Attached files
| file | filename |
|---|---|
| EX-32.1 - EX 32.1 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex321jo200910k.htm |
| EX-31.2 - EX 31.2 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex312jo200910k.htm |
| EX-23 - EX 23 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex23tojo200910k.htm |
| EX-18 - EX 18 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex18tojo200910k.htm |
| EX-21 - EX 21 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex21tojo200910k.htm |
| EX-31.1 - EX 31.1 TO JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | ex311tojo200910k.htm |
| 10-K - JOHNSON OUTDOORS 2009 10-K - JOHNSON OUTDOORS INC | jo200910k.htm |
Exhibit
10.30
REVOLVING
CREDIT AND SECURITY AGREEMENT
NATIONAL
CITY BANK, CANADA BRANCH
(AS
A LENDER, AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT)
WITH
JOHNSON
OUTDOORS CANADA INC.
(AS
BORROWER)
Arranged
by:
PNC
CAPITAL MARKETS LLC
(AS
LEAD ARRANGER AND SOLE BOOKRUNNER)
November
4, 2009
|
TABLE
OF CONTENTS
|
Page
|
|
DEFINITIONS
|
1
|
||
|
1.1.
|
Accounting
Terms
|
1
|
|
|
1.2.
|
General
Terms
|
1
|
|
|
1.3.
|
PPSA
Terms
|
19
|
|
|
1.4.
|
Certain
Matters of Construction
|
19
|
|
|
II.
|
ADVANCES,
PAYMENTS
|
20
|
|
|
2.1.
|
Revolving
Advances
|
20
|
|
|
2.2.
|
Procedure
for Revolving Advances Borrowing.
|
22
|
|
|
2.3.
|
Disbursement
of Advance Proceeds
|
24
|
|
|
2.4.
|
Swing
Loans
|
24
|
|
|
2.5.
|
Maximum
Advances
|
25
|
|
|
2.6.
|
Repayment
of Advances
|
25
|
|
|
2.7.
|
Repayment
of Excess Advances
|
26
|
|
|
2.8.
|
Statement
of Account
|
26
|
|
|
2.9.
|
Additional
Payments
|
26
|
|
|
2.10.
|
Manner
of Borrowing and Payment
|
26
|
|
|
2.11.
|
Mandatory
Prepayments
|
29
|
|
|
2.12.
|
Use
of Proceeds.
|
30
|
|
|
2.13.
|
Defaulting
Lender
|
30
|
|
|
III.
|
INTEREST
AND FEES
|
31
|
|
|
3.1.
|
Interest
|
31
|
|
|
3.2.
|
Facility
Fee
|
32
|
|
|
3.3.
|
Fees
|
32
|
|
|
3.4.
|
Computation
of Interest and Fees
|
33
|
|
|
3.5.
|
Maximum
Charges
|
33
|
|
|
3.6.
|
Increased
Costs
|
33
|
|
|
3.7.
|
Basis
For Determining Interest Rate Inadequate or Unfair
|
34
|
|
|
3.8.
|
Capital
Adequacy
|
34
|
|
|
3.9.
|
Gross
Up for Taxes
|
35
|
|
i
|
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
IV.
|
COLLATERAL: GENERAL
TERMS
|
36
|
|
|
4.1.
|
Security
Interest in the Collateral
|
36
|
|
|
4.2.
|
Perfection
of Security Interest
|
36
|
|
|
4.3.
|
Disposition
of Collateral
|
36
|
|
|
4.4.
|
Preservation
of Collateral
|
37
|
|
|
4.5.
|
Ownership
of Collateral
|
37
|
|
|
4.6.
|
Defense
of Agent’s and Lenders’ Interests
|
38
|
|
|
4.7.
|
Books
and Records
|
38
|
|
|
4.8.
|
Financial
Disclosure
|
38
|
|
|
4.9.
|
Compliance
with Laws
|
39
|
|
|
4.10.
|
Inspection
of Premises
|
39
|
|
|
4.11.
|
Insurance
|
39
|
|
|
4.12.
|
Failure
to Pay Insurance
|
40
|
|
|
4.13.
|
Payment
of Taxes
|
40
|
|
|
4.14.
|
Payment
of Leasehold Obligations
|
40
|
|
|
4.15.
|
Receivables
|
41
|
|
|
4.16.
|
Intentionally
Omitted
|
43
|
|
|
4.17.
|
Maintenance
of Equipment
|
43
|
|
|
4.18.
|
Exculpation
of Liability
|
43
|
|
|
4.19.
|
Environmental
Matters.
|
43
|
|
|
4.20.
|
Financing
Statements
|
45
|
|
|
4.21.
|
Security
Interest Limitations
|
45
|
|
|
V.
|
REPRESENTATIONS
AND WARRANTIES
|
46
|
|
|
5.1.
|
Authority
|
46
|
|
|
5.2.
|
Formation
and Qualification
|
46
|
|
|
5.3.
|
Survival
of Representations and Warranties
|
46
|
|
|
5.4.
|
Tax
Returns
|
47
|
|
|
5.5.
|
Intentionally
Omitted
|
47
|
|
|
5.6.
|
Entity
Names
|
47
|
|
|
5.7.
|
Environmental
Compliance
|
47
|
|
ii
|
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
5.8.
|
Solvency;
No Litigation, Violation, Indebtedness or Default
|
47
|
|
|
5.9.
|
Patents,
Trademarks, Copyrights and Licenses
|
48
|
|
|
5.10.
|
Licenses
and Permits
|
48
|
|
|
5.11.
|
Default
of Indebtedness
|
48
|
|
|
5.12.
|
No
Default
|
49
|
|
|
5.13.
|
No
Burdensome Restrictions
|
49
|
|
|
5.14.
|
No
Labour Disputes
|
49
|
|
|
5.15.
|
Intentionally
Omitted
|
49
|
|
|
5.16.
|
Intentionally
Omitted
|
49
|
|
|
5.17.
|
Disclosure
|
49
|
|
|
5.18.
|
Swaps
|
49
|
|
|
5.19.
|
Conflicting
Agreements
|
49
|
|
|
5.20.
|
Application
of Certain Laws and Regulations
|
49
|
|
|
5.21.
|
Business
and Property of Borrower
|
50
|
|
|
5.22.
|
Intentionally
Omitted
|
50
|
|
|
5.23.
|
Anti-Terrorism
Laws
|
50
|
|
|
5.24.
|
Intentionally
Omitted
|
50
|
|
|
5.25.
|
Intentionally
Omitted
|
50
|
|
|
5.26.
|
Equity
Interests
|
50
|
|
|
VI.
|
AFFIRMATIVE
COVENANTS
|
50
|
|
|
6.1.
|
Payment
of Fees
|
50
|
|
|
6.2.
|
Conduct
of Business and Maintenance of Existence and Assets
|
51
|
|
|
6.3.
|
Violations
|
51
|
|
|
6.4.
|
Government
Receivables
|
51
|
|
|
6.5.
|
Intentionally
Omitted
|
51
|
|
|
6.6.
|
Execution
of Supplemental Instruments
|
51
|
|
|
6.7.
|
Payment
of Indebtedness
|
51
|
|
|
VII.
|
NEGATIVE
COVENANTS
|
51
|
|
|
7.1.
|
Merger,
Consolidation, Acquisition and Sale of Assets
|
51
|
|
|
7.2.
|
Creation
of Liens
|
52
|
|
iii
|
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
7.3.
|
Guarantees
|
52
|
|
|
7.4.
|
Investments
|
52
|
|
|
7.5.
|
Loans
|
52
|
|
|
7.6.
|
Capital
Expenditures
|
52
|
|
|
7.7.
|
Dividends
|
52
|
|
|
7.8.
|
Indebtedness
|
53
|
|
|
7.9.
|
Nature
of Business
|
53
|
|
|
7.10.
|
Transactions
with Affiliates
|
53
|
|
|
7.11.
|
Leases
|
53
|
|
|
7.12.
|
Subsidiaries
|
53
|
|
|
7.13.
|
Fiscal
Year and Accounting Changes
|
53
|
|
|
7.14.
|
Pledge
of Credit
|
53
|
|
|
7.15.
|
Amendment
of Articles of Incorporation, By-Laws or Certificate of Formation,
Operating Agreement
|
53
|
|
|
7.16.
|
Intentionally
Omitted
|
53
|
|
|
7.17.
|
Prepayment
of Indebtedness
|
54
|
|
|
VIII.
|
CONDITIONS
PRECEDENT
|
54
|
|
|
8.1.
|
Conditions
to Initial Advances
|
54
|
|
|
8.2.
|
Conditions
to Each Advance
|
57
|
|
|
IX.
|
INFORMATION
AS TO BORROWER
|
58
|
|
|
9.1.
|
Disclosure
of Material Matters
|
58
|
|
|
9.2.
|
Schedules
|
58
|
|
|
9.3.
|
Environmental
Reports
|
58
|
|
|
9.4.
|
Litigation
|
58
|
|
|
9.5.
|
Material
Occurrences
|
58
|
|
|
9.6.
|
Government
Receivables
|
59
|
|
|
9.7.
|
Intentionally
Omitted
|
59
|
|
|
9.8.
|
Intentionally
Omitted
|
59
|
|
|
9.9.
|
Intentionally
Omitted
|
59
|
|
|
9.10.
|
Other
Reports
|
59
|
|
iv
|
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
9.11.
|
Additional
Information
|
59
|
|
|
9.12.
|
Intentionally
Omitted
|
59
|
|
|
9.13.
|
Intentionally
Omitted
|
59
|
|
|
9.14.
|
Notice
of Suits, Adverse Events
|
59
|
|
|
9.15.
|
Intentionally
Omitted
|
60
|
|
|
9.16.
|
Intentionally
Omitted
|
60
|
|
|
9.17.
|
Additional
Documents
|
60
|
|
|
X.
|
EVENTS
OF DEFAULT
|
60
|
|
|
10.1.
|
Nonpayment
|
60
|
|
|
10.2.
|
Breach
of Representation
|
60
|
|
|
10.3.
|
Financial
Information
|
60
|
|
|
10.4.
|
Judicial
Actions
|
60
|
|
|
10.5.
|
Noncompliance
|
60
|
|
|
10.6.
|
Judgments
|
60
|
|
|
10.7.
|
Bankruptcy
|
61
|
|
|
10.8.
|
Inability
to Pay
|
61
|
|
|
10.9.
|
Affiliate
Bankruptcy
|
61
|
|
|
10.10.
|
Material
Adverse Effect
|
61
|
|
|
10.11.
|
Lien
Priority
|
61
|
|
|
10.12.
|
Cross
Default
|
61
|
|
|
10.13.
|
Breach
of Guaranty
|
61
|
|
|
10.14.
|
Change
of Ownership
|
61
|
|
|
10.15.
|
Invalidity
|
62
|
|
|
10.16.
|
Licenses
|
62
|
|
|
10.17.
|
Seizures
|
62
|
|
|
10.18.
|
Operations
|
62
|
|
|
10.19.
|
U.S.
Loan Documents
|
62
|
|
|
XI.
|
LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT
|
63
|
|
|
11.1.
|
Rights
and Remedies
|
63
|
|
|
11.2.
|
Agent’s
Discretion
|
64
|
|
v
|
TABLE
OF CONTENTS
(continued)
|
Page
|
||
|
11.3.
|
Setoff
|
64
|
|
|
11.4.
|
Rights
and Remedies not Exclusive
|
65
|
|
|
11.5.
|
Allocation
of Payments After Event of Default
|
65
|
|
|
XII.
|
WAIVERS
AND JUDICIAL PROCEEDINGS
|
66
|
|
|
12.1.
|
Waiver
of Notice
|
66
|
|
|
12.2.
|
Delay
|
66
|
|
|
12.3.
|
Jury
Waiver
|
66
|
|
|
XIII.
|
EFFECTIVE
DATE AND TERMINATION
|
66
|
|
|
13.1.
|
Term
|
66
|
|
|
13.2.
|
Termination
|
66
|
|
|
XIV.
|
REGARDING
AGENT
|
67
|
|
|
14.1.
|
Appointment
|
67
|
|
|
14.2.
|
Nature
of Duties
|
67
|
|
|
14.3.
|
Lack
of Reliance on Agent and Resignation
|
68
|
|
|
14.4.
|
Certain
Rights of Agent
|
68
|
|
|
14.5.
|
Reliance
|
69
|
|
|
14.6.
|
Notice
of Default
|
69
|
|
|
14.7.
|
Indemnification
|
69
|
|
|
14.8.
|
Agent
in its Individual Capacity
|
69
|
|
|
14.9.
|
Delivery
of Documents
|
69
|
|
|
14.10.
|
Borrower’s
Undertaking to Agent
|
70
|
|
|
14.11.
|
No
Reliance on Agent’s Customer Identification Program
|
70
|
|
|
14.12.
|
Other
Agreements
|
70
|
|
|
XV.
|
BORROWING
AGENCY. INTENTIONALLY OMITTED
|
70
|
|
|
XVI.
|
MISCELLANEOUS
|
70
|
|
|
16.1.
|
Governing
Law
|
70
|
|
|
16.2.
|
Entire
Understanding.
|
71
|
|
|
16.3.
|
Successors
and Assigns; Participations; New Lenders
|
73
|
|
|
16.4.
|
Application
of Payments
|
75
|
|
|
16.5.
|
Indemnity
|
75
|
|
vi
| TABLE
OF CONTENTS
(continued)
|
|||
|
16.6.
|
Notice
|
76
|
|
|
16.7.
|
Survival
|
79
|
|
|
16.8.
|
Severability
|
79
|
|
|
16.9.
|
Expenses
|
79
|
|
|
16.10.
|
Currency
Indemnity
|
79
|
|
|
16.11.
|
Injunctive
Relief
|
80
|
|
|
16.12.
|
Consequential
Damages
|
80
|
|
|
16.13.
|
Captions
|
80
|
|
|
16.14.
|
Counterparts;
Facsimile Signatures
|
80
|
|
|
16.15.
|
Construction
|
80
|
|
|
16.16.
|
Confidentiality;
Sharing Information
|
80
|
|
|
16.17.
|
Publicity
|
80
|
vii
LIST OF
EXHIBITS AND SCHEDULES
|
Exhibits
|
|||
|
Exhibit
1.2
|
Borrowing
Base Certificate
|
||
|
Exhibit
1.2(a)
|
U.S.
Loan Agreement
|
||
|
Exhibit
1.2(b)
|
Perfection
Certificate
|
||
|
Exhibit
2.1(a)
|
Form
of Revolving Credit Note
|
||
|
Exhibit
2.4(a)
|
Swing
Loan Note
|
||
|
Exhibit
2.4(b)
|
Swing
Loan Request
|
||
|
Exhibit
8.1(k)
|
Financial
Condition Certificate
|
||
|
Exhibit
16.3
|
Commitment
Transfer Supplement
|
||
|
Schedules
|
|||
|
Schedule
1.2
|
Permitted
Encumbrances
|
||
|
Schedule
4.5
|
Equipment
and Inventory Locations
|
||
|
Schedule
4.15(g)
|
Deposit
and Investment Accounts
|
||
|
Schedule
4.19
|
Real
Property
|
||
|
Schedule
5.1
|
Consents
|
||
|
Schedule
5.2(a)
|
Jurisdictions
of Qualification and Good Standing
|
||
|
Schedule
5.6
|
Prior
Names
|
||
|
Schedule
5.8(b)
|
Litigation
|
||
|
Schedule
5.9
|
Intellectual
Property, Source Code Escrow Agreements
|
||
|
Schedule
5.10
|
Licenses
and Permits
|
||
|
Schedule
5.14
|
Labour
Disputes
|
||
|
Schedule
7.3
|
Guarantees
|
i
REVOLVING
CREDIT
AND
SECURITY
AGREEMENT
Revolving
Credit and Security Agreement dated as of November 4, 2009 among JOHNSON
OUTDOORS CANADA INC., a Canadian corporation, (“Borrower”), the financial
institutions which are now or which hereafter become a party hereto
(collectively, the “Lenders” and each individually a “Lender”) and NATIONAL
CITY BANK, CANADA BRANCH (“NCB”), as administrative agent and collateral
agent for Lenders (NCB, in such capacity, the “Agent”).
IN
CONSIDERATION of the mutual covenants and undertakings herein contained,
Borrower, Lenders and Agent hereby agree as follows:
I.
DEFINITIONS.
1.1.
Accounting
Terms. As used in this Agreement, the Other Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in Section 1.2 or elsewhere in this
Agreement and accounting terms partly defined in Section 1.2 to the extent not
defined, shall have the respective meanings given to them under GAAP; provided,
however, whenever such accounting terms are used for the purposes of determining
compliance with financial covenants in this Agreement, such accounting terms
shall be defined in accordance with GAAP as applied in preparation of the
audited financial statements of Borrower for the fiscal year ended October 3,
2008.
1.2.
General
Terms. For purposes of this Agreement the following terms
shall have the following meanings:
“Advance Rates” shall
have the meaning set forth in Section 2.1(a)(y)(iii).
“Advances” shall mean
and include the Revolving Advances and the Swing Loans, and any portion(s)
thereof.
“Affiliate” of any
Person shall mean (a) any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with such Person, or
(b) any Person who is a director, managing member, general partner or senior
officer (i) of such Person, (ii) of any Subsidiary of such Person or (iii) of
any Person described in clause (a) above. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, (x) to
vote 5% or more of the Equity Interests having ordinary voting power for the
election of directors of such Person or other Persons performing similar
functions for any such Person, or (y) to direct or cause the direction of the
management and policies of such Person whether by ownership of Equity Interests,
contract or otherwise.
“Agent” shall have the
meaning set forth in the preamble to this Agreement and shall include its
successors and permitted assigns.
1
“Agreement” shall mean
this Revolving Credit and Security Agreement, as the same may be amended,
restated, supplemented or otherwise modified from time to time.
“Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the highest of (i) the Base
Rate in effect on such day, (ii) the Federal Funds Open Rate in effect on such
day plus one
half of one-percent (1/2 of 1%), and (iii) the sum of the Daily LIBOR Rate in
effect on such day plus one percent
(1.0%), so long as a Daily LIBOR Rate is offered, ascertainable and not
unlawful
“Anti-Terrorism Laws”
shall mean any Applicable Laws relating to terrorism or money laundering,
including The Proceeds of
Crime (Money Laundering) and Terrorist Financing Act
(Canada) (as any of the foregoing Applicable Laws may from time to time be
amended, renewed, extended, or replaced).
“Applicable Law” shall
mean all laws, rules and regulations applicable to the Person, conduct,
transaction, covenant, Other Document or contract in question, including all
applicable common law and equitable principles; all applicable provisions of all
applicable state, provincial, federal and foreign constitutions, statutes,
rules, regulations and orders of any Governmental Body, and all orders,
judgments and decrees of all courts and arbitrators.
“Authority” shall have
the meaning set forth in Section 4.19(d) hereof.
“Base Rate” shall mean
the annual rate of interest announced by Agent from time to time as a reference
rate then in effect for determining interest rates on commercial loans made in
U.S. currency in Canada to be in effect from time to time, such rate to be
adjusted automatically, without notice, on the effective date of any change in
such rate. This rate of interest is determined from time to time by
NCB as a means of pricing some loans to its customers and is neither tied to any
external rate of interest or index nor does it necessarily reflect the lowest
rate of interest actually charged by NCB to any particular class or category of
customers of NCB.
“Base Rate Loan” shall
mean any Advance that bears interest based upon the Alternate Base
Rate.
“Blocked Accounts”
shall have the meaning set forth in Section 4.15(g) hereof.
“Blocked Account Bank”
shall have the meaning set forth in Section 4.15(g) hereof.
“Borrower” shall have
the meaning set forth in the preamble to this Agreement and shall extend to all
permitted successors and assigns of such Person.
“Borrower’s Account”
shall have the meaning set forth in Section 2.8.
“Borrowing Base
Certificate” shall mean a certificate in substantially the form of
Exhibit 1.2 duly executed by any one director or officer of Borrower and
delivered to Agent, appropriately completed, by which such officer shall certify
to Agent the Formula Amount and calculation thereof as of the date of such
certificate.
2
“Business Day” shall
mean any day other than Saturday or Sunday or a legal holiday on which
commercial banks are authorized or required by law to be closed for business in
East Brunswick, New Jersey, Toronto, Ontario or Vancouver, British Columbia and,
if the applicable Business Day relates to any Eurodollar Rate Loans, such day
must also be a day on which dealings are carried on in the London interbank
market.
“Canadian Dollars” or
“C$” shall mean
lawful money of Canada.
“Capital Expenditures”
shall mean expenditures made or liabilities incurred for the acquisition of any
fixed assets or improvements, replacements, substitutions or additions thereto
which have a useful life of more than one year, including the total principal
portion of Capitalized Lease Obligations, which, in accordance with GAAP, would
be classified as capital expenditures.
“Capitalized Lease
Obligation” shall mean any Indebtedness of Borrower represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
“Change of Ownership”
shall mean (a) 99% or more of the voting Equity Interests of any direct or
indirect Subsidiary of JOI is no longer owned directly or indirectly (on a fully
diluted basis) by JOI, (b) 50% or more of the voting Equity Interests of JOI is
no longer owned directly or indirectly (on a fully diluted basis) by the Johnson
Family, (c) from and after the date hereof, individuals who on the date hereof
constitute the board of directors of JOI (together with any new directors whose
election by such board of directors or whose nomination for election by the
shareholders of JOI was approved by a vote of a majority of the directors then
still in office who were either directors on the date hereof or whose election
or nomination for election was previously approved) cease for any reason to
constitute a majority of the board of directors of JOI then in office; or (d)
any merger, consolidation or sale of substantially all of the property or assets
of Borrower or any direct or indirect Subsidiary of Borrower except as permitted
by Section 7.1.
“Charges” shall mean
all taxes, charges, fees, imposts, levies or other assessments, including all
net income, gross income, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp,
occupation and property taxes, custom duties, fees, assessments, liens, claims
and charges of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts, imposed by any taxing or
other authority, domestic or foreign, upon the Collateral, Borrower or any of
its Affiliates.
“Closing Date” shall
mean November 4, 2009 or such other date as may be agreed to by the parties
hereto.
“Collateral” shall
mean and include:
(a) all
Receivables;
(b) all
Equipment;
3
(c) all
General Intangibles;
(d) all
Inventory;
(e) all
Investment Property;
(f) all of
Borrower’s right, title and interest in and to, whether now owned or hereafter
acquired and wherever located; (i) its respective goods and other property
including, but not limited to, all merchandise returned or rejected by
Customers, relating to or securing any of the Receivables; (ii) all of
Borrower’s rights as a consignor, a consignee, an unpaid vendor, mechanic,
artisan, or other lienor, including stoppage in transit, setoff, detinue,
replevin, reclamation and repurchase; (iii) all additional amounts due to
Borrower from any Customer relating to the Receivables; (iv) other property,
including warranty claims, relating to any goods securing the Obligations; (v)
all of Borrower’s contract rights, rights of payment which have been earned
under a contract right, instruments (including promissory notes), documents,
chattel paper (including electronic chattel paper), warehouse receipts, deposit
accounts, letters of credit and money; (vi) if and when obtained by Borrower,
all real and personal property of third parties in which Borrower has been
granted a lien or security interest as security for the payment or enforcement
of Receivables; (vii) all letter of credit rights (whether or not the respective
letter of credit is evidenced by a writing); (viii) all supporting obligations;
and (ix) any other goods, personal property or real property now owned or
hereafter acquired in which Borrower has expressly granted a security interest
or may in the future grant a security interest to Agent hereunder, or in any
amendment or supplement hereto or thereto, or under any other agreement between
Agent and Borrower;
(g) all of
Borrower’s ledger sheets, ledger cards, files, correspondence, records, books of
account, business papers, computers, computer software (owned by Borrower or in
which it has an interest), computer programs, tapes, disks and documents
relating to (a), (b), (c), (d), (e), (f) or (g) of this paragraph;
and
(h) all
proceeds and products of (a), (b), (c), (d), (e), (f), (g) and (h) in whatever
form, including, but not limited to: cash, deposit accounts (whether
or not comprised solely of proceeds), certificates of deposit, insurance
proceeds (including hazard, flood and credit insurance), negotiable instruments
and other instruments for the payment of money, chattel paper, security
agreements, documents, eminent domain proceeds, condemnation proceeds and tort
claim proceeds.
“Commitment
Percentage” of any Lender shall mean the percentage set forth below such
Lender’s name on the signature page hereof as same may be adjusted upon any
assignment by a Lender pursuant to Section 16.3(c) or (d) hereof.
“Commitment Transfer
Supplement” shall mean a document in the form of Exhibit 16.3 hereto,
properly completed and otherwise in form and substance satisfactory to Agent by
which the Purchasing Lender purchases and assumes a portion of the obligation of
Lenders to make Advances under this Agreement.
“Consents” shall mean
all filings and all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Bodies and other third
parties,
4
domestic
or foreign, necessary to carry on Borrower’s business or necessary (including to
avoid a conflict or breach under any agreement, instrument, other document,
license, permit or other authorization) for the execution, delivery or
performance of this Agreement, the Other Documents or the Subordinated Loan
Documentation, including any Consents required under all applicable federal,
state, provincial or other Applicable Law.
“Consigned Inventory”
shall mean Inventory of Borrower that is in the possession of another Person on
a consignment, sale or return, or other basis that does not constitute a final
sale and acceptance of such Inventory.
“Contract Rate” shall
have the meaning set forth in Section 3.1 hereof.
“Customer” shall mean
and include the account debtor with respect to any Receivable and/or the
prospective purchaser of goods, services or both with respect to any contract or
contract right, and/or any party who enters into or proposes to enter into any
contract or other arrangement with Borrower, pursuant to which Borrower is to
deliver any personal property or perform any services.
“Daily LIBOR Rate”
shall mean, for any day, the rate per annum determined by Agent by dividing (x)
the Published Rate by (y) a number equal to 1.00 minus the Reserve
Percentage.
“Dating Receivables Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(ii)
hereof.
“Debt Payments” shall
mean and include for any period, and without duplication (a) all cash
actually expended by Borrower to make interest payments on any Advances
hereunder, plus
(b) all cash actually expended by Borrower to make payments for all fees,
commissions and charges set forth herein and with respect to any Advances, plus (c) all cash
actually expended by Borrower to make payments on Capitalized Lease Obligations,
plus (d)
without duplication all cash actually expended by Borrower to make payments
under any Plan to which Borrower is a party, plus (e) all cash
actually expended by Borrower to make payments with respect to any other
Indebtedness for borrowed money, plus (f) all cash
expended by Borrower to make a prepayment of Revolving Advances to the extent
that the Maximum Revolving Advance Amount is permanently reduced by the amount
of such prepayment.
“Default” shall mean
an event, circumstance or condition which, with the giving of notice or passage
of time or both, would constitute an Event of Default.
“Default Rate” shall
have the meaning set forth in Section 3.1 hereof.
“Defaulting Lender”
shall have the meaning set forth in Section 2.13(a) hereof.
“Depository Accounts”
shall have the meaning set forth in Section 4.15(g) hereof.
“Designated Lender”
shall have the meaning set forth in Section 16.2(b) hereof.
“Documents” shall have
the meaning set forth in Section 8.1(c) hereof.
5
“Dollar” and the sign
“$” shall mean
lawful money of the United States of America.
“Early Termination
Date” shall have the meaning set forth in Section 13.1
hereof.
“Eligible Dating
Receivables” shall mean a Receivable in the watercraft and marine
equipment business line of Borrower which is not an Eligible Receivable as a
result of Subsection (b) of the definition of Eligible Receivables (but which
would otherwise constitute an Eligible Receivable by Agent) and for which
Borrower has provided extended terms to such Customer under a written dating
program acceptable to Agent and such Receivable is not unpaid more than thirty
(30) days after the original due date under such dating program; provided
further that no Receivables shall constitute Eligible Dating Receivables if such
Receivable is due more than 365 days after its original invoice
date.
“Eligible Inventory”
shall mean and include Inventory, excluding work in process, with respect to
Borrower, valued at the lower of cost or market value, determined on a
first-in-first-out basis, which is not, in Agent’s Permitted Discretion,
obsolete, slow moving or unmerchantable and which Agent, in its Permitted
Discretion, shall not deem ineligible Inventory, based on such considerations as
Agent may from time to time deem appropriate including whether the Inventory is
subject to a perfected, first priority security interest in favor of Agent and
no other Lien (other than a Permitted Encumbrance). In addition,
Inventory shall not be Eligible Inventory if it (i) does not conform to all
applicable standards imposed by any Governmental Body which has regulatory
authority over such goods or the use or sale thereof, (ii) is in transit, (iii)
is located outside the continental United States or Canada or at a location that is
not otherwise in compliance with this Agreement, (iv) constitutes Consigned
Inventory, (v) is the subject of an Intellectual Property Claim which is
reasonably likely to prohibit Borrower from selling such Inventory in the
Ordinary Course of Business or Agent from selling such Inventory in the exercise
of its remedies hereunder; (vi) is subject to a License Agreement or other
agreement that limits, conditions or restricts Borrower’s or Agent’s right to
sell or otherwise dispose of such Inventory, unless Agent is a party to a
Licensor/Agent Agreement with the Licensor under such License Agreement or Agent
has established reserves in an amount determined necessary by Agent in its
Permitted Discretion and Agent is otherwise satisfied that it may sell or
otherwise dispose of such Inventory without (a) infringing the rights of such
Licensor, (b) violating any contract with such Licensor, or (c) incurring any
liability with respect to payment of royalties other than royalties incurred
pursuant to sale of such Inventory under the current License Agreement or such
other License Agreements as are approved by the Agent in its Permitted
Discretion; (vii) is situated at a location not owned by Borrower unless the
owner or occupier of such location has executed in favor of Agent a Lien Waiver
Agreement or Agent has instituted a rent reserve in an amount equal to three
months rent for such location; or (viii) if the sale of such Inventory would
result in an ineligible Receivable.
“Eligible Receivables”
shall mean and include with respect to Borrower, each Receivable of Borrower
arising in the Ordinary Course of Business and which Agent, in its Permitted
Discretion, shall deem to be an Eligible Receivable, based on such
considerations as Agent may from time to time reasonably deem
appropriate. A Receivable shall not be deemed eligible unless such
Receivable is subject to Agent’s first priority perfected security interest and
no other Lien (other than Permitted Encumbrances), and is evidenced by an
invoice or other documentary evidence satisfactory to Agent. In
addition, no Receivable shall be an Eligible Receivable if:
6
(a)
it arises out of a sale made by Borrower to an Affiliate of Borrower or to a
Person controlled by an Affiliate of Borrower;
(b) it is due
or unpaid more than sixty (60) days after the original due date or one hundred
(120) days after the original invoice date;
(c) fifty
percent (50%) or more of the Receivables from such Customer are not deemed
Eligible Receivables hereunder (such percentage may, from time to time, be
decreased in Agent’s Permitted Discretion, or be increased upon the consent of
Required Lenders);
(d) any
covenant, representation or warranty contained in this Agreement with respect to
such Receivable has been breached;
(e) the
Customer shall (i) apply for, suffer, or consent to the appointment of, or the
taking of possession by, a receiver, custodian, trustee or liquidator of itself
or of all or a substantial part of its property or call a meeting of its
creditors, (ii) admit in writing its inability, or be generally unable, to pay
its debts as they become due or cease operations of its present business, (iii)
make a general assignment for the benefit of creditors, (iv) commence a
voluntary case or proceeding under any state, federal, or Canadian bankruptcy
laws (as now or hereafter in effect), (v) be adjudicated a bankrupt or
insolvent, (vi) file a petition seeking to take advantage of any other law
providing for the relief of debtors, (vii) acquiesce to, or fail to have
dismissed, any petition which is filed against it in any involuntary case under
such bankruptcy laws, or (viii) take any action for the purpose of effecting any
of the foregoing;
(f) the sale
is to a Customer outside the continental United States of America or Canada,
unless the sale is on letter of credit, guaranty or acceptance terms, in each
case acceptable to Agent in its Permitted Discretion;
(g) the sale
to the Customer is on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval, consignment or any other repurchase or return basis or is evidenced by
chattel paper;
(h) Agent
determines, in the exercise of its Permitted Discretion, that collection of such
Receivable is insecure or that such Receivable may not be paid by reason of the
Customer’s financial inability to pay;
(i) the
Customer is the United States of America, any state, the federal government of
Canada, the government of any province or territory of Canada or any department,
agency or instrumentality of any of them, unless the Borrower assigns its right
to payment of such Receivable to Agent pursuant to the Assignment of Claims Act
of 1940, as amended (31 U.S.C. Sub-Section 3727 et seq. and 41 U.S.C.
Sub-Section 15 et seq.) or the Financial Administration Act (Canada) or has
otherwise complied with other applicable statutes or ordinances;
(j) the goods
giving rise to such Receivable have not been delivered to and accepted by the
Customer or the services giving rise to such Receivable have not been
performed by the
Borrower and accepted by the Customer or the Receivable otherwise does not
represent a final sale;
7
(k) the
Receivables of the Customer exceed a credit limit determined by Agent, in the
exercise of its Permitted Discretion, to the extent such Receivable exceeds such
credit limit provided Borrower has received prior written notice of such credit
limit;
(l) the
Receivable is subject to any offset, deduction, defense, dispute, or
counterclaim (provided such Receivable shall be ineligible only to the extent of
such offset, deduction, defense or counterclaim), the Customer is also a
creditor or supplier of Borrower (unless such Customer has provided a non-offset
agreement acceptable to Agent) or the Receivable is contingent in any respect or
for any reason;
(m) the
Borrower has made any agreement with any Customer for any deduction therefrom,
except for discounts or allowances made in the Ordinary Course of Business for
prompt payment, all of which discounts or allowances are reflected in the
calculation of the face value of each respective invoice related
thereto;
(n) any
return, rejection or repossession of the merchandise has occurred (provided such
Receivable shall be ineligible only to the extent of the amount billed for
returned, rejected or repossessed merchandise) or the rendition of services has
been disputed;
(o) such
Receivable is not payable to Borrower; or
(p) such
Receivable is not otherwise satisfactory to Agent as determined in good faith by
Agent in the exercise of its Permitted Discretion.
“Environmental
Complaint” shall have the meaning set forth in Section 4.19(d)
hereof.
“Environmental Laws”
shall mean all applicable, Canadian, federal, provincial and local
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances and legally enforceable rules, regulations, policies, guidelines,
interpretations, decisions, orders and directives of federal, provincial and
local governmental agencies and authorities with respect thereto.
“Equipment” shall mean
and include as to Borrower all of Borrower’s goods (other than Inventory)
whether now owned or hereafter acquired and wherever located including all
equipment, machinery, apparatus, motor vehicles, fittings, furniture,
furnishings, fixtures, parts, accessories and all replacements and substitutions
therefor or accessions thereto.
“Equity Interests” of
any Person shall mean any and all shares, rights to purchase, options, warrants,
general, limited or limited liability partnership interests, member interests,
participation or other equivalents of or interest in (regardless of how
designated) equity of such Person, whether voting or nonvoting, including common
stock, preferred stock, convertible securities or any other “equity
security”.
8
“Eurodollar Rate”
shall mean for any Eurodollar Rate Loan for the then current Interest Period
relating thereto, the interest rate per annum determined by Agent by dividing
(the resulting quotient rounded upwards, if necessary, to the nearest 1/100th of
1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such
other substitute Bloomberg page that displays rates at which US dollar deposits
are offered by leading banks in the London interbank deposit market), or the
rate which is quoted by another source selected by Agent which has been approved
by the British Bankers’ Association as an authorized information vendor for the
purpose of displaying rates at which U.S. dollar deposits are offered by leading
banks in the London interbank deposit market (an “Alternate Source”), at
approximately 11:00 a.m., London time, two (2) Business Days prior to the
commencement of such Interest Period as the London interbank offered rate for
U.S. Dollars for an amount comparable to such Eurodollar Rate Loan and having a
borrowing date and a maturity comparable to such Interest Period (or if there
shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or
any substitute page) or any Alternate Source, a comparable replacement rate
determined by Agent at such time (which determination shall be conclusive absent
manifest error)), by (ii) a number equal 1.00 minus the Reserve Percentage. The
Eurodollar Rate may also be expressed by the following formula:
|
Average
of London interbank offered rates quoted by Bloomberg
or appropriate Successor as shown on
|
|
|
Eurodollar
Rate =
|
Bloomberg Page BBAM1
1.00
- Reserve Percentage
|
The
Eurodollar Rate shall be adjusted with respect to any Eurodollar Rate Loan that
is outstanding on the effective date of any change in the Reserve Percentage as
of such effective date. Agent shall give prompt notice to Borrower of
the Eurodollar Rate as determined or adjusted in accordance herewith, which
determination shall be conclusive absent manifest error.
“Eurodollar Rate Loan”
shall mean an Advance at any time that bears interest based on the Eurodollar
Rate.
“Event of Default”
shall have the meaning set forth in Article X hereof.
“Federal Funds Effective
Rate” for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed and rounded upward to the nearest 1/100th of
1%) announced by the Federal Reserve Bank of New York (or any successor) on such
day as being the weighted average of the rates on overnight federal funds
transactions arranged by federal funds brokers on the previous trading day, as
computed and announced by such Federal Reserve Bank (or any successor) in
substantially the same manner as such Federal Reserve Bank computes and
announces the weighted average it refers to as the “Federal Funds Effective
Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank
(or its successor) does not announce such rate on any day, the “Federal Funds
Effective Rate” for such day shall be the Federal Funds Effective Rate for the
last day on which such rate was announced.
“Federal Funds Open
Rate” for any day shall mean the rate per annum (based on a year of 360
days and actual days elapsed) which is the daily federal funds open rate as
quoted by ICAP North America, Inc. (or any successor) as set forth on the
Bloomberg Screen BTMM for
9
that day
opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that
displays such rate), or as set forth on such other recognized electronic source
used for the purpose of displaying such rate as selected by NCB (an “Alternate
Source”) (or if such rate for such day does not appear on the Bloomberg Screen
BTMM (or any substitute screen) or on any Alternate Source, or if there shall at
any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any
substitute screen) or any Alternate Source, a comparable replacement rate
determined by the NCB at such time (which determination shall be conclusive
absent manifest error); provided however, that if such day is not a Business
Day, the Federal Funds Open Rate for such day shall be the “open” rate on the
immediately preceding Business Day. If and when the Federal Funds
Open Rate changes, the rate of interest with respect to any advance to which the
Federal Funds Open Rate applies will change automatically without notice to
Borrower, effective on the date of any such change.
“Formula Amount” shall
have the meaning set forth in Section 2.1(a).
“GAAP” shall mean
generally accepted accounting principles in the United States of America in
effect from time to time.
“General Intangibles”
shall mean and include as to Borrower all of Borrower’s general intangibles,
whether now owned or hereafter acquired, including all payment intangibles, all
choses in action, causes of action, corporate or other business records,
inventions, designs, patents, patent applications, equipment formulations,
manufacturing procedures, quality control procedures, trademarks, trademark
applications, service marks, trade secrets, goodwill, copyrights, design rights,
software, computer information, source codes, codes, records and updates,
registrations, licenses, franchises, customer lists, tax refunds, tax refund
claims, computer programs, all claims under guaranties, security interests or
other security held by or granted to Borrower to secure payment of any of the
Receivables by a Customer (other than to the extent covered by Receivables) all
rights of indemnification and all other intangible property of every kind and
nature (other than Receivables).
“Governmental Body”
shall mean any nation or government, any state or province or other political
subdivision thereof or any entity, authority, agency, division or department
exercising the legislative, judicial, regulatory or administrative functions of
or pertaining to a government.
“Guarantor” shall mean
any Person who may hereafter guarantee payment or performance of the whole or
any part of the Obligations and “Guarantors” means collectively all such
Persons.
“Guarantor Security
Agreement” shall mean any security agreement executed by any Guarantor in
favor of Agent securing the Obligations or the Guaranty of such
Guarantor.
“Guaranty” shall mean
any guaranty of the obligations of Borrower executed by a Guarantor in favor of
Agent for its benefit and for the ratable benefit of Lenders.
“Hazardous Discharge”
shall have the meaning set forth in Section 4.19(d) hereof.
10
“Hazardous Substance”
shall mean, without limitation, any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
Hazardous Wastes, hazardous or Toxic Substances or related materials as defined
in any applicable Environmental Law and in the regulations adopted pursuant
thereto. Notwithstanding the foregoing, “Hazardous Substances” shall
not include commercially reasonable amounts of such materials used in the
Ordinary Course of Business which are used and stored in accordance with
Environmental Laws.
“Hazardous Wastes”
shall mean all waste materials subject to regulation under any applicable
Environmental Laws.
“Hedge Liabilities”
shall have the meaning provided in the definition of “Lender-Provided Interest
Rate Hedge”.
“Indebtedness” of a
Person at a particular date shall mean all obligations of such Person which in
accordance with GAAP would be classified upon a balance sheet as liabilities
(except capital stock and surplus earned or otherwise) and in any event, without
limitation by reason of enumeration, shall include all indebtedness, debt and
other similar monetary obligations of such Person whether direct or guaranteed,
and all premiums, if any, due at the required prepayment dates of such
indebtedness, and all indebtedness secured by a Lien on assets owned
by such Person, whether or not such indebtedness actually shall have been
created, assumed or incurred by such Person. Any indebtedness of such
Person resulting from the acquisition by such Person of any assets subject to
any Lien shall be deemed, for the purposes hereof, to be the equivalent of the
creation, assumption and incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.
“Intellectual
Property” shall mean property constituting under any Applicable Law a
patent, patent application, copyright, trademark, service mark, trade name, mask
work, trade secret or license or other right to use any of the
foregoing.
“Intellectual Property
Claim” shall mean the assertion by any Person of a claim (whether
asserted in writing, by action, suit or proceeding or otherwise) that Borrower’s
ownership, use, marketing, sale or distribution of any Inventory, Equipment,
Intellectual Property or other property or asset is violative of any ownership
of or right to use any Intellectual Property of such Person.
“Intercompany Loan”
shall mean temporary loans provided by the Borrower to JOI from time to
time.
“Interest Period”
shall mean the period provided for any Eurodollar Rate Loan pursuant to Section
2.2(b) hereof.
“Interest Rate Hedge”
shall mean an interest rate exchange, collar, cap, swap, adjustable strike cap,
adjustable strike corridor or similar agreements entered into by Borrower or its
Subsidiaries in order to provide protection to, or minimize the impact upon,
Borrower, any Guarantor and/or their respective Subsidiaries of increasing
floating rates of interest applicable to Indebtedness.
11
“Inventory” shall mean
and include as to Borrower all of Borrower’s now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be
furnished under any consignment arrangement, contract of service or held for
sale or lease, all raw materials, work in process, finished goods and materials
and supplies of any kind, nature or description which are or might be used or
consumed in Borrower’s business or used in selling or furnishing such goods,
merchandise and other personal property, and all documents of title or other
documents representing them.
“Inventory Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(iii)
hereof.
“Investment Property”
shall mean and include as to Borrower, all of Borrower’s now owned or hereafter
acquired securities (whether certificated or uncertificated), securities
entitlements, securities accounts, commodities contracts and commodities
accounts.
“Johnson Family” shall
mean at any time, collectively, the estate of Samuel C. Johnson, the widow of
Samuel C. Johnson and the children and grandchildren of Samuel C. Johnson, the
executor or administrator of the estate or other legal representative of any
such Person, all trusts for the benefit of the foregoing or their heirs or any
one or more of them, and all partnerships, corporations or other entities
directly or indirectly controlled by the foregoing or any one or more of
them.
“JOI” shall mean
Johnson Outdoors Inc., a Wisconsin corporation.
“Leasehold Interests”
shall mean all of Borrower’s right, title and interest in and to, and as lessee,
of the premises identified on Schedule 4.19(A) hereto.
“Lender” and “Lenders” shall have
the meaning ascribed to such term in the preamble to this Agreement and shall
include each Person which becomes a transferee, successor or assign of any
Lender.
“Lender-Provided Interest
Rate Hedge” shall mean an Interest Rate Hedge which is provided by any
Lender and with respect to which Agent confirms meets the following
requirements: such Interest Rate Hedge (i) is documented in a standard
International Swap Dealer Association Agreement, (ii) provides for the method of
calculating the reimbursable amount of the provider’s credit exposure in a
reasonable and customary manner, and (iii) is entered into for hedging (rather
than speculative) purposes. The liabilities of Borrower to the
provider of any Lender-Provided Interest Rate Hedge (the “Hedge Liabilities”)
shall be “Obligations” hereunder, guaranteed obligations under the Guaranty and
secured obligations under the Guarantor Security Agreement and otherwise treated
as Obligations for purposes of each of the Other Documents. The Liens securing
the Hedge Liabilities shall be pari passu with the Liens securing all other
Obligations under this Agreement and the Other Documents.
“License Agreement”
shall mean any agreement between Borrower and a Licensor pursuant to which
Borrower is authorized to use any Intellectual Property in connection with the
manufacturing, marketing, sale or other distribution of any Inventory of
Borrower or otherwise in connection with Borrower’s business
operations.
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“Licensor” shall mean
any Person from whom Borrower obtains the right to use (whether on an exclusive
or non-exclusive basis) any Intellectual Property in connection with Borrower’s
manufacture, marketing, sale or other distribution of any Inventory or otherwise
in connection with Borrower’s business operations.
“Licensor/Agent
Agreement” shall mean an agreement between Agent and a Licensor, in form
and content satisfactory to Agent, by which Agent is given the unqualified
right, vis-à-vis such Licensor, to enforce Agent’s Liens with respect to and to
dispose of Borrower’s Inventory with the benefit of any Intellectual Property
applicable thereto, irrespective of Borrower’s default under any License
Agreement with such Licensor.
“Lien” shall mean any
mortgage, deed of trust, pledge, hypothecation, assignment, security interest,
lien (whether statutory or otherwise), Charge, claim or encumbrance, or
preference, priority or other security agreement or preferential arrangement
held or asserted in respect of any asset of any kind or nature whatsoever
including any conditional sale or other title retention agreement, any lease
having substantially the same economic effect as any of the foregoing, and the
filing of, or agreement to give, any financing statement under the PPSA or
comparable law of any jurisdiction.
“Lien Waiver
Agreement” shall mean an agreement which is executed in favor of Agent by
a Person who owns or occupies premises at which any Collateral may be located
from time to time and by which such Person shall waive or subordinate any Lien
that such Person may ever have with respect to any of the Collateral and shall
authorize Agent from time to time to enter upon the premises to inspect or
remove the Collateral from such premises or to use such premises to store or
dispose of such Inventory.
“Material Adverse
Effect” shall mean a material adverse effect on (a) the condition
(financial or otherwise), results of operations, assets, business, properties or
prospects of Borrower taken as a whole, (b) Borrower’s ability to duly and
punctually pay or perform the Obligations in accordance with the terms thereof,
(c) the value of the Collateral, or Agent’s Liens on the Collateral or the
priority of any such Lien or (d) the practical realization of the benefits of
Agent’s and each Lender’s rights and remedies under this Agreement and the Other
Documents.
“Maximum Revolving Advance
Amount” shall mean (i) Four Million Dollars ($4,000,000) for the period
commencing on July 15th of
each year through and including November 15th of
each year, and (ii) Six Million Dollars ($6,000,000) for the period commencing
on November 16th of
each year through and including July 14th of
the immediately succeeding year.
“Maximum Swing Loan Advance
Amount” shall mean the lesser of (a) One Million Dollars ($1,000,000) and
(b) an amount which when added to the “Swing Loans” (as such term is defined in
the US Loan Agreement) outstanding under the US Loan Agreement equals
$7,500,000.
“Modified Commitment Transfer
Supplement” shall have the meaning set forth in Section 16.3(d)
hereof.
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“NCB” shall have the
meaning set forth in the preamble to this Agreement and shall extend to all of
its successors and assigns.
“Notes” shall mean
collectively, the Revolving Credit Notes and the Swing Loan Note, in each case
as amended, restated, supplemented or replaced from time to time.
“Obligations” shall
mean and include any and all loans (including without limitation, all Advances
and Swing Loans, advances, debts, liabilities, obligations, covenants and duties
owing by Borrower to Lenders or Agent or to any other direct or indirect
subsidiary or Affiliate of Agent or any Lender of any kind or nature, present or
future (including any interest or other amounts accruing thereon, and any costs
and expenses of any Person payable by Borrower and any indemnification
obligations payable by Borrower arising or payable after maturity, or after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to Borrower, whether or not a claim
for post-filing or post-petition interest or other amounts is allowable or
allowed in such proceeding), whether or not evidenced by any note, guaranty or
other instrument, whether arising under any agreement, instrument or document,
(including this Agreement and the Other Documents) whether or not for the
payment of money, whether arising by reason of an extension of credit, opening
of a letter of credit, loan, equipment lease or guarantee, under any interest or
currency swap, future, option or other similar agreement, or in any other
manner, whether arising out of overdrafts or deposit or other accounts or
electronic funds transfers (whether through automated clearing houses or
otherwise) or out of Agent’s or any Lenders non-receipt of or inability to
collect funds or otherwise not being made whole in connection with depository
transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or
contingent, joint or several, due or to become due, now existing or hereafter
arising, contractual or tortious, liquidated or unliquidated, regardless of how
such indebtedness or liabilities arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but not limited to, any and all of Borrower’s Indebtedness and/or liabilities
under this Agreement, the Other Documents or under any other agreement between
Agent or Lenders and Borrower and any amendments, extensions, renewals or
increases and all costs and expenses of Agent and any Lender incurred in the
documentation, negotiation, modification, enforcement, collection or otherwise
in connection with any of the foregoing, including but not limited to reasonable
attorneys’ fees and expenses and all obligations of Borrower to Agent or Lenders
to perform acts or refrain from taking any action.
“Ordinary Course of
Business” shall mean with respect to Borrower, the ordinary course of
Borrower’s business as conducted on the Closing Date, or as subsequently
modified to address changes in market conditions, technology or the addition of
business lines reasonably related or complementary to Borrower’s business, and
as disclosed to and acceptable to Agent in its Permitted
Discretion.
“Other Documents”
shall mean the Notes, the Perfection Certificate, any Guaranty, any Guarantor
Security Agreement, any agreement with respect to any Blocked Accounts any
Lender-Provided Interest Rate Hedge and any and all other agreements,
instruments and documents, including intercreditor agreements, guaranties,
pledges, powers of attorney, consents, interest or currency swap agreements or
other similar agreements and all other writings heretofore, now or hereafter
executed by Borrower or any Guarantor and/or delivered to Agent or any Lender in
respect of the transactions contemplated by this Agreement.
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“Out-of-Formula Loans”
shall have the meaning set forth in Section 16.2(b) hereof.
“Parent” of any Person
shall mean a corporation or other entity owning, directly or indirectly at least
50% of the shares of stock or other ownership interests having ordinary voting
power to elect a majority of the directors of the Person, or other Persons
performing similar functions for any such Person.
“Participant” shall
mean each Person who shall be granted the right by any Lender to participate in
any of the Advances and who shall have entered into a participation agreement in
form and substance satisfactory to such Lender.
“Payment Office” shall
mean initially 130 King Street West, Suite 2140, Toronto, Ontario M5X 1E4;
thereafter, such other office of Agent, if any, which it may designate by notice
to Borrower and to each Lender to be the Payment Office.
“Perfection
Certificate” shall mean, the perfection certificate attached hereto as
Exhibit 1.2(b) and the responses thereto provided by Borrower and delivered
to Agent.
“Pension Benefit Plan”
shall mean at any time any employee pension benefit plan within the meaning of
the Pension Benefits Act (Ontario) and either (i) is maintained or to which
contributions are required by Borrower for employees of Borrower; or (ii) has at
any time within the preceding five years been maintained or to which
contributions have been required by Borrower for employees of
Borrower.
“Permitted Assignee”
shall mean: (a) Agent, any Lender or any of their direct or indirect Affiliates;
(b) any fund that is administered or managed by Agent or any Lender, an
Affiliate of Agent or any Lender or a related entity; (c) any Person to whom
Agent or any Lender assigns its rights and obligations under this Agreement as
part of an assignment and transfer of such Agent’s or Lender’s rights in and to
a material portion of such Agent’s or Lender’s portfolio of asset-based credit
facilities.
“Permitted Discretion”
shall mean Agent’s commercially reasonable credit judgment, from the perspective
of an asset based secured lender, made in good faith and determined on a basis
consistent with its then current credit policies and procedures.
“Permitted
Encumbrances” shall mean: (a) Liens in favor of Agent for the benefit of
Agent and Lenders; (b) Liens for taxes, assessments or other governmental
charges (including customs charges) not delinquent or being Properly Contested
and so long as such Liens are not senior to the Liens of Agent; (c) Liens
disclosed in the financial statements referred to in Section 5.5, in existence
on the Closing Date; (d) deposits or pledges to secure obligations under
worker’s compensation, social security or similar laws, or under unemployment
insurance; (e) deposits or pledges to secure bids, tenders, contracts (other
than contracts for the payment of money), leases, statutory obligations, surety
and appeal bonds and other obligations of like nature arising in the Ordinary
Course of Business; (f) Liens arising by virtue of the rendition, entry or
issuance against Borrower or any Subsidiary, or any property of Borrower or
any
15
Subsidiary,
of any judgment, writ, order, or decree for so long as each such Lien (i) is in
existence for less than 20 consecutive days after it first arises or is being
Properly Contested and (ii) is at all times junior in priority to any Liens in
favor of Agent; (g) mechanics’, workers’, materialmen’s, bailees’, shippers’,
warehousers’ or other like Liens arising in the Ordinary Course of Business with
respect to obligations which are not due or which are being Properly Contested;
(h) Liens placed upon fixed assets hereafter acquired to secure a portion of the
purchase price thereof, provided that (x) any such lien shall not encumber any
other property of Borrower and (y) the aggregate amount of Indebtedness secured
by such Liens incurred as a result of such purchases during any fiscal year
shall not exceed the amount provided for in Section 7.6; (i) Liens disclosed on
Schedule 1.2., (j) licenses, leases or subleases granted to third Persons in the
Ordinary Course of Business and not interfering in any material respect with the
business of Borrower; and (k) Liens permitted under subsections (g), (h) or (j)
of this definition existing on any asset prior to the acquisitions thereof by
Borrower permitted herein.
“Person” shall mean
any individual, sole proprietorship, partnership, corporation, business trust,
joint stock company, trust, unincorporated organization, association, limited
liability company, limited liability partnership, institution, public benefit
corporation, joint venture, entity or Governmental Body (whether federal,
provincial, state, county, city, municipal or otherwise, including any
instrumentality, division, agency, body or department thereof).
“Plan” shall mean any
employee benefit plan within the meaning of the Pension Benefits Act (Ontario)
(including a Pension Benefit Plan and a Multiemployer Plan), maintained for
employees of Borrower or any such Plan to which Borrower is required to
contribute.
“PPSA” shall mean the
Personal Property Security Act (Ontario).
“Priority Payables”
means, with respect to any Person, any amount payable by such Person which is
secured by a Lien in favour of a Governmental Body which ranks or is capable of
ranking prior to or pari passu with the Liens created by this Agreement in
respect of any Eligible Inventory or Eligible Receivables, including amounts
owing for wages, vacation pay, severance pay, employee deductions, sales tax,
excise tax, Tax payable pursuant to Part IX of the Excise Tax Act (Canada) (net
of GST input credits), income tax, workers compensation, government royalties,
pension fund obligations, overdue rents or Taxes, and other statutory or other
claims that have or may have priority over such Liens created by this
Agreement.
“Properly Contested”
shall mean, in the case of any Indebtedness or Lien, as applicable, of any
Person (including any taxes) that is not paid as and when due or payable by
reason of such Person’s bona fide dispute concerning its liability to pay same
or concerning the amount thereof: (i) such Indebtedness or Lien, as applicable,
is being properly contested in good faith by appropriate proceedings promptly
instituted and diligently conducted; (ii) such Person has established
appropriate reserves as shall be required in conformity with GAAP; (iii) the
non-payment of such Indebtedness will not have a Material Adverse Effect and
will not result in the forfeiture of any assets of such Person; (iv) no Lien is
imposed upon any of such Person’s assets with respect to such Indebtedness
unless such Lien is at all times junior and subordinate in priority to the Liens
in favor of Agent (except only with respect to property taxes that have priority
as a matter of applicable state law) and enforcement of such Lien is stayed
during the period prior to the final resolution or disposition of such dispute;
(v) if such Indebtedness or
16
Lien, as
applicable, results from, or is determined by the entry, rendition or issuance
against a Person or any of its assets of a judgment, writ, order or decree,
enforcement of such judgment, writ, order or decree is stayed pending a timely
appeal or other judicial review; and (vi) if such contest is abandoned, settled
or determined adversely (in whole or in part) to such Person, such Person
forthwith pays such Indebtedness and all penalties, interest and other amounts
due in connection therewith.
“Published Rate” shall
mean the rate of interest published each Business Day in the Wall Street Journal
“Money Rates” listing under the caption “London Interbank Offered Rates” for a
one month period (or, if no such rate is published therein for any reason, then
the Published Rate shall be the Eurodollar Rate for a one month period as
published in another publication selected by Agent).
“Purchasing CLO” shall
have the meaning set forth in Section 16.3(d) hereof.
“Purchasing Lender”
shall have the meaning set forth in Section 16.3(c) hereof.
“Real Property” shall
mean all of Borrower’s right, title and interest in and to the owned and leased
premises identified on Schedule 4.19 hereto or which is hereafter owned or
leased by Borrower.
“Receivables” shall
mean and include, as to Borrower, all of Borrower’s accounts, contract rights,
instruments (including those evidencing indebtedness owed to Borrower by its
Affiliates), documents, chattel paper (including electronic chattel paper),
general intangibles relating to accounts, drafts and acceptances, credit card
receivables and all other forms of obligations owing to Borrower arising out of
or in connection with the sale or lease of Inventory or the rendition of
services, all supporting obligations, guarantees and other security therefor,
whether secured or unsecured, now existing or hereafter created, and whether or
not specifically sold or assigned to Agent hereunder.
“Receivables Advance
Rate” shall have the meaning set forth in Section 2.1(a)(y)(i)
hereof.
“Register” shall have
the meaning set forth in Section 16.3(e) hereof.
“Release” shall have
the meaning set forth in Section 5.7(c)(i) hereof.
“Required Lenders”
shall mean Lenders holding at least sixty-six and two-thirds percent
(66 2/3%) of the Advances and, if no Advances are outstanding, shall mean
Lenders holding sixty-six and two-thirds percent (66 2/3%) of the
Commitment Percentages; provided, however, if there are fewer than three (3)
Lenders, Required Lenders shall mean all Lenders.
“Reserve Percentage”
shall mean as of any day the maximum percentage in effect on such day as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the reserve requirements (including supplemental,
marginal and emergency reserve requirements) with respect to eurocurrency
funding (currently referred to as “Eurocurrency Liabilities”.
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“Revolving Advances”
shall mean Advances made other than Swing Loans.
“Revolving Credit
Notes” shall have the meaning set forth in Section 2.1(a)
hereof.
“Revolving Interest
Rate” shall mean an interest rate per annum equal to (a) the sum of the
Alternate Base Rate plus two and
one-quarter of one percent (2.25%) with respect to Base Rate Loans, or (b) the
sum of three and one-quarter of one percent (3.25%) plus the greater of
(i) two percent (2.00%) or (ii) the Eurodollar Rate with respect to Eurodollar
Rate Loans.
“Settlement Date”
shall mean the Closing Date and thereafter Wednesday or Thursday of each week or
more frequently if Agent deems appropriate unless such day is not a Business Day
in which case it shall be the next succeeding Business Day.
“Subsidiary” of any
Person shall mean a corporation or other entity of whose Equity Interests having
ordinary voting power (other than Equity Interests having such power only by
reason of the happening of a contingency) to elect a majority of the directors
of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person.
“Swing Loan Facility”
shall mean NCB’s right to make Swing Loans to Borrower pursuant to Section 2.4
hereof in an aggregate amount up to the Maximum Swing Loan Amount.
“Swing Loan Note”
shall have the meaning set forth in Section 2.4(a) hereof.
“Swing Loan Request”
shall have the meaning set forth in Section 2.4(b) hereof.
“Swing Loans” shall
mean collectively and “Swing Loan” shall
mean separately all Advances or any Advance made to Borrower pursuant to Section
2.4 hereof.
“Term” shall have the
meaning set forth in Section 13.1 hereof.
“Toxic Substance”
shall mean and include any material present on the Real Property or the
Leasehold Interests which has been shown to have significant adverse effect on
human health or which is subject to regulation under any applicable Canadian or
provincial laws now in force or hereafter enacted relating to toxic
substances. “Toxic Substance” includes but is not limited to
asbestos, polychlorinated biphenyls (PCBs) and lead-based paints.
“Transferee” shall
have the meaning set forth in Section 16.3(d) hereof.
“Undrawn Availability”
at a particular date shall mean an amount equal to (a) the lesser of (i) the
Formula Amount or (ii) the Maximum Revolving Advance Amount, less the Maximum
Undrawn Amount, minus (b) the sum of
(i) the outstanding amount of Advances, plus (ii) all amounts
due and owing to Borrower’s trade creditors which are outstanding more than
sixty (60) days beyond their due date and not Properly Contested, plus (iii) fees and
expenses under this Agreement which are due and payable by Borrower but which
have not been paid or charged to Borrower’s Account.
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“Unfunded Capital
Expenditures” shall mean Capital Expenditures made through Revolving
Advances or out of Borrower’s own funds other than through equity contributed
subsequent to the Closing Date or purchase money or other financing or lease
transactions permitted hereunder.
“Uniform Commercial
Code” means the Uniform Commercial Code as adopted in the State of New
York from time to time.
“U.S. Dollar
Equivalent” means, at the date of determination, the amount of U.S.
Dollars that Agent could purchase, in accordance with its normal practice, with
a specified amount of Canadian Dollars based on the Bank of Canada noon spot
rate on such date.
“U.S. Loan Agreement”
shall mean that certain Revolving Credit and Security Agreement dated September
29, 2009, and attached hereto as Exhibit 1.2(a), among JOI, Johnson Outdoors
Watercraft Inc., Johnson Outdoors Marine Electronics LLC, Johnson Outdoors Gear,
LLC, Johnson Outdoors Diving LLC, Under Sea Industries, Inc., and Techsonic
Industries, Inc. and PNC Bank, National Association the other financial
institutions party thereto from time to time as amended, restated, supplemented
or replaced from time to time.
“Week” shall mean the
time period commencing with the opening of business on a Wednesday and ending on
the end of business the following Tuesday.
1.3.
PPSA
Terms. All terms used herein and defined in the PPSA from time
to time shall have the meaning given therein unless otherwise defined
herein. Without limiting the foregoing, the terms “accounts”,
“chattel paper”, “instruments”, “intangibles”, “goods”, “proceeds”, “supporting
obligations”, “securities”, “investment property”, “documents”, “deposit
accounts”, “letter of credit rights”, “inventory”, “equipment” and “fixtures”,
as and when used in the description of Collateral shall have the meanings given
to such terms in the PPSA. To the extent the definition of any
category or type of collateral is expanded by any amendment, modification or
revision to the PPSA, such expanded definition will apply automatically as of
the date of such amendment, modification or revision.
1.4.
Certain Matters of
Construction.
(a) General. The
terms “herein”, “hereof” and “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular section, paragraph or
subdivision. All references herein to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement. Any pronoun used shall be
deemed to cover all genders. Wherever appropriate in the context,
terms used herein in the singular also include the plural and vice
versa. All references to statutes and related regulations shall
include any amendments of same and any successor statutes and
regulations. Unless otherwise provided, all references to any
instruments or agreements to which Agent is a party, including references to any
of the Other Documents, shall include any and all modifications, supplements or
amendments thereto, any and all restatements or replacements thereof and any and
all extensions or renewals thereof. All references herein to the time
of day shall mean the time in New York, New York, unless otherwise
specified. Unless otherwise provided, all financial calculations
shall be performed with Inventory valued on a first-in, first
19
out
basis. Whenever the words “including” or “include” shall be used,
such words shall be understood to mean “including, without limitation” or
“include, without limitation”. A Default or Event of Default shall be
deemed to exist at all times during the period commencing on the date that such
Default or Event of Default occurs to the date on which such Default or Event of
Default is waived in writing pursuant to this Agreement or, in the case of a
Default, is cured within any period of cure expressly provided for in this
Agreement; and an Event of Default shall “continue” or be “continuing” until
such Event of Default has been waived in writing by the Required Lenders or all
Lenders, as applicable. Any Lien referred to in this Agreement or any
of the Other Documents as having been created in favor of Agent, any agreement
entered into by Agent pursuant to this Agreement or any of the Other Documents,
any payment made by or to or funds received by Agent pursuant to or as
contemplated by this Agreement or any of the Other Documents, or any act taken
or omitted to be taken by Agent, shall, unless otherwise expressly provided, be
created, entered into, made or received, or taken or omitted, for the benefit or
account of Agent and Lenders. Wherever the phrase “to the best of Borrower’s
knowledge” or words of similar import relating to the knowledge or the awareness
of Borrower are used in this Agreement or Other Documents, such phrase shall
mean and refer to (i) the actual knowledge of a senior officer of Borrower or
(ii) the knowledge that a senior officer would have obtained if he had engaged
in good faith and diligent performance of his duties, including the making of
such reasonably specific inquiries as may be necessary of the employees or
agents of Borrower and a good faith attempt to ascertain the existence or
accuracy of the matter to which such phrase relates. All covenants
hereunder shall be given independent effect so that if a particular action or
condition is not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or otherwise within the limitations of, another
covenant shall not avoid the occurrence of a default if such action is taken or
condition exists. In addition, all representations and warranties
hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached will not affect the incorrectness of a breach of a
representation or warranty hereunder.
(b) Currency
Conversion. All calculations of Dollar amounts which utilize
amounts expressed in Canadian Dollars shall be made using the U.S. Dollar
Equivalent of such Canadian Dollar amounts in a manner reasonably calculated by
Agent.
II.
ADVANCES,
PAYMENTS.
2.1.
Revolving
Advances.
(a) Amount of Revolving
Advances. Subject to the terms and conditions set forth in
this Agreement including Sections 2.1(b), (c), (d) and (e) each Lender,
severally and not jointly, will make Revolving Advances to Borrower denominated
in U.S. Dollars in aggregate amounts outstanding at any time equal to such
Lender’s Commitment Percentage of the lesser of (x) the Maximum Revolving
Advance Amount, or (y) an amount equal to the sum of:
(i) up to
85%, subject to the provisions of Sections 2.1(b), (c) and (e) hereof,
(“Receivables Advance Rate”), of Eligible Receivables (other than the Eligible
Dating Receivables), plus
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(ii) up to
85%, subject to the provision of Sections 2.1(b), (c) and (e) hereof (“Dating
Receivables Advance Rate”), of Eligible Dating Receivables, plus
(iii) up to the
lesser of (A) 65%, subject to the provisions of Sections 2.1(b), (c) and (e)
hereof, of the value of the Eligible Inventory (“Inventory Advance Rate” and
together with the Receivables Advance Rate and Dating Receivables Advance Rate,
collectively, the “Advance Rates”) or (B) 85% of the appraised net orderly
liquidation value of Eligible Inventory (as evidenced by an Inventory appraisal
satisfactory to Agent in its Permitted Discretion exercised in good faith
(seasonally adjusted on July 15th and
November 15th of
each year based upon high season and low season values)), minus
(iv) such
reserves as Agent may in the exercise of its Permitted Discretion deem proper
and necessary from time to time, including reserves for Priority
Payables.
The
amount derived from the sum of (x) Sections 2.1(a) (y)(i), and (ii) and (iii)
minus
(y) Sections 2.1(a) (y)(iv) at any time and from time to time shall be
referred to as the “Formula Amount”. The Revolving Advances shall be
evidenced by one or more secured promissory notes (collectively, the “Revolving
Credit Notes”) substantially in the form attached hereto as Exhibit
2.1(a).
(b) Sub-Limitations on
Advances.
(i) Advances Against Eligible
Inventory. Aggregate Advances made on account of Eligible
Inventory hereunder and aggregate advances made on account of eligible inventory
under the U.S. Loan Agreement shall not exceed, at any time, an amount equal to:
(A) $15,000,000 from July 15th of
each year through November 15th of
each year, and (B) $25,000,000 from November 16th of
each year through July 14th of
the immediately succeeding year. Aggregate Advances made on account
of Eligible Inventory hereunder shall not exceed, at any time, an amount equal
to: (A) $2,000,000 from July 15th of
each year through November 15th of
each year, and (B) $2,800,000 from November 16th of
each year through July 14th of
the immediately succeeding year.
(ii) Advances Against Eligible
Dating Receivables. Aggregate Advances on account of Eligible Dating
Receivables hereunder and under aggregate advances made on account of eligible
dating receivables the U.S. Loan Agreement shall not exceed, at any time, an
amount equal to: (A) $20,000,000 from June 1st of
each year through November 30th of
such year; and (B) $25,000,000 from December 1st of
each year through May 31st of
the immediately succeeding year.
(iii) Advances Against Eligible
Dating Receivables Extended Terms. Aggregate Advances against
Eligible Dating Receivables hereunder and under aggregate advances made on
account of eligible dating receivables the U.S. Loan Agreement due or
outstanding more than 270 days from their original invoice date shall not exceed
$500,000 at any time.
(c) Annual Pay
Down. Intentionally
Deleted
21
(d) Discretionary
Rights. The Advance Rates may be increased or decreased by
Agent at any time and from time to time in the exercise of its Permitted
Discretion. Borrower consents to any such increases or decreases and
acknowledges that decreasing the Advance Rates or increasing or imposing
reserves may limit or restrict Advances requested by Borrower. Agent
shall give Borrower five (5) days prior written notice of its intention to
decrease the Advance Rates; provided however, if as a result of a field exam or
the completion of an Inventory appraisal, Agent elects to decrease the Advance
rates, impose a new reserve(s) or impose new ineligible(s) and such modification
would cause the Advances calculated under the Formula Amount to be reduced by
more than 20%, Agent will provide Borrower with notice ten (10) days prior to
instituting such modification.. The rights of Agent under this
subsection are subject to the provisions of Section 16.2(b).
2.2.
Procedure for Revolving
Advances Borrowing.
(a) Borrower
may notify Agent prior to 12:00 Noon central time on a Business Day of
Borrower’s request to incur, on that day, a Revolving Advance
hereunder. Should any amount required to be paid as interest
hereunder, or as fees or other charges under this Agreement or any other
agreement with Agent or Lenders, or with respect to any other Obligation, become
due, same shall be deemed a request for a Revolving Advance as of the date such
payment is due, in the amount required to pay in full such interest, fee, charge
or Obligation under this Agreement or any other agreement with Agent or Lenders,
and such request shall be irrevocable.
(b) Notwithstanding
the provisions of subsection (a) above, in the event Borrower desires to obtain
a Eurodollar Rate Loan for any Advance (other than a Swing Loan, which may not
be a Eurodollar Rate Loan), Borrower shall give Agent written notice by no later
than 12:00 Noon, central time on the day which is three (3) Business Days prior
to the date such Eurodollar Rate Loan is to be borrowed, specifying (i) the date
of the proposed borrowing (which shall be a Business Day), (ii) the type of
borrowing and the amount on the date of such Advance to be borrowed, which
amount shall be in a minimum amount of $500,000 and in integral multiples of
$100,000 thereafter, and (iii) the duration of the first Interest Period
therefor. Interest Periods for Eurodollar Rate Loans shall be for
one, two or three months; provided, if an Interest Period would end on a day
that is not a Business Day, it shall end on the next succeeding Business Day
unless such day falls in the next succeeding calendar month in which case the
Interest Period shall end on the next preceding Business Day. No
Eurodollar Rate Loan shall be made available to Borrower during the continuance
of a Default or an Event of Default. After giving effect to each
requested Eurodollar Rate Loan, including those which are converted from a Base
Rate Loan under Section 2.2(d), there shall not be outstanding more than four
(4) Eurodollar Rate Loans, in the aggregate.
(c) Each
Interest Period of a Eurodollar Rate Loan shall commence on the date such
Eurodollar Rate Loan is made, continued or converted and shall end on such date
as Borrower may elect as set forth in subsection (b)(iii) above provided that
the exact length of each Interest Period shall be determined in accordance with
the practice of the interbank market for offshore Dollar deposits and no
Interest Period shall end after the last day of the Term.
22
Borrower shall elect the initial Interest Period applicable to a Eurodollar Rate
Loan by its notice of borrowing given to Agent pursuant to Section 2.2(b) or by
its notice of conversion or continuation given to Agent pursuant to Section
2.2(d), as the case may be. Borrower shall elect the duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not later than 12:00 Noon on the day which is three (3) Business Days
prior to the last day of the then current Interest Period applicable to such
Eurodollar Rate Loan. If Agent does not receive timely notice of the
Interest Period elected by Borrower, Borrower shall be deemed to have elected to
convert to a Base Rate Loan subject to Section 2.2(d) hereinbelow.
(d) Provided
that no Event of Default shall have occurred and be continuing, Borrower may, on
the last Business Day of the then current Interest Period applicable to any
outstanding Eurodollar Rate Loan, or on any Business Day with respect to Base
Rate Loans, convert any such loan into a loan of another type in the same
aggregate principal amount provided that any conversion of a Eurodollar Rate
Loan shall be made only on the last Business Day of the then current Interest
Period applicable to such Eurodollar Rate Loan or continue any Eurodollar Rate
Loan for the same Interest Period. If Borrower desires to convert or
continue a loan, Borrower shall give Agent written notice by no later than 12:00
Noon, central time (i) on the day which is three (3) Business Days’ prior to the
date on which such conversion is to occur with respect to a conversion from a
Base Rate Loan to a Eurodollar Rate Loan or a continuation of a Eurodollar Rate
Loan, or (ii) on the day which is one (1) Business Day prior to the date on
which such conversion is to occur with respect to a conversion from a Eurodollar
Rate Loan to a Base Rate Loan, specifying, in each case, the date of such
conversion, the loans to be converted and if the conversion is from a Base Rate
Loan to any other type of loan, the duration of the first Interest Period
therefor.
(e) At its
option and upon written notice given prior to 12:00 Noon, central time at least
three (3) Business Days’ prior to the date of such prepayment, Borrower may
prepay the Eurodollar Rate Loans in whole at any time or in part from time to
time with accrued interest on the principal being prepaid to the date of such
repayment. Borrower shall specify the date of prepayment of Advances
which are Eurodollar Rate Loans and the amount of such prepayment. In
the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current Interest Period
with respect thereto, Borrower shall indemnify Agent and Lenders therefor in
accordance with Section 2.2(f) hereof.
(f) Borrower
shall indemnify Agent and Lenders and hold Agent and Lenders harmless from and
against any and all losses or expenses that Agent and Lenders may sustain or
incur as a consequence of any prepayment, conversion of or any default by
Borrower in the payment of the principal of or interest on any Eurodollar Rate
Loan or failure by Borrower to complete a borrowing of, a prepayment of or
conversion of or to a Eurodollar Rate Loan after notice thereof has been given,
including, but not limited to, any interest payable by Agent or Lenders to
lenders of funds obtained by it in order to make or maintain its Eurodollar Rate
Loans hereunder. A certificate as to any additional amounts payable
pursuant to the foregoing sentence submitted by Agent or any Lender to Borrower
shall be conclusive absent manifest error.
(g) Notwithstanding
any other provision hereof, if any Applicable Law or any change therein or in
the interpretation or application thereof, shall make it unlawful for any
(i) Lender
(for purposes of this subsection (g), the term “Lender” shall include any Lender
and the
23
office or
branch where any Lender or any corporation or bank controlling such Lender makes
or maintains any Eurodollar Rate Loans) to make or maintain its Eurodollar Rate
Loans, the obligation of Lenders to make Eurodollar Rate Loans hereunder shall
forthwith be cancelled and Borrower shall, if any affected Eurodollar Rate Loans
are then outstanding, promptly upon request from Agent, either pay all such
affected Eurodollar Rate Loans or convert such affected Eurodollar Rate Loans
into loans of another type. If any such payment or conversion of any
Eurodollar Rate Loan or is made on a day that is not the last day of the
Interest Period applicable to such Eurodollar Rate Loan or, Borrower shall pay
Agent, upon Agent’s request, such amount or amounts as may be necessary to
compensate Lenders for any loss or expense sustained or incurred by Lenders in
respect of such Eurodollar Rate Loan as a result of such payment or conversion,
including (but not limited to) any interest or other amounts payable by Lenders
to lenders of funds obtained by Lenders in order to make or maintain such
Eurodollar Rate Loan. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Lenders to Borrower
shall be conclusive absent manifest error.
2.3.
Disbursement of Advance
Proceeds. All Advances shall be disbursed from whichever
office or other place Agent may designate from time to time and, together with
any and all other Obligations of Borrower to Agent or Lenders, shall be charged
to Borrower’s Account on Agent’s books. During the Term, Borrower may
use the Revolving Advances and Swing Loans by borrowing, prepaying and
reborrowing, all in accordance with the terms and conditions
hereof. The proceeds of each Revolving Advance requested by Borrower
or deemed to have been requested by Borrower under Section 2.2(a) hereof shall,
with respect to requested Revolving Advances to the extent Lenders make such
Revolving Advances, be made available to Borrower on the day so requested by way
of credit to Borrower’s operating account at NCB, or such other bank as Borrower
may designate following notification to Agent, in immediately available funds
or, with respect to Revolving Advances deemed to have been requested by
Borrower, be disbursed to Agent to be applied to the outstanding Obligations
giving rise to such deemed request. The proceeds of each Swing Loan
requested by Borrower shall be made available to Borrower on the day so
requested by way of credit to Borrower’s operating account at NCB, or such other
bank as Borrower may designate following notification to Agent, in immediately
available funds.
2.4.
Swing
Loans.
(a) Subject
to the terms and conditions hereof and relying upon the representations and
warranties herein set forth, and in order to minimize the transfer of funds
between Lenders and Agent for administrative convenience, NCB may make available
to Borrower, at its option, cancelable at any time for any reason whatsoever,
Swing Loans denominated in U.S. Dollars at any time or from time to time after
the date hereof to, but not including, the expiration of the Term, in an
aggregate principal amount up to but not in excess of the Maximum Swing Loan
Advance Amount, provided that the outstanding aggregate principal amount of
Swing Loans and the Revolving Advances at any one time outstanding shall not
exceed an amount equal to the lesser of (i) the Maximum Revolving Advance Amount
or (ii) the Formula Amount. To the extent that Borrower requests a Revolving
Advance at any time and to the extent that Borrower is entitled to obtain a
Revolving Advance from Lenders under the terms and conditions of this Agreement,
NCB may elect to provide all or a portion of such Revolving Advances in the form
of Swing Loans in accordance with the terms hereof. The making
of
24
Swing
Loans by NCB from time to time shall not create any duty or obligation, or
establish any course of conduct, pursuant to which NCB shall thereafter be
obligated to make Swing Loans in the future. All Swing Loans shall be
evidenced by a secured promissory note (the “Swing Loan Note”) substantially in
the form attached hereto as Exhibit 2.4(a).
(b) Except as
otherwise provided herein, Borrower may from time to time prior to the
expiration of the Term request NCB to make Swing Loans by delivery to NCB, not
later than 12 Noon central time on the proposed borrowing date of a duly
completed request therefor substantially in the form of Exhibit 2.4(b) hereto or
a request by telephone immediately confirmed in writing by letter, facsimile or
telex (each, a “Swing Loan Request”), it being understood that NCB may rely on
the authority of any individual making such a telephonic request without the
necessity of receipt of such written confirmation. Each Swing Loan
Request shall be irrevocable and shall specify the proposed borrowing date and
the principal amount of such Swing Loan, which shall be not less than
$50,000. Each Swing Loan Request shall be deemed a representation by
Borrower that Borrower has satisfied all of the conditions for the Swing Loan so
requested set forth in this Agreement.
2.5.
Maximum
Advances. The aggregate balance of Revolving Advances plus Swing Loans
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount or (b) the Formula Amount.
2.6.
Repayment of
Advances.
(a) The
Revolving Advances and Swing Loans shall be due and payable in full on the last
day of the Term subject to earlier prepayment as herein provided.
(b) Borrower
recognizes that the amounts evidenced by checks, notes, drafts or any other
items of payment relating to and/or proceeds of Collateral may not be
collectible by Agent on the date received. In consideration of
Agent’s agreement to conditionally credit Borrower’s Account as of the next
Business Day following Agent’s receipt of those items of payment, Borrower
agrees that, in computing the charges under this Agreement, all items of payment
shall be deemed applied by Agent on account of the Obligations one (1) Business
Day after (i) the Business Day of Agent’s receipt of such payments via wire
transfer or electronic depository check or (ii) in the case of payments received
by Agent in any other form, the Business Day such payment constitutes good funds
in Agent’s account. Agent is not, however, required to conditionally
credit Borrower’s Account for the amount of any item of payment which is
unsatisfactory to Agent and Agent may charge Borrower’s Account for the amount
of any item of payment which was conditionally credited but which is
subsequently returned to Agent unpaid.
(c) All
payments of principal, interest and other amounts payable hereunder, or under
any of the Other Documents shall be made to Agent at the Payment Office not
later than 12:00 Noon central time on the due date therefor in lawful money of
the United States of America in federal funds or other funds immediately
available to Agent. Agent shall have the right to effectuate payment
on any and all Obligations due and owing hereunder by charging Borrower’s
Account or by making Advances as provided in Section 2.2 hereof.
25
(d) Borrower
shall pay principal, interest, and all other amounts payable hereunder, or under
any related agreement, without any deduction whatsoever, including, but not
limited to, any deduction for any setoff or counterclaim.
2.7.
Repayment of Excess
Advances. The aggregate balance of Advances outstanding at any
time in excess of the maximum amount of Advances permitted hereunder shall be
immediately due and payable without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred.
2.8.
Statement of
Account. Agent shall maintain, in accordance with its
customary procedures, a loan account (“Borrower’s Account”) in the name of
Borrower in which shall be recorded the date, amount and currency of each
Advance made by Agent and the date, amount and currency of each payment in
respect thereof; provided, however, the failure by Agent to record the date,
amount and currency of any Advance shall not adversely affect Agent or any
Lender. Each month, Agent shall send to Borrower a statement showing
the accounting for the Advances made, payments made or credited in respect
thereof, and other transactions between Agent and Borrower during such
month. The monthly statements shall be deemed correct and binding
upon Borrower in the absence of manifest error and shall constitute an account
stated between Lenders and Borrower unless Agent receives a written statement of
Borrower’s specific exceptions thereto within sixty (60) days after such
statement is received by Borrower. The records of Agent with respect
to the loan account shall be conclusive evidence absent manifest error of the
amounts of Advances and other charges thereto and of payments applicable
thereto.
2.9.
Additional
Payments. Any sums expended by Agent or any Lender due to
Borrower’s failure to perform or comply with its obligations under this
Agreement or any Other Document including Borrower’s obligations under Sections
4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof, may be charged to Borrower’s Account
as a Revolving Advance and added to the Obligations.
2.10.
Manner of Borrowing and
Payment.
(a) Each
borrowing of Revolving Advances shall be advanced according to the applicable
Commitment Percentages of Lenders.
(b) Each
payment (including each prepayment) by Borrower on account of the principal of
and interest on the Revolving Advances, shall be applied to the Revolving
Advances pro rata according to the applicable Commitment Percentages of
Lenders. Each payment by Borrower on account of the principal and
interest on Swing Loans shall be applied to Swing Loans for the account of
NCB. Except as expressly provided herein, all payments (including
prepayments) to be made by Borrower on account of principal, interest and fees
shall be made without set off or counterclaim and shall be made to Agent on
behalf of Lenders to the Payment Office, in each case on or prior to 12:00 Noon,
central time, in Dollars and in immediately available funds. Agent
shall have the right to apply such payments against outstanding obligations
denominated in either Dollars or Canadian Dollars, and may effect currency
exchange transactions in order to do so.
26
(c) (i) Making Revolving Credit
Advances. Promptly after receipt by Agent of a request for a
Revolving Advance pursuant to Section 2.2(a), Agent shall notify Lenders of its
receipt of such request specifying the information provided by Borrower and the
apportionment among Lenders of the requested Revolving Advance as determined by
Agent. Each Lender shall remit the principal amount of each Revolving
Advance to Agent such that Agent is able to, and Agent shall, to the extent
Lenders have made funds available to it for such purpose and subject to Section
8.2, fund such Revolving Advance to Borrower in U.S. Dollars and immediately
available funds at the Payment Office prior to 12:00 Noon, central time, on the
applicable borrowing date; provided that if any
Lender fails to remit such funds to Agent in a timely manner, Agent may elect in
its sole discretion to fund with its own funds the Revolving Advance of such
Lender on such borrowing date, and such Lender shall be subject to the repayment
obligation in Section 2.10(c)(ii).
(ii) Presumptions by
Agent. Unless Agent shall have received notice from a Lender
prior to the proposed date of any Revolving Advance that such Lender will not
make available to Agent such Lender’s Commitment Percentage of such Revolving
Advance, Agent may assume that such Lender has made such share available on such
date in accordance with Section 2.10(c) (i) and may, in reliance upon such
assumption, make available to Borrower a corresponding amount. In
such event, if a Lender has not in fact made its share of the applicable
Revolving Advance available to Agent, then the applicable Lender and Borrower
severally agree to pay to Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date such amount is
made available to Borrower to but excluding the date of payment to Agent, at (i)
in the case of a payment to be made by such Lender, the greater of the Federal
Funds Effective Rate and a rate determined by Agent in accordance with banking
industry rules on interbank compensation, and (ii) in the case of a payment to
be made by Borrower, the interest rate applicable to Revolving Advances
consisting of Base Rate Loans. If such Lender pays its share of the
applicable Revolving Advance to Agent, then the amount so paid shall constitute
such Lender’s Revolving Advance. Any payment by Borrower shall be
without prejudice to any claim Borrower may have against a Lender that shall
have failed to make such payment to Agent.
(iii) Making Swing
Loans. So long as NCB elects to make Swing Loans, NCB shall,
after receipt by it of a Swing Loan Request pursuant to Section 2.4(b), fund
such Swing Loan to Borrower in immediately available funds at the Payment Office
prior to 3:00 p.m. central time on the borrowing date.
(iv) Borrowings to Repay Swing
Loans. NCB may, at its option, exercisable at any time for any
reason whatsoever, demand repayment of the Swing Loans, and each Lender shall
make a Revolving Advance in an amount equal to such Lender’s Commitment
Percentage of the aggregate principal amount of the outstanding Swing Loans,
plus, if NCB so requests, accrued interest thereon, provided that no Lender
shall be obligated in any event to make Revolving Advances in an amount in
excess of its Commitment Percentage times the Maximum
Revolving Advance Amount. Revolving Advances made pursuant to the
preceding sentence shall bear interest at the interest rate applicable to
Revolving Advances consisting of Base Rate Loans, and shall be deemed to have
been properly requested in accordance with Section 2.2(a) without regard to any
of the requirements of that provision. NCB shall provide notice to
Lenders (which may be telephonic or written notice by letter, facsimile or
electronic
27
transmission)
that such Revolving Advances are to be made under this Section 2.10(c)(iv) and
of the apportionment among Lenders, and Lenders shall be unconditionally
obligated to fund such Revolving Advances (whether or not the conditions
specified in Section 8.2 are then satisfied) by the time NCB so requests, which
shall not be earlier than 2:00 p.m. central time on the Business Day next after
the date Lenders receive such notice from NCB. If any such amount is
not transferred to NCB by any Lender on such settlement date, NCB shall be
entitled to recover such amount on demand from such Lender together with
interest thereon as specified in Section 2.1.3.
(d) (i) Notwithstanding
anything to the contrary contained in Sections 2.10(a) and (b) hereof,
commencing with the first Business Day following the Closing Date, each
borrowing of Revolving Advances shall be advanced by Agent and each payment by
Borrower on account of Revolving Advances shall be applied first to those
Revolving Advances advanced by Agent. On or before 1:00 p.m., central
time, on each Settlement Date commencing with the first Settlement Date
following the Closing Date, Agent and Lenders shall make certain payments as
follows: (I) if the aggregate amount of new Revolving Advances made by Agent
during the preceding Week (if any) exceeds the aggregate amount of repayments
applied to outstanding Revolving Advances during such preceding Week, then each
Lender shall provide Agent with funds in an amount equal to its applicable
Commitment Percentage of the difference between (w) such Revolving Advances and
(x) such repayments and (II) if the aggregate amount of repayments applied to
outstanding Revolving Advances during such Week exceeds the aggregate amount of
new Revolving Advances made during such Week, then Agent shall provide each
Lender with funds in an amount equal to its applicable Commitment Percentage of
the difference between (y) such repayments and (z) such Revolving
Advances.
(ii) Each
Lender shall be entitled to earn interest at the applicable Contract
Rate on outstanding Advances which it has funded.
(iii) Promptly
following each Settlement Date, Agent shall submit to each Lender a certificate
with respect to payments received and Advances made during the Week immediately
preceding such Settlement Date. Such certificate of Agent shall be
conclusive in the absence of manifest error.
(e) If any
Lender or Participant (a “Benefited Lender”) shall at any time receive any
payment of all or part of its Advances, or interest thereon, or receive any
Collateral in respect thereof (whether voluntarily or involuntarily or by
set-off) in a greater proportion than any such payment to and Collateral
received by any other Lender, if any, in respect of such other Lender’s
Advances, or interest thereon, and such greater proportionate payment or receipt
of Collateral is not expressly permitted hereunder, such Benefited Lender shall
purchase for cash from the other Lenders a participation in such portion of each
such other Lender’s Advances, or shall provide such other Lender with the
benefits of any such Collateral, or the proceeds thereof, as shall be necessary
to cause such Benefited Lender to share the excess payment or benefits of such
Collateral or proceeds ratably with each of the other Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such Benefited Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest. Each Lender so purchasing a portion
of another Lender’s Advances may exercise all rights of payment (including
rights of set-off) with respect to such portion as fully as if such Lender were
the direct holder of such portion.
28
(f) Unless
Agent shall have been notified by telephone, confirmed in writing, by any Lender
that such Lender will not make the amount which would constitute its applicable
Commitment Percentage of the Advances available to Agent, Agent may (but shall
not be obligated to) assume that such Lender shall make such amount available to
Agent on the next Settlement Date and, in reliance upon such assumption, make
available to Borrower a corresponding amount. Agent will promptly
notify Borrower of its receipt of any such notice from a Lender. If
such amount is made available to Agent on a date after such next Settlement
Date, such Lender shall pay to Agent on demand an amount equal to the product of
(i) the daily average Federal Funds Rate (computed on the basis of a year of 360
days) during such period as quoted by Agent, times (ii) such amount, times (iii)
the number of days from and including such Settlement Date to the date on which
such amount becomes immediately available to Agent. A certificate of
Agent submitted to any Lender with respect to any amounts owing under this
paragraph (e) shall be conclusive, in the absence of manifest
error. If such amount is not in fact made available to Agent by such
Lender within three (3) Business Days after such Settlement Date, Agent shall be
entitled to recover such an amount, with interest thereon at the rate per annum
then applicable to such Revolving Advances hereunder, on demand from Borrower;
provided, however, that Agent’s right to such recovery shall not prejudice or
otherwise adversely affect Borrower’s rights (if any) against such
Lender.
2.11.
Mandatory
Prepayments.
(a) Subject
to Section 4.3(b) hereof, when Borrower sells or otherwise disposes of any
Collateral other than (i) Inventory in the Ordinary Course of Business, Borrower
shall repay the Advances, subject to the right to reborrow hereunder, in an
amount equal to the net cash proceeds of such sale (i.e., gross proceeds less
the reasonable costs of such sales or other dispositions less any holdbacks or
escrowed funds less any outstanding Indebtedness secured by a Permitted
Encumbrance on such Collateral and required to be paid in connection with such
sale or disposition) or (ii) the sale of Equipment which is subsequently
replaced in accordance with Section 4.3, Borrower shall repay the Advances in an
amount equal to the net cash proceeds of such sale, in each case, such
repayments to be made promptly but in no event more than one (1) Business Day
following receipt of such net cash proceeds, and until the date of payment, such
proceeds shall be held in trust for Agent. The foregoing shall not be
deemed to be implied consent to any such sale otherwise prohibited by the terms
and conditions hereof. Repayments under this paragraph (a) shall be
applied, to the outstanding principal balance of the Revolving Advances and
Swing Loans (in the order determined by Agent), provided that, after the occurrence and
during the continuance of an Event of Default, such repayments shall be applied
to the Advances and the other Obligations in such order as Agent may determine
in its sole discretion.
(b) Upon
either (i) the issuance and/or incurrence of any Indebtedness for borrowed money
(other than Indebtedness permitted in accordance with the provisions of Section
7.8) by Borrower or (ii) the issuance of any additional Equity Interests (other
than Equity Interests issued to employees, officers or directors of Borrower) or
receipt of any additional capital contributions by Borrower (not including any
contributions made in the form of equity for the purposes of funding Capital
Expenditures by Borrower), Borrower shall repay the Advances, subject to the
right to reborrow hereunder, in an amount equal to the net cash proceeds of such
issuance, incurrence and/or capital contribution (i.e., gross proceeds less the
reasonable costs of
29
such
issuance, incurrence and/or capital contribution), such repayments to be made
promptly but in no event more than one (1) Business Day following receipt of
such net proceeds, and until the date of payment, such proceeds shall be held in
trust for Agent pursuant to an express trust hereby, separate and segregated
from all other funds, assets and property of Borrower. The foregoing
shall not be deemed to be implied consent to any such issuance and/or incurrence
of Indebtedness or issuance of additional Equity Interests otherwise prohibited
by the terms and conditions hereof (to the extent, if any, of any such
prohibition contained herein).
(c) Upon (i)
payment by any insurer of any proceeds under any insurance policy of Borrower in
respect of any destruction, damage or other casualty event with respect to any
property or assets of Borrower or (ii) payment of any award in respect of any
exercise of eminent domain, condemnation or other taking by any Governmental
Body with respect to any property or assets of Borrower, Borrower shall repay
the Advances as and to the extent required by Section 4.11 below.
2.12.
Use of
Proceeds.
Borrower shall apply the proceeds of
Advances to provide for its working capital needs and to make Intercompany
Loans.
2.13.
Defaulting
Lender.
(a) Notwithstanding
anything to the contrary contained herein, in the event any Lender (x) has
refused (which refusal constitutes a breach by such Lender of its obligations
under this Agreement) to make available its portion of any Advance or (y)
notifies either Agent or Borrower that it does not intend to make available its
portion of any Advance (if the actual refusal would constitute a breach by such
Lender of its obligations under this Agreement) (each, a “Lender Default”), all
rights and obligations hereunder of such Lender (a “Defaulting Lender”) as to
which a Lender Default is in effect and of the other parties hereto shall be
modified to the extent of the express provisions of this Section 2.13 while such
Lender Default remains in effect.
(b) Advances
(other than Swing Loans, which shall be advanced by NCB) shall be incurred pro
rata from Lenders (the “Non-Defaulting Lenders”) which are not Defaulting
Lenders based on their respective Commitment Percentages, and no Commitment
Percentage of any Lender or any pro rata share of any Advances required to be
advanced by any Lender shall be increased as a result of such Lender
Default. Amounts received in respect of principal of any type of
Advances shall be applied to reduce the applicable Advances of each Lender
(other than any Defaulting Lender) pro rata based on the aggregate of the
outstanding Advances of that type of all Lenders at the time of such
application; provided, that, Agent shall not be obligated to transfer to a
Defaulting Lender any payments received by Agent for the Defaulting Lender’s
benefit, nor shall a Defaulting Lender be entitled to the sharing of any
payments hereunder (including
any principal, interest or fees). Amounts payable to a Defaulting
Lender shall instead be paid to or retained by Agent. Agent may hold
and, in its discretion, re-lend to Borrower the amount of such payments received
or retained by it for the account of such Defaulting Lender.
30
(c) A
Defaulting Lender shall not be entitled to give instructions to Agent or to
approve, disapprove, consent to or vote on any matters relating to this
Agreement and the Other Documents. All amendments, waivers and other
modifications of this Agreement and the Other Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of “Required
Lenders”, a Defaulting Lender shall be deemed not to be a Lender and not to have
either Advances outstanding or a Commitment Percentage.
(d) Other
than as expressly set forth in this Section 2.13, the rights and obligations of
a Defaulting Lender (including the obligation to indemnify Agent) and the other
parties hereto shall remain unchanged. Nothing in this Section 2.13
shall be deemed to release any Defaulting Lender from its obligations under this
Agreement and the Other Documents, shall alter such obligations, shall operate
as a waiver of any default by such Defaulting Lender hereunder, or shall
prejudice any rights which Borrower, Agent or any Lender may have against any
Defaulting Lender as a result of any default by such Defaulting Lender
hereunder.
(e) In the
event a Defaulting Lender retroactively cures to the satisfaction of Agent the
breach which caused a Lender to become a Defaulting Lender, such Defaulting
Lender shall no longer be a Defaulting Lender and shall be treated as a Lender
under this Agreement.
III.
INTEREST
AND FEES.
3.1.
Interest.
(a) Interest
on Advances shall be payable in arrears on the first day of each month with
respect to Base Rate Loans and, with respect to Eurodollar Rate Loans, at the
end of each Interest Period. Interest charges shall be computed on
the actual principal amount of Advances outstanding during the month at a rate
per annum equal to (i) with respect to Revolving Advances, the applicable
Revolving Interest Rate and (ii) with respect to Swing Loans, the rate set forth
in subclause (a) of the definition of Revolving Interest Rate (as applicable,
the “Contract Rate”). Whenever, subsequent to the date of this
Agreement, the Alternate Base Rate is increased or decreased, the applicable
Contract Rate shall be similarly changed without notice or demand of any kind by
an amount equal to the amount of such change in the Alternate Base Rate during
the time such change or changes remain in effect. The Eurodollar Rate
shall be adjusted with respect to Eurodollar Rate Loans without notice or demand
of any kind on the effective date of any change in the Reserve Percentage as of
such effective date. Upon and after the occurrence of an Event of
Default, and during the continuation thereof, at the option of Agent or at the
direction of Required Lenders, the Obligations shall bear interest at the
applicable Contract Rate plus two (2%) percent
per annum (as applicable, the “Default Rate”).
(b) For the
purposes of the Interest Act
(Canada) and disclosure thereunder, whenever any interest or any fee to
be paid hereunder or in connection herewith is to be calculated on the basis of
a 360-day year, the yearly rate of interest to which the rate used in such
calculation is equivalent is the rate so used multiplied by the actual number of
days in the calendar year in which the same is to be ascertained and divided by
360. The rates of interest under this Agreement are nominal rates,
and not effective rates or yields. The principle of deemed
reinvestment of interest does not apply to any interest calculation under this
Agreement.
31
(c) Any
provision of this Agreement that would oblige Borrower to pay any fine, penalty
or rate of interest on any arrears of principal or interest secured by a
mortgage on real property or hypothec on immovables that has the effect of
increasing the charge on arrears beyond the rate of interest payable on
principal money not in arrears shall not apply to Borrower, which shall be
required to pay interest on money in arrears at the same rate of interest
payable on principal money not in arrears.
(d) If any
provision of this Agreement would oblige Borrower to make any payment of
interest or other amount payable to any Lender in an amount or calculated at a
rate which would be prohibited by law or would result in a receipt by that
Lender of “interest” at a “criminal rate” (as such terms are construed under the
Criminal Code
(Canada)), then, notwithstanding such provision, such amount or rate
shall be deemed to have been adjusted with retroactive effect to the maximum
amount or rate of interest, as the case may be, as would not be so prohibited by
applicable law or so result in a receipt by that Lender of “interest” at a
“criminal rate”, such adjustment to be effected, to the extent necessary (but
only to the extent necessary), as follows:
(i) first, by
reducing the amount or rate of interest; and
(ii) thereafter,
by reducing any fees, commissions, costs, expenses, premiums and other amounts
required to be paid which would constitute interest for purposes of
section 347 of the Criminal Code
(Canada).
3.2.
Facility
Fee. If, for any calendar quarter during the Term, the average
daily unpaid balance of the Revolving Advances (and for purposes of this
calculation, all Swing Loans advanced by NCB shall be treated as Revolving
Advances) for each day of such calendar quarter does not equal the Maximum
Revolving Advance Amount, then Borrower shall pay to Agent for the ratable
benefit of Lenders a fee at a rate equal to one-half of one percent (.50%) per
annum on the amount by which the Maximum Revolving Advance Amount exceeds such
average daily unpaid balance of Revolving Advances. Such fee shall be
payable to Agent in arrears on the first day of each calendar quarter with
respect to the previous calendar quarter.
3.3.
Fees.
(a) Borrower
shall pay the closing fee to the Agent in the amount of $37,500 on the Closing
Date.
(b) Agent
may, in its Permitted Discretion, exercised in a commercially reasonable manner,
at any time after the Closing Date, engage the services of an independent
appraisal firm or firms of reputable standing, satisfactory to Agent, for the
purpose of appraising the then current values of Borrower’s Inventory. Absent
the occurrence and continuance of an Event of
Default at such time, Agent shall consult with Borrower as to the identity of
any such firm. All of the fees and out-of-pocket costs and expense of
any such firm (collectively, “appraisal amounts”) shall be paid for when due, in
full and without off-set, by Borrower. In the event the value of
Borrower’s Inventory, as so determined pursuant to such appraisal, is less than
anticipated by Agent or Lenders, such that the Revolving Advances against
Eligible Inventory, are in fact in excess of such Advances permitted hereunder,
then, promptly upon Agent’s written
32
demand
for same, Borrower shall make mandatory prepayments of the then outstanding
Revolving Advances made against such Eligible Inventory so as to eliminate the
excess Advances, provided that, so long as no Default or Event of Default has
occurred hereunder, Agent shall not charge Borrower for more than (i) two such
examinations in the first year from the Closing Date and (ii) one such
examination in each year thereafter.
3.4.
Computation of Interest and
Fees. Interest and fees hereunder shall be computed on the
basis of a year of 360 days and for the actual number of days
elapsed. If any payment to be made hereunder becomes due and payable
on a day other than a Business Day, the due date thereof shall be extended to
the next succeeding Business Day and interest thereon shall be payable at the
applicable Contract Rate during such extension.
3.5.
Maximum
Charges. In no event whatsoever shall interest and other
charges charged hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed hereunder would otherwise exceed
the highest rate permitted under law, such excess amount shall be first applied
to any unpaid principal balance owed by Borrower, and if the then remaining
excess amount is greater than the previously unpaid principal balance, Lenders
shall promptly refund such excess amount to Borrower and the provisions hereof
shall be deemed amended to provide for such permissible rate.
3.6.
Increased
Costs. In the event that any Applicable Law or any change
therein or in the interpretation or application thereof, or compliance by any
Lender (for purposes of this Section 3.6, the term “Lender” shall include Agent
or any Lender and any corporation or bank controlling Agent or any Lender) and
the office or branch where Agent or any Lender (as so defined) makes or
maintains any Eurodollar Rate Loans with any request or directive (whether or
not having the force of law) from any central bank or other financial, monetary
or other authority, shall:
(a) subject
Agent or any Lender to any tax of any kind whatsoever with respect to this
Agreement or any Other Document or change the basis of taxation of payments to
Agent or any Lender of principal, fees, interest or any other amount payable
hereunder or under any Other Documents (except for changes in the rate of tax on
the overall net income of Agent or any Lender by the jurisdiction in which it
maintains its principal office);
(b) impose,
modify or hold applicable any reserve, special deposit, assessment or similar
requirement against assets held by, or deposits in or for the account of,
advances or loans by, or other credit extended by, any office of Agent or any
Lender, including pursuant to Regulation D of the Board of Governors of the
Federal Reserve System; or
(c) impose on
Agent or any Lender or the London interbank Eurodollar market any other
condition with respect to this Agreement or any Other Document;
and
the result of any of the foregoing is to increase the cost to Agent or any
Lender of making, renewing or maintaining its Advances hereunder by an amount
that Agent or such Lender deems to be material or to reduce the amount of any
payment (whether of principal, interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material, then, in
any case Borrower shall promptly pay Agent or such Lender, upon
33
its
demand, such additional amount as will compensate Agent or such Lender for such
additional cost or such reduction, as the case may be, provided that the
foregoing shall not apply to increased costs which are reflected in the
Eurodollar Rate, as the case may be. Agent or such Lender shall
certify the amount of such additional cost or reduced amount to Borrower, and
such certification shall be conclusive absent manifest error.
3.7.
Basis For Determining
Interest Rate Inadequate or Unfair. In the event that Agent or
any Lender shall have determined that:
(a) reasonable
means do not exist for ascertaining the Eurodollar Rate applicable pursuant to
Section 2.2 hereof for any Interest Period; or
(b) Dollar
deposits in the relevant amount and for the relevant maturity are not available
in the London interbank Eurodollar market, with respect to an outstanding
Eurodollar Rate Loan, a proposed Eurodollar Rate Loan, or a proposed conversion
of a Base Rate Loan into a Eurodollar Rate Loan,
then
Agent shall give Borrower prompt written, telephonic or telegraphic notice of
such determination. If such notice is given, (i) any such requested
Eurodollar Rate Loan shall be made as a Base Rate Loan, unless Borrower shall
notify Agent no later than 10:00 a.m. (Toronto time) two (2) Business Days prior
to the date of such proposed borrowing, that its request for such borrowing
shall be cancelled or made as an unaffected type of Eurodollar Rate Loan, (ii)
any Base Rate Loan or Eurodollar Rate Loan which was to have been converted to
an affected type of Eurodollar Rate Loan shall be continued as or converted into
a Base Rate Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m.
(Toronto time) two (2) Business Days prior to the proposed conversion, shall be
maintained as an unaffected type of Eurodollar Rate Loan, and (iii) any
outstanding affected Eurodollar Rate Loans shall be converted into a Base Rate
Loan, or, if Borrower shall notify Agent, no later than 10:00 a.m. (Toronto
time) two (2) Business Days prior to the last Business Day of the then current
Interest Period applicable to such affected Eurodollar Rate Loan, shall be
converted into an unaffected type of Eurodollar Rate Loan, on the last Business
Day of the then current Interest Period for such affected Eurodollar Rate
Loans. Until such notice has been withdrawn, Lenders shall have no
obligation to make an affected type of Eurodollar Rate Loan or maintain
outstanding affected Eurodollar Rate Loans and Borrower shall not have the right
to convert a Base Rate Loan or an unaffected type of Eurodollar Rate Loan into
an affected type of Eurodollar Rate Loan.
3.8.
Capital
Adequacy.
(a) In the
event that Agent or any Lender shall have determined that any Applicable Law or
guideline regarding capital adequacy, or any change therein, or any change in
the interpretation or administration thereof by any Governmental Body, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Agent or any Lender (for purposes of this Section 3.8,
the term “Lender” shall include Agent or any Lender and any corporation or bank
controlling Agent or any Lender) and the office or branch where Agent or any
Lender (as so defined) makes or maintains any Eurodollar Rate Loans 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
34
reducing
the rate of return on Agent or any Lender’s capital as a consequence of its
obligations hereunder to a level below that which Agent or such Lender could
have achieved but for such adoption, change or compliance (taking into
consideration Agent’s and each Lender’s policies with respect to capital
adequacy) by an amount deemed by Agent or any Lender to be material, then, from
time to time, Borrower shall pay upon demand to Agent or such Lender such
additional amount or amounts as will compensate Agent or such Lender for such
reduction. In determining such amount or amounts, Agent or such
Lender may use any reasonable averaging or attribution methods. The
protection of this Section 3.8 shall be available to Agent and each Lender
regardless of any possible contention of invalidity or inapplicability with
respect to the Applicable Law or condition; provided, however, that Agent and
Lenders shall demonstrate to Borrower that they have availed themselves of such
protections with regard to their respective other similarly situated
Borrower.
(b) A
certificate of Agent or such Lender setting forth such amount or amounts as
shall be necessary to compensate Agent or such Lender with respect to Section
3.8(a) hereof when delivered to Borrower shall be conclusive absent manifest
error.
3.9.
Gross Up for
Taxes. If Borrower shall be required by Applicable Law to
withhold or deduct any taxes from or in respect of any sum payable under this
Agreement or any of the Other Documents to Agent, or any Lender, assignee of any
Lender, or Participant (each, individually, a “Payee” and collectively, the
“Payees”), (a) the sum payable to such Payee or Payees, as the case may be,
shall be increased as may be necessary so that, after making all required
withholding or deductions, the applicable Payee or Payees receives an amount
equal to the sum it would have received had no such withholding or deductions
been made (the “Gross-Up Payment”), (b) Borrower shall make such withholding or
deductions, and (c) Borrower shall pay the full amount withheld or deducted to
the relevant taxation authority or other authority in accordance with Applicable
Law. Notwithstanding the foregoing, no Borrower shall be obligated to
make any portion of the Gross-Up Payment that is attributable to any withholding
or deductions that would not have been paid or claimed had the applicable Payee
or Payees properly claimed a complete exemption with respect thereto pursuant to
this Section 3.9. Any Payee that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located or any treaty to which such jurisdiction is a party with
respect to payments hereunder, shall deliver to the Borrower such properly
completed and executed documentation, if any, prescribed by applicable law or
treaty as will permit such payments to be made without withholding or at a
reduced rate, and if any Payee receives or is granted any tax credit or
deduction which in its reasonable judgment is allocable to a Gross-Up Payment,
such Payee shall pay to the Borrower the amount of such credit or deduction to
the extent it will leave the Payee in no worse position than it would have been
if the Borrower had not been required to make the Gross-Up
Payment. Nothing contained herein shall interfere with the right of
any Payee to arrange its tax affairs in whatever manner it deems appropriate or
to claim relief from a tax liability in priority to any other credit or
deduction available to it.
35
IV.
COLLATERAL: GENERAL TERMS
4.1.
Security Interest in the
Collateral.
(a) To secure
the prompt payment and performance to Agent and each Lender of the Obligations,
Borrower hereby assigns, pledges and grants to Agent for its benefit and for the
ratable benefit of each Lender a continuing security interest in and to and Lien
on all of its Collateral, whether now owned or existing or hereafter acquired or
arising and wheresoever located. Borrower shall mark its books and
records as may be necessary or appropriate to evidence, protect and perfect
Agent’s security interest and shall cause its financial statements to reflect
such security interest. Borrower shall promptly provide Agent with
written notice of all commercial tort claims, such notice to contain the case
title together with the applicable court and a brief description of the
claim(s). Upon delivery of each such notice, Borrower shall be deemed
to hereby grant to Agent a security interest and lien in and to such commercial
tort claims and all proceeds thereof.
(b) Borrower
confirms that value has been given by Agent to Borrower, that Borrower has
rights in the Collateral existing at the date of this Agreement and that
Borrower and Agent have not agreed to postpone the time for attachment of any of
the Liens to any of the Collateral. The Liens will have effect and be
deemed to be effective whether or not the Obligations or any part thereof are
owing or in existence before or after or upon the date of this
Agreement.
4.2. Perfection of Security
Interest. Borrower shall take all action that may be necessary
or desirable, or that Agent may request, so as at all times to maintain the
validity, perfection, enforceability and priority of Agent’s security interest
in and Lien on the Collateral or to enable Agent to protect, exercise or enforce
its rights hereunder and in the Collateral, including, but not limited to, (i)
immediately discharging all Liens other than Permitted Encumbrances, (ii)
obtaining Lien Waiver Agreements, (iii) delivering to Agent, endorsed or
accompanied by such instruments of assignment as Agent may specify, and stamping
or marking, in such manner as Agent may specify, any and all chattel paper,
instruments, letters of credits and advices thereof and documents evidencing or
forming a part of the Collateral, (iv) entering into warehousing, lockbox and
other custodial arrangements satisfactory to Agent, and (v) executing and
delivering financing statements, control agreements, instruments of pledge,
mortgages, notices and assignments, in each case in form and substance
satisfactory to Agent, relating to the creation, validity, perfection,
maintenance or continuation of Agent’s security interest and Lien under the
PPSA, the Uniform Commercial Code or other Applicable Law. By its
signature hereto, Borrower hereby authorizes Agent to file against Borrower, one
or more financing, continuation or amendment statements pursuant to the PPSA,
the Uniform Commercial Code in form and substance satisfactory to Agent (which
statements may have a description of collateral which is broader than that set
forth herein). All charges, expenses and fees Agent may incur in
doing any of the foregoing, and any local taxes relating thereto, shall be
charged to Borrower’s Account as a Revolving Advance of a Base Rate Loan and
added to the Obligations, or, at Agent’s option, shall be paid to Agent for its
benefit and for the ratable benefit of Lenders immediately upon
demand.
4.3. Disposition of
Collateral. Borrower will safeguard and protect all Collateral
for Agent’s general account and make no disposition thereof whether by sale,
lease or otherwise except (a) the sale of Inventory in the Ordinary Course of
Business, and (b) the disposition or transfer of obsolete and worn-out Equipment
in the Ordinary Course of Business or Equipment no longer used or useful in
Borrower’s business during any fiscal year having an aggregate
fair
36
market
value of not more than $250,000 and only to the extent that (i) the net proceeds
of any such disposition of Equipment are either (i) used to acquire replacement
Equipment which is subject to Agent’s security interest subject to any other
Permitted Encumbrance, (ii) remitted to any holder of a Permitted Encumbrance on
such Equipment to the extent of such Person’s prior Lien on such Equipment, or
(iii) remitted to Agent to the extent required under Section 2.11 to be applied
pursuant to Section 2.11.
4.4.
Preservation of
Collateral. In addition to the rights and remedies set forth
in Section 11.1 hereof, Agent: (a) may at any time take such steps as Agent
deems necessary in its Permitted Discretion to protect Agent’s interest in and
to preserve the Collateral, including the hiring of such security guards or the
placing of other security protection measures as Agent may deem appropriate; (b)
may employ and maintain at any of Borrower’s premises a custodian who shall have
full authority to do all acts necessary to protect Agent’s interests in the
Collateral; (c) may lease warehouse facilities to which Agent may move all or
part of the Collateral; (d) may use Borrower’s owned or leased lifts, hoists,
trucks and other facilities or equipment for handling or removing the
Collateral; and (e) shall have, and is hereby granted, a right of ingress and
egress to the places where the Collateral is located, and may proceed over and
through any of Borrower’s owned or leased property. Borrower shall
cooperate fully with all of Agent’s efforts to preserve the Collateral and will
take such actions to preserve the Collateral as Agent may direct. All
of Agent’s expenses of preserving the Collateral, including any expenses
relating to the bonding of a custodian, shall be charged to Borrower’s Account
as a Revolving Advance and added to the Obligations.
4.5.
Ownership of
Collateral.
(a) With
respect to the Collateral, at the time the Collateral becomes subject to Agent’s
security interest: (i) Borrower shall be the sole owner of and fully
authorized and able to sell, transfer, pledge and/or grant a security interest
in each and every item of the its respective Collateral to Agent; and, except
for Permitted Encumbrances the Collateral shall be free and clear of all Liens
and encumbrances whatsoever; (ii) each document and agreement executed by
Borrower or delivered to Agent or any Lender in connection with this Agreement
shall be true and correct in all respects; (iii) all signatures and endorsements
of Borrower that appear on such documents and agreements shall be genuine and
Borrower shall have full capacity to execute same; and (iv) Borrower’s Equipment
and Inventory shall be located as set forth on Schedule 4.5 and shall not be
removed from such location(s) without the prior written consent of Agent except
with respect to the sale of Inventory in the Ordinary Course of Business and
Equipment to the extent permitted in Section 4.3 hereof.
(b) (i) There
is no location at which Borrower has any Inventory (except for Inventory in
transit) other than those locations listed on Schedule 4.5; (ii) Schedule 4.5
hereto contains a correct and complete list, as of the Closing Date, of the
legal names and addresses of each warehouse at which Inventory of Borrower is
stored; none of the receipts received by Borrower from any warehouse states that
the goods covered thereby are to be delivered to bearer or to the order of a
named Person or to a named Person and such named Person’s assigns; (iii)
Schedule 4.5 hereto sets forth a correct and complete list as of the Closing
Date of (A) each place of business of Borrower and (B) the chief executive
office of Borrower; and (iv) Schedule 4.5 hereto sets forth a correct and
complete list as of the Closing Date of the location, by province
37
and
street address, of all Real Property owned or leased by Borrower, together with
the names and addresses of any landlords.
4.6.
Defense of Agent’s and
Lenders’ Interests. Until (a) payment and performance in full
of all of the Obligations (other than indemnification obligations for which no
claim has been made) and (b) termination of this Agreement, Agent’s interests in
the Collateral shall continue in full force and effect. During such
period the Borrower shall not, without Agent’s prior written consent, pledge,
sell (except Inventory in the Ordinary Course of Business and other Collateral
to the extent permitted in Section 4.3 hereof), assign, transfer, create or
suffer to exist a Lien upon or encumber or allow or suffer to be encumbered in
any way except for Permitted Encumbrances, any part of the
Collateral. Borrower shall defend Agent’s interests in the Collateral
against any and all Persons whatsoever. At any time following demand
by Agent for payment of all Obligations, Agent shall have the right to take
possession of the indicia of the Collateral and the Collateral in whatever
physical form contained, including: labels, stationery, documents,
instruments and advertising materials. If Agent exercises this right
to take possession of the Collateral, Borrower shall, upon demand, assemble it
in the best manner possible and make it available to Agent at a place reasonably
convenient to Agent. In addition, with respect to all Collateral,
Agent and Lenders shall be entitled to all of the rights and remedies set forth
herein and further provided by the PPSA, the Uniform Commercial Code or other
Applicable Law. Borrower shall, and Agent may, at its option,
instruct all suppliers, carriers, forwarders, warehousers or others receiving or
holding cash, checks, Inventory, documents or instruments in which Agent holds a
security interest to deliver same to Agent and/or subject to Agent’s order and
if they shall come into Borrower’s possession, they, and each of them, shall be
held by Borrower in trust as Agent’s trustee, and Borrower will immediately
deliver them to Agent in their original form together with any necessary
endorsement.
4.7.
Books and
Records. Borrower shall: (a) keep proper books of record and
account in which full, true and correct entries will be made of all dealings or
transactions of or in relation to its business and affairs; (b) set up on its
books accruals with respect to all taxes, assessments, charges, levies and
claims; and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables, advances and investments and
all other proper accruals (including by reason of enumeration, accruals for
premiums, if any, due on required payments and accruals for depreciation,
obsolescence, or amortization of properties), which should be set aside from
such earnings in connection with its business. All determinations
pursuant to this subsection shall be made in accordance with, or as required by,
GAAP consistently applied in the opinion of such independent public accountant
as shall then be regularly engaged by Borrower.
4.8.
Financial
Disclosure. Borrower hereby irrevocably authorizes and directs
all accountants and auditors employed by Borrower at any time during the Term to
exhibit and deliver to Agent and each Lender copies of any of Borrower’s
financial statements, trial balances or other accounting records of any sort in
the accountant’s or auditor’s possession, and to disclose to Agent and each
Lender any information such accountants may have concerning Borrower’s financial
status and business operations. Borrower hereby authorizes all
Governmental Bodies to furnish to Agent and each Lender copies of reports or
examinations relating to Borrower, whether made by Borrower or otherwise;
however, Agent and each Lender
38
will
attempt to obtain such information or materials directly from Borrower prior to
obtaining such information or materials from such accountants or Governmental
Bodies.
4.9.
Compliance with
Laws. Borrower shall comply with all Applicable Laws with
respect to the Collateral or any part thereof or to the operation of Borrower’s
business the non-compliance with which could reasonably be expected to have a
Material Adverse Effect. Borrower may, however, contest or dispute
any Applicable Laws in any reasonable manner, provided that any related Lien is
inchoate or stayed and sufficient reserves are established to the reasonable
satisfaction of Agent to protect Agent’s Lien on or security interest in the
Collateral.
4.10.
Inspection of
Premises. At all reasonable times and so long as no Event of
Default has occurred and is continuing, upon contemporaneous notice to Borrower,
Agent and each Lender shall have full access to and the right to audit, check,
inspect and make abstracts and copies from Borrower’s books, records, audits,
correspondence and all other papers relating to the Collateral and the operation
of Borrower’s business. Subject to the foregoing, Agent, any Lender
and their agents may enter upon any premises of Borrower at any time during
business hours and at any other reasonable time, and from time to time, for the
purpose of inspecting the Collateral and any and all records pertaining thereto
and the operation of Borrower’s business; provided, that Agent shall use its
best efforts to conduct such inspections in a manner that will not interfere
with Borrower’s continued operations and no Lender shall have the independent
right to enter the premises of Borrower without Agent.
4.11.
Insurance. The
assets and properties of Borrower at all times shall be maintained in accordance
with the requirements of all insurance carriers which provide insurance with
respect to the assets and properties of Borrower so that such insurance shall
remain in full force and effect. Borrower shall bear the full risk of
any loss of any nature whatsoever with respect to the Collateral. At
Borrower’s own cost and expense in amounts and with carriers acceptable to
Agent, Borrower shall: (a) keep all its insurable properties and properties in
which Borrower has an interest insured against the hazards of fire, flood,
sprinkler leakage, those hazards covered by “all-risk” coverage insurance and
such other hazards, and for such amounts, as is customary in the case of
companies engaged in businesses similar to Borrower’s including business
interruption insurance; (b) maintain crime and fiduciary liability insurance in
such amounts as is customary in the case of companies engaged in businesses
similar to Borrower insuring against larceny, embezzlement or other criminal
misappropriation of insured’s officers and employees who may either singly or
jointly with others at any time have access to the assets or funds of Borrower
either directly or through authority to draw upon such funds or to direct
generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others; (d) maintain all such worker’s compensation or similar
insurance as may be required under the laws of any state or jurisdiction in
which Borrower is engaged in business; (e) furnish Agent with (i) evidence of
the maintenance of such policies by the renewal thereof at least fifteen (15)
days before any expiration date, and (ii) appropriate loss payable endorsements
in form and substance satisfactory to Agent, naming Agent as a loss payee as its
interests may appear with respect to all insurance
coverage referred to in clause (a) above, and as an additional insured with
respect to all insurance coverage referred to in clause (c) above, and providing
(A) that all proceeds under all insurance coverage referred to in clause (a)
above shall be payable to Agent, (B) no such insurance shall be affected by any
act or neglect of the insured or owner of the property
39
described
in such policy. Borrower shall not cancel, amend or terminate such policy and
loss payable clauses referred to in clause (e) above unless at least thirty (30)
days’ prior written notice is given to Agent. In the event of any
loss under all insurance coverage referred to in clause (a) above, the carriers
named therein hereby are directed by Agent and the Borrower to make payment for
such loss to Agent and not to Borrower and Agent jointly. If any
insurance losses are paid by check, draft or other instrument payable to
Borrower and Agent jointly, Agent may endorse Borrower’s name thereon and do
such other things as Agent may deem advisable to reduce the same to
cash. Agent is hereby authorized to adjust and compromise claims
under insurance coverage referred to in clauses (a), and (b) above; provided
however, that so long as no Default or Event of Default has occurred or is
continuing, Borrower shall have the right to adjust and compromise claims in
amounts less than $250,000. All loss recoveries upon any such
insurance shall be applied to the Obligations, in such order as Agent in its
sole discretion shall determine. Any surplus shall be paid by Agent
to Borrower or applied as may be otherwise required by law. Any
deficiency thereon shall be paid by Borrower to Agent, on demand.
4.12.
Failure to Pay
Insurance. If Borrower fails to obtain insurance as
hereinabove provided, or to keep the same in force, Agent, if Agent so elects,
may obtain such insurance and pay the premium therefor on behalf of Borrower,
and charge Borrower’s Account therefor as a Revolving Advance of a Base Rate
Loan and such expenses so paid shall be part of the Obligations.
4.13.
Payment of
Taxes. Except to the extent such charges are Properly
Contested, Borrower will pay, when due, all taxes, assessments and other Charges
lawfully levied or assessed upon Borrower or any of the Collateral including
real and personal property taxes, assessments and charges and all franchise,
income, employment, social security benefits, withholding, and sales
taxes. If any tax by any Governmental Body is or may be imposed on or
as a result of any transaction between Borrower and Agent or any Lender which
Agent or any Lender may be required to withhold or pay or if any taxes,
assessments, or other Charges remain unpaid after the date fixed for their
payment, or if any claim shall be made which, in Agent’s or any Lender’s
opinion, may possibly create a valid Lien on the Collateral, Agent may without
notice to Borrower pay the taxes, assessments or other Charges and Borrower
hereby indemnifies and holds Agent and each Lender harmless in respect
thereof. Agent will not pay any taxes, assessments or Charges to the
extent that Borrower has Properly Contested such charges. The amount
of any payment by Agent under this Section 4.13 shall be charged to Borrower’s
Account as a Revolving Advance of a Base Rate Loan and added to the Obligations
and, until Borrower shall furnish Agent with an indemnity therefor (or supply
Agent with evidence satisfactory to Agent that due provision for the payment
thereof has been made), Agent may hold without interest any balance standing to
Borrower’s credit and Agent shall retain its security interest in and Lien on
any and all Collateral held by Agent.
4.14.
Payment of Leasehold
Obligations. Borrower shall at all times pay, when and as due,
its rental obligations under all leases under which it is a tenant, and shall
otherwise comply, in all material respects, with all other terms of such leases
and keep them in full force and effect and, at Agent’s request will provide
evidence of having done so; provided, that the foregoing will not apply to any
leases Borrower have for reasonable business purposes elected to terminate early
and from which Borrower have removed Collateral to another location otherwise in
compliance herewith.
40
4.15. Receivables.
(a) Nature of
Receivables. Each of the Receivables shall be a bona fide and
valid account representing a bona fide indebtedness incurred by the Customer
therein named, for a fixed sum as set forth in the invoice relating thereto
(provided immaterial or unintentional invoice errors shall not be deemed to be a
breach hereof) with respect to an absolute sale or lease and delivery of goods
upon stated terms of Borrower, or work, labor or services theretofore rendered
by Borrower as of the date each Receivable is created. Same shall be
due and owing in accordance with the Borrower’s standard terms of sale without
dispute, setoff or counterclaim except as may be stated on the accounts
receivable schedules delivered by Borrower to Agent.
(b) Solvency of
Customers. Each Customer, to the best of Borrower’s knowledge,
as of the date each Receivable is created, is and will be solvent and able to
pay all Receivables on which the Customer is obligated in full when due or with
respect to such Customers of Borrower who are not to Borrower’s knowledge
solvent Borrower has set up on its books and in its financial records bad debt
reserves adequate to cover such Receivables.
(c) Location of
Borrower. Borrower’s chief executive office is located at the
office identified on Schedule 4.15 attached hereto. Until written
notice is given to Agent by Borrower of any other office at which Borrower keeps
its records pertaining to Receivables, all such records shall be kept at such
executive office.
(d) Collection of
Receivables. Except as permitted in Section 4.15(g) hereof,
until Borrower’s authority to do so is terminated by Agent (which notice Agent
may give at any time following the occurrence of an Event of Default or a
Default or when Agent in its Permitted Discretion deems it to be in Lenders’
best interest to do so), Borrower will, at Borrower’s sole cost and expense, but
on Agent’s behalf and for Agent’s account, collect as Agent’s property and in
trust for Agent all amounts received on Receivables, and shall not commingle
such collections with Borrower’s funds or use the same except to pay
Obligations. Borrower shall deposit in the Blocked Account or, upon
request by Agent, deliver to Agent, in original form and on the date of receipt
thereof, all checks, drafts, notes, money orders, acceptances, cash and other
evidences of Indebtedness.
(e) Notification of Assignment
of Receivables. At any time following the occurrence of an
Event of Default or when Agent in its Permitted Discretion deems it in Lenders’
best interest to do so, Agent shall have the right to send notice of the
assignment of, and Agent’s security interest in and Lien on, the Receivables to
any and all Customers or any third party in possession of or with other rights
in any of the Collateral. Thereafter, Agent shall have the sole right
to collect the Receivables, take possession of the Collateral, or
both. Agent’s actual collection expenses, including, but not limited
to, stationery and postage, telephone and telegraph, secretarial and clerical
expenses and the salaries of any collection personnel used for collection, may
be charged to Borrower’s Account and added to the Obligations.
41
Borrower
hereby constitutes Agent or Agent’s designee as Borrower’s attorney with power
(i) at any time: (A) to endorse Borrower’s name upon any notes, acceptances,
checks, drafts, money orders or other evidences of payment or Collateral; (B) to
sign Borrower’s name on any invoice or bill of lading relating to any of the
Receivables, drafts against Customers, assignments and verifications of
Receivables; (C) to send verifications of Receivables to any Customer; (D) to
sign Borrower’s name on all financing statements or any other documents or
instruments deemed necessary or appropriate by Agent to preserve, protect, or
perfect Agent’s interest in the Collateral and to file same; and (ii) at any
time following the occurrence of a Default or Event of Default: (A) to demand
payment of the Receivables; (B) to enforce payment of the Receivables by legal
proceedings or otherwise; (C) to exercise all of Borrower’s rights and remedies
with respect to the collection of the Receivables and any other Collateral; (D)
to settle, adjust, compromise, extend or renew the Receivables; (E) to settle,
adjust or compromise any legal proceedings brought to collect Receivables; (F)
to prepare, file and sign Borrower’s name on a proof of claim in bankruptcy or
similar document against any Customer; (G) to prepare, file and sign Borrower’s
name on any notice of Lien, assignment or satisfaction of Lien or similar
document in connection with the Receivables; (H) to accept the return of goods
represented by any of the Receivables without notice to or consent by Borrower,
without discharging or in any way affecting Borrower’s liability hereunder and
(I) to do all other acts and things necessary to carry out this
Agreement. All acts of said attorney or designee are hereby ratified
and approved, and said attorney or designee shall not be liable for any acts of
omission or commission nor for any error of judgment or mistake of fact or of
law, unless done maliciously or with gross (not mere) negligence (as determined
by a court of competent jurisdiction in a final non-appealable judgment); this
power being coupled with an interest is irrevocable while any of the Obligations
remain unpaid. Agent shall have the right at any time after the
occurrence of an Event of Default change the address for delivery of mail
addressed to Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to Borrower.
(g) Establishment of a Lockbox
Account, Dominion Account. All proceeds of Collateral shall be
deposited by Borrower into either (i) a lockbox account, dominion account or
such other “blocked account” (“Blocked Accounts”) established at a bank or banks
(each such bank, a “Blocked Account Bank”) pursuant to an arrangement with such
Blocked Account Bank as may be selected by Borrower and be acceptable to Agent
or (ii) depository accounts (“Depository Accounts”) established at Agent for the
deposit of such proceeds. Borrower, Agent and each Blocked Account
Bank shall enter into a deposit account control agreement in form and substance
satisfactory to Agent directing such Blocked Account Bank, upon notice from
Agent, to transfer such funds so deposited to Agent, either to any account
maintained by Agent at said Blocked Account Bank or by wire transfer to
appropriate account(s) of Agent. All funds deposited in such Blocked
Accounts shall immediately become the property of Agent and Borrower shall
obtain the agreement by such Blocked Account Bank to waive any offset rights
against the funds so deposited. Neither Agent nor any Lender assumes
any responsibility for such blocked account arrangement, including any claim of
accord and satisfaction or release with respect to deposits accepted by any
Blocked Account Bank thereunder. All deposit accounts and investment
accounts of Borrower are set forth on Schedule
4.15(g). Notwithstanding anything to the
contrary set forth in this Section 4.15(g), Borrower shall be permitted to
deposit checks or other payments received at Borrower’s locations in the
Ordinary Course of Business in deposit accounts which may not be subject to a
blocked account or similar agreements; provided that, at
42
no time
shall Borrower have more than $50,000 in the aggregate in all such accounts
which are not Blocked Accounts or Depository Accounts.
(h) Adjustments. Borrower
will not, without Agent’s consent, compromise or adjust any material amount of
the Receivables (or extend the time for payment thereof) or accept any material
returns of merchandise or grant any additional discounts, allowances or credits
thereon except for those compromises, adjustments, returns, discounts, credits
and allowances as granted in the Ordinary Course of Business of
Borrower.
4.16.
Intentionally
Omitted
4.17.
Maintenance of
Equipment. The Equipment shall be maintained in good operating
condition and repair (reasonable wear and tear excepted) and all necessary
replacements of and repairs thereto shall be made so that the value and
operating efficiency of the Equipment shall be maintained and
preserved. Borrower shall not use or operate the Equipment in
violation of any law, statute, ordinance, code, rule or regulation the violation
of which would reasonably be expected to have a Material Adverse
Effect. Borrower shall have the right to sell Equipment to the extent
set forth in Section 4.3 hereof.
4.18.
Exculpation of
Liability. Nothing herein contained shall be construed to
constitute Agent or any Lender as Borrower’s agent for any purpose whatsoever,
nor shall Agent or any Lender be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof. Neither
Agent nor any Lender, whether by anything herein or in any assignment or
otherwise, assume any of Borrower’s obligations under any contract or agreement
assigned to Agent or such Lender, and neither Agent nor any Lender shall be
responsible in any way for the performance by Borrower of any of the terms and
conditions thereof.
4.19.
Environmental
Matters.
(a) Borrower
shall ensure that the Real Property and all operations and businesses conducted
thereon remains in material compliance with all Environmental Laws and shall not
place or permit to be placed any Hazardous Substances on any Real Property
except as permitted by Applicable Law or appropriate governmental
authorities.
(b) Borrower
shall maintain procedures to assure and monitor continued material compliance
with all applicable Environmental Laws which procedures shall include periodic
reviews of such compliance.
(c) Borrower
shall (i) employ in connection with the use of the Real Property appropriate
technology necessary to maintain compliance with any applicable Environmental
Laws and (ii) dispose of any and all Hazardous Waste generated at the Real
Property only at facilities and with carriers that maintain valid permits under
any applicable Environmental Laws. Borrower shall use its best
efforts to obtain certificates of disposal, such as hazardous waste manifest
receipts, from all treatment, transport, storage or disposal facilities or
operators employed by Borrower in connection with the transport or disposal of
any Hazardous Waste generated at the Real Property.
43
(d) In the
event Borrower obtains, gives or receives written notice of any Release or
threat of Release of a reportable quantity of any Hazardous Substances at the
Real Property (any such event being hereinafter referred to as a “Hazardous
Discharge”) or receives any written notice of violation, request for information
or notification that it is potentially responsible for investigation or cleanup
of environmental conditions at the Real Property, demand letter or complaint,
order, citation, or other written notice with regard to any Hazardous Discharge
or violation of Environmental Laws affecting the Real Property or Borrower’s
interest therein (any of the foregoing is referred to herein as an
“Environmental Complaint”) from any Person, including any Governmental Body
responsible in whole or in part for environmental matters in the province in
which the Real Property is located (any such person or entity hereinafter the
“Authority”), then Borrower shall, within five (5) Business Days, give written
notice of same to Agent detailing facts and circumstances of which Borrower is
aware giving rise to the Hazardous Discharge or Environmental
Complaint. Such information is to be provided to allow Agent to
protect its security interest in and Lien on the Real Property and the
Collateral and is not intended to create nor shall it create any obligation upon
Agent or any Lender with respect thereto.
(e) Borrower
shall promptly forward to Agent copies of any written request for information,
notification of potential liability, demand letter relating to potential
responsibility with respect to the investigation or cleanup of Hazardous
Substances at any other site owned, operated or used by Borrower to dispose of
Hazardous Substances and shall continue to forward copies of correspondence
between Borrower and the Authority regarding such claims to Agent until the
claim is settled. Borrower shall promptly forward to Agent copies of
all documents and reports concerning a Hazardous Discharge at the Real Property
that Borrower is required to file under any Environmental Laws. Such
information is to be provided solely to allow Agent to protect Agent’s security
interest in and Lien on the Real Property and the Collateral.
(f) Borrower
shall respond promptly as required by Environmental Laws to any Hazardous
Discharge or Environmental Complaint and take all necessary action in order to
safeguard the health of any Person and to avoid subjecting the Collateral or
Real Property to any Lien. If Borrower shall fail to respond promptly
to any Hazardous Discharge or Environmental Complaint or Borrower shall fail to
comply with any of the requirements of any Environmental Laws, Agent on behalf
of Lenders may, but without the obligation to do so, for the sole purpose of
protecting Agent’s interest in the Collateral: (i) give such notices or (ii)
enter onto the Real Property (or authorize third parties to enter onto the Real
Property) and take such actions as Agent (or such third parties as directed by
Agent) deem reasonably necessary or advisable, to clean up, remove, mitigate or
otherwise deal with any such Hazardous Discharge or Environmental
Complaint. All reasonable costs and expenses incurred by Agent and
Lenders (or such third parties) in the exercise of any such rights, including
any sums paid in connection with any judicial or administrative investigation or
proceedings, fines and penalties, together with interest thereon from the date
expended at the Default Rate for Base Rate Loans constituting Revolving Advances
shall be paid upon demand by Borrower, and until paid shall be added to and
become a part of the Obligations secured by the Liens created by the terms of
this Agreement or any other agreement between Agent, any Lender and
Borrower.
44
(g) Promptly
upon the written request of Agent from time to time, Borrower shall provide
Agent, at Borrower’s expense, with an environmental site assessment or
environmental audit report prepared by an environmental engineering firm
acceptable in the reasonable opinion of Agent, to assess with a reasonable
degree of certainty the existence of a Hazardous Discharge and the potential
costs in connection with abatement, cleanup and removal of any Hazardous
Substances found on, under, at or within the Real Property. Unless an
Event of Default has occurred, such requests shall be made no more frequently
than once per year unless Agent reasonably believes that a Hazardous Discharge
has occurred or an Environmental Complaint has been or will be
filed. Any report or investigation of such Hazardous Discharge
proposed and acceptable to an appropriate Authority that is charged to oversee
the clean-up of such Hazardous Discharge shall be acceptable to
Agent. If such estimates, individually or in the aggregate, exceed
$100,000, Agent shall have the right to require Borrower to post a bond, letter
of credit or other security reasonably satisfactory to Agent to secure payment
of these costs and expenses.
(h) Borrower
shall defend and indemnify Agent and Lenders and hold Agent, Lenders and their
respective employees, agents, directors and officers harmless from and against
all loss, liability, damage and expense, claims, costs, fines and penalties,
including attorney’s fees, suffered or incurred by Agent or Lenders under or on
account of any Environmental Laws, including the assertion of any Lien
thereunder, with respect to any Hazardous Discharge, the presence of any
Hazardous Substances affecting the Real Property, whether or not the same
originates or emerges from the Real Property or any contiguous real estate,
including any loss of value of the Real Property as a result of the foregoing,
except to the extent such loss, liability, damage, expense claim, cost, fine or
penalty is attributable to any Hazardous Discharge or the presence of any
Hazardous Substances resulting from (i) actions on the part of Agent or any
Lender or (ii) the actions of a third party which occur after the termination of
this Agreement. Borrower’s obligations under this Section 4.19 shall
arise upon the discovery of the presence of any Hazardous Substances at the Real
Property, whether or not any federal, provincial, or local environmental agency
has taken or threatened any action in connection with the presence of any
Hazardous Substances. Borrower’s obligation and the indemnifications
hereunder shall survive the termination of this Agreement.
(i) For
purposes of Section 4.19 and 5.7, all references to Real Property shall be
deemed to include all of Borrower’s right, title and interest in and to its
owned and leased premises.
4.20.
Financing
Statements. Except as respects the financing statements filed
by Agent and the financing statements described on Schedule 1.2, no financing
statement covering any of the Collateral or any proceeds thereof is on file in
any public office.
4.21.
Security Interest
Limitations. The security interests granted herein shall not
attach to (i) any consumer goods of Borrower, or (ii) the last day of any real
property lease, or any agreement to lease, to which Borrower is now or becomes a
party as lessee, provided that any such last day shall be held in trust by
Borrower for Agent and, on the exercise by Agent of it rights and remedies
hereunder, shall be assigned by Borrower as directed by
Agent. Notwithstanding Section 4.1 hereof, Agent shall only have a
security interest in, and not a present assignment of, any Canadian trademarks
forming part of the Collateral.
45
V. REPRESENTATIONS
AND WARRANTIES.
Borrower
represents and warrants as follows:
5.1.
Authority. Borrower
has full power, authority and legal right to enter into this Agreement and the
Other Documents and to perform all its respective Obligations hereunder and
thereunder. This Agreement and the Other Documents have been duly
executed and delivered by Borrower, and this Agreement and the Other Documents
constitute the legal, valid and binding obligation of Borrower enforceable in
accordance with their terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, moratorium or similar laws affecting
creditors’ rights generally. The execution, delivery and performance
of this Agreement and of the Other Documents (a) are within Borrower’s corporate
or limited liability company powers, as applicable, have been duly authorized by
all necessary corporate or company, action, as applicable are not in
contravention of law or the terms of Borrower’s by-laws, certificate of
incorporation or operating agreement, certificate of formation, as applicable,
or other applicable documents relating to Borrower’s formation or to the conduct
of Borrower’s business or of any material agreement or undertaking to which
Borrower is a party or by which Borrower is bound, (b) will not conflict with or
violate any law or regulation, or any judgment, order or decree of any
Governmental Body, (c) will not require the Consent of any Governmental Body or
any other Person, except those Consents set forth on Schedule 5.1 hereto, all of
which will have been duly obtained, made or compiled prior to the Closing Date
and which are in full force and effect and (d) will not conflict with, nor
result in any breach in any of the provisions of or constitute a default under
or result in the creation of any Lien except Permitted Encumbrances upon any
asset of Borrower under the provisions of any agreement, charter document,
instrument, by-laws or operating agreement or other instrument to which Borrower
is a party or by which it or its property is a party or by which it may be
bound.
5.2.
Formation and
Qualification.
(a) Borrower
is duly incorporated or formed, as applicable, and in good standing under the
laws of the jurisdiction listed on Schedule 5.2(a) and is qualified to do
business and is in good standing in the jurisdictions listed on Schedule 5.2(a)
which constitute all jurisdictions in which qualification and good standing are
necessary for Borrower to conduct its business and own its property and where
the failure to so qualify could reasonably be expected to have a Material
Adverse Effect on Borrower. Borrower has delivered to Agent true and
complete copies of its certificate of incorporation and by-laws or certificate
of formation and operating agreement, as applicable, and will promptly notify
Agent of any amendment or changes thereto.
(b) Borrower
has no Subsidiaries.
5.3.
Survival of Representations
and Warranties. All representations and warranties of Borrower
contained in this Agreement and the Other Documents shall be true at the time of
Borrower’s execution of this Agreement and the Other Documents, and shall
survive the execution, delivery and acceptance thereof by the parties thereto
and the closing of the transactions described therein or related
thereto.
46
5.4.
Tax
Returns. Borrower has filed all Canadian federal, provincial,
and local tax returns and other reports each is required by law to file and has
paid all taxes, assessments, fees and other governmental charges that are set
out in such returns and reports as being due and payable. Canadian
federal, provincial, and local income tax returns of Borrower have been assessed
by the appropriate taxing authorities for all fiscal years prior to and
including the fiscal year ending September 2008. The provision for
taxes on the books of Borrower is adequate for all years not closed by
applicable statutes, and for taxes accrued to date for its current fiscal year,
and no Borrower has any knowledge of any deficiency or additional assessment in
connection therewith not provided for on its books.
5.5. Intentionally
Omitted
5.6.
Entity
Names. Borrower has not been known by any other corporate name
in the five years preceding the date hereof and does not sell Inventory under
any other name except as set forth on Schedule 5.6, nor has Borrower been the
surviving corporation or company, as applicable, of a merger or consolidation or
acquired all or substantially all of the assets of any Person during the five
(5) years preceding the date hereof except as set forth on Schedule
5.6.
5.7.
Environmental
Compliance.
(a) Borrower
has duly complied with, and its facilities, business, assets, property,
leaseholds, Real Property and Equipment are in compliance in all material
respects with, the provisions of Environmental Laws; there have been no
outstanding citations, notices or orders of non-compliance issued to Borrower or
relating to its business, assets, property, leaseholds or Equipment under any
such laws, rules or regulations.
(b) Borrower
has been issued all required Canadian federal, provincial, and local licenses,
certificates or permits relating to all applicable Environmental Laws which are
material to the operation of the business.
(c) (i) There
are no visible signs of releases, spills, discharges, leaks or disposal
(collectively referred to as “Releases”) of Hazardous Substances at, upon, under
or within any Real Property including any premises leased by Borrower; (ii)
there are no underground storage tanks or polychlorinated biphenyls on the Real
Property including any premises leased by Borrower; (iii) the Real Property
including any premises leased by Borrower has never been used as a treatment,
storage or disposal facility of Hazardous Waste; and (iv) no Hazardous
Substances are present on the Real Property including any premises leased by
Borrower, excepting such quantities as are handled in accordance with all
applicable manufacturer’s instructions and governmental regulations and in
proper storage containers and as are necessary for the operation of the
commercial business of Borrower or of its tenants.
5.8.
Solvency; No Litigation,
Violation, Indebtedness or Default.
(a) After
giving effect to the Transactions, Borrower will be solvent, able to pay its
debts as they mature, will have capital sufficient to carry on its business and
all businesses in which it is about to engage, and (i) as of the Closing Date,
the fair present saleable value of its assets, calculated on a going concern
basis, is in excess of the amount of its liabilities
47
and (ii)
subsequent to the Closing Date, the fair saleable value of its assets
(calculated on a going concern basis) will be in excess of the amount of its
liabilities.
(b) Except as
disclosed in Schedule 5.8(b), Borrower does not have (i) any pending, or to
Borrower’s knowledge threatened, litigation, arbitration, actions or proceedings
which would reasonably expected to have a Material Adverse Effect, and (ii) any
liabilities or indebtedness for borrowed money other than the
Obligations.
(c) Borrower
is not in violation of (i) any applicable statute, law, rule, regulation or
ordinance or (ii) any order of any court, Governmental Body or arbitration board
or tribunal, in each case, in any respect which would reasonably be expected to
have a Material Adverse Effect.
5.9.
Patents, Trademarks,
Copyrights and Licenses. All patents, patent applications,
trademarks, trademark applications, service marks, service mark applications,
copyrights, copyright applications, design rights, tradenames, assumed names,
trade secrets and licenses owned by Borrower are set forth on Schedule 5.9, are
valid and have been duly registered or filed with all appropriate Governmental
Bodies and constitute all of the intellectual property rights which are
necessary for the operation of its business; there is no objection to or pending
challenge to the validity of any such patent, trademark, copyright, design
rights, tradename, trade secret or license and the Borrower is not aware of any
grounds for any challenge, except as set forth in Schedule 5.9
hereto. Each patent, patent application, patent license, trademark,
trademark application, trademark license, service mark, service mark
application, service mark license, design rights, copyright, copyright
application and copyright license owned or held by Borrower and all trade
secrets used by Borrower consist of original material or property developed by
Borrower or was lawfully acquired by Borrower from the proper and lawful owner
thereof. To the extent reasonably deemed necessary by Borrower for
the operation of its business, each of such items has been maintained so as to
preserve the value thereof from the date of creation or acquisition
thereof. With respect to all software used by Borrower, Borrower is
in possession of all source and object codes related to each piece of software
or owns or licenses such software or is the beneficiary of a source code escrow
agreement, each such source code escrow agreement being listed on Schedule 5.9
hereto.
5.10.
Licenses and
Permits. Except as set forth in Schedule 5.10, Borrower (a) is
in compliance with and (b) has procured and is now in possession of, all
material licenses or permits required by any applicable federal, provincial or local law,
rule or regulation for the operation of its business in each jurisdiction
wherein it is now conducting or proposes to conduct business and where the
failure to procure such licenses or permits could have a Material Adverse
Effect.
5.11.
Default of
Indebtedness. The Borrower is not in default in the payment of
the principal of or interest on any Indebtedness or under any instrument or
agreement under or subject to which any Indebtedness has been issued and no
event has occurred under the provisions of any such instrument or agreement
which with or without the lapse of time or the giving of notice, or both,
constitutes or would constitute an event of default thereunder.
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5.12.
No
Default. The Borrower is not in default in the payment or
performance of any of its contractual obligations the failure with which to
comply would reasonably be expected to have a Material Adverse Effect and no
Default has occurred.
5.13.
No Burdensome
Restrictions. The Borrower is not party to any contract or
agreement the performance of which would have a Material Adverse
Effect. Borrower has heretofore delivered to Agent true and complete
copies of all material contracts to which it is a party or to which it or any of
its properties is subject. Borrower has not agreed or consented to
cause or permit in the future (upon the happening of a contingency or otherwise)
any of its property, whether now owned or hereafter acquired, to be subject to a
Lien which is not a Permitted Encumbrance.
5.14.
No Labour
Disputes. Borrower is not involved in any material labor
dispute; there are no strikes or walkouts or union organization of Borrower’s
employees threatened or in existence and no labour contract is uled to expire
during the Term other than as set forth on Schedule 5.14 hereto.
5.15. Intentionally
Omitted
5.16. Intentionally
Omitted
5.17.
Disclosure. No
representation or warranty made by Borrower in this Agreement, the Perfection
Certificate, or in any financial statement, report, certificate or any other
document furnished in connection herewith or therewith contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no
fact known to Borrower or which reasonably should be known to Borrower which
Borrower has not disclosed to Agent in writing with respect to the transactions
contemplated or evidenced by this Agreement which would reasonably be expected
to have a Material Adverse Effect.
5.18.
Swaps. Borrower
is not a party to, nor will it be a party to, any swap agreement whereby
Borrower has agreed or will agree to swap interest rates or currencies unless
same provides that damages upon termination following an event of default
thereunder are payable on an unlimited “two-way basis” without regard to fault
on the part of either party.
5.19.
Conflicting
Agreements. No provision of any mortgage, indenture, contract,
agreement, judgment, decree or order binding on Borrower or affecting the
Collateral conflicts with, or requires any Consent which has not already been
obtained to, or would in any way prevent the execution, delivery or performance
of, the terms of this Agreement or the Other Documents.
5.20.
Application of Certain Laws
and Regulations. Neither Borrower nor any Affiliate of
Borrower is subject to any law, statute, rule or regulation which regulates the
incurrence of any Indebtedness, including laws, statutes, rules or regulations
relative to common or interstate carriers or to the sale of electricity, gas,
steam, water, telephone, telegraph or other public utility
services.
49
5.21. Business and Property of
Borrower. Upon and after the Closing Date, Borrower
does not propose to engage in any business other than the manufacture,
distribution and sale of primarily outdoor equipment, or as permitted in Section
7.9 and activities necessary to conduct the foregoing. On the Closing
Date and at all times thereafter, Borrower owns all the property and possess all
of the rights and Consents necessary for the conduct of the business of
Borrower.
5.22.
Intentionally
Omitted
5.23.
Anti-Terrorism
Laws.
(a) General. Neither
Borrower nor any Affiliate of Borrower is in violation of any Anti-Terrorism Law
or engages in or conspires to engage in any transaction that evades
or avoids, or has the purpose of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.
Intentionally
Omitted
5.24.
Intentionally
Omitted
5.25.
Intentionally
Omitted
5.26.
Equity
Interests. The authorized and outstanding Equity Interests of
Borrower is as shown on Schedule 5.27 hereto. All of the Equity
Interests of Borrower has been duly and validly authorized and issued and is
fully paid and non-assessable and has been sold and delivered to the holders
hereof in compliance with, or under valid exemption from, all Canadian federal
and provincial laws and the rules and regulations of each Governmental Body
governing the sale and delivery of securities. Except for the rights
and obligations shown on Schedule 5.27, there are no subscriptions, warrants,
options, calls, commitments, rights or agreement by which Borrower or any of the
shareholders of Borrower is bound relating to the issuance, transfer, voting or
redemption of shares of its Equity Interests or any pre-emptive rights held by
any Person with respect to the Equity Interests of Borrower. Except
as shown on Schedule 5.27, Borrower have not issued any securities convertible
into or exchangeable for shares of its Equity Interests or any options, warrants
or other rights to acquire such shares or securities convertible into or
exchangeable for such shares.
VI. AFFIRMATIVE
COVENANTS.
Borrower
shall, unless otherwise agreed in writing by the Required Lenders or the
Lenders, as applicable, or until payment in full of the Obligations and
termination of this Agreement:
6.1.
Payment of
Fees. Pay to Agent on demand all usual and customary fees and
expenses which Agent incurs in connection with (a) the forwarding of Advance
proceeds and (b) the establishment and maintenance of any Blocked Accounts or
Depository Accounts as provided for in Section 4.15(g). Agent may,
without making demand, charge Borrower’s Account for all such fees and
expenses.
50
6.2.
Conduct of Business and
Maintenance of Existence and Assets. (a) Conduct continuously
and operate actively its business according to good business practices and
maintain all of its properties useful or necessary in its business in good
working order and condition (reasonable wear and tear excepted and except as may
be disposed of in accordance with the terms of this Agreement), including all
licenses, patents, copyrights, design rights, tradenames, trade secrets and
trademarks and take all actions necessary to enforce and protect the validity of
any intellectual property right or other right included in the Collateral and
reasonably necessary for the operation of the Borrower’s business; (b) keep in
full force and effect its existence and comply in all material respects with the
laws and regulations governing the conduct of its business where the failure to
do so would reasonably be expected to have a Material Adverse Effect; and (c)
make all such reports and pay all such franchise and other taxes and license
fees and do all such other acts and things as may be lawfully required to
maintain its rights, licenses, leases, powers and franchises under the laws of
Canada or any political subdivision thereof where the failure to do so would
reasonably be expected to have a Material Adverse Effect.
6.3.
Violations. Promptly
notify Agent in writing of any violation of any law, statute, regulation or
ordinance of any Governmental Body, or of any agency thereof, applicable to
Borrower which would reasonably be expected to have a Material Adverse
Effect.
6.4.
Government
Receivables. To the extent that any Receivables from a
Governmental Body are included in the Formula Amount, take all steps necessary
to protect Agent’s interest in the Collateral under the Financial Administration
Act (Canada), the Uniform Commercial Code, the PPSA and all other applicable
statutes or ordinances and deliver to Agent appropriately endorsed, any
instrument or chattel paper connected with any Receivable arising out of
contracts between Borrower and the United States, any state, Canada, any
province, or any department, agency or instrumentality of any of
them.
6.5. Intentionally
Omitted
6.6.
Execution of Supplemental
Instruments. Execute and deliver to Agent from time to time,
upon demand, such supplemental agreements, statements, assignments and
transfers, or instructions or documents relating to the Collateral, and such
other instruments as Agent may request, in order that the full intent of this
Agreement may be carried into effect.
6.7.
Payment of
Indebtedness. Pay, discharge or otherwise satisfy at or before
maturity (subject, where applicable, to specified grace periods and, in the case
of the trade payables, to normal payment practices) all its obligations and
liabilities of whatever nature, except when the failure to do so would not
reasonably be expected to have a Material Adverse Effect or when the amount or
validity thereof being Properly Contested, subject at all times to any
applicable subordination arrangement in favor of Lenders.
VII.
NEGATIVE COVENANTS.
The
Borrower shall not, unless otherwise agreed in writing by the Required Lenders
or the Lenders, as applicable, or until satisfaction in full of the Obligations
and termination of this Agreement:
7.1. Merger, Consolidation, Acquisition and Sale
of Assets.
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(a) Enter into any merger, consolidation or other reorganization with or into any other Person or acquire all or a substantial portion of the assets or Equity Interests of any Person or permit any other Person to consolidate with or merge with it; provided that (i) Borrower may enter into Permitted Acquisitions and (ii) so long as no Default or Event of Default has occurred or is continuing, Borrower may, upon prior written notice to Agent, enter into any such transactions with another Borrower.
(b) Sell,
lease, transfer or otherwise dispose of any of its properties or assets, except
(i) dispositions of Collateral to the extent expressly permitted by Section 4.3
and (ii) any other sales or dispositions expressly permitted by this
Agreement.
7.2.
Creation of
Liens. Create or suffer to exist any Lien or transfer upon or
against any of its property or assets now owned or hereafter acquired, except
Permitted Encumbrances.
7.3.
Guarantees. Become
liable upon the obligations or liabilities of any Person by assumption,
endorsement or guaranty thereof or otherwise (other than to Lenders) except (a)
as disclosed on Schedule 7.3, (b) the endorsement of checks in the Ordinary
Course of Business and (c) the guarantee by Borrower of Indebtedness incurred by
another Borrower which is permitted under this Agreement.
7.4.
Investments. Purchase
or acquire obligations or Equity Interests of, or any other interest in, any
Person, except (a) obligations issued or guaranteed by the United States of
America or any agency thereof, (b) commercial paper with maturities of not more
than 180 days and a published rating of not less than A-1 or P-1 (or the
equivalent rating), (c) certificates of time deposit and bankers’ acceptances
having maturities of not more than 180 days and repurchase agreements backed by
United States or Canadian government securities of a commercial bank if (i) such
bank has a combined capital and surplus of at least $500,000,000, or (ii) its
debt obligations, or those of a holding company of which it is a Subsidiary, are
rated not less than A (or the equivalent rating) by a nationally recognized
investment rating agency, and (d) U.S. or Canadian money market funds that
invest solely in obligations issued or guaranteed by the United States of
America, Canada or an agency thereof.
7.5.
Loans. Make
advances, loans or extensions of credit to any Person, including any Parent,
Subsidiary or Affiliate except (a) with respect to the extension of commercial
trade credit in connection with the sale of Inventory in the Ordinary Course of
Business, (b) loans to employees in the Ordinary Course of Business not to
exceed the aggregate amount of $50,000 at any time outstanding and (c)
Intercompany Loans.
7.6.
Capital
Expenditures. Contract for, purchase or make any expenditure
or commitments for Capital Expenditures in an aggregate amount for Borrower in
excess of $750,000 in any fiscal year.
7.7.
Dividends. Declare,
pay or make any dividend or distribution on any Equity Interests of Borrower
(other than dividends or distributions payable in its stock, or split-ups or
reclassifications of its stock) or apply any of its funds, property or assets to
the purchase, redemption or other retirement of any Equity Interest, or of any
options to purchase or acquire any Equity Interest of Borrower except Borrower
may make dividends or distributions to JOI while the U.S. Loan Agreement remains
in effect, provided that no Default or Event of Default has
occurred.
52
7.8.
Indebtedness. Create,
incur, assume or suffer to exist any Indebtedness (exclusive of trade debt)
except in respect of: (i) Indebtedness to Lenders; (ii) Indebtedness incurred
for Capital Expenditures permitted under Section 7.6 hereof; and (iii)
Indebtedness set forth on Schedule 7.8.
7.9.
Nature of
Business. Substantially change the nature of the business in
which it is presently engaged, nor except as specifically permitted hereby
purchase or invest, directly or indirectly, in any assets or property other than
in the Ordinary Course of Business for assets or property which are useful in,
necessary for and are to be used in its business as presently conducted or in
any complementary business.
7.10.
Transactions with
Affiliates. Directly or indirectly, purchase, acquire or lease
any property from, or sell, transfer or lease any property to, or otherwise
enter into any transaction or deal with, any Affiliate, except transactions
disclosed to Agent, which are in the Ordinary Course of Business, on an
arm’s-length basis on terms and conditions no less favorable than terms and
conditions which would have been obtainable from a Person other than an
Affiliate.
7.11.
Leases. Enter
as lessee into any lease arrangement for real or personal property (unless
capitalized and permitted under Section 7.6 hereof) if after giving effect
thereto, aggregate annual rental payments for all leased property would exceed $
12,000,000 in any one fiscal year in the aggregate for Borrower and its
Affiliates.
7.12.
Subsidiaries. Except
in connection with a Permitted Acquisition, or for such other valid business
purposes which Borrower deem necessary, which Agent, in its Permitted
Discretion, has approved:
(a) Form any
Subsidiary; or
(b) Enter
into any partnership, joint venture or similar arrangement.
7.13.
Fiscal Year and Accounting
Changes. Change its fiscal year from a 52/53 week year ending
on or about September 30 of each year or make any significant change (i) in
accounting treatment and reporting practices except as required by GAAP or (ii)
except as required by law, in tax reporting treatment in a manner that would be
adverse to Lenders.
7.14.
Pledge of
Credit. Now or hereafter pledge Agent’s or any Lender’s credit
on any purchases or for any purpose whatsoever or use any portion of any Advance
in or for any business other than Borrower’s business as conducted on the date
of this Agreement.
7.15.
Amendment of Articles of
Incorporation, By-Laws or Certificate of Formation, Operating
Agreement. Amend, modify or waive any material term or
provision of its Articles of Incorporation or By-Laws or Certificate of
Formation or Operating Agreement, as applicable, unless required by
law.
7.16.
Intentionally
Omitted
53
7.17.
Prepayment of
Indebtedness. At any time, directly or indirectly, prepay any
Indebtedness (other than to Lenders), or repurchase, redeem, retire or otherwise
acquire any Indebtedness of Borrower.
VIII. CONDITIONS
PRECEDENT.
8.1.
Conditions to Initial
Advances. The agreement of Lenders to make the initial
Advances requested to be made on the Closing Date is subject to the
satisfaction, or waiver by Agent, immediately prior to or concurrently with the
making of such Advances, of the following conditions precedent:
(a) Notes. Agent
shall have received the Notes duly executed and delivered by an authorized
officer of Borrower;
(b) Filings, Registrations and
Recordings. Each document (including any Uniform Commercial
Code or PPSA financing statement) required by this Agreement, any related
agreement or under law or reasonably requested by Agent to be filed, registered
or recorded in order to create, in favor of Agent, a perfected security interest
in or lien upon the Collateral shall have been properly filed, registered or
recorded in each jurisdiction in which the filing, registration or recordation
thereof is so required or requested, and Agent shall have received an
acknowledgment copy, or other evidence satisfactory to it, of each such filing,
registration or recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(c) Corporate and Company
Proceedings of Borrower. Agent shall have received a copy of
the resolutions in form and substance reasonably satisfactory to Agent, of the
Board of Directors of Borrower, authorizing (i) the execution, delivery and
performance of this Agreement, the Notes, and any related agreements
(collectively the “Documents”) and (ii) the granting by Borrower of the security
interests in and liens upon the Collateral in each case certified by the
Secretary, or an Assistant Secretary, or Manager of Borrower as of the Closing
Date; and, such certificate shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the date of such
certificate;
(d) Incumbency Certificates of
Borrower. Agent shall have received a certificate of the
Secretary or an Assistant Secretary or the Manager of Borrower, dated the
Closing Date, as to the incumbency and signature of the officers of Borrower
executing this Agreement, the Other Documents, any certificate or other
documents to be delivered by it pursuant hereto, together with evidence of the
incumbency of such Secretary or Assistant Secretary;
(e) Guarantees. Agent
shall have received Guarantees and Guarantor Security Agreements from JOI and
its U.S. Affiliates in form and substance reasonably satisfactory to
Agent.
(f) U.S. Loan
Agreement. The U.S. Loan Agreement shall have been executed
and delivered, and the initial advance shall have been made
thereunder.
54
(g) Certificates. Agent
shall have received a copy of the articles or certificate of incorporation or
continuation or amalgamation, as applicable. of Borrower, and all amendments
thereto, certified by the appropriate official of its jurisdiction of
organization, together with copies of the articles or by-laws, as applicable, of
Borrower and all shareholders’ agreements of Borrower’s shareholders, certified
as accurate and complete by the Secretary of Borrower;
(h) Good Standing
Certificates. Agent shall have received good standing
certificates for Borrower dated not more than 30 days prior to the Closing Date,
issued by the appropriate official of Borrower’s jurisdiction of organization
and each jurisdiction where the conduct of Borrower’s business activities or the
ownership of its properties necessitates qualification;
(i) Legal
Opinion. Agent shall have received the executed legal opinion
of Gowling Lafleur Henderson LLP with respect to Canadian law matters, in form
and substance satisfactory to Agent which shall cover such matters incident to
the transactions contemplated by this Agreement, the Notes the Other Documents,
and related agreements as Agent may reasonably require and Borrower hereby
authorizes and directs such counsel to deliver such opinions to Agent and
Lenders;
(j) No
Litigation. (i) No litigation, investigation or proceeding
before or by any arbitrator or Governmental Body shall be continuing or
threatened against Borrower or against the officers or directors of
Borrower (A) in connection with this Agreement, the Other Documents, or any of
the transactions contemplated thereby and which, in the reasonable opinion of
Agent, is deemed material or (B) which would, in the reasonable opinion of
Agent, have a Material Adverse Effect; and (ii) no injunction, writ, restraining
order or other order of any nature materially adverse to Borrower or the conduct
of its business or inconsistent with the due consummation of the Transactions
shall have been issued by any Governmental Body;
(k) Financial Condition
Certificates. Agent shall have received an executed Financial
Condition Certificate in the form of Exhibit 8.1(k).
(l) Collateral
Examination. Agent shall have completed Collateral
examinations and received appraisals, the results of which shall be satisfactory
in form and substance to Lenders, of the Receivables, Inventory, General
Intangibles, and Equipment of Borrower and all books and records in connection
therewith;
(m) Fees. Agent
shall have received all fees payable to Agent and Lenders on or prior to the
Closing Date hereunder, including pursuant to Article III hereof;
(n) Pro Forma Financial
Statements. Agent shall have received a copy of the Pro Forma
Financial Statements which shall be satisfactory in all respects to
Lenders;
(o) Insurance. Agent
shall have received in form and substance satisfactory to Agent, certified
copies of Borrower’s casualty insurance policies, together with loss payable
endorsements on Agent’s standard form of loss payee endorsement naming Agent as
loss payee, and certified copies of Borrower’s liability insurance policies,
together with endorsements naming Agent as a co-insured;
55
(p) Discharge of Prior
Registrations. The existing PPSA registrations against
Borrower made by General Electric Capital Corporation (“GE”) and by Morgan Stanley
Senior Funding, Inc. (“Morgan
Stanley”) shall have been discharged or the Borrower shall have provided
notices to GE and Morgan Stanley pursuant to Section 56(2) of the PPSA requiring
the discharge of such registrations.
(q) Intentionally
Omitted
(r) Payment
Instructions. Agent shall have received written instructions
from Borrower directing the application of proceeds of the initial Advances made
pursuant to this Agreement;
(s) Blocked
Accounts. Agent shall have received duly executed agreements
establishing the Blocked Accounts or Depository Accounts with financial
institutions acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral;
(t) Consents. Agent
shall have received any and all Consents necessary to permit the effectuation of
the transactions contemplated by this Agreement and the Other Documents; and,
Agent shall have received such Consents and waivers of such third parties as
might assert claims with respect to the Collateral, as Agent and its counsel
shall deem necessary;
(u) No Adverse Material
Change. (i) Since April 3, 2009, there shall not have occurred
any event, condition or state of facts which would reasonably be expected to
have a Material Adverse Effect and (ii) no representations made or information
supplied to Agent or Lenders shall have been proven to be inaccurate or
misleading in any material respect;
(v) Leasehold
Agreements. Agent shall have received landlord, mortgagee or
warehouseman agreements satisfactory to Agent with respect to all premises
leased by Borrower at which Inventory and books and records are
located;
(w) Other
Documents. Agent shall have received the executed Other
Documents, all in form and substance satisfactory to Agent;
(x) Financial
Projections. Agent shall have received financial projections of Borrower
for the upcoming three fiscal years, presented on a month by month basis for the
first year and
on a quarterly basis for the following years, in form and substance satisfactory
to Agent;
(y) Contract
Review. Agent shall have reviewed all material contracts of
Borrower including leases, union contracts, labor contracts, vendor supply
contracts, license agreements and distributorship agreements and such contracts
and agreements shall be satisfactory in all respects to Agent;
(z) Closing Certificate. Agent shall have received a closing certificate signed by the Chief Financial Officer of Borrower dated as of the date hereof, stating that (i) all representations and warranties set forth in this Agreement and the Other Documents are true and correct on and as of such date, (ii) Borrower are on such date in compliance with all the terms and provisions set forth in this Agreement and the Other Documents and (iii) on such date no Default or Event of Default has occurred or is continuing;
56
(aa) Borrowing
Base. Agent shall have received evidence from Borrower that
the aggregate amount of Eligible Receivables and Eligible Inventory is
sufficient in value and amount to support Advances in the amount requested by
Borrower on the Closing Date;
(bb) Intentionally
Omitted
(cc) Compliance with
Laws. Agent shall be reasonably satisfied that Borrower is in
compliance with all applicable Canadian federal, provincial, local or
territorial laws or regulations; and
(dd) Other. All
corporate and other proceedings, and all documents, instruments and other legal
matters in connection with the Transactions shall be satisfactory in form and
substance to Agent and its counsel.
8.2.
Conditions to Each
Advance. The agreement of Lenders or NCB to make any Advance
requested to be made on any date (including the initial Advance), is subject to
the satisfaction of the following conditions precedent as of the date such
Advance is made:
(a) Representations and
Warranties. Each of the representations and warranties made by
Borrower in or pursuant to this Agreement, the Other Documents and any related
agreements to which it is a party, and each of the representations and
warranties contained in any certificate, document or financial or other
statement furnished at any time under or in connection with this Agreement, the
Other Documents or any related agreement shall be true and correct in all
material respects on and as of such date as if made on and as of such date
except to the extent a representation or warranty is made only as of a specified
date in which case such representation or warranty shall be true as of such
specified date;
(b) No
Default. No Event of Default or Default shall have occurred
and be continuing on such date, or would exist after giving effect to the
Advances requested to be made, on such date; provided, however that Agent, in
its sole discretion, subject only to the limitations in Section 16.2(b), may
continue to make Advances notwithstanding the existence of an Event of Default
or Default and that any Advances so made shall not be deemed a waiver of any
such Event of Default or Default; and
(c) Maximum
Advances. In the case of any type of Advance requested to be
made, after giving effect thereto, the aggregate amount of such type of Advance
shall not exceed the maximum amount of such type of Advance permitted under this
Agreement.
Each
request for an Advance by Borrower hereunder shall constitute a representation
and warranty by Borrower as of the date of such Advance that the conditions
contained in this subsection shall have been satisfied.
57
IX. INFORMATION
AS TO BORROWER.
Borrower
shall, until satisfaction in full of the Obligations and the termination of this
Agreement:
9.1.
Disclosure of Material
Matters. Immediately upon learning thereof, report to Agent
all matters materially affecting the value, enforceability or collectibility of
any portion of the Collateral, including Borrower’s reclamation or repossession
of, or the return to Borrower of, a material amount of goods or claims or
disputes asserted by any Customer or other obligor.
9.2.
Schedules. Deliver
to Agent on or before the fifteenth (15th) day of each fiscal month of Borrower
as and for the prior fiscal month (a) accounts receivable agings inclusive of
reconciliations to the general ledger, (b) accounts payable schedules inclusive
of reconciliations to the general ledger, (c) Inventory reports and (d) a
Borrowing Base Certificate in form and substance satisfactory to Agent (which
shall be calculated as of the last day of the prior month and which shall not be
binding upon Agent or restrictive of Agent’s rights under this
Agreement). In addition, Borrower will deliver to Agent at such
intervals as Agent may require: (i) confirmatory assignment schedules, (ii)
copies of Customer’s invoices, (iii) evidence of shipment or delivery, and (iv)
such further schedules, documents and/or information regarding the Collateral as
Agent may in its Permitted Discretion require including trial balances and test
verifications. Agent shall have the right to confirm and verify all
Receivables by any manner and through any medium it considers advisable and do
whatever it may deem reasonably necessary in its Permitted Discretion to protect
its interests hereunder. The items to be provided under this Section
are to be in form satisfactory to Agent and, where applicable, executed by
Borrower and delivered to Agent from time to time solely for Agent’s convenience
in maintaining records of the Collateral, and Borrower’s failure to deliver any
of such items to Agent shall not affect, terminate, modify or otherwise limit
Agent’s Lien with respect to the Collateral.
9.3.
Environmental
Reports. Furnish Agent, within forty-five (45) days after the
end of each fiscal quarter, with a certificate signed by the president or
secretary of Borrower stating, to the best of his knowledge, that Borrower is in
compliance in all material respects with all Canadian federal, provincial and
local Environmental Laws. To the extent Borrower is not in compliance
with the foregoing laws, the certificate shall set forth with specificity all
areas of material non-compliance and the proposed action Borrower will implement
in order to achieve full compliance.
9.4.
Litigation. Promptly
notify Agent in writing of any claim, litigation, suit or administrative
proceeding affecting Borrower or any Guarantor, whether or not the claim is
covered by insurance, and of any litigation, suit or administrative proceeding,
which in any such case affects the Collateral or which would reasonably be
expected to have a Material Adverse Effect.
58
of
Borrower as of the date of such statements; (e) each and every default by
Borrower which would reasonably be expected to result in the acceleration of the
maturity of any Indebtedness, including the names and addresses of the holders
of such Indebtedness with respect to which there is a default existing or with
respect to which the maturity has been or could be accelerated, and the amount
of such Indebtedness; and (f) any other development in the business or affairs
of Borrower or any Guarantor which would reasonably be expected to have a
Material Adverse Effect; in each case describing the nature thereof and the
action Borrower propose to take with respect thereto.
9.6.
Government
Receivables. Notify Agent immediately if any of its
Receivables arise out of contracts between Borrower and the United States, any
state, Canada, any province, or any department, agency or instrumentality of any
of them.
9.7.
Intentionally
Omitted
9.8.
Intentionally
Omitted
9.9. Intentionally
Omitted
9.10.
Other
Reports. Furnish Agent as soon as available, but in any event
within ten (10) days after the issuance thereof, (i) with copies of such
financial statements, reports and returns as Borrower shall send to its
stockholders and/or members and (ii) copies of all notices, reports, financial
statements and other materials sent pursuant to the U.S. Loan
Agreement.
9.11.
Additional
Information. Furnish Agent with such additional information as
Agent shall reasonably request in order to enable Agent to determine whether the
terms, covenants, provisions and conditions of this Agreement and the Notes have
been complied with by Borrower including, without the necessity of any request
by Agent, (a) copies of all environmental audits and reviews, (b) at least
thirty (30) days prior thereto, notice of Borrower’s opening of any new office
or place of business or Borrower’s closing of any existing office or place of
business, and (c) promptly upon Borrower’s learning thereof, notice of any labor
dispute to which Borrower may become a party, any strikes or walkouts relating
to any of its plants or other facilities, and the expiration of any labor
contract to which Borrower is a party or by which Borrower is
bound.
9.12.
Intentionally
Omitted
9.13. Intentionally
Omitted
9.14.
Notice of Suits, Adverse
Events. Furnish Agent with prompt written notice of (i) any
lapse or other termination of any Consent issued to Borrower by any Governmental
Body or any other Person that is material to the operation of Borrower’s
business, (ii) any refusal by any Governmental Body or any other Person to renew
or extend any such Consent; and (iii) copies of any periodic or special reports
filed by Borrower or any Guarantor with any Governmental Body or Person, if such
reports indicate any material change in the business, operations, affairs or
condition of Borrower or any Guarantor, or if copies thereof are requested by
Lender, and (iv) copies of any material notices and other communications from
any Governmental Body or Person which specifically relate to Borrower or any
Guarantor.
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9.15.
Intentionally
Omitted
9.16.
Intentionally
Omitted
9.17.
Additional
Documents. Execute and deliver to Agent, upon request, such
documents and agreements as Agent may, from time to time, reasonably request to
carry out the purposes, terms or conditions of this Agreement.
X. EVENTS OF
DEFAULT.
The
occurrence of any one or more of the following events shall constitute an “Event
of Default”:
10.1.
Nonpayment. Failure
by Borrower to pay any principal or interest on the Obligations when due,
whether at maturity or by reason of acceleration pursuant to the terms of this
Agreement or by notice of intention to prepay, or by required prepayment or
failure to pay any other liabilities or make any other payment, fee or charge
provided for herein when due or in any Other Document;
10.2.
Breach of
Representation. Any representation or warranty made or deemed
made by Borrower or any Guarantor in this Agreement, any Other Document or any
related agreement or in any certificate, document or financial or other
statement furnished at any time in connection herewith or therewith shall prove
to have been misleading in any material respect on the date when made or deemed
to have been made;
10.3.
Financial
Information. Failure by Borrower to (i) furnish financial
information when due or when requested or (ii) permit the inspection of its
books or records in accordance with the terms hereof;
10.4.
Judicial
Actions. Issuance of a notice of Lien, levy, assessment,
injunction or attachment against Borrower’s Inventory or Receivables or against
a material portion of Borrower’s other property which is not stayed or lifted
within thirty (30) days;
10.5.
Noncompliance. Except
as otherwise provided for in Sections 10.1, 10.3 and 10.5(ii), (i) failure or
neglect of Borrower or any Guarantor or any Person to perform, keep or observe
any term, provision, condition, covenant herein contained, or contained in any
Other Document or any other agreement or arrangement, now or hereafter entered
into between Borrower or any Guarantor or such Person, and Agent or any Lender,
or (ii) failure or neglect of Borrower to perform, keep or observe any term,
provision, condition or covenant, contained in Sections 4.6, 4.7, 4.9, 6.1, 6.3,
6.4, 9.4 or 9.6 hereof which is not cured within ten (10) days from the
occurrence of such failure or neglect;
10.6.
Judgments. Any
judgment or judgments are rendered against Borrower or any Guarantor for an
aggregate amount in excess of $150,000 or against all Borrower or Guarantors for
an aggregate amount in excess of $150,000 and (i) enforcement proceedings shall
have been commenced by a creditor upon such judgment, (ii) there shall be any
period of thirty (30) consecutive days during which a stay of enforcement of
such judgment, by reason of a pending
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appeal or
otherwise, shall not be in effect, or (iii) any such judgment results in the
creation of a Lien upon any of the Collateral (other than a Permitted
Encumbrance);
10.7.
Bankruptcy. Borrower
or any Guarantor shall (i) apply for, consent to or suffer the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) commence a
voluntary case under any state or federal bankruptcy laws (as now or hereafter
in effect), (iv) be adjudicated a bankrupt or insolvent, (v) file a petition
seeking to take advantage of any other law providing for the relief of debtors,
(vi) acquiesce to, or fail to have dismissed, within thirty (30) days, any
petition filed against it in any involuntary case under such bankruptcy
laws, or (vii) take any action for the purpose of effecting any of
the foregoing;
10.8.
Inability to
Pay. Borrower or any Guarantor shall admit in writing its
inability, or be generally unable, to pay its debts as they become due or cease
operations of its present business;
10.9.
Affiliate
Bankruptcy. Any Affiliate or any Subsidiary of Borrower, or
any Guarantor, shall (i) apply for, consent to or suffer the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar fiduciary of itself or of all or a substantial part of its property,
(ii) admit in writing its inability, or be generally unable, to pay its debts as
they become due or cease operations of its present business, (iii) make a
general assignment for the benefit of creditors, (iv) commence a voluntary case
under any state or federal bankruptcy laws (as now or hereafter in effect), (v)
be adjudicated a bankrupt or insolvent, (vi) file a petition seeking to take
advantage of any other law providing for the relief of debtors, (vii) acquiesce
to, or fail to have dismissed, within thirty (30) days, any petition filed
against it in any involuntary case under such bankruptcy laws, or (viii) take
any action for the purpose of effecting any of the foregoing;
10.10.
Material Adverse
Effect. The occurrence of any Material Adverse
Effect;
10.11.
Lien
Priority. Any Lien created hereunder or provided for hereby or
under any related agreement for any reason ceases to be or is not a valid and
perfected Lien having a first priority interest;
10.12.
Cross
Default. A default of the obligations of Borrower under any
other agreement to which it is a party shall occur which causes a Material
Adverse Effect which default is not cured within any applicable grace
period;
10.13.
Breach of
Guaranty. Termination or breach of any Guaranty or Guaranty
Security Agreement or similar agreement executed and delivered to Agent in
connection with the Obligations of Borrower, or if any Guarantor attempts to
terminate, challenges the validity of, or its liability under, any such Guaranty
or Guaranty Security Agreement or similar agreement;
10.14.
Change of
Ownership. Any Change of Ownership shall occur;
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10.15.
Invalidity. Any
material provision of this Agreement or any Other Document shall, for any
reason, cease to be valid and binding on Borrower or any Guarantor, or Borrower
or any Guarantor shall so claim in writing to Agent or any
Lender;
10.16.
Licenses. (i)
Any Governmental Body shall (A) revoke, terminate, suspend or adversely modify
any license, permit, patent trademark or tradename of Borrower or any Guarantor
or (B) commence proceedings to suspend, revoke, terminate or adversely modify
any such license, permit, trademark, tradename or patent and such proceedings
shall not be dismissed or discharged within sixty (60) days, or (C) schedule or
conduct a hearing on the renewal of any license, permit, trademark, tradename or
patent necessary for the continuation of Borrower’s or any Guarantor’s business
and the staff of such Governmental Body issues a report recommending the
termination, revocation, suspension or material, adverse modification of such
license, permit, trademark, tradename or patent, and in each case under (A)-(C),
such revocation, termination, suspension or adverse modification has occurred or
is reasonably likely to occur, and would reasonably be expected to have a
Material Adverse Effect; (ii) any agreement which is necessary or material to
the operation of Borrower’s or any Guarantor’s business shall be revoked or
terminated and not replaced by a substitute acceptable to Agent within thirty
(30) days after the date of such revocation or termination, and such revocation
or termination and non-replacement would reasonably be expected to have a
Material Adverse Effect;
10.17.
Seizures. Any
portion of the Collateral shall be seized or taken by a Governmental Body, or
Borrower or any Guarantor or the title and rights of Borrower or any Guarantor
which is the owner of any material portion of the Collateral shall have become
the subject matter of claim, litigation, suit or other proceeding which might,
in the opinion of Agent, upon final determination, result in impairment or loss
of the security provided by this Agreement or the Other Documents;
10.18.
Operations. Other
than scheduled shut downs in the Ordinary Course of Business, the operations of
Borrower’s or any Guarantor’s manufacturing facility are interrupted at any time
for more than 5 consecutive days, unless Borrower or Guarantor shall (i) be
entitled to receive for such period of interruption, proceeds of business
interruption insurance sufficient to assure that its per diem cash needs during
such period is at least equal to its average per diem cash needs for the
consecutive three month period immediately preceding the initial date of
interruption and (ii) receive such proceeds in the amount described in clause
(i) preceding not later than thirty (30) days following the initial date of any
such interruption; provided, however, that notwithstanding the provisions of
clauses (i) and (ii) of this section, an Event of Default shall be deemed to
have occurred if Borrower or Guarantor shall be receiving the proceeds of
business interruption insurance for a period of sixty (60) consecutive
days;
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XI. LENDERS’
RIGHTS AND REMEDIES AFTER DEFAULT.
11.1.
Rights and
Remedies.
(a) Upon the
occurrence of (i) an Event of Default pursuant to Section 10.7 all Obligations
shall be immediately due and payable and this Agreement and the obligation of
Lenders to make Advances shall be deemed terminated; and, (ii) any of the other
Events of Default and at any time thereafter, at the option of Required Lenders
all Obligations shall be immediately due and payable and Lenders shall have the
right to terminate this Agreement and to terminate the obligation of Lenders to
make Advances and (iii) a filing of a petition against Borrower in any
involuntary case under any provincial or federal insolvency or bankruptcy laws,
all Obligations shall be immediately due and payable and the obligation of
Lenders to make Advances hereunder shall be terminated other than as may be
required by an appropriate order of the bankruptcy court having jurisdiction
over Borrower. Upon the occurrence of any Event of Default, Agent
shall have the right to exercise any and all rights and remedies provided for
herein, under the Other Documents, under the PPSA and at law or equity
generally, including the right to foreclose the security interests granted
herein and to realize upon any Collateral by any available judicial procedure
and/or to take possession of and sell any or all of the Collateral with or
without judicial process. Agent may enter any of Borrower’s premises
or other premises without legal process and without incurring liability to
Borrower therefor, and Agent may thereupon, or at any time thereafter, in its
discretion without notice or demand, take the Collateral and remove the same to
such place as Agent may deem advisable and Agent may require Borrower to make
the Collateral available to Agent at a convenient place. With or
without having the Collateral at the time or place of sale, Agent may sell the
Collateral, or any part thereof, at public or private sale, at any time or
place, in one or more sales, at such price or prices, and upon such terms,
either for cash, credit or future delivery, as Agent may
elect. Except as to that part of the Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market, Agent shall give Borrower reasonable notification of such
sale or sales, it being agreed that in all events written notice mailed to
Borrower at least ten (10) days prior to such sale or sales is reasonable
notification. At any public sale Agent or any Lender may bid for and
become the purchaser, and Agent, any Lender or any other purchaser at any such
sale thereafter shall hold the Collateral sold absolutely free from any claim or
right of whatsoever kind, including any equity of redemption and all such
claims, rights and equities are hereby expressly waived and released by
Borrower. In connection with the exercise of the foregoing remedies,
including the sale of Inventory, Agent is granted a perpetual nonrevocable,
royalty free, nonexclusive license and Agent is granted permission to use all of
Borrower’s (a) trademarks, trade styles, trade names, patents, patent
applications, copyrights, service marks, licenses, franchises and other
proprietary rights which are used or useful in connection with Inventory for the
purpose of marketing, advertising for sale and selling or otherwise disposing of
such Inventory and (b) Equipment for the purpose of completing the manufacture
of unfinished goods. The cash proceeds realized from the sale of any
Collateral shall be applied to the Obligations in the order set forth in Section
11.5 hereof. Noncash proceeds will only be applied to the Obligations
as they are converted into cash. If any deficiency shall arise,
Borrower shall remain liable to Agent and Lenders therefor.
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law, to
fail to obtain governmental or third party consents for the collection or
disposition of Collateral to be collected or disposed of, (iii) to fail to
exercise collection remedies against Customers or other Persons obligated on
Collateral or to remove Liens on or any adverse claims against Collateral, (iv)
to exercise collection remedies against Customers and other Persons obligated on
Collateral directly or through the use of collection agencies and other
collection specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the Collateral is
of a specialized nature, (vi) to contact other Persons, whether or not in the
same business as Borrower, for expressions of interest in acquiring all or any
portion of such Collateral, (vii) to hire one or more professional auctioneers
to assist in the disposition of Collateral, whether or not the Collateral is of
a specialized nature, (viii) to dispose of Collateral by utilizing internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than
retail markets, (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements
to insure Agent against risks of loss, collection or disposition of Collateral
or to provide to Agent a guaranteed return from the collection or disposition of
Collateral, or (xii) to the extent deemed appropriate by Agent, to obtain the
services of other brokers, investment bankers, consultants and other
professionals to assist Agent in the collection or disposition of any of the
Collateral. Borrower acknowledges that the purpose of this Section
11.1(b) is to provide non-exhaustive indications of what actions or omissions by
Agent would not be commercially unreasonable in Agent’s exercise of remedies
against the Collateral and that other actions or omissions by Agent shall not be
deemed commercially unreasonable solely on account of not being indicated in
this Section 11.1(b). Without limitation upon the foregoing, nothing
contained in this Section 11.1(b) shall be construed to grant any rights to
Borrower or to impose any duties on Agent that would not have been granted or
imposed by this Agreement or by Applicable Law in the absence of this Section
11.1(b).
(c) Without
limiting any right or remedy of Agent in this Agreement, upon the occurrence of
any Event of Default, Agent may by instrument in writing appoint any person as a
receiver of all or any part of the Collateral of Borrower. Agent may
from time to time remove or replace a receiver, or make application to any court
of competent jurisdiction for the appointment of a receiver. Any
receiver appointed by Agent shall (for purposes relating to responsibility for
the receiver’s acts or omissions) be considered to be the agent of
Borrower. Agent may from time to time fix the receiver’s remuneration
and Borrower shall pay the amount of such remuneration to
Agent. Agent shall not be liable to Borrower or any other person in
connection with appointing or not appointing a receiver or in connection with
the receiver’s actions or omissions.
11.2.
Agent’s
Discretion. Agent shall have the right in its sole discretion
to determine which rights, Liens, security interests or remedies Agent may at
any time pursue, relinquish, subordinate,
or modify or to take any other action with respect thereto and such
determination will not in any way modify or affect any of Agent’s or Lenders’
rights hereunder.
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11.4.
Rights and Remedies not
Exclusive. The enumeration of the foregoing rights and
remedies is not intended to be exhaustive and the exercise of any rights or
remedy shall not preclude the exercise of any other right or remedies provided
for herein or otherwise provided by law, all of which shall be cumulative and
not alternative.
11.5.
Allocation of Payments After
Event of Default. Notwithstanding any other provisions of this
Agreement to the contrary, after the occurrence and during the continuance of an
Event of Default, all amounts collected or received by Agent on account of the
Obligations or any other amounts outstanding under any of the Other Documents or
in respect of the Collateral (less amounts payable to the holders of prior
Permitted Encumbrances) shall be paid over or delivered as follows:
FIRST, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable legal fees) of Agent in connection with enforcing its rights and the
rights of Lenders under this Agreement and the Other Documents and any
protective advances made by Agent with respect to the Collateral under or
pursuant to the terms of this Agreement;
SECOND,
to payment of any fees owed to Agent;
THIRD, to
the payment of all reasonable out-of-pocket costs and expenses (including
reasonable attorneys’ fees) of each of Lenders to the extent owing to such
Lender pursuant to the terms of this Agreement;
FOURTH,
to the payment of all of the Obligations consisting of accrued interest on
account of the Swing Loans;
FIFTH, to
the payment of the outstanding principal amount of the Obligations consisting of
Swing Loans;
SIXTH, to
the payment of all of the remaining Obligations consisting of accrued fees and
interest;
SEVENTH,
to the payment of the outstanding principal amount of the remaining Obligations
(including the payment or cash collateralization of any outstanding Letters of
Credit);
EIGHTH,
to all other Obligations and other obligations which shall have become due and
payable under the Other Documents or otherwise and not repaid pursuant to
clauses “FIRST” through “SEVENTH” above; and
NINTH, to
the payment of the surplus, if any, to whoever may be lawfully entitled to
receive such surplus.
In
carrying out the foregoing, (i) amounts received shall be applied in the
numerical order provided until exhausted prior to application to the next
succeeding category; and (ii) each of Lenders shall receive (so long as it is
not a Defaulting Lender) an amount equal to its pro rata share (based on the
proportion that the then outstanding Advances held by such Lender bears to the
aggregate then outstanding Advances) of amounts available to be applied pursuant
to clauses “SIXTH”, “SEVENTH” and “EIGHTH” above.
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XII. WAIVERS
AND JUDICIAL PROCEEDINGS.
12.1.
Waiver of
Notice. Borrower hereby waives notice of non-payment of any of
the Receivables, demand, presentment, protest and notice thereof with respect to
any and all instruments, notice of acceptance hereof, notice of loans or
advances made, credit extended, Collateral received or delivered, or any other
action taken in reliance hereon, and all other demands and notices of any
description, except such as are expressly provided for herein.
12.2.
Delay. No
delay or omission on Agent’s or any Lender’s part in exercising any right,
remedy or option shall operate as a waiver of such or any other right, remedy or
option or of any Default or Event of Default.
12.3.
Jury
Waiver. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM
WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HEREBY CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
XIII. EFFECTIVE
DATE AND TERMINATION.
13.1.
Term. This
Agreement, which shall inure to the benefit of and shall be binding upon the
respective successors and permitted assigns of Borrower, Agent and each Lender,
shall become effective on the date hereof and shall continue in full force and
effect until September 28, 2012 (the “Term”) unless sooner terminated as herein
provided. Borrower may terminate this Agreement at any time upon
ninety (90) days’ prior written notice upon payment in full of the
Obligations. Notwithstanding any other provision hereof, this
Agreement shall terminate concurrently with the termination of the U.S. Loan
Agreement.
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granted
to Agent and Lenders hereunder and the financing statements filed hereunder
shall continue in full force and effect, notwithstanding the termination of this
Agreement or the fact that Borrower’s Account may from time to time be
temporarily in a zero or credit position, until all of the Obligations of
Borrower have been indefeasibly paid and performed in full after the termination
of this Agreement (other than obligations for indemnification for which no claim
has been made) or Borrower has furnished Agent and Lenders with an
indemnification satisfactory to Agent and Lenders with respect
thereto). Accordingly, Borrower waives any rights which it may have
under the Uniform Commercial Code or the PPSA to demand the filing of
termination statements with respect to the Collateral, and Agent shall not be
required to send such termination statements to Borrower, or to file them with
any filing office, unless and until this Agreement shall have been terminated in
accordance with its terms and all Obligations have been indefeasibly paid in
full in immediately available funds (other than obligations for indemnification
for which no claim has been made and for which Borrower have furnished Agent and
Lenders with an indemnification satisfactory to Agent and
Lenders. All representations, warranties, covenants, waivers and
agreements contained herein shall survive termination hereof until all
Obligations are indefeasibly paid and performed in full.
XIV. REGARDING
AGENT.
14.1.
Appointment. Each
Lender hereby designates NCB to act as Agent for such Lender under this
Agreement and the Other Documents. Each Lender hereby irrevocably
authorizes Agent to take such action on its behalf under the provisions of this
Agreement and the Other Documents and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of Agent by the terms hereof and thereof and such other powers as are
reasonably incidental thereto and Agent shall hold all Collateral, payments of
principal and interest, fees (except the fees set forth in Sections 3.3 and 3.4
and the Closing Fee), charges and collections (without giving effect to any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders. Agent may perform any of its duties hereunder by or through
its agents or employees. As to any matters not expressly provided for
by this Agreement (including collection of the Notes) Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding; provided, however, that Agent shall not be
required to take any action which exposes Agent to liability or which is
contrary to this Agreement or the Other Documents or Applicable Law unless Agent
is furnished with an indemnification reasonably satisfactory to Agent with
respect thereto.
14.2.
Nature of
Duties. Agent shall have no duties or responsibilities except
those expressly set forth in this Agreement and the Other
Documents. Neither Agent nor any of its officers, directors,
employees or agents shall be (i) liable for any action taken or omitted by them
as such hereunder or in connection herewith, unless caused by their gross (not
mere) negligence or willful misconduct (as determined by a court of competent
jurisdiction in a final non-appealable judgment), or (ii) responsible in any
manner for any recitals, statements, representations or warranties made by
Borrower or any officer thereof contained in this Agreement, or in any of the
Other Documents or in any certificate, report, statement or other document
referred to or provided for in, or received by Agent under or in connection
with, this Agreement or any of the Other Documents or for the value, validity,
effectiveness, genuineness,
67
due
execution, enforceability or sufficiency of this Agreement, or any of the Other
Documents or for any failure of Borrower to perform its obligations
hereunder. Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any of the Other
Documents, or to inspect the properties, books or records of
Borrower. The duties of Agent as respects the Advances to Borrower
shall be mechanical and administrative in nature; Agent shall not have by reason
of this Agreement a fiduciary relationship in respect of any Lender; and nothing
in this Agreement, expressed or implied, is intended to or shall be so construed
as to impose upon Agent any obligations in respect of this Agreement except as
expressly set forth herein.
14.3.
Lack of Reliance on Agent
and Resignation. Independently and without reliance upon Agent
or any other Lender, each Lender has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of Borrower and
each Guarantor in connection with the making and the continuance of the Advances
hereunder and the taking or not taking of any action in connection herewith, and
(ii) its own appraisal of the creditworthiness of Borrower and each
Guarantor. Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before making of the Advances or at any time or times thereafter except as shall
be provided by Borrower pursuant to the terms hereof. Agent shall not
be responsible to any Lender for any recitals, statements, information,
representations or warranties herein or in any agreement, document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility or sufficiency of this
Agreement or any Other Document, or of the financial condition of Borrower or
any Guarantor, or be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or conditions of this
Agreement, the Notes, the Other Documents or the financial condition of
Borrower, or the existence of any Event of Default or any Default.
Agent may
resign on sixty (60) days’ written notice to each of Lenders and Borrower and
upon such resignation, the Required Lenders will promptly designate a successor
Agent reasonably satisfactory to Borrower.
Any such
successor Agent shall succeed to the rights, powers and duties of Agent, and the
term “Agent” shall mean such successor agent effective upon its appointment, and
the former Agent’s rights, powers and duties as Agent shall be terminated,
without any other or further act or deed on the part of such former
Agent. After any Agent’s resignation as Agent, the provisions of this
Article XIV shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under this Agreement.
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14.5.
Reliance. Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, order or other document or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or entity, and, with respect to all legal matters
pertaining to this Agreement and the Other Documents and its duties hereunder,
upon advice of counsel selected by it. Agent may employ agents and
attorneys-in-fact and shall not be liable for the default or misconduct of any
such agents or attorneys-in-fact selected by Agent with reasonable
care.
14.6.
Notice of
Default. Agent shall not be deemed to have knowledge or notice
of the occurrence of any Default or Event of Default hereunder or under the
Other Documents, unless Agent has received notice from a Lender or Borrower
referring to this Agreement or the Other Documents, describing such Default or
Event of Default and stating that such notice is a “notice of
default”. In the event that Agent receives such a notice, Agent shall
give notice thereof to Lenders. Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of
Lenders.
14.7.
Indemnification. To
the extent Agent is not reimbursed and indemnified by Borrower, each Lender will
reimburse and indemnify Agent in proportion to its respective portion of the
Advances (or, if no Advances are outstanding, according to its Commitment
Percentage), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against Agent in performing its duties hereunder, or in any way
relating to or arising out of this Agreement or any Other Document; provided
that, Lenders shall not be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross (not mere) negligence or
willful misconduct (as determined by a court of competent jurisdiction in a
final non-appealable judgment).
14.8.
Agent in its Individual
Capacity. With respect to the obligation of Agent to lend
under this Agreement, the Advances made by it shall have the same rights and
powers hereunder as any other Lender and as if it were not performing the duties
as Agent specified herein; and the term “Lender” or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity as a Lender. Agent may engage in business with Borrower as
if it were not performing the duties specified herein, and may accept fees and
other consideration from Borrower for services in connection with this Agreement
or otherwise without having to account for the same to Lenders.
69
14.10.
Borrower’s Undertaking to
Agent. Without prejudice to their respective obligations to
Lenders under the other provisions of this Agreement, Borrower hereby undertakes
with Agent to pay to Agent from time to time on demand all amounts from time to
time due and payable by it for the account of Agent or Lenders or any of them
pursuant to this Agreement to the extent not already paid. Any
payment made pursuant to any such demand shall pro tanto satisfy the relevant
Borrower’s obligations to make payments for the account of Lenders or the
relevant one or more of them pursuant to this Agreement.
14.11.
No Reliance on Agent’s
Customer Identification Program. Each Lender acknowledges and
agrees that neither such Lender, nor any of its Affiliates, participants or
assignees, may rely on Agent to carry out such Lender’s, Affiliate’s,
participant’s or assignee’s customer identification program, or other
obligations required or imposed under or pursuant to applicable law including
any programs involving any of the following items relating to or in connection
with Borrower, its Affiliates or its agents, this Agreement, the Other Documents
or the transactions hereunder or contemplated hereby: (1) any identity
verification procedures, (2) any record-keeping, (3) comparisons with government
lists, (4) customer notices or (5) other procedures required under applicable
laws.
14.12.
Other
Agreements. Each of Lenders agrees that it shall not, without
the express consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of Agent, set off against the Obligations,
any amounts owing by such Lender to Borrower or any deposit accounts of Borrower
now or hereafter maintained with such Lender. Anything in this
Agreement to the contrary notwithstanding, each of Lenders further agrees that
it shall not, unless specifically requested to do so by Agent, take any action
to protect or enforce its rights arising out of this Agreement or the Other
Documents, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Other Documents shall be taken in
concert and at the direction or with the consent of Agent or Required
Lenders.
XV. BORROWING
AGENCY. Intentionally
Omitted
XVI. MISCELLANEOUS.
16.1.
Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the federal laws of
Canada applicable therein. Any judicial proceeding brought by or
against Borrower with respect to any of the Obligations, this Agreement, the
Other Documents or any related agreement may be brought in any court of
competent jurisdiction in the Province of Ontario and, by execution and delivery
of this Agreement, Borrower accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this
Agreement. Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
registered mail (return receipt requested) directed to Borrower at its address
set forth in Section 16.6 and service so made shall be deemed completed five (5)
days after the same shall have been so deposited in the mails of the United
States of America or Canada, or, at Agent’s option, by service upon Borrower and
for which Borrower irrevocably appoints JOI as Borrower’s agent for the purpose
of accepting service within the State of New York or Canada. Nothing
herein shall affect the right to serve process in any manner
permitted
70
by law or
shall limit the right of Agent or any Lender to bring proceedings against
Borrower in the courts of any other jurisdiction. Borrower waives any
objection to jurisdiction and venue of any action instituted hereunder and shall
not assert any defense based on lack of jurisdiction or venue or based upon
forum non conveniens. Borrower waives the right to remove any
judicial proceeding brought against Borrower in any provincial court to any
federal court. Any judicial proceeding by Borrower against Agent or
any Lender involving, directly or indirectly, any matter or claim in any way
arising out of, related to or connected with this Agreement or any related
agreement, shall be brought only in a federal or provincial court located in the
Province of Ontario.
16.2.
Entire
Understanding.
(a) This
Agreement and the documents executed concurrently herewith contain the entire
understanding between Borrower, Agent and each Lender and supersedes all prior
agreements and understandings, if any, relating to the subject matter
hereof. Any promises, representations, warranties or guarantees not
herein contained and hereinafter made shall have no force and effect unless in
writing, signed by Borrower’s, Agent’s and each Lender’s respective
officers. Neither this Agreement nor any portion or provisions hereof
may be changed, modified, amended, waived, supplemented, discharged, cancelled
or terminated orally or by any course of dealing, or in any manner other than by
an agreement in writing, signed by the party to be charged. Borrower
acknowledges that it has been advised by counsel in connection with the
execution of this Agreement and Other Documents and is not relying upon oral
representations or statements inconsistent with the terms and provisions of this
Agreement.
(b) The
Required Lenders, Agent with the consent in writing of the Required Lenders, and
Borrower may, subject to the provisions of this Section 16.2(b), from time to
time enter into written supplemental agreements to this Agreement or the Other
Documents executed by Borrower, for the purpose of adding or deleting any
provisions or otherwise changing, varying or waiving in any manner the rights of
Lenders, Agent or Borrower thereunder or the conditions, provisions or terms
thereof or waiving any Event of Default thereunder, but only to the extent
specified in such written agreements; provided, however, that no such
supplemental agreement shall, without the consent of all Lenders:
(i) increase
the Commitment Percentage, the maximum dollar commitment of any Lender or the
Maximum Revolving Advance Amount;
(ii) extend
the maturity of any Notes or the due date for any amount payable hereunder, or
decrease the rate of interest or reduce any fee payable by Borrower to Lenders
pursuant to this Agreement;
(iii) alter the
definition of the term Required Lenders or alter, amend or modify this Section
16.2(b);
(iv) release
any Collateral during any calendar year (other than in accordance with the
provisions of this Agreement) having an aggregate value in excess of
$1,000,000;
(v) change
the rights and duties of Agent;
71
(vi) permit
any Revolving Advance to be made if after giving effect thereto the total of
Revolving Advances outstanding hereunder would exceed the Formula Amount for
more than thirty (30) consecutive Business Days or exceed one hundred and five
percent (105%) of the Formula Amount;
(vii) increase
the Advance Rates above the Advance Rates in effect on the Closing Date;
or
(viii) modify
Section 11.5; or
(ix) release
Borrower or any Guarantor.
Any such
supplemental agreement shall apply equally to each Lender and shall be binding
upon Borrower, Lenders and Agent and all future holders of the
Obligations. In the case of any waiver, Borrower, Agent and Lenders
shall be restored to their former positions and rights, and any Event of Default
waived shall be deemed to be cured and not continuing, but no waiver of a
specific Event of Default shall extend to any subsequent Event of Default
(whether or not the subsequent Event of Default is the same as the Event of
Default which was waived), or impair any right consequent thereon.
In the
event that Agent requests the consent of a Lender pursuant to this Section 16.2
and such consent is denied, then NCB may, at its option, require such Lender to
assign its interest in the Advances to NCB or to another Lender or to any other
Person designated by Agent (the “Designated Lender”), for a price equal to (i)
the then outstanding principal amount thereof plus (ii) accrued and unpaid
interest and fees due such Lender, which interest and fees shall be paid when
collected from Borrower. In the event NCB elects to require any
Lender to assign its interest to NCB or to the Designated Lender, NCB will so
notify such Lender in writing within forty five (45) days following such
Lender’s denial, and such Lender will assign its interest to NCB or the
Designated Lender no later than five (5) days following receipt of such notice
pursuant to a Commitment Transfer Supplement executed by such Lender, NCB or the
Designated Lender, as appropriate, and Agent.
Notwithstanding
(a) the existence of a Default or an Event of Default, (b) that any of the other
applicable conditions precedent set forth in Section 8.2 hereof have not been
satisfied or (c) any other provision of this Agreement, Agent may at its
discretion and without the consent of the Required Lenders, voluntarily permit
the outstanding Revolving Advances at any time to exceed the Formula Amount by
up to five percent (5%) of the Formula Amount for up to thirty (30) consecutive
Business Days; provided that such outstanding Advances shall not exceed the
Maximum Revolving Advance Amount less the aggregate Maximum Undrawn Amount (the
“Out-of-Formula Loans”). If Agent is willing in its sole and absolute
discretion to make such Out-of-Formula Loans, such Out-of-Formula Loans shall be
payable on demand and shall bear interest at the Default Rate for Revolving
Advances consisting of Base Rate Loans; provided that, if Lenders do make
Out-of-Formula Loans, neither Agent nor Lenders shall be deemed thereby to have
changed the limits of Section 2.1(a). For purposes of this paragraph,
the discretion granted to Agent hereunder shall not preclude involuntary
overadvances that may result from time to time due to the fact that the Formula
Amount was unintentionally exceeded for any reason, including, but not limited
to, Collateral previously deemed to be either “Eligible
72
Receivables”,
“Eligible Dating Receivables” or “Eligible Inventory”, as applicable, becomes
ineligible, collections of Receivables applied to reduce outstanding Revolving
Advances are thereafter returned for insufficient funds or overadvances are made
to protect or preserve the Collateral. In the event Agent
involuntarily permits the outstanding Revolving Advances to exceed the Formula
Amount by more than five percent (5%), Agent shall use its efforts to have
Borrower decrease such excess in as expeditious a manner as is practicable under
the circumstances and not inconsistent with the reason for such excess, but in
no event may such involuntary advances be outstanding for a period of more than
sixty (60) consecutive days without the written consent of Required
Lenders. Revolving Advances made after Agent has determined the
existence of involuntary overadvances shall be deemed to be involuntary
overadvances and shall be decreased in accordance with the preceding
sentence.
In
addition to (and not in substitution of) the discretionary Revolving Advances
permitted above in this Section 16.2, Agent is hereby authorized by Borrower and
Lenders, from time to time in Agent’s sole discretion, (A) after the occurrence
and during the continuation of a Default or an Event of Default, or (B) at any
time that any of the other applicable conditions precedent set forth in Section
8.2 hereof have not been satisfied, to make Revolving Advances to Borrower on
behalf of Lenders which Agent, in its reasonable business judgment, deems
necessary or desirable (a) to preserve or protect the Collateral, or any portion
thereof, (b) to enhance the likelihood of, or maximize the amount of, repayment
of the Advances and other Obligations, or (c) to pay any other amount chargeable
to Borrower pursuant to the terms of this Agreement; provided, that at any time
after giving effect to any such Revolving Advances the outstanding Revolving
Advances do not exceed one hundred and five percent (105%) of the Formula Amount
for more than sixty (60) consecutive days without the written consent of
Required Lenders; provided further that such outstanding Advances shall not
exceed the Maximum Revolving Advance Amount less the aggregate
Maximum Undrawn Amount.
16.3.
Successors and Assigns;
Participations; New Lenders.
(a) This
Agreement shall be binding upon and inure to the benefit of Borrower, Agent,
each Lender, all future holders of the Obligations and their respective
successors and assigns, except that the Borrower may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of Agent and each Lender.
(b) Borrower
acknowledges that in the regular course of commercial banking business one or
more Lenders may at any time and from time to time sell participating interests
in the Advances to other financial institutions (each such transferee or
purchaser of a participating interest, a “Participant”). Each
Participant may exercise all rights of payment (including rights of set-off)
with respect to the portion of such Advances held by it or other Obligations
payable hereunder as fully as if such Participant were the direct holder thereof
provided that Borrower shall not be required to pay to any Participant more than
the amount which it would have been required to pay to Lender which granted an
interest in its Advances or other Obligations payable hereunder to such
Participant had such Lender retained such interest in the Advances hereunder or
other Obligations payable hereunder and in no event shall Borrower be required
to pay any such amount arising from the same circumstances and with respect to
the same Advances or other Obligations payable hereunder to both such Lender and
such Participant. Borrower hereby grants to any Participant a
continuing security interest in any deposits, moneys or other property actually
or constructively held by such Participant as security for the Participant’s
interest in the Advances.
73
(c) Any
Lender, (i) with the consent of Agent which shall not be unreasonably withheld
or delayed, may sell, assign or transfer all or any part of its rights and
obligations under or relating to Advances under this Agreement and the Other
Documents to a Permitted Assignee (provided no consent of Agent shall be
required for any sale, assignment or transfer to an Affiliate of any such
Lender) and such Permitted Assignee may commit to make Advances hereunder, and
(ii) with the consent of Agent and, so long as no Default or Event of Default
has occurred and is continuing, the consent of Borrower, in each case not to be
unreasonably withheld or delayed, may sell, assign or transfer all or any part
of its rights and obligations under or relating to Advances under this Agreement
and the Other Documents to one or more Persons who is not a Permitted Assignee
and one or more such Persons may commit to make Advances hereunder (in each
case, a “Purchasing Lender”), in minimum amounts of not less than $100,000,
pursuant to a Commitment Transfer Supplement, executed by a Purchasing Lender,
the transferor Lender, and Agent and delivered to Agent for
recording. Upon such execution, delivery, acceptance and recording,
from and after the transfer effective date determined pursuant to such
Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the rights and obligations of a Lender thereunder with a Commitment
Percentage as set forth therein, and (ii) the transferor Lender thereunder
shall, to the extent provided in such Commitment Transfer Supplement, be
released from its obligations under this Agreement, the Commitment Transfer
Supplement creating a novation for that purpose. Such Commitment
Transfer Supplement shall be deemed to amend this Agreement to the extent, and
only to the extent, necessary to reflect the addition of such Purchasing Lender
and the resulting adjustment of the Commitment Percentages arising from the
purchase by such Purchasing Lender of all or a portion of the rights and
obligations of such transferor Lender under this Agreement and the Other
Documents. Borrower hereby consents to the addition of such
Purchasing Lender and the resulting adjustment of the Commitment Percentages
arising from the purchase by such Purchasing Lender of all or a portion of the
rights and obligations of such transferor Lender under this Agreement and the
Other Documents. Borrower shall execute and deliver such further
documents and do such further acts and things in order to effectuate the
foregoing.
(d) Any
Lender, with the consent of Agent which shall not be unreasonably withheld or
delayed, may directly or indirectly sell, assign or transfer all or any portion
of its rights and obligations under or relating to Revolving Advances under this
Agreement and the Other Documents to an entity, whether a corporation,
partnership, trust, limited liability company or other entity that (i) is
engaged in making, purchasing, holding or otherwise investing in bank loans and
similar extensions of credit in the ordinary course of its business and (ii)
is administered,
serviced or managed by the assigning Lender or an Affiliate of such Lender (a
“Purchasing CLO” and together with each Participant and Purchasing Lender, each
a “Transferee” and collectively the “Transferees”), pursuant to a Commitment
Transfer Supplement modified as appropriate to reflect the interest being
assigned (“Modified Commitment Transfer Supplement”), executed by any
intermediate purchaser, the Purchasing CLO, the transferor Lender, and Agent as
appropriate and delivered to Agent for recording. Upon such execution
and delivery, from and after the transfer effective date determined pursuant to
such Modified Commitment Transfer Supplement, (i) Purchasing CLO thereunder
shall be a
74
party
hereto and, to the extent provided in such Modified Commitment Transfer
Supplement, have the rights and obligations of a Lender thereunder and (ii) the
transferor Lender thereunder shall, to the extent provided in such Modified
Commitment Transfer Supplement, be released from its obligations under this
Agreement, the Modified Commitment Transfer Supplement creating a novation for
that purpose. Such Modified Commitment Transfer Supplement shall be
deemed to amend this Agreement to the extent, and only to the extent, necessary
to reflect the addition of such Purchasing CLO. Borrower hereby
consents to the addition of such Purchasing CLO. Borrower shall
execute and deliver such further documents and do such further acts and things
in order to effectuate the foregoing.
(e) Agent
shall maintain at its address a copy of each Commitment Transfer Supplement and
Modified Commitment Transfer Supplement delivered to it and a register (the
“Register”) for the recordation of the names and addresses of each Lender and
the outstanding principal, accrued and unpaid interest and other fees due
hereunder. The entries in the Register shall be conclusive, in the
absence of manifest error, and Borrower, Agent and Lenders may treat each Person
whose name is recorded in the Register as the owner of the Advance recorded
therein for the purposes of this Agreement. The Register shall be
available for inspection by Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice. Agent shall receive a
fee in the amount of $3,500 payable by the applicable Purchasing Lender and/or
Purchasing CLO upon the effective date of each transfer or assignment (other
than to an intermediate purchaser) to such Purchasing Lender and/or Purchasing
CLO.
(f) Borrower
authorizes each Lender to disclose to any Transferee and any prospective
Transferee any and all financial information in such Lender’s possession
concerning Borrower which has been delivered to such Lender by or on behalf of
Borrower pursuant to this Agreement or in connection with such Lender’s credit
evaluation of Borrower.
16.4.
Application of
Payments. Subject to the terms of Section 11.5 hereof, Agent
shall have the continuing and exclusive right to apply any payment and any and
all proceeds of Collateral to any portion of the Obligations. To the
extent that Borrower makes a payment or Agent or any Lender receives any payment
or proceeds of the Collateral for Borrower’s benefit, which are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, debtor in possession, receiver, custodian or any other
party under any bankruptcy law, common law or equitable cause, then, to such
extent, the Obligations or part thereof intended to be satisfied shall be
revived and continue as if such payment or proceeds had not been received by
Agent or such Lender.
16.5.
Indemnity. Borrower
shall indemnify Agent, each Lender and each of their respective officers,
directors, Affiliates, attorneys, employees and agents from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including fees and disbursements of counsel) which may be imposed on, incurred
by, or asserted against Agent or any Lender in any claim, litigation, proceeding
or investigation instituted or conducted by any Governmental Body or
instrumentality or any other Person with respect to any aspect of, or any
transaction contemplated by, or referred to in, or any matter related to, this
Agreement or the Other Documents, whether or not Agent or any Lender is a party
thereto, except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of the party being
75
indemnified
(as determined by a court of competent jurisdiction in a final and
non-appealable judgment). Without limiting the generality of the
foregoing, this indemnity shall extend to any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including fees and disbursements of counsel)
asserted against or incurred by any of the indemnitees described above in this
Section 16.5 by any Person under any Environmental Laws or similar laws by
reason of Borrower’s or any other Person’s failure to comply with laws
applicable to solid or hazardous waste materials, including Hazardous Substances
and Hazardous Waste, or other Toxic Substances. Additionally, if any
taxes (excluding taxes imposed upon or measured solely by the net income of
Agent and Lenders, but including any intangibles taxes, stamp tax, recording tax
or franchise tax) shall be payable by Agent, Lenders or Borrower on account of
the execution or delivery of this Agreement, or the execution, delivery,
issuance or recording of any of the Other Documents, or the creation or
repayment of any of the Obligations hereunder, by reason of any Applicable Law
now or hereafter in effect, Borrower will pay (or will promptly reimburse Agent
and Lenders for payment of) all such taxes, including interest and penalties
thereon, and will indemnify and hold the indemnitees described above in this
Section 16.5 harmless from and against all liability in connection
therewith.
16.6.
Notice. Any
notice or request hereunder may be given to Borrower or Borrower or to Agent or
any Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a notice of
change of address under this Section. Any notice, request, demand,
direction or other communication (for purposes of this Section 16.6 only, a
“Notice”) to be given to or made upon any party hereto under any provision of
this Loan Agreement shall be given or made by telephone or in writing (which
includes by means of electronic transmission (i.e., “e-mail”) or facsimile
transmission or by setting forth such Notice on a site on the World Wide Web (a
“Website Posting”) if Notice of such Website Posting (including the information
necessary to access such site) has previously been delivered to the applicable
parties hereto by another means set forth in this Section 16.6) in accordance
with this Section 16.6. Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under their
respective names on Section 16.6 hereof or in accordance with any subsequent
unrevoked Notice from any such party that is given in accordance with this
Section 16.6. Any Notice shall be effective:
(a) In the
case of hand-delivery, when delivered;
(b) If given
by mail, four days after such Notice is deposited with the United States or
Canadian Postal Service, with first-class postage prepaid, return receipt
requested;
(c) In the
case of a telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business Day by
hand delivery, a facsimile or electronic transmission, a Website Posting or an
overnight courier delivery of a confirmatory Notice (received at or before noon
on such next Business Day);
(d) In the
case of a facsimile transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice receives
confirmation of the delivery thereof from its own facsimile
machine;
76
(e) In the
case of electronic transmission, when actually received;
(f) In the
case of a Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set forth in
this Section 16.6; and
(g) If given
by any other means (including by overnight courier), when actually
received.
Any
Lender giving a Notice to Borrower shall concurrently send a copy thereof to
Agent, and Agent shall promptly notify the other Lenders of its receipt of such
Notice.
(A) If
to Agent or NCB at:
National
City Bank, Canada Branch
130 King
Street West, Suite 2140
Toronto,
Ontario M5X 1E4
Attention: Michael
Danby, Assistant Vice President
Telephone: (416)
361-1744 ext. 223
Facsimile: (416)
361-0085
with a
copy to:
PNC Bank,
National Association
200 South
Wacker Drive, Suite 600
Chicago,
Illinois 60606
Attention: Portfolio
Manager
Telephone:
(312) 454-2920
Facsimile: (312)
454-2919
with a
copy to:
PNC Bank,
National Association
PNC
Agency Services
PNC
Firstside Center
500 First
Avenue, 4th Floor
Pittsburgh,
Pennsylvania 15219
Attention:
Trina Barkley
Telephone:
(412) 768-0423
Facsimile:
(412) 705-2006
77
with a
copy to:
Blank
Rome LLP
The
Chrysler Building
405
Lexington Avenue
New York,
New York 10174-0208
Attention:
Lawrence F. Flick II, Esquire
Telephone:
(212) 885-5556
Facsimile:
(215) 832-5556
with a
copy to:
Blake,
Cassels & Graydon LLP
Barristers
& Solicitors
199 Bay
Street
Suite
2800, Commerce Court West
Toronto,
Ontario M5L 1A9
Attention:
Nathan Cheifetz
Telephone:
(416) 863-2969
Facsimile:
(416) 863-2653
(B) If
to a Lender other than Agent, as specified on the signature pages
hereof
(C) If
to Borrower:
Johnson
Outdoors Canada Inc.
c/o
Johnson Outdoors Inc.
555 Main
Street
Racine,
Wisconsin 53403
Attention: Alisa
Swire, Esquire
Telephone:
(262) 631-6644
Facsimile: (262)
631-6610
with a
copy to:
Godfrey
& Kahn, S.C.
780 North
Water Street
Milwaukee,
WI 53202
Attention:
Kristin A. Roeper, Esquire
Telephone:
(414) 287-9594
Facsimile:
(414) 273-5198
78
with a
copy to:
Gowling
Lafleur Henderson LLP
PO Box
30
Suite
2300 - 550 Burrard Street
Vancouver,
B.C. V6C 2B5
Attention: Jack
M. Yong
Telephone: (604)
443-7698
Facsimile: (604)
443-5645
16.7.
Survival. The
obligations of Borrower under Sections 2.2(f), 3.7, 3.8, 3.9, 4.19(h), and 16.5
and the obligations of Lenders under Section 14.7, shall survive termination of
this Agreement and the Other Documents and payment in full of the
Obligations.
16.8.
Severability. If
any part of this Agreement is contrary to, prohibited by, or deemed invalid
under Applicable Laws or regulations, such provision shall be inapplicable and
deemed omitted to the extent so contrary, prohibited or invalid, but the
remainder hereof shall not be invalidated thereby and shall be given effect so
far as possible.
16.9.
Expenses. All
costs and expenses including reasonable attorneys’ fees (including the allocated
costs of in house counsel) and disbursements incurred by Agent on its behalf or
on behalf of Lenders (a) in all efforts made to enforce payment of any
Obligation or effect collection of any Collateral, or (b) in connection with the
entering into, modification, amendment, administration and enforcement of this
Agreement or any consents or waivers hereunder or thereunder and all related
agreements, documents and instruments, or (c) in instituting, maintaining,
preserving, enforcing and foreclosing on Agent’s security interest in or Lien on
any of the Collateral, or maintaining, preserving or enforcing any of Agent’s or
any Lender’s rights hereunder, and under all related agreements, documents and
instruments, whether through judicial proceedings or otherwise, or (d) in
defending or prosecuting any actions or proceedings arising out of or relating
to Agent’s or any Lender’s transactions with Borrower, any Guarantor or any
Subordinated Lender or (e) in connection with any advice given to Agent or any
Lender with respect to its rights and obligations under this Agreement and all
related agreements, documents and instruments, may be charged to Borrower’s
Account and shall be part of the Obligations.
16.10.
Currency
Indemnity. If, for the purposes of obtaining judgment in any
court in any jurisdiction with respect to this Agreement or any Other Document,
it becomes necessary to convert into the currency of such jurisdiction (the
“Judgment
Currency”) any amount due under this Agreement or under any
Other Document in any currency other than the Judgment Currency (the “Currency Due”), then
conversion shall be made at the rate of exchange prevailing on the Business Day
before the day on which the
79
judgment
is given. For this purpose “rate of exchange” means the rate at which
Agent is able, on the relevant date, to purchase the Currency Due with the
Judgment Currency in accordance with its normal practice. In the
event that there is a change in the rate of exchange prevailing between the
Business Day before the day on which the judgment is given and the date of
receipt by Agent of the amount due, Borrower will, on the date of receipt by
Agent, pay such additional amounts, if any, or be entitled to receive
reimbursement of such amount, if any, as may be necessary to ensure that the
amount received by Agent on such date is the amount in the Judgment Currency
which when converted at the rate of exchange prevailing on the date of receipt
by Agent is the amount then due under this Agreement or such Other Document in
the Currency Due. If the amount of the Currency Due which Agent is so
able to purchase is less than the amount of the Currency Due originally due to
it, Borrower shall indemnify and save Agent and Lenders harmless from and
against all loss or damage arising as a result of such
deficiency. This indemnity shall constitute an obligation separate
and independent from the other obligations contained in this Agreement and the
Other Documents, shall give rise to a separate and independent cause of action,
shall apply irrespective of any indulgence granted by Agent from time to time
and shall continue in full force and effect notwithstanding any judgment or
order for a liquidated sum in respect of an amount due under this Agreement or
any Other Document or under any judgment or order.
16.11.
Injunctive
Relief. Borrower recognizes that, in the event Borrower fails
to perform, observe or discharge any of its obligations or liabilities under
this Agreement, or threatens to fail to perform, observe or discharge such
obligations or liabilities, any remedy at law may prove to be inadequate relief
to Lenders; therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.
16.12.
Consequential
Damages. Neither Agent nor any Lender, nor any agent or
attorney for any of them, shall be liable to Borrower or any Guarantor (or any
Affiliate of any such Person) for indirect, punitive, exemplary or consequential
damages arising from any breach of contract, tort or other wrong relating to the
establishment, administration or collection of the Obligations or as a result of
any transaction contemplated under this Agreement or any Other
Document.
16.13.
Captions. The
captions at various places in this Agreement are intended for convenience only
and do not constitute and shall not be interpreted as part of this
Agreement.
16.14.
Counterparts; Facsimile
Signatures. This Agreement may be executed in any number of
and by different parties hereto on separate counterparts, all of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature delivered by a
party by facsimile or other electronic transmission shall be deemed to be an
original signature hereto.
16.16.
Construction. The
parties acknowledge that each party and its counsel have reviewed this Agreement
and that the normal rule of construction to the effect that any ambiguities are
to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
thereto.
16.17. Confidentiality; Sharing
Information. Agent, each Lender and each Transferee shall hold
all non-public information obtained by Agent, such Lender or such Transferee
pursuant to the requirements of this Agreement in accordance with Agent’s, such
Lender’s and such Transferee’s customary procedures for handling confidential
information of this nature;
80
provided,
however, Agent, each Lender and each Transferee may disclose such confidential
information (a) to its examiners, Affiliates, outside auditors, counsel and
other professional advisors, (b) to Agent, any Lender or to any prospective
Transferees, and (c) as required or requested by any Governmental Body or
representative thereof or pursuant to legal process; provided, further that (i)
unless specifically prohibited by Applicable Law or court order, Agent, each
Lender and each Transferee shall use its reasonable best efforts prior to
disclosure thereof, to notify the Borrower of the applicable request for
disclosure of such non-public information (A) by a Governmental Body or
representative thereof (other than any such request in connection with an
examination of the financial condition of a Lender or a Transferee by such
Governmental Body) or (B) pursuant to legal process and (ii) in no event shall
Agent, any Lender or any Transferee be obligated to return any materials
furnished by Borrower other than those documents and instruments in possession
of Agent or any Lender in order to perfect its Lien on the Collateral once the
Obligations have been paid in full and this Agreement has been
terminated. Borrower acknowledges that from time to time financial
advisory, investment banking and other services may be offered or provided to
Borrower or one or more of its Affiliates (in connection with this Agreement or
otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such
Lender and Borrower hereby authorizes each Lender to share any information
delivered to such Lender by Borrower and its Subsidiaries pursuant to this
Agreement, or in connection with the decision of such Lender to enter into this
Agreement, to any such Subsidiary or Affiliate of such Lender, it being
understood that any such Subsidiary or Affiliate of any Lender receiving such
information shall be bound by the provisions of this Section 16.15 as if it were
a Lender hereunder. Such authorization shall survive the repayment of
the other Obligations and the termination of this Agreement.
16.17. Publicity. Borrower
and each Lender hereby authorizes Agent to make appropriate announcements of the
financial arrangement entered into among Borrower, Agent and Lenders, including
announcements which are commonly known as tombstones, in such publications and
to such selected parties as Agent shall in its sole and absolute discretion deem
appropriate; provided, that the contents of such announcements shall be subject
to the prior written consent of JOI which consent shall not be unreasonably
withheld, conditioned or delayed.
Each of
the parties has signed this Agreement as of the day and year first above
written.
JOHNSON OUTDOORS CANADA
INC.
By: /s/ Donald P.
Sesterhenn
Name: Donald P. Sesterhenn
Title: Treasurer & Secretary
NATIONAL
CITY BANK, CANADA BRANCH
As
Collateral Agent and Administrative Agent
By: /s/ Mike
Danby
Name: Mike Danby
Title: Assistant Vice President
By: /s/ Bill
Hines
Name: Bill Hines
Title: Senior Vice President & Principal
Officer
NATIONAL
CITY BANK, CANADA BRANCH
As a
Lender
By: /s/ Mike
Danby
Name: Mike Danby
Title: Assistant Vice President
By: /s/ Bill
Hines
Name: Bill Hines
Title: Senior Vice President & Principal
Officer
Commitment Percentage 40%
TD
BANK, N.A.
By: /s/ William H. Moul,
Jr.
Name: William
H. Moul, Jr.
Title: Vice
President
Address
for Notices:
2005
Market St., 2nd Floor
Philadelphia,
PA 19103
c/o
William H. Moul, Jr.
phone: 215-282-3863
fax: 215-282-4033
william.moul@tdbanknorth.com
Commitment
Percentage: 21.333333333%
ASSOCIATED
COMMERCIAL FINANCE, INC.
By: /s/ Peter
O.
Strobel
Name: Peter
O. Strobel
Title: Senior
Vice President
Address
for Notices:
19601
West Bluemound Road
Suite
100
Brookfield,
WI 53045
c/o
Peter O. Strobel
phone: 262-797-7344
fax: 262-797-7177
peter.strobel@associatedbank.com
THE PRIVATEBANK AND TRUST
COMPANY
By: /s/ Mitchell B.
Rasky
Name: Mitchell
B. Rasky
Title: Managing
Director
Address
for Notices:
The
PrivateBank and Trust Company
120
South LaSalle Street
Chicago,
IL 60603
c/o
Mitchell B. Rasky
phone: 312-564-6954
fax: 312-564-6888
mrasky@theprivatebank.com
Commitment
Percentage: 25.333333333%