Exhibit 99(b)(8)
NEITHER THIS NOTE NOR ANY SECURITIES WHICH MAY BE ISSUED UPON CONVERSION HEREOF
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR REGISTERED
OR OTHERWISE QUALIFIED UNDER ANY STATE OR OTHER SECURITIES LAW. NEITHER THIS
NOTE NOR ANY SUCH SECURITIES MAY BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND REGISTRATION OR OTHER
QUALIFICATION UNDER ANY APPLICABLE STATE OR OTHER SECURITIES LAWS, OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION OR OTHER
QUALIFICATION IS NOT REQUIRED.
WORLDWIDE SPORTS & RECREATION, INC.
CONVERTIBLE SUBORDINATED PIK PROMISSORY NOTE
Principal Amount: $12,200,000.00 August __, 2000
Worldwide Sports & Recreation, Inc., a Delaware corporation, with its
principal office at 9200 Cody, Overland Park, Kansas 66214, for value received,
promises to pay to the order of Wind Point Partners IV, L.P., as agent (the
"NOTE AGENT") for and on behalf of the Noteholders (as defined below), the
principal sum of Twelve Million Two Hundred Thousand and No/100 Dollars
($12,200,000.00) (the "LOAN"), together with interest thereon, as hereinafter
provided and as set forth herein. All payments hereunder shall be made directly
to each Noteholder at the address of each such Noteholder set forth on EXHIBIT A
hereto, or at such other place as each Noteholder shall from time to time
designate in writing to the Company, based on such Noteholder's Pro Rata Share,
as set forth on EXHIBIT A hereto.
1. PRINCIPAL AND INTEREST
1.1. INTEREST RATE AND INTEREST PAYMENTS. Except as provided in Section
1.2, the principal balance of the Loan outstanding from time to time (including,
without limitation, all increases thereof resulting from the addition of PIK
Interest (defined herein) thereto in accordance with the terms hereof) shall
bear interest per annum at a rate equal to the Prime Rate (defined herein) (the
"INTEREST RATE") and shall accrue and be added to the principal balance of the
Loan at the time interest hereon is otherwise payable at the Interest Rate, and
thereafter shall itself accrue interest at the Interest Rate (the "PIK
INTEREST"). PIK Interest shall be paid in arrears by the Company to the
Noteholders at the Interest Rate on the first day of each month during the term
hereof, commencing on September 1, 2000. For purposes hereunder, references to
the "principal balance" of the Loan shall include all PIK Interest that from
time to time has been added to the outstanding principal balance of the Loan and
shall be due and payable on the Maturity Date (defined herein) or on such other
date as may be required hereby.
1.2. DEFAULT RATE. During any period of time commencing on the date any
Event of Default (defined herein) has occurred and ending on the date that such
Event of Default shall have been cured or waived in writing by the Note Agent
(defined herein), the principal balance of the Loan outstanding from time to
time shall bear interest per annum at a rate equal to three percent (3%) plus
the Prime Rate.
1.3. INTEREST COMPUTATION. Interest shall be computed on the basis of a
360-day year consisting of 12 30-day months and charged for the actual number of
days during the period for which interest is being charged. In computing
interest, the date of payment shall be excluded.
1.4. MAXIMUM INTEREST. Notwithstanding any provision to the contrary
contained herein, no Noteholder shall collect a rate of interest on any
obligation or liability due and owing by the Company to such Noteholder in
excess of the maximum contract rate of interest permitted by applicable law
("EXCESS INTEREST"). Each Noteholder and the Company agrees that the interest
laws of the State of Delaware shall govern the relationship among them and
understand and believe that the transactions contemplated by this Note comply
with the usury laws of the State of Delaware, but in the event of a final
adjudication to the contrary, the Company shall be obligated to pay, NUNC PRO
TUNC, to each Noteholder only such interest as then shall be permitted by the
laws of the state found to govern the contract relationship among each
Noteholder and the Company. If any Excess Interest is provided for or determined
by a court of competent jurisdiction to have been provided for in this Note,
then in such event (a) the Company shall not be obligated to pay such Excess
Interest, (b) any Excess Interest collected by any Noteholder shall be, at the
Note Agent's option, (i) applied to the outstanding principal balance of the
Loan in such manner as the Note Agent may elect or to PIK Interest not in excess
of the maximum rate permitted by applicable law (the "MAXIMUM RATE") or (ii)
refunded to the payor thereof, (c) the interest rates provided for herein (the
"STATED RATE") shall be automatically reduced to the Maximum Rate and this Note
shall be deemed to have been, and shall be, modified to reflect such reduction
and (d) the Company shall not have any action against the Note Agent or any
Noteholder for any damages arising out of the payment or collection of such
Excess Interest; PROVIDED, HOWEVER, that if at any time thereafter the Stated
Rate is less than the Maximum Rate, the Company shall, to the extent permitted
by law, continue to pay interest at the Maximum Rate until such time as the
total interest received by each Noteholder is equal to the total interest which
such Noteholder would have received had the Stated Rate been (but for the
operation of this provision) the interest rate payable. Thereafter, the interest
rate payable shall be the Stated Rate unless and until the Stated Rate again
exceeds the Maximum Rate, in which event the provisions contained in this
Section 1.4 shall again apply.
1.5. PRINCIPAL PAYMENTS.
Unless converted in accordance with Section 3 hereof, the entire
principal balance of the Loan shall be due and payable on October 31, 2008 (the
"MATURITY DATE"), together with all PIK Interest, and any and all other amounts
then owing hereunder. Subject always to the subordination provisions contained
in Section 4 of this Note, principal and PIK Interest due but not paid on the
Maturity Date, shall bear interest at the rate per annum equal to three percent
(3%) plus the Prime Rate and shall be payable on demand.
Subject always to the subordination provisions contained in this Note and
the
terms of the Credit Agreement (defined in the definition of "Senior
Indebtedness" herein) and the Note Agreement (defined in "Senior Indebtedness"
herein), this Note may be prepaid at any time in whole or in part from time to
time, by payment of principal and interest accrued to the date of payment, but
without premium or penalty; provided, any such payment shall be made pro rata to
the Noteholders based upon such Noteholder's Pro Rata Share.
All payments and prepayments hereunder shall be applied first to PIK
Interest and then to the unpaid principal balance outstanding.
2. DEFINITIONS. As used in this Note, the following terms, unless the
context otherwise requires, have the following meanings:
"COMPANY" includes Worldwide Sports & Recreation, Inc. and any
corporation or other entity which shall succeed to all or substantially all of
the assets and business of Worldwide Sports & Recreation, Inc., by merger or
sale of all or substantially all of its assets or otherwise.
"COMMON STOCK" shall mean the Company's common stock, par value $0.01 per
share.
"NOTE" shall mean this Convertible Subordinated PIK Promissory Note.
"NOTEHOLDERS", "HOLDER", or similar terms, when the context refers to
holders of this Note, shall mean any Person(s) in his or its capacity from time
to time as the holder(s) of this Note.
"PREFERRED STOCK" shall mean the Company's Series A Preferred Stock, par
value $0.01 per share.
"PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"PRIME RATE" shall mean the rate per annum equal to prime rate as
published from time to time in the financial section of THE WALL STREET JOURNAL
(or, if such rate ceases to be so published, as quoted from such other generally
available and recognizable source as the Note Agent may select). The rate of
interest hereunder shall change automatically and immediately as and when the
Prime Rate shall change, without notice to the Company, and any notice to which
it may be entitled is hereby waived.
"SENIOR DEFAULT" means any default by Company under any document,
instrument or agreement evidencing or securing the Senior Indebtedness after the
expiration of any notice, grace and/or cure periods.
"SENIOR INDEBTEDNESS" means any and all indebtedness, premium, interest,
liabilities and other obligation (including post-petition interest, even if not
an allowed claim) now or hereafter owing by the Company or any of its
subsidiaries (a) pursuant to that certain
Second Amended and Restated Credit Agreement (the "CREDIT AGREEMENT") dated as
of the date hereof by and among the Company, Antares Capital Corporation, a
Delaware corporation, as agent ("SENIOR AGENT") for the several financial
institutions from time to time party to the Credit Agreement and for itself as a
lender, Heller Financial, Inc. ("HELLER"), Fleet Capital Corporation ("FLEET")
and National City Bank of Michigan/Illinois ("NATIONAL CITY") (National City,
Heller and Fleet being co-agents); (b) that certain Second Amended and Restated
Note Agreement dated as of the date hereof (the "NOTE AGREEMENT") in favor of
the holders of the securities issued thereunder and the $55,000,000 12% Senior
Subordinated Notes Due August 5, 2007 and Warrants to Purchase Common Stock
issued and outstanding under the Note Agreement; (c) to any lender or group of
lenders in connection with principal indebtedness incurred by the Company or its
Affiliates up to Forty Million Dollars ($40,000,000) in excess of the Senior
Principal Amount (defined herein); and (d) refinancings or recapitalizations of
the Senior Indebtedness, as any of the foregoing may be amended, supplemented,
restated, extended, renewed, refinanced or modified from time to time (the
credit facilities or agreements described in subsections (a), (b), (c) and (d)
being collectively defined as the "SENIOR CREDIT FACILITIES" and the holders of
the Senior Credit Facilities being collectively defined as the "SENIOR
LENDERS");
"SENIOR PRINCIPAL AMOUNT" means at any time, the aggregate outstanding
balance of the debt owed by the Company under the Senior Credit Facilities (as
the same may be amended, supplemented, restated, extended, renewed, refinanced
or modified from time to time); provided, however, that in determining such
amount, the Company, the Noteholders and the Senior Lenders shall assume that
for all revolving credit facilities, the maximum revolver amount shall be deemed
to have been drawn, whether or not such draws have actually been borrowed.
3. CONVERSION.
3.1. CONVERSION. On or at any time after the date hereof and continuing
until this Note is paid in full, in the event there remains outstanding
hereunder principal and/or PIK Interest, the Note Agent, on behalf of the
Noteholders, shall have the right to convert all or any portion of the
outstanding principal and/or PIK Interest (the aggregate dollar amount of such
principal and/or PIK Interest, hereafter the "CONVERTED AMOUNT") into the number
of shares of Common Stock equal to the Converted Amount multiplied by 0.014202
(the "COMMON CONVERSION RATIO") and rounded to the nearest whole share
(representing a price per share of $1.00), and the number of shares of Preferred
Stock equal to the Converted Amount multiplied by 0.00985798 (the "PREFERRED
CONVERSION RATIO") and rounded to the nearest one-hundredth (1/100) of a share
(representing a price per share of $100.00) (such Common Stock and Preferred
Stock being the "CONVERSION STOCK"). Upon the consummation of the aforesaid
conversion and by virtue of the issuance and delivery of fully paid and
non-assessable shares of Conversion Stock, the Converted Amount of principal
and/or PIK Interest shall be deemed to have been paid and satisfied in full.
In the event of any split, stock dividend, subdivision, combination or
reclassification of shares of Common Stock or Preferred Stock or any other
recapitalization of the Company having the effect of increasing or decreasing
the number of shares of issued and outstanding Common Stock or Preferred Stock,
the Common Conversion Ratio and the Preferred Conversion Ratio shall be adjusted
so that the number of shares of Common Stock and Preferred Stock into which this
Note may be converted is equal to that number of shares of Common Stock and
Preferred
Stock that represents the same proportionate ownership interest in the Company
as would have resulted if the conversion had taken place immediately prior to
the event causing such adjustment.
The conversion as described in this Section 3.1 shall occur only upon the
delivery by Note Agent to the Company of written notice of election to convert
in the form of EXHIBIT B hereto as executed by the Note Agent on behalf of the
Noteholders. Upon the Company's receipt of such written notice, each Noteholder
shall receive his or its Pro Rata Share, as set forth on EXHIBIT A, of the
Conversion Stock in accordance with the terms of Section 3.3 herein and the
outstanding balance of this Note shall be permanently reduced by the Converted
Amount. The Note Agent shall give prompt written to each Noteholder describing
in reasonable detail each conversion event pursuant to this Section 3.
3.2. RESERVATION OF STOCK. The Company hereby represents and warrants
that it has taken all necessary corporate action and obtained all necessary
consents and approvals to authorize the issuance of this Note and the conversion
contemplated by Section 3.1, and hereby covenants that, it will at all times
prior to the payment in full of this Note reserve and keep available such number
of authorized shares of its Common Stock and Preferred Stock as may be
deliverable upon conversion of this Note.
3.3. FULLY PAID SHARES; CERTIFICATES. The Company hereby (a) represents
and warrants that all shares of Conversion Stock issued or transferred upon the
conversion of this Note, pursuant to the terms of Section 3.1 hereof, shall be
validly issued, fully paid, non-assessable and free and clear of any claims,
liens or encumbrances and (b) agrees that all certificates representing each
Noteholder's Pro Rata Share of the Conversion Stock shall be promptly delivered
to the applicable Noteholders.
3.4. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. This Note does not by
itself entitle the Noteholders to any voting rights or other rights as a
shareholder of the Company. In the absence of conversion of this Note, no
provisions of this Note, and no enumeration herein of the rights or privileges
of the holder shall cause such holder to be a shareholder of the Company for any
purpose by virtue hereof.
4. SUBORDINATION.
This Note and all amounts (including all principal, PIK Interest and
other fees, costs and other obligations) payable by the Company with respect to
this Note (the "SUBORDINATED DEBT") are and shall be subordinated and junior in
right of payment to the prior payment in full in cash of the Senior Indebtedness
to the extent and in the manner set forth herein. Each holder of the Senior
Indebtedness shall be deemed to have acquired and advanced Senior Indebtedness
in reliance upon the provisions contained in this Note.
If (a) a Senior Default has occurred and is continuing, or a Senior
Default would be caused by the making of any payment of the Subordinated Debt
and (b) written notice thereof (the "SENIOR DEFAULT NOTICE") has been delivered
by the applicable Senior Lender to the Note Agent and the Company at the
applicable addresses specified herein (such period of time being referred to as
the "PAYMENT SUSPENSION PERIOD"), then, except as otherwise set forth below, the
Company shall not make, and the holders of the Subordinated Debt shall not
accept or receive
from the Company, directly or indirectly, in cash or other property or in any
other manner (including, without limitation, from or by way of any collateral or
redemption or sale), payment in respect of all or any part of the Subordinated
Debt unless and until the earlier of the date (i) the Senior Indebtedness has
been paid in full in cash, (ii) such Senior Default has been cured by the
Company or waived in writing by the requisite holders of the applicable Senior
Indebtedness or (iii) the holders of the applicable Senior Indebtedness have
waived the Payment Suspension Period; PROVIDED, HOWEVER, in no event may any
payment be made hereunder unless such payment is permitted to be made in
accordance with the Credit Agreement and the Note Agreements; PROVIDED, FURTHER,
HOWEVER, that notwithstanding anything in this Section 4 to the contrary, the
Note Agent, on behalf of the Noteholders, may convert all or any portion of any
outstanding principal and PIK Interest into Common Stock and Preferred Stock at
any time pursuant to Section 3.
Upon any distribution of assets of the Company or upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in any
bankruptcy, insolvency, reorganization or receivership proceeding or upon an
assignment for the benefit of creditors or any other marshaling of the assets
and liabilities of the Company or otherwise:
(I) the holders of all Senior Indebtedness shall be entitled to
receive payment in full in cash (or in a manner otherwise acceptable to
such holders of Senior Indebtedness) of the principal thereof, the
interest due thereon and any premium or other payment obligation with
respect thereto (including interest, fees and charges accruing thereon
after the commencement of any such proceedings whether or not such
interest, fees and charges are allowed claims) before the holders of the
Subordinated Debt are entitled to receive any payment upon the
Subordinated Debt and the holders of Senior Indebtedness shall be
entitled to receive for application in payment thereof any payment or
distribution of any kind or character, whether in cash, property or
securities or by setoff or otherwise, which may be payable or deliverable
in any such proceedings in respect of this Note (excluding securities
which are subordinated to the same extent as this Note is subordinated to
the Senior Indebtedness hereunder, hereafter "PERMITTED JUNIOR
SECURITIES"); and
(II) any payment or distribution of assets of the Company of any
kind or character, whether in cash, property or securities (excluding
Permitted Junior Securities), by set-off or otherwise, to which the
holders of the Subordinated Debt would be entitled pursuant to this Note
but for the provisions contained herein shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or their agents
or representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, interest on and any
premium or other amounts payable with respect to the Senior Indebtedness
held or represented by each such holder, to the extent necessary to make
payment in full of all Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of the
Senior Indebtedness.
Upon the occurrence of any such dissolution, winding up, liquidation or
reorganization proceedings, if Note Agent, on behalf of the Noteholders, has not
filed any claim, proof of claim or other instrument of similar character
necessary to enforce the obligations of the Company in respect of this Note
within thirty (30) days before the expiration of the time to file the same, then
and in such event, but only in such event, any holder of the Senior Indebtedness
may notify (the "CLAIM NOTICE") the Note Agent and each Noteholder in compliance
with Section 10.1 herein of (i) such fact and (ii) the fact that such holder of
the Senior Indebtedness may, if such claim, proof of claim or other instrument
of similar character is not so timely filed by the Note Agent, on behalf of the
Noteholders, file such claim or other instrument of similar character. Assuming
that the Claim Notice is timely given, the holder of the Senior Indebtedness
may, at any time within ten (10) days prior to the expiration of the time to
file the same, as an attorney-in-fact for such Noteholders, file any claim,
proof of claim or such other instrument of similar character on behalf of such
Noteholders. Notwithstanding the foregoing, the Noteholders shall nevertheless
retain all rights to enforce such claim, proof of claim or other instrument in
their capacity as holders of this Note.
The consolidation of the Company with, or the merger of the Company into,
another entity shall not be deemed a dissolution, winding up, liquidation or
reorganization of the Company for the purposes herein if such other entity is
organized in the United States and such entity, as a part of such consolidation
or merger, succeeds to the Company's property and business and assumes the
Company's obligations (including the Senior Indebtedness and the Subordinated
Debt).
All payments or distributions by the Company upon or with respect to the
Subordinated Debt which are received by Noteholders in violation of or contrary
to the provisions contained in this Section 4 shall be received in trust for the
benefit of the holders of the Senior Indebtedness and shall be paid over upon
demand to such holders in the same form as so received (with all necessary
endorsements) to be applied to the payment of the Senior Indebtedness.
The provisions of this Note shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the Senior
Indebtedness is rescinded or must otherwise be returned by the holders of the
Senior Indebtedness for any reason whatsoever (including, without limitation,
the insolvency, bankruptcy or reorganization of the Company) all as though such
payment had not been made.
The provisions of this Note are for the purpose of defining the relative
rights of the holders of Senior Indebtedness on the one hand and the holders of
Subordinated Debt on the other hand, and nothing herein shall impair (as among
the Company, the holders of the Subordinated Debt and creditors of the Company,
other than the holders of the Senior Indebtedness) the Company's obligation to
the holders of the Subordinated Debt to pay to such holders the full amount of
the Subordinated Debt in accordance with the terms of this Note. No provision of
this Note shall be deemed to subordinate, to any extent, any claim or right of
any holder of the Subordinated Debt to any claim against the Company by any
creditor or any other Person except to the extent expressly provided herein.
To the extent that (A) the holders of the Subordinated Debt have turned
over any
cash, securities or other property received as payments from the Company on the
Subordinated Debt to the holders of Senior Indebtedness for application to the
Senior Indebtedness or (B) any cash, securities or other property to which the
holders of the Subordinated Debt would otherwise have been entitled (but for the
provisions of this Note) as payments from the Company on the Subordinated Debt
are paid to the holders of Senior Indebtedness hereunder for application to the
Senior Indebtedness, and any such payments described in clause (A) or (B) or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from or disgorged by the holders of the
Subordinated Debt or are otherwise required to be refunded, repaid or restored
by the holders of the Subordinated Debt to the Company or any trustee, receiver
or other Person under any law (including, without limitation, any bankruptcy or
insolvency law or any federal or state equitable cause), then to the extent any
such restoration, the holders of Senior Indebtedness shall repay such amount to
the holders of the Subordinated Debt and such holder's obligations hereunder
shall be renewed and continued in full force and effect as if such payment had
not been made to the holders of the Subordinated Debt or the holders of Senior
Indebtedness. This paragraph shall survive the termination and cancellation of
this Note.
The holders of Senior Indebtedness may, at any time and from time to
time, in their discretion, renew, amend, extend or otherwise modify the terms
and provisions of the Senior Indebtedness (or any notice evidencing or creating
the same) so held (including, without limitation, the terms and provisions
relating to the principal amount outstanding thereunder, the rate of interest
thereof, the payment terms thereof and the provisions thereof regarding default
or any other matter) or exercise any of their rights under the Senior
Indebtedness including, without limitation, the waiver of defaults thereunder,
all without notice to or consent from the Note Agent or Noteholders. No
compromise, alteration, amendment, renewal or other change of, or waiver,
consent or other action in respect of any liability or obligation under or in
respect of, any terms, covenants or conditions of the Senior Indebtedness (or
any instrument evidencing or creating the same), whether or not such release is
in accordance with the provisions of the Senior Indebtedness (or any instrument
evidencing or creating the same), shall in any way alter or affect any of the
subordination provisions of this Note.
Except as provided in the immediately succeeding sentence, until the
Senior Indebtedness shall have been paid and performed in full in cash (or in a
manner otherwise satisfactory to the holders of Senior Indebtedness) and the
termination of all commitments under all documents, instruments and agreements
evidencing or securing the Senior Indebtedness, the Noteholders shall not take
or continue any action, or exercise any rights, remedies or powers under the
terms of this Note, or exercise or continue to exercise any other right or
remedy at law or equity that the Noteholders might otherwise possess, to collect
any amount due and payable in respect of this Note, including, without
limitation, the acceleration of this Note (the Noteholders can, however,
exercise their conversion rights in accordance with the terms of Section 3
hereinbefore), the commencement of any foreclosure on any lien or security
interest, the filing of any petition in bankruptcy or the taking advantage of
any other insolvency law of any jurisdiction (any such action, right, remedy or
power being referred to herein as a "COLLECTION ACTION"), unless and until the
Senior Indebtedness shall have been fully and finally paid and satisfied in cash
and the termination of all commitments thereunder. Notwithstanding the
foregoing, upon the passage of three hundred sixty-five (365) days from the
delivery of a written notice to the holders of the Senior Indebtedness by the
Note Agent that an Event of Default under
this Note has occurred, if any such Event of Default described therein shall not
have been cured or waived within such period, the Note Agent may, upon five
Business Days' prior written notice to the holders of the Senior Indebtedness
(which five day notice may be given during such three hundred sixty-five (365)
day period), declare in writing such Event of Default and accelerate the
Subordinated Debt or take any other Collection Action; provided that in no event
may the Noteholders initiate, or participate in the initiation of, a proceeding
involving the bankruptcy, insolvency, reorganization or receivership of the
Company. Notwithstanding the foregoing, the Noteholders may file a proof of
claim in any bankruptcy or similar proceeding instituted by another entity.
The Company and the holders of this Note will not amend, supplement,
alter, waive or otherwise modify any of the terms or provisions of this Note
without the prior written consent of the Required Lenders (defined herein as
defined in the Credit Agreement) and the Required Holders (defined herein as
defined in the Note Agreement) if the effect or result of any such amendment,
supplement, alteration, waiver or other modification is (a) to advance the date
of any required prepayment or repayment of any principal or PIK Interest due
under this Note, (b) to increase the maximum principal amount of this Note
(other than in connection with the interest that is capitalized), (c) to make
more restrictive any Event of Default or any covenants contained therein or to
add any Event of Default or covenant to this Agreement as in effect on the date
of this Note, or (d) to amend Section 10.4 of this Note, (e) to amend this
Section 4 or any term defined in this Section 4, (f) to amend Section 8 of this
Note, (g) to require that interest due hereunder be paid in cash, rather than it
being capitalized in accordance with the terms hereof, or (h) to change or amend
any other term of this Agreement if such change or amendment would result in a
Default or an Event of Default under the Credit Agreement or the Note Agreement,
increase the obligations of the Company or confer additional material rights on
the holders of this Note in a manner materially adverse to the Company or the
holders of Senior Indebtedness.
Notwithstanding the foregoing or any permissible action taken by a
Noteholder, no Noteholder shall be entitled to receive any payment of principal
or PIK Interest in contravention of the other provisions of this Note.
5. WAIVERS. The Company hereby waives presentment, demand for
performance, notice of nonperformance, protest, notice of protest, and notice of
dishonor. No delay on the part of the Note Agent or any Noteholder in exercising
any right hereunder shall operate as a waiver of such right under this Note.
6. EVENTS OF DEFAULT. Each of the following occurrences shall constitute
an event of default (hereinafter, an "EVENT OF DEFAULT") hereunder:
(a) the Company fails to pay when due and payable (whether at the
Maturity Date, pursuant to Section 8 or otherwise) the full amount
of all PIK Interest then owing on this Note or the full amount of
any principal payment on this Note or any other amounts payable
under this Note;
(b) if the Company shall (i) generally not be paying its debts as they
become due, (ii) file, or consent, by answer or otherwise, to the
filing against it of a petition for relief or reorganization or
arrangement or any other petition in or under Title 11 of
the United States Code, as amended (the "BANKRUPTCY CODE"), or any
other insolvency law of any jurisdiction, (iii) make an assignment
for the benefit of creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers
for it or for any substantial part of its property, (v) be
adjudicated insolvent, or (vi) make, or propose to make, any
distribution of its assets in dissolution or liquidation; or
(c) if any governmental body or authority of competent jurisdiction
shall enter an order appointing, without consent of the Company, a
custodian, receiver, trustee or other officer with similar powers
with respect to it or with respect to any substantial part of the
Company's property, or if an order for relief shall be entered in
any case or proceeding for liquidation or reorganization or
otherwise to take advantage of the Bankruptcy Code or any
insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or if any petition for
any such relief shall be filed against the Company and such
petition shall not be dismissed or stayed within sixty (60) days.
If an Event of Default shall occur and be continuing, the entire principal
amount of this Note, together with all PIK Interest, shall become and be
immediately due and payable, without presentment, demand, protest or notice of
any kind.
7. COLLECTION. If the indebtedness represented by this Note or any part
thereof is collected at law or in equity or in bankruptcy, receivership or other
judicial proceedings or if this Note is placed in the hands of attorneys for
collection after default, the Company agrees to pay, in addition to the
principal and interest payable hereon, reasonable attorneys' fees and costs
incurred by the Note Agent and by each of the Noteholders.
8. CHANGE IN CONTROL. In the event that there shall occur either (a) an
Event of Default under Section 7.1(e) of the Credit Agreement or (b) a Change in
Control, as defined in the Note Agreement, and after the payment in full of all
Senior Indebtedness, the outstanding principal and PIK Interest shall be
immediately due and payable.
9. AGENCY
9.1. APPOINTMENT AND AUTHORIZATION. Each Noteholder hereby irrevocably
appoints, designates and authorizes the Note Agent to take such action on its or
his behalf under the provisions of this Note and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this Note.
Notwithstanding any provision to the contrary contained elsewhere in this Note,
the Note Agent shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Note Agent have or be deemed to have
any fiduciary relationship with any Noteholder, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Note or otherwise exist against the Note Agent.
9.2. DELEGATION OF DUTIES. The Note Agent may execute any of its duties
under this Note by or through agents, employees or attorneys-in-fact and shall
be entitled to seek advice of counsel concerning all matters pertaining to such
duties. The Note Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.3. LIABILITY OF THE NOTE AGENT. The Note Agent shall not be liable for
any action taken or omitted to be taken by it or any Noteholder under or in
connection with this Note, except that the Note Agent shall be liable for its
own bad faith, gross negligence and willful misconduct. The Note Agent shall not
be responsible in any manner to any Noteholder for any recital, statement,
representation or warranty made by the Company, or any officer thereof,
contained in this Note, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Note Agent under or
in connection with, this Note, or for the validity, effectiveness, genuineness,
enforceability or sufficiency of this Note, or for any failure of the Company to
perform its obligations hereunder. The Note Agent shall not be under any
obligation to any Noteholder to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Note,
or to inspect the properties, books or records of the Company.
9.4. RELIANCE BY THE NOTE AGENT. The Note Agent shall be entitled to
rely, and shall be fully protected in relying in good faith, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile
or telephone message, written statement or other document or conversation
believed by it to be genuine and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company), independent accountants and other experts selected by
the Note Agent. The Note Agent shall be fully justified in failing or refusing
to take any action under this Note unless it shall first receive such advice or
concurrence of each Noteholder as it deems appropriate and, if it so requests,
it shall first be indemnified to its satisfaction by each Noteholder in
accordance with its Pro Rata Share against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. The Note Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Note in accordance with a request or consent
of each Noteholder and such request and any action taken or failure to act
pursuant thereto shall be binding upon each Noteholder.
9.5. NOTICE OF DEFAULT. The Note Agent shall not be deemed to have
knowledge or notice of the occurrence of any Event of Default, unless the Note
Agent shall have received written notice from a Noteholder or the Company
referring to this Note, describing such Default or Event of Default and stating
that such notice is a "notice of default". In the event that the Note Agent
receives such a notice, the Note Agent shall give notice thereof to each
Noteholder. The Note Agent shall take such action with respect to such Event of
Default as it deems appropriate, in its sole and absolute discretion, and the
Note Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Event of Default as it shall deem
advisable and in the best interest of the Noteholders.
9.6. CREDIT DECISION. Each Noteholder expressly acknowledges that the
Note Agent has not made any representation or warranty to it and that no act by
the Note Agent hereinafter taken, including any review of the affairs of the
Company shall be deemed to constitute any representation or warranty by the Note
Agent to any Noteholder. Each Noteholder represents to the Note Agent that it
has, independently and without reliance upon the Note Agent and based on such
documents and information as it has deemed appropriate, made its own appraisal
of and
investigation into the business, prospects, operations, property, financial and
other condition and creditworthiness of the Company, and made its own decision
to extend credit to the Company hereunder. Each Noteholder also represents that
it will, independently and without reliance upon the Note Agent make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Company. Except as expressly set forth herein, the Note
Agent shall not have any duty or responsibility to provide any Noteholder with
any credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the Company which
may come into the possession of the Note Agent.
9.7. INDEMNIFICATION. Upon demand therefor each Noteholder shall
severally, but not jointly and severally, indemnify the Note Agent (to the
extent not reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), ratably on the basis of its Pro Rata Share
in an amount not to exceed its Pro Rata Share of the principal balance of this
Note from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Subordinated Debt and the termination or resignation of the
Note Agent) be imposed on, incurred by or asserted against the Note Agent (in
its capacity as such) in any way relating to or arising out of this Note or any
document contemplated by or referred to herein or the transactions contemplated
hereby or thereby or any action taken or omitted by the Note Agent under or in
connection with any of the foregoing. In addition, each Noteholder shall
severally, but not jointly and severally, reimburse the Note Agent upon demand
for its ratable share of any costs or out-of-pocket expenses (including
reasonable attorneys' fees, costs and expenses) incurred by the Note Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Note, or any document contemplated by or referred
to herein to the extent that the Note Agent is not reimbursed for such expenses
by or on behalf of the Company. Notwithstanding anything to the contrary
expressed or implied herein, the Note Agent shall not be entitled to
indemnification hereunder for liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, disbursements or other
amounts resulting from its own bad faith, gross negligence or willful
misconduct.
9.8. THE NOTE AGENT IN INDIVIDUAL CAPACITY. The Note Agent, in its
individual capacity, may make loans to, acquire equity interests in and
generally engage in any kind of business with the Company as though it were not
the Note Agent hereunder and without notice to or consent of each Noteholder.
With respect to its loan hereunder, the Note Agent, in its individual capacity,
shall have the same rights and powers under this Note as any other Noteholder
and may exercise the same as though it were not the Note Agent, and the terms
"NOTEHOLDER" and "NOTEHOLDERS" shall include the Note Agent, in its individual
capacity.
9.9. AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Note, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
the Note Agent and the Company. No amendment or waiver of any provision of this
Note which materially and adversely affects a Noteholder shall be effective
without the consent of the affected Noteholder.
9.10. SUCCESSOR NOTE AGENT. The Note Agent may resign as the Note Agent
upon thirty (30) days' prior written notice to the Noteholders. If Note Agent
shall resign or otherwise not be able to fill such position, the Noteholders
holding a majority of the then outstanding principal amount owing under this
Note shall appoint from among the Noteholders a successor Note Agent for the
Noteholders, which successor Note Agent shall be reasonably acceptable to the
Company. If no successor Note Agent is appointed in accordance with the
foregoing prior to the effective date of the resignation of the Note Agent, the
Note Agent may thereupon appoint a successor Note Agent from among the
Noteholders, which Person shall be reasonably acceptable to the Company. Upon
the acceptance of its appointment as successor Note Agent hereunder, such
successor Note Agent shall succeed to all the rights, powers and duties of the
retiring Note Agent and the term "NOTE AGENT" shall mean such successor Note
Agent and the retiring Note Agent's appointment, powers and duties as Note Agent
shall be terminated. After any retiring Note Agent's resignation hereunder as
Note Agent, the indemnification and reimbursement provisions of this Note shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Note Agent hereunder. If no successor Note Agent has accepted
appointment as Note Agent by the date which is thirty (30) days following a
retiring Note Agent's notice of resignation (or, if later, ten (10) days after
the date upon which the Note Agent designates a successor Note Agent), the
retiring Note Agent's resignation shall nevertheless thereupon become effective
and the Noteholders shall perform all duties of the Note Agent hereunder until
such time, if any as the Noteholders possessing a majority of the then
outstanding principal amount owing under this Note appoint a successor Note
Agent as provided for above.
10. GENERAL PROVISIONS.
10.1. NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or mailed by certified mail return receipt
requested, postage prepaid or by nationally recognized overnight carrier
(charges prepaid), at the respective addresses of the parties as set forth on
Exhibit A. Any party hereto may change such address by prior written notice to
the Note Agent. Notice shall conclusively be deemed to have been given when
personally delivered or when deposited in the mail or with such overnight
carrier in the manner set forth above and shall be deemed to have been received
when delivered.
10.2. SEVERABILITY; HEADINGS. In case any provision of this Note shall be
declared by a court to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, unless to do so would deprive the Noteholders or
the Company of a substantial part of its bargain. Such court may reform such
invalid, illegal or unenforceable provision so as to give the maximum
permissible effect to the intentions of the parties as expressed in this Note.
All headings used herein are used for convenience only and shall not be used to
construe or interpret this Note.
10.3. ENTIRE AGREEMENT; CHANGES. This Note contains the entire agreement
between the parties hereto superseding and replacing any prior agreement or
understanding relating to the subject matter hereof. Neither this Note nor any
term hereof may be changed, waived, discharged or terminated orally but only by
an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought.
10.4. LAW GOVERNING. This Note shall be construed and enforced in
accordance with, and governed by, the internal laws of the State of Delaware,
excluding that body of law applicable to conflicts of law, except that the
provisions of Section 4 shall be governed by the law of the State of Illinois.
10.5. SPECIFIC PERFORMANCE. The Company and each Noteholder agrees that
it is impossible to measure in money damages which will accrue to a Noteholder
by reason of a failure of the Company to allow a conversion to Conversion Stock
pursuant to the terms hereof. Therefore, if any Noteholder shall institute any
action or proceeding to enforce the provisions hereof relating to such
conversion, the Company hereby waives the claim or defense therein that there is
an adequate remedy at law.
10.6. PROHIBITION ON TRANSFER AND ASSIGNMENT. This Note shall be binding
on the Company and its successors and assigns. This Note may not be transferred,
assigned, sold, pledged, collaterally assigned or otherwise disposed of, whether
in whole or in part, by any Noteholder, except to another Noteholder or in
connection with a permitted transfer of Common Stock or Preferred Stock held by
a Noteholder.
10.7. NO EFFECT ON OTHER RELATIONSHIPS. Notwithstanding anything herein
to the contrary, nothing contained in this Note shall affect, limit or impair
the rights and remedies of a Noteholder in its capacity, as applicable, as a
lender to or security holder of the Company or any of its subsidiaries.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each party has caused this Note to be signed in its
name this [___] day of August, 2000.
THE COMPANY: WORLDWIDE SPORTS & RECREATION, INC.
By:
B. Joseph Messner
President
NOTE AGENT: WIND POINT PARTNERS IV, L.P., AS AGENT
FOR THE NOTEHOLDERS
BY: WIND POINT INVESTORS IV, L.P.
ITS: GENERAL PARTNER
BY: WIND POINT ADVISORS L.L.C.
ITS: GENERAL PARTNER
By:
Its:
By:
Its:
ACKNOWLEDGMENT OF LENDERS
Each of the undersigned Noteholders hereby acknowledges and agrees to the
terms of the foregoing Convertible Subordinated PIK Promissory Note.
[INSERT SIGNATURE BLOCKS FOR ALL NOTEHOLDERS]
EXHIBIT A
NOTEHOLDERS
- --------------------------------------- --------------------------------------- ----------------------------
NOTEHOLDER ADDRESS PRO RATA SHARE
- --------------------------------------- --------------------------------------- ----------------------------
Excorp Holdings Limited 18.6%
- --------------------------------------- --------------------------------------- ----------------------------
The Northwestern Mutual Life Insurance See Schedule I to the Note Agreement 5.8%
Company
- --------------------------------------- --------------------------------------- ----------------------------
Antares Capital Corporation 1.2%
- --------------------------------------- --------------------------------------- ----------------------------
B. Joseph Messner 1.2%
- --------------------------------------- --------------------------------------- ----------------------------
Metropolitan Life Insurance Company See Schedule I to the Note Agreement 1.1%
- --------------------------------------- --------------------------------------- ----------------------------
Rivolier S.A. 0.5%
- --------------------------------------- --------------------------------------- ----------------------------
Wind Point Partners III, L.P. 32.0%
- --------------------------------------- --------------------------------------- ----------------------------
Wind Point III Executive Advisor 0.3%
Partners, L.P.
- --------------------------------------- --------------------------------------- ----------------------------
Wind Point Partners IV, L.P. 31.9%
- --------------------------------------- --------------------------------------- ----------------------------
Wind Point IV Executive Advisor 0.1%
Partners, L.P.
- --------------------------------------- --------------------------------------- ----------------------------
Wind Point Associates IV, LLC 0.1%
- --------------------------------------- --------------------------------------- ----------------------------
Aetna Life Insurance Company 6.9%
- --------------------------------------- --------------------------------------- ----------------------------
Julius Hoeft 0.1%
- --------------------------------------- --------------------------------------- ----------------------------
Daniel Dallemolle 0.2%
- --------------------------------------- --------------------------------------- ----------------------------
EXHIBIT B
(Form of Notice of Conversion)
To Worldwide Sports & Recreation, Inc.:
The undersigned, as Note Agent for the Noteholders named in that certain
Convertible Subordinated PIK Promissory Note in the principal amount of
$12,200,000 dated as of August ___, 2000 (the "NOTE"), issued by Worldwide
Sports & Recreation, Inc. (the "COMPANY"), hereby exercises its right to convert
all or a portion of the principal and PIK Interest of said Note equal to
$_________ into ______ shares of Common Stock and _____ shares of Series A
Preferred Stock of the Company at the Conversion Price established pursuant to
the terms of the Note.
Please issue each certificate for the shares as follows:
Print or Type Each Name
Social Security or Other Identifying Number
Street Address
City State Zip Code
and deliver each certificate to the applicable addresses, unless different
addresses are indicated below.
WIND POINT PARTNERS IV, L.P., AS AGENT FOR THE
NOTEHOLDERS
BY: WIND POINT INVESTORS IV, L.P.
ITS: GENERAL PARTNER
BY: WIND POINT ADVISORS L.L.C.
ITS: GENERAL PARTNER
By:
Its:
By:
Its:
Dated:______________
(Signature must conform in all respects to Wind
Point Partners IV, L.P. or, if the Note has been
transferred without reissuance by the Company, the
registered holder's name as specified in the
Company's records)