________________________
Title:__________________________________
