JUNIOR TERM LOAN CREDIT AGREEMENT
Dated as of October 31, 2005
among
ICON HEALTH & FITNESS, INC.,
as Borrower,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders,
and
BACK BAY CAPITAL FUNDING LLC,
as Administrative Agent
1. DEFINITIONS AND RULES OF INTERPRETATION. 1
1.1. Definitions. 1
1.2. Rules of Interpretation. 18
2. THE TERM LOAN. 19
2.1. Commitment to Lend. 19
2.2. The Term Notes. . 19
2.3. Interest on the Term Loan. 19
2.4. Payments of Principal. 19
2.5. Intentionally Omitted 19
2.6. Fees. 19
3. ADDITIONAL TERM LOAN PAYMENTS. 20
3.1. Mandatory Repayments of Term Loans. 20
3.2. Optional Prepayments of the Term Loan. 21
4. INTENTIONALLY OMITTED. 21
5. CERTAIN GENERAL PROVISIONS. 22
5.1. Fees. 22
5.2. Funds for Payments. 22
5.3. Computations. 23
5.4. Interest Limitation. 23
5.5. Interest After Default. 23
5.6. Collateral Security and Guaranty Documents. 23
6. REPRESENTATIONS AND WARRANTIES. 24
6.1. Corporate Authority, Etc. 24
6.2. Financial Statements; Projections. 25
6.3. Solvency. 26
6.4. No Material Adverse Change; Distributions. . 26
6.5. Absence of Mortgages and Liens. 26
6.6. Franchises, Patents, Copyrights, etc. 27
6.7. Litigation. 27
6.8. No Materially Adverse Contracts, etc. 27
6.9. Compliance with Other Instruments, Laws, etc. 27
6.10. Tax Status. 27
6.11. No Default or Event of Default. 28
6.12. Holding Company and Investment Company Acts. 28
6.13. Employee Benefit Plans. 28
6.14. Regulations U and X. 29
6.15. True Copies of Governing Documents. . 29
6.16. Fiscal Year. 29
6.17. Perfection of Security Interest. . 29
6.18. Subsidiaries, etc. 29
6.19. Environmental Compliance. 29
6.20. Bank Accounts. 31
6.21. Labor Contracts. 31
6.22. Disclosure. 31
6.23. Title to Properties. . 31
6.24. Certain Transactions. 32
6.25. Foreign Assets Control Regulations, Etc.. . 32
6.26. Subordinated Debt. 32
7. AFFIRMATIVE COVENANTS OF THE CREDIT PARTIES. 32
7.1. Punctual Payment. 32
7.2. Maintenance of Office. 33
7.3. Records and Accounts. 33
7.4. Financial Statements, Certificates and Information. 33
7.5. Notices. 35
7.6. Legal Existence; Maintenance of Properties. . 36
7.7. Insurance. 37
7.8. Taxes. 37
7.9. Compliance with Laws, Contracts, Licenses, and Permits. 37
7.10. Employee Benefit Plans. 38
7.11. Use of Proceeds. 38
7.12. Certain Changes. 38
7.13. Conduct of Business. 38
7.14. Further Assurances. 39
7.15. Inspection of Properties and Books, etc. 39
7.16. Additional Mortgaged Property. 40
7.17. Bank Accounts. 40
8. NEGATIVE COVENANTS OF THE CREDIT PARTIES. 41
8.1. Investments. 41
8.2. Restrictions on Indebtedness. 42
8.3. Restrictions on Liens. 43
8.4. Restricted Payments. 45
8.5. Merger, Consolidation and Disposition of Assets. 46
8.6. Sale and Leaseback. 46
8.7. Change of Fiscal Year. 47
8.8. Employee Benefit Plans. 47
8.9. Compliance With Environmental Laws. 47
8.10. Change in Terms of Governing Documents. 47
8.11. Creation of Subsidiaries. 47
8.12. Transactions with Affiliates. 48
8.13. Agency Account. 48
8.14. Cancellation of Indebtedness. 49
8.15. Subordinated Debt. 49
8.16. Intentionally Omitted. 49
8.17. No Speculative Transactions. 49
8.18. Changes Relating to Certain Agreements. 49
8.19. Credit Parties other than the Borrower. 49
9. FINANCIAL COVENANTS OF THE CREDIT PARTIES. 49
9.1. Consolidated EBITDA. 49
9.2. Average Secured Funded Debt to Consolidated EBITDA. 50
9.3. Combined Facility Borrowing Base. 51
10. CLOSING CONDITIONS. 51
10.1. Loan Documents. 51
10.2. Certified Copies of Governing Documents. 51
10.3. Corporate or Other Action. 51
10.4. Incumbency Certificate. 51
10.5. Validity of Liens. 52
10.6. Perfection Certificates and Collateral Search Results. 52
10.7. Certificates of Insurance. 52
10.8. Agency Account Agreements. . 52
10.9. Borrowing Base Report and Minimum Availability. 52
10.10. Accounts Receivable Aging Report. 52
10.11. Inventory Appraisal. 53
10.12. Payment of Closing Fees. 53
10.13. Payoff Letter. . 53
10.14. Opinions of Counsel. 53
10.15. Intentionally Omitted. 53
10.16. Title Insurance. 53
10.17. Hazardous Waste Assessments. 53
10.18. Solvency Certificate. 54
10.19. No Material Adverse Change. 54
10.20. Landlord Waivers. 54
10.21. Intentionally Omitted. 54
10.22. Collateral Examinations/Appraisals. 54
10.23. Financial Statements and Projections. 54
10.24. Intercreditor Agreement; Senior Credit Facility Loan Documents. 54
10.25. Subordinated Debt. 54
11. ADDITIONAL CONDITIONS . 54
11.1. Representations True; No Default or Event of Default. 54
11.2. No Legal Impediment. 55
11.3. Governmental Regulation. 55
11.4. Proceedings and Documents. 55
11.5. Payment of Fees. 55
11.6. Exchange Limitations. . 55
11.7. Validity of Liens. 55
12. EVENTS OF DEFAULT; ACCELERATION; ETC. 55
12.1. Events of Default and Acceleration. 55
12.2. Intentionally Omitted 59
12.3. Remedies. 59
12.4. Distribution of Collateral Proceeds. 59
13. SETOFF. 60
14. THE AGENT. 61
14.1. Authorization. 61
14.2. Foreign Appointments. 62
14.3. Employees and Administrative Agents. 62
14.4. No Liability. 63
14.5. No Representations. 63
14.6. Payments. 63
14.7. Intentionally Omitted. 64
14.8. Indemnity. 64
14.9. Administrative Agent as Lender. 64
14.10. Resignation; Removal. 64
14.11. Notification of Defaults and Events of Default. 65
14.12. Duties in the Case of Enforcement. . 65
14.13. Administrative Agent May File Proofs of Claim. 65
15. EXPENSES. 66
16. INDEMNIFICATION. 67
17. SURVIVAL OF COVENANTS, ETC. 67
18. ASSIGNMENT AND PARTICIPATION. 67
18.1. General Conditions. 67
18.2. Assignments. 68
18.3. Register. 69
18.4. New Notes. 69
18.5. Participations. 69
18.6. Payments to Participants. 70
18.7. Assignee or Participant Affiliated with the Credit Parties. . 70
18.8. Miscellaneous Assignment Provisions. 70
19. NOTICES, ETC. 70
20. GOVERNING LAW. 71
21. HEADINGS. 71
22. COUNTERPARTS. 71
23. ENTIRE AGREEMENT, ETC. 72
24. WAIVER OF JURY TRIAL. 72
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. 72
26. SEVERABILITY. 73
27. CONFIDENTIALITY. 74
28. USA PATRIOT ACT. 75
29. DESIGNATION OF PERMITTED LIENS. 75
EXHIBITS AND SCHEDULES
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Collateral Update
Exhibit C Form of Term Note
Exhibit D Form of Compliance Certificate
Exhibit E Form of Indenture Borrowing Base Report
Exhibit F Form of Excess Availability Report
Schedule 1 Lenders, Commitment Percentages, Lending Offices
Schedule 1(a) Mortgaged Properties
Schedule 6.6 Intellectual Property
Schedule 6.7 Litigation
Schedule 6.8 Material Adverse Contracts
Schedule 6.13 Employment Matters
Schedule 6.18 Subsidiaries
Schedule 6.19 Environmental Matters
Schedule 6.20 Bank Accounts
Schedule 6.21 Labor Contracts
Schedule 6.24 Certain Transactions
Schedule 8.1 Certain Investments
Schedule 8.2(e) Existing Indebtedness
Schedule 8.3 Existing Liens
Schedule 8.4 Certain Affiliate Payments
Schedule 10.20 Landlord Waivers
JUNIOR TERM LOAN CREDIT AGREEMENT
This JUNIOR TERM LOAN CREDIT AGREEMENT is made as of October 31, 2005, by
and among ICON HEALTH & FITNESS, INC., a Delaware corporation (the "Borrower"),
the other Credit Parties party hereto, BACK BAY CAPITAL FUNDING LLC and the
other lenders from time to time party hereto, and BACK BAY CAPITAL FUNDING LLC,
as administrative agent for itself and the other Lenders (the "Administrative
Agent").
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1. Definitions. The following terms shall have the meanings set forth
in this section 1 or elsewhere in the provisions of this Junior Term Loan Credit
Agreement referred to below:
A Rated Bank See section 8.1
Accounts Receivable. All rights of any Credit Party to payment for goods
sold, leased or otherwise marketed in the ordinary course of business and all
rights of any Credit Party to payment for services rendered in the ordinary
course of business and all sums of money or other proceeds due thereon pursuant
to transactions with account debtors, recorded on books of account in accordance
with GAAP.
Administrative Agent. Back Bay Capital Funding LLC, acting as
administrative agent and, with respect to the Security Documents governed by
English law, as security trustee, for the Lenders, and each other Person
appointed as the successor of the Administrative Agent in accordance with
section 14.10.
Administrative Agent's Fees. Those fees and reimbursable amounts payable
to the Administrative Agent as set forth in the Fee Letter.
Administrative Agent's Office. The Administrative Agent's office located
at 40 Broad Street, Boston, MA 02109, or at such other location as the
Administrative Agent may designate from time to time.
Administrative Agent's Special Counsel. Greenberg Traurig, LLP, or such
other counsel as may be approved by the Administrative Agent.
Affiliate. With respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.
Agency Account Agreement. Those certain "Agency Account Agreements" and
related lockbox and deposit control agreements as defined in and pursuant to
section 7.17.1 of the Senior Credit Facility Loan Agreement.
Applicable Margin. Six percent (6.0%).
Applicable Rate. See section 2.3.
Applicable Pension Legislation. At any time, any pension or retirement
benefits legislation (be it national, federal, provincial, territorial or
otherwise) then applicable to any Credit Party.
Approved Fund. Any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.
Assignment and Acceptance. An assignment and acceptance entered into by
a Lender and an Eligible Assignee (with the consent of any party whose consent
is required by section 18.2), and accepted by the Administrative Agent, in
substantially the form of Exhibit A or any other form approved by the
Administrative Agent.
Average Secured Funded Debt. As at any date, the aggregate of (a) all
secured funded Indebtedness of the Credit Parties, including, but not limited to
the outstanding principal balances of the Senior Credit Facility Loan and the
Term Loan, and (b) the outstanding face amount of all letters of credit and
bankers acceptances issued under the Senior Credit Facility Loan Agreement and
any unpaid drawing amounts thereunder, measured based upon the average month-end
balances for such amounts for the twelve (12) month period ending on such date
of determination.
Bain Entities. Collectively, Bain Capital Fund IV, L.P., Bain Capital
Fund IV B, L.P., Bain Associates and BCIP Trust Associates, L.P., and funds or
trusts managed or controlled by Bain Capital, Inc.
Balance Sheet Date. May 31, 2005.
Base Rate. For any day a fluctuating rate per annum equal to the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America, N.A. as its "prime rate." The "prime rate" is a rate set by Bank of
America, N.A. based upon various factors including Bank of America N.A.'s costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate. If such "prime rate" is discontinued or not
published by Bank of America, N.A., then as a standard, a comparable reference
rate shall be determined as the floating rate equal to the rate publicly quoted
from time to time by The Wall Street Journal in the Money Rate section as the
"Prime Rate". Any change in such rate announced by Bank of America N.A., or The
Wall Street Journal as the case may be, shall take effect at the opening of
business on the day specified in the public announcement of such change.
Bondholders. As defined in the Deed of Hypothec.
Bondholders' Instrument. As defined in the Deed of Hypothec.
Bonds. Any bonds, mortgage bonds, debentures or other titles of
Indebtedness issued by ICON du Canada and secured under the Deed of Hypothec for
the purposes of Article 2692 of the Civil Code of Quebec and includes, without
limitation, the Initial Bonds.
Borrower. As defined in the preamble hereto.
Borrower Pledge Agreement. The Pledge Agreement of even date herewith
executed by the Borrower in favor of the Administrative Agent, on behalf of
itself and the Lenders, pledging all Capital Stock of its Subsidiaries.
Borrowing Base Report. Each "Borrowing Base Report", as defined in and
delivered pursuant to the Senior Credit Facility Loan Agreement.
Business Day. Any day on which commercial banking institutions in
Boston, Massachusetts, are open for the transaction of banking business.
Canadian Dollars. Lawful money of Canada.
Capital Expenditures. With respect to the Credit Parties, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
the Credit Parties during any measuring period for any fixed assets or
improvements or for replacements, substitutions or additions thereto, that have
a useful life of more than one year and that are required to be capitalized
under GAAP.
Capital Stock. Any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.
Capitalized Leases. Leases under which any Credit Party is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the lessee or obligor in
accordance with GAAP.
Cash Management Bank. Bank of America, N.A., its successors and assigns,
in its capacity as the provider of cash management services to the Credit
Parties.
Casualty Event. With respect to any property (including any interest in
property) of any Credit Party, any loss of, damage to, or condemnation or other
taking of, such property for which any Credit Party receives insurance proceeds,
proceeds of a condemnation award or other compensation.
Change of Control. Any event, transaction or occurrence as a result of
which (a) the Existing Holders shall cease to own, directly or indirectly, a
majority of the voting stock of Holdings, (b) the Existing Holders shall cease
to have or exercise the right, directly or indirectly, to designate at least a
majority of the members of the Board of Directors of Holdings, (c) the Existing
Holders and their Affiliates cease to own (directly or indirectly) and control
all of the economic and voting rights associated with ownership of at least
fifty-one percent (51%) of all classes of the outstanding Capital Stock of all
classes of Holdings on a fully diluted basis, (d) Holdings ceases to own and
control all of the economic and voting rights associated with all of the
outstanding Capital Stock of the Borrower, (e) the Borrower ceases to own and
control all of the economic and voting rights associated with all of the
outstanding Capital Stock of each of its Subsidiaries or (f) any "Change of
Control" (as such
term is defined in the Subordinated Notes Documents or the documents governing
any other Indebtedness of any Credit Party) shall occur.
Closing Date. The date on which the conditions set forth in section 10
and 11 have been satisfied and Lenders shall have funded the Term Loan
hereunder.
Code. The Internal Revenue Code of 1986.
Collateral. All of the property, rights and interests of any Credit
Party that are or are intended to be subject to the Liens created by the
Security Documents.
Collateral Assignment of Intercompany Notes. The Collateral Assignment
of Intercompany Notes made by each applicable Credit Party in favor of the
Administrative Agent, on behalf of itself and the Lenders.
Collateral Update Certificate. The Collateral Update Certificate as
defined in the Senior Credit Facility Loan Agreement as of the date of this
Agreement to be provided to the Agent and Lenders in accordance with 7.4(d) or,
in the event that the Borrower no longer prepares such Collateral Update
Certificate in accordance with the Senior Credit Facility Loan Agreement, then
such alternate certificate signed by the chief financial officer or cash manager
of the Borrower in substantially the form of Exhibit B hereto.
Commitment. With respect to each Lender, the amount set forth on
Schedule 1 hereto as the portion of the Term Loan to be made by such Lender to
the Borrower under this Credit Agreement.
Commitment Fee. As provided for in the Fee Letter.
Commitment Percentage. With respect to each Lender, the percentage set
forth on Schedule 1 hereto as such Lender's percentage of the aggregate
Commitments of all of the Lenders.
Compliance Certificate. See 7.4(c).
Consolidated or consolidated. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Credit Parties,
consolidated in accordance with GAAP.
Consolidated EBITDA. For any fiscal period, without duplication, an
amount equal to (a) consolidated net income of the Credit Parties for such
period, minus (b) the sum of (i) income tax credits, (ii) interest income, (iii)
gain from extraordinary items for such period, (iv) any aggregate net gain (but
not any aggregate net loss) during such period arising from the sale, exchange
or other disposition of capital assets by any Credit Party (including any fixed
assets, whether tangible or intangible, and all inventory sold in conjunction
with the disposition of fixed assets and all securities), and (v) any other
non-cash gains that have been added in determining consolidated net income, in
each case to the extent included in the calculation of consolidated net income
of the Credit Parties for such period in accordance with GAAP, but without
duplication, plus (c) the sum of (i) any provision for income taxes, (ii)
Consolidated Interest Expense, (iii) non-cash loss from extraordinary items for
such period, (iv) the amount of non-cash charges (including depreciation and
amortization) for such period, (v) amortized debt discount for such period, and
(vi) the amount of any deduction to consolidated net income as the result of any
grant to any members of the management of any Credit Party of any Capital Stock,
in each case to the extent included in the calculation of consolidated net
income of the Credit Parties for such period in accordance with GAAP, but
without duplication. For purposes of this definition, the following items shall
be excluded in determining consolidated net income of the Credit Parties: (1)
the income (or deficit) of any other Person (other than a Subsidiary) in which
any Credit Party has an ownership interest, except to the extent any such income
has actually been received by a Credit Party in the form of cash dividends or
distributions; (2) the undistributed earnings of any Subsidiary of any Credit
Party to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of
any contractual obligation or requirement of law applicable to such Subsidiary;
(3) any restoration to income of any extraordinary or contingency reserve except
to the extent that such reserve reduced Consolidated EBITDA in such four quarter
period; (4) any write-up of any asset; (5) any net gain from the collection of
the proceeds of life insurance policies; (6) any net gain (but not any aggregate
loss) arising from the acquisition of any securities, or the extinguishment,
under GAAP, of any Indebtedness, of the Credit Parties; (7) in the case of a
successor to any Credit Party by consolidation or merger or as a transferee of
its assets, any earnings of such successor prior to such consolidation, merger
or transfer of assets; and (8) any deferred credit representing the excess of
equity in any Subsidiary of any Credit Party at the date of acquisition of such
Subsidiary over the cost to such Credit Party of the investment in such
Subsidiary.
Consolidated Interest Expense. For any fiscal period, interest expense
(whether cash or non-cash) of the Credit Parties determined in accordance with
GAAP for the relevant period ended on such date, including interest expense with
respect to Indebtedness of any Credit Party and interest expense for the
relevant period that has been capitalized on the balance sheet of the Credit
Parties.
Control. The possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
Control Letter. A letter agreement between the Administrative Agent and
(i) the issuer of uncertificated securities with respect to uncertificated
securities in the name of any Credit Party, (ii) a securities intermediary with
respect to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the name
of any Credit Party, (iii) a futures commission merchant, as applicable, or
clearing house with respect to commodity accounts and commodity contracts held
by any Credit Party, whereby, among other things, the issuer, securities
intermediary or futures commission merchant disclaims any security interest in
the applicable financial assets, acknowledges the Lien of the Administrative
Agent, on behalf of itself and Lenders, on such financial assets, and agrees to
follow the instructions or entitlement orders of the Administrative Agent
without further consent by the affected Credit Party.
Copyright Mortgage. The Memorandum of Grant of Security Interest in
Copyrights, made by each applicable Credit Party in favor of the Administrative
Agent, on behalf of itself and the Lenders.
Credit Agreement. This Junior Term Loan Credit Agreement, including the
Schedules and Exhibits hereto.
Credit Parties. Holdings, the Borrower and each of their respective
Subsidiaries.
CS First Boston. Credit Suisse First Boston Corporation, a Delaware
corporation.
CS First Boston Debt. Indebtedness of Holdings issued to CS First Boston
in the amount of $7,500,000 pursuant to (i) the Amended and Restated Note
Agreement, Dated as of September 27, 1999, and (ii) the 0% Convertible
Subordinated Note Due September 27, 2011, dated September 27, 1999, in the form
thereof delivered to the Administrative Agent on or prior to the Closing Date.
Deed of Hypothec. That certain Deed of Hypothec and Issue of Mortgage
Bonds dated as of the date hereof between ICON du Canada and the Administrative
Agent, acting as fonde de pouvoir pursuant to Article 2629 of the Civil Code of
Quebec to secure payment of the applicable Bond.
Default. See 12.1.
Default Rate. An interest rate equal to the Applicable Rate plus (iii)
3% per annum, provided that such amount does not exceed the maximum amount
permitted by applicable law, in which case the interest rate will be such lesser
permissible amount.
Derivative Agreement. Any forward contract, futures contract, swap,
option or other similar agreement or arrangement (including, without limitation,
caps, floors, collars and similar agreements), the value of which is dependent
upon interest rates, currency exchange rates, commodities or other indices
(including foreign exchange lines).
Dollars or $. Dollars in lawful currency of the United States of
America.
Early Termination Fee. See 2.6.3.
EBITDA Test Event. The Borrower's failure to maintain Excess
Availability of at least Forty Million Dollars ($40,000,000) for a period of
three (3) consecutive Business Days.
Eligible Assignee. Any of (a) a Lender, (b) an Affiliate of a Lender,
(c) an Approved Fund and (d) any other Person (other than a natural person)
approved by (i) the Administrative Agent and (ii) unless a Default or an Event
of Default has occurred and is continuing, the Borrower (each such approval not
to be unreasonably withheld or delayed).
Employee Benefit Plan. (i) Any employee benefit plan within the meaning
of 3(3) of ERISA maintained or contributed to by any Credit Party or any ERISA
Affiliate, other than a Guaranteed Pension Plan or a Multiemployer Plan and (ii)
with respect to any Canadian Subsidiary, any employee benefit program relating
to employees of such Canadian Subsidiary other than pension plans, but
including, without limitation, profit sharing, deferred compensation, incentive
severance, change of control, phantom stock, stock option, stock purchase, bonus
and health or insurance plans and arrangements (in each case, oral or written).
Employment Agreements. The Employment Agreement dated as of February 27,
2004 among Holdings, the Borrower and Scott Watterson and the Employment
Agreement dated as of February 27, 2004 among Holdings, the Borrower and Gary
Stevenson, as amended from time to time in accordance with the provisions of
this Credit Agreement.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer with
any Credit Party under 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
European Subsidiaries. ICON Health & Fitness Italia SpA, ICON Health &
Fitness (Holdings) Limited, ICON Health & Fitness Limited, ICON Health &
Fitness France SAS, and AICON Health & Fitness GmBH.
Excess Availability. As of any date of determination thereof, the
difference between (a) the lesser of (i) the "Total Commitment", as defined
under and determined in accordance with the Senior Credit Facility Loan
Agreement, and (ii) the "Borrowing Base", as defined under and determined in
accordance with the Senior Credit Facility Loan Agreement, and (b) the
"Revolving Exposure", as defined under and determined in accordance with the
Senior Credit Facility Loan Agreement, in each case as the Senior Credit
Facility Loan Agreement is in effect as of the date of this Agreement, without
giving effect to any subsequent amendments.
Excess Availability Report. A report signed by the chief financial
officer or cash manager of the Borrower setting forth Excess Availability for
each Business Day since the date of the last Senior Credit Facility Report
delivered by the Borrower to the Administrative Agent, in the form attached
hereto as Exhibit F.
Excess Cash Flow. For any period, Consolidated EBITDA less the sum of
(a) all Capital Expenditures, (b) cash taxes, (c) all payments of principal on
account of the Term Loan, (d) cash interest expense, (e) cash payments under
Capitalized Leases, (f) the amount by which working capital as of the beginning
of such period is less than working capital as of the end of such period, and
(g) $5,000,000, all as calculated in accordance with GAAP and without
duplication.
Existing Credit Agreement. The Credit Agreement, as amended, dated as of
April 9, 2002, among the Borrower, the other credit parties signatory thereto,
the lenders signatory thereto, General Electric Capital Corporation, as
administrative agent, and the other parties thereto.
Existing Holders. Collectively, the Bain Entities, CS First Boston,
Scott Watterson, Gary Stevenson, , Lee Ming Tsung, Wan-Kung Cho, Stanley C.
Tutteman, Inverness/Phoenix Capital LLC, and Robert Gay.
Event of Default. See 12.1.
Fees. Collectively, the Administrative Agent's Fees, the Early
Termination Fee and other fees as the Borrower may be obligated to pay as set
forth in this Agreement.
Fee Letter. The fee letter dated of even date herewith among the
Borrower and the Administrative Agent.
Fiscal Month. Any of the monthly accounting periods of the Borrower.
Fiscal Quarter. Any of the quarterly accounting periods of the Borrower,
ending on or about August 31, November 30, February 28 and May 31 of each year;
provided, however that the first three Fiscal Quarters of each Fiscal Year end
on the Saturday nearest the dates set forth in this definition.
Fiscal Year. Any of the annual accounting periods of the Borrower ending
on May 31 of each year.
Free Motion. Free Motion Fitness, Inc., a Utah corporation.
Fund. Any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its business.
GAAP. (i) When used in 9, whether directly or indirectly through
reference to a capitalized term used therein, means (A) principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the Fiscal Year
ended on the Balance Sheet Date, and (B) to the extent consistent with such
principles, the accounting practice of the Credit Parties reflected in the
Credit Parties' financial statements for the year ended on the Balance Sheet
Date, and (ii) when used in general, other than as provided above, means
principles that are (A) consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, as in effect from
time to time, and (B) consistently applied with past financial statements of the
Credit Parties adopting the same principles, provided that in each case referred
to in this definition of "GAAP" a certified public accountant would, insofar as
the use of such ac
counting principles is pertinent, be in a position to deliver an unqualified
opinion (other than qualifications regarding changes in GAAP and as to normal
year-end adjustments) as to financial statements in which such principles have
been properly applied.
Governing Documents. With respect to any Person, its certificate or
articles of incorporation, certificate of change of name (if any), certificate
of formation, or, as the case may be, certificate of limited partnership, its
by-laws, memorandum and articles of association, operating agreement or, as the
case may be, partnership agreement or other constitutive documents and all
shareholder agreements, voting trusts and similar arrangements applicable to any
of its Capital Stock.
Governmental Authority. Any national, foreign, federal, state,
provincial, regional, local municipal or other government, or any department,
commission, board, bureau, agency, public authority or instrumentality thereof,
or any court or arbitrator.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of 3(2) of ERISA maintained or contributed to by any Credit Party or
any ERISA Affiliate the benefits of which are guaranteed on termination in full
or in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan, and with respect to any Canadian Subsidiary, all pension and retirement
plans relating to the current and former employees of such Subsidiary, whether
registered or unregistered, funded or unfunded and written or oral, and with
respect to such Subsidiary, all pension and retirement plans relating to the
current and former employees of such Subsidiary, whether registered or
unregistered, funded or unfunded and written or oral.
Guaranties. Collectively, the Holdings Guaranty, the Subsidiary
Guaranty, the ICON du Canada Guaranty, the ICON Fitness Holdings Guaranty, and
any other guaranty executed by any Guarantor in favor of the Administrative
Agent and the Lenders in respect of the Obligations.
Guarantors. Holdings, ICON Fitness Holdings, ICON du Canada, ICON New
Brunswick, International Holdings, Universal, Free Motion, ICON IP, NordicTrack,
and each other Person, if any, that executes a guaranty or other similar
agreement in favor of the Administrative Agent in connection with the
transactions contemplated by this Credit Agreement and the other Loan Documents.
Holdings. HF Holdings, Inc. a Delaware corporation.
Holdings Guaranty. The guaranty of even date herewith executed by
Holdings in favor of the Administrative Agent and the Lenders.
Holdings Pledge Agreement. The Pledge Agreement of even date herewith
executed by Holdings in favor of the Administrative Agent, on behalf of itself
and Lenders, pledging all of the Capital Stock of the Borrower.
ICON du Canada. ICON of Canada Inc./ICON du Canada Inc., a Quebec
company.
ICON du Canada Guaranty. The guaranty of even date herewith executed by
ICON du Canada in favor of the Administrative Agent and the Lenders, guarantying
the obligations of ICON New Brunswick under the Subsidiary Guaranty.
ICON du Canada Pledge Agreement. The Hypothec and Pledge of Bonds
between ICON du Canada and the Administrative Agent pursuant to which ICON du
Canada pledges the Bonds to the Administrative Agent and the Lenders.
ICON IP. ICON IP, Inc., a Delaware corporation.
ICON Fitness Holdings. ICON Health & Fitness (Holdings) Limited, a
company incorporated under the laws of England and Wales.
ICON Fitness Holdings Guaranty. The guaranty dated on or about the date
herewith executed by ICON Fitness Holdings in favor of the Administrative Agent
and the Lenders.
ICON Fitness Holdings Pledge Agreements. The charge over shares granted
or to be granted by ICON Fitness Holdings in favor of the Administrative Agent,
on behalf of itself and the Lenders, charging 65% of the Capital Stock of each
European Subsidiary.
ICON New Brunswick. 510152 N.B. Ltd., a New Brunswick corporation.
Indebtedness. As to any Person and whether recourse is secured by or is
otherwise available against all or only a portion of the assets of such Person
and whether or not contingent, but without duplication:
(a) every obligation of such Person for money borrowed,
(b) every obligation of such Person evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in connection with
the acquisition of property, assets or businesses,
(c) every reimbursement obligation of such Person with respect to letters
of credit, bankers' acceptances, or similar facilities issued for the account of
such Person,
(d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (including securities repurchase
agreements but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business which are not overdue or which are being
contested in good faith),
(e) every obligation of such Person under any Capitalized Lease,
(f) every obligation of such Person under any Synthetic Lease,
(g) all sales by such Person of (i) accounts or general intangibles for
money due or to become due, (ii) chattel paper, instruments or documents
creating or evidencing a right to payment of money or (iii) other receivables
(collectively "receivables"), whether pursuant to a purchase facility or
otherwise, other than in connection with the disposition of the business
operations of such Person relating thereto or a disposition of defaulted
receivables for collection and not as a financing arrangement, and together with
any obligation of such Person to pay any discount, interest, fees, indemnities,
penalties, recourse, expenses or other amounts in connection therewith,
(h) every obligation of such Person (an "equity related purchase
obligation") to purchase, redeem, retire or otherwise acquire for value any
shares of Capital Stock issued by such Person or any rights measured by the
value of such Capital Stock,
(i) every obligation of such Person under any Derivative Agreement,
(j) every obligation in respect of Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent that such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity, except to the
extent that the terms of such Indebtedness provide that such Person is not
liable therefor and such terms are enforceable under applicable law, and
(k) every obligation, contingent or otherwise, of such Person
guaranteeing, or having the economic effect of guarantying or otherwise acting
as surety for, any obligation of a type described in any of clauses (a) through
(j) (the "primary obligation") of another Person (the "primary obligor"), in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds for
the purchase of) any security for the payment of such primary obligation, (ii)
to purchase property, securities or services for the purpose of assuring the
payment of such primary obligation, or (iii) to maintain working capital, equity
capital or other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such primary obligation.
The "amount" or "principal amount" of any Indebtedness at any time of
determination represented by (1) any Indebtedness, issued at a price that is
less than the principal amount at maturity thereof, shall be the amount of the
liability in respect thereof determined in accordance with GAAP, (2) any
Capitalized Lease shall be the present value of the aggregate of the rentals
obligation under such Capitalized Lease payable over the term thereof that is
not subject to termination by the lessee, (3) any sale of receivables shall be
the amount of unrecovered capital or principal investment of the purchaser
(other than Holdings or any of its wholly-owned Subsidiaries) thereof, excluding
amounts representative of yield or interest earned on such investment, (4) any
Synthetic Lease shall be the stipulated loss value, termination value or other
equivalent amounts, (5) any Derivative Agreement shall be the maximum amount of
any termination or loss payment required to be paid by such Person if such
Derivative Agr
eement were, at the time of determination, to be terminated by reason of any
event of default or early termination event thereunder, whether or not such
event of default or early termination event has in fact occurred, (6) any equity
related purchase obligation shall be the maximum fixed redemption or purchase
price thereof inclusive of any accrued and unpaid dividends to be comprised in
such redemption or purchase price and (7) any guaranty or other contingent
liability referred to in clause (k) shall be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such guaranty
or other contingent obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
Indenture Borrowing Base Report. A report signed by the chief financial
officer or cash manager of the Borrower demonstrating calculation of the
Borrowing Base (as defined in the Subordinated Indenture) as of the last day of
the most recently ended Fiscal Quarter and the amount of Indebtedness incurred
pursuant to Sections 4.09(b)(1) and 4.09(b)(13) of the Subordinated Indenture as
of the last day of such Fiscal Quarter in the form of Exhibit E hereto.
Initial Bonds. The demand mortgage bonds in the amount of Cdn.
$600,000,000, each dated the date hereof issued by ICON du Canada in favor of
the Administrative Agent under the provisions of the Deed of Hypothec and
pledged pursuant to the Deed of Hypothec and the ICON du Canada Pledge
Agreement.
Intercreditor Agreement. That certain Intercreditor Agreement, dated as
of the date hereof, among the Credit Parties, the Senior Credit Facility Agent
and the Administrative Agent.
International Holdings. ICON International Holdings, Inc., a Delaware
corporation.
International Pledge Agreements. (a) A pledge agreement dated as of the
Closing Date, pledging to the Administrative Agent for the benefit of the
Lenders 65% of the Capital Stock of ICON du Canada and 100% of the Capital Stock
of ICON New Brunswick and (b) a charge over shares charging in favor of the
Administrative Agent for the benefit of the Lenders 100% of the Capital Stock of
ICON Fitness Holdings.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be included as an Investment all interest accrued with respect to
Indebtedness constituting an Investment unless and until such interest is paid;
(iii) there shall be deducted in respect of each such Investment any amount
received as a return of capital (but only by repurchase, redemption, retirement,
repayment, liquidating dividend or liquidating distribution); (iv) there shall
not be deducted in respect o
f any Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (ii) may be deducted when paid; and (v) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Jumpking. Jumpking, Inc., a Utah corporation.
Lender or Lenders. Back Bay Capital Funding LLC and the other lending
institutions listed on Schedule 1 hereto, and any other person who becomes an
assignee of any rights and obligations of a Lender pursuant to 18.
Liens. Any encumbrance, mortgage, deed of trust, assignment, attachment,
deposit arrangement, lien (statutory, judgment or otherwise), pledge,
hypothecation, charge, restriction or other security interest, security
agreement, or any interest of any kind securing any obligation of any entity or
person, whether such interest is based on common law, civil law, statute or
contract..
Loan Documents. This Credit Agreement, the Term Note(s), the Guaranties,
the Security Documents, the Intercreditor Agreement, and any other agreement
between any Credit Party and/or the Administrative Agent and/or any Lender
relating to fee arrangements.
Loans. The Term Loan.
Management Agreements Each of the Management Agreements dated as of
September 24, 1999 among the Borrower, Holdings, and each of Scott Watterson and
Gary Stevenson, the Management Agreement dated as of September 24, 1999 among
the Borrower, Holdings and Bain Capital, Inc. and Section 7.1(b) of Securities
Purchase Agreement dated as of September 24, 1999 between Holdings and CS First
Boston, each as amended from time to time in accordance with the provisions of
this Credit Agreement.
Maturity Date. October 31, 2010.
Monitoring Fee. As provided for in the Fee Letter.
Mortgaged Property. Any Real Estate which is subject to any Mortgage.
Mortgages. (a) The mortgage(s) and, if applicable, deed(s) of trust,
dated on or prior to the Closing Date, from the Borrower and ICON du Canada to
the Administrative Agent with respect to the fee and, if applicable, leasehold
interests of such Credit Parties in the properties listed on Schedule 1(a)
hereto, and (b) any other deeds of mortgage, deeds of trust, or deeds of
leasehold mortgage executed and delivered to the Administrative Agent after the
Closing Date pursuant to 7.16 hereof, in each case, in form and substance
satisfactory to the Administrative Agent.
Multiemployer Plan. Any multiemployer plan within the meaning of 3(37)
of ERISA maintained or contributed to by any Credit Party or any ERISA
Affiliate.
Non-U.S. Lender. See 5.2.3.
NordicTrack. NordicTrack, Inc., a Utah corporation.
Obligations. All indebtedness, obligations and liabilities of the Credit
Parties to any of the Lenders, the Administrative Agent, or any of their
Affiliates, individually or collectively, existing on the date of this Credit
Agreement or arising thereafter, direct or indirect, joint or several, absolute
or contingent, matured or unmatured, liquidated or unliquidated, secured or
unsecured, arising by contract, operation of law or otherwise, arising or
incurred under this Credit Agreement or any of the other Loan Documents or in
respect of the Term Loan or other instruments at any time evidencing any
thereof.
Outstanding or outstanding. With respect to the Term Loan, the aggregate
unpaid principal thereof as of any date of determination.
Patent Agreement. The Patent Collateral Assignment and Security
Agreement, made in favor of the Administrative Agent, on behalf of itself and
the other Lenders, by each applicable Credit Party.
PBGC. The Pension Benefit Guaranty Corporation created by 4002 of ERISA
and any successor entity or entities having similar responsibilities.
Perfection Certificates. The Perfection Certificates referenced to and
defined in each of the Security Agreements.
Permitted Acquisition. The acquisition of any Person, business, or
specified group of assets (the "Target") by any Credit Party, provided that,
with respect to any such acquisition, (1) the Administrative Agent and the
Required Lenders approve, in their sole discretion, such acquisition in writing
in advance or (2) each of the following conditions is met:
(a) immediately prior to and after giving effect to, such acquisition, no
Default or Event of Default shall then exist, and the Borrower shall so certify;
(b) the Target is located in the United States or Canada;
(c) if applicable, the Borrower shall certify compliance with the
financial covenant contained in 9 on a pro forma basis after giving effect to
such acquisition;
(d) (i) the consideration therefor shall be paid in cash or by the
issuance of unsecured Indebtedness permitted hereby or assumption of unsecured
Indebtedness of the Target permitted hereby (provided that any Indebtedness so
assumed shall have been in existence prior to, and shall not have been incurred
in contemplation of, such acquisition) and shall not be secured by any assets of
the Target or the Credit Parties, (ii) the aggregate consideration paid or to be
paid (in cash or by such issuance or assumption of Indebtedness) by the Credit
Parties in connection with any one such acquisition shall not exceed $5,000,000
and (iii) the aggregate consideration paid or to be paid (in cash or by such
issuance or assumption of indebtedness) by the Credit Parties in connection with
all such acquisitions made during any Fiscal Year shall not exceed $10,000,000;
(e) such acquisition shall have been approved by the board of directors
and shareholders, if required, of the Target;
(f) immediately prior to giving effect to such acquisition, Excess
Availability shall be no less than $55,000,000;
(g) at least thirty (30) days prior to the consummation of such
acquisition, the Borrower shall deliver to the Administrative Agent updated
versions of the most recent projections provided to the Administrative Agent
pursuant to the terms of this Credit Agreement, reflecting that Excess
Availability shall be $40,000,000 or greater for at least ninety (90) days after
the consummation of the acquisition;
(h) either (i) such acquisition is the acquisition of assets (and
assumption of liabilities) only (for use in substantially the same line of
business as the line of business of the Credit Parties) or (ii) such acquisition
involves the purchase of the Capital Stock or other equity interests of a Target
and each of the following conditions is met:
(A) such acquisition is the acquisition of one hundred percent (100%) of
the Capital Stock of such Target;
(B) such Target is in substantially the same line of business as the
Credit Parties;
(C) one of the Credit Parties is the survivor of any merger or
consolidation with such Target;
(D) not less than thirty (30) Business Days prior to such acquisition,
the Borrower shall (i) notify the Administrative Agent and the Lenders thereof
identifying the Target, the proposed purchase price and terms of payment
thereof, and the proposed closing date for such acquisition, and (ii) provide to
the Administrative Agent (A) the most recent draft acquisition agreement
relating to such transaction and all related documents, instruments and
agreements, and (B) all recent and historical financial information regarding
the Target available to the Credit Parties; and
(E) contemporaneously with the occurrence of any such acquisition, the
Borrower shall (I) cause such Target to guaranty all of the Obligations
hereunder pursuant to a guaranty in form and substance satisfactory to the
Administrative Agent, which such guaranty shall be a Loan Document hereunder,
(II) cause such Target to grant to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, a perfected security interest and lien
upon all of its assets, subject only to the lien to be granted to the Senior
Credit Facility Agent, for the benefit of the Lenders under the Senior Credit
Facility, (III) pledge or cause the applicable Credit Party to pledge to the
Administrative Agent, for the benefit of the Administrative Agent and the
Lenders, 100% of the Capital Stock of the Target (limited, in the case of any
Target that is a foreign Subsidiary that is a "controlled foreign corporation"
under Section 957 of the Internal Revenue Code, to a pledge of 65% of the
Capital Stock of each
such Target to the extent the pledge of any greater percentage would result in
material adverse tax consequences to the Borrower), and (IV) cause such Target
to deliver to the Lenders and the Administrative Agent (aa) evidence of proper
corporate or other authorization, and (bb) legal opinions with respect to each
of the matters and documents set forth in this clause (E), in each case, in form
and substance satisfactory to the Administrative Agent and the Lenders; and
(F) the Borrower shall provide to the Administrative Agent such
additional information relating to the Target and the proposed acquisition as
the Administrative Agent may reasonably request.
Permitted Liens. Liens permitted by 8.3 hereof.
Person. Any individual, corporation, limited liability company,
partnership, limited partnership, trust, unincorporated association, business,
or other legal entity, or any Governmental Authority.
Pledge Agreements. The Borrower Pledge Agreement, the Holdings Pledge
Agreement the International Pledge Agreements, and the ICON Fitness Holdings
Pledge Agreements and any other pledge agreement or share charge granted by any
Credit Party (as required by this Credit Agreement or any other Loan Document).
Real Estate. All real property at any time owned or leased (as lessee or
sublessee) by any Credit Party.
Register. See 18.3.
Related Parties. With respect to any specified Person, such Person's
Affiliates and the respective directors and officers of such Person.
Required Lenders. As of any date, Lenders holding at least fifty-one
percent (51%) of the outstanding principal balance of the Term Loan.
Restricted Payment. With respect to any Credit Party (a) the declaration
or payment of any dividend or the incurrence of any liability to make any other
payment or distribution of cash or other property or assets in respect of
Capital Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Capital
Stock or any other payment or distribution made in respect thereof, either
directly or indirectly; (c) any payment or prepayment of principal of, premium,
if any, or interest, fees or other charges on or with respect to, and any
redemption, purchase, retirement, defeasance, sinking fund or similar payment
and any claim for rescission with respect to, any Subordinated Debt; (d) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
Capital Stock of such Credit Party now or hereafter outstanding; (e) any payment
of a claim for the rescissio
n of the purchase or sale of, or for material damages arising from the purchase
or sale of, any shares of such Credit Party's Capital Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any holder of the Capital Stock of
such Credit Party other than payment of compensation in the ordinary course to
stockholders who are employees of such Credit Party; and (g) any payment of
management fees (or other fees of a similar nature) by such Credit Party to any
equity holder or Affiliate of such Credit Party.
Security Agreement. The Security Agreement of even date herewith entered
into by and among the Administrative Agent, on behalf of itself and the Lenders,
and each Credit Party that is a signatory thereto.
Security Documents. The Guaranties, the Security Agreement, the
Copyright Agreement, the Patent Agreement, the Trademark Agreement, the Pledge
Agreements, the Mortgages, the Collateral Assignment of Intercompany Notes, the
U.K. Debenture Agreement, the Agency Account Agreements, the Bonds, the Deed of
Hypothec, the ICON du Canada Pledge Agreement and all other instruments and
documents, including without limitation Uniform Commercial Code and Personal
Property Security Act financing statements, and other equivalent registrations
and personal property security filings with respect to any other applicable
jurisdiction, control agreements and the like, required to be executed or
delivered pursuant to, or in connection with, this Credit Agreement or any other
Loan Document.
Senior Credit Facility Agent. Bank of America, N.A., in its capacity as
Administrative Agent under the Senior Credit Facility Loan Agreement, and its
successors and assigns in such capacity.
Senior Credit Facility Loan. The "Obligations" of the Borrower under the
Senior Credit Facility Loan Documents.
Senior Credit Facility Loan Agreement. The Revolving Credit Agreement,
dated as of the date hereof, by and among the Credit Parties, certain financial
institutions party thereto and the Senior Credit Facility Agent, as agent for
such financial institutions.
Senior Credit Facility Loan Documents. The "Loan Documents", as defined
in the Senior Credit Facility Loan Agreement.
Senior Management. The chairman, president, chief financial officer,
chief executive officer, any vice president, the cash manager, the treasurer,
the controller, or the general counsel of the Borrower.
Stockholders Agreement. means the certain Stockholders Agreement among
the stockholders of Holdings dated as of September 24, 1999.
Subordinated Debt. The Indebtedness of the Borrower evidenced by the
Subordinated Notes and any other unsecured Indebtedness of any Credit Party that
is expressly subordinated and made junior to the payment and performance in full
of the Obligations, and evidenced as such by a subordination and intercreditor
agreement or by another written instrument containing subordination provisions
in form and substance approved by the Administrative Agent in writing.
Subordinated Debt Documents. The Subordinated Notes and the Subordinated
Indenture.
Subordinated Indenture. The Indenture between the Borrower and The Bank
of New York dated as of April 9, 2002, as from time to time amended.
Subordinated Notes. The 11.25% unsecured Subordinated Notes due 2012
issued by the Borrower in an aggregate original principal amount of
$155,000,000.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock. Unless otherwise specified, all
references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a
Subsidiary or Subsidiaries of the Borrower.
Subsidiary Guarantors. The domestic and Canadian Subsidiaries of the
Borrower that have executed a Guaranty.
Subsidiary Guaranty. The guaranty or guaranties granted or to be granted
on or about the date hereof executed by International Holdings, Universal, Free
Motion, ICON IP, NordicTrack, and ICON New Brunswick in favor of the
Administrative Agent and the Lenders.
Synthetic Lease. Any lease of goods or other property, whether real or
personal, which is treated as an operating lease under GAAP and as a loan or
financing for U.S. or Canadian income tax purposes.
Term Loan. The term loan to be made by the Lenders to the Borrower
pursuant to 2 hereof.
Term Note(s). See 2.2.
Title Insurance Company. (a) with respect to the Mortgaged Property
located in Utah, Stewart Title Guaranty and (b) with respect to the Mortgaged
Property located in Quebec, First Canadian Title.
Title Policy. In relation to each Mortgaged Property, an ALTA standard
form title insurance policy issued by the Title Insurance Company (with such
reinsurance or co-insurance as the Administrative Agent may require, any such
reinsurance to be with direct access endorsements) in such amount as may be
determined by the Administrative Agent insuring the priority of the Mortgage of
such Mortgaged Property and that a Credit Party holds marketable fee simple or
leasehold title to such Mortgaged Property, subject only to Permitted Liens and
which shall not contain exceptions for mechanics liens or persons in occupancy,
shall not insure over any matter except to the extent that any such affirmative
insurance is acceptable to the Administrative Agent in its sole discretion, and
shall contain such endorsements and affirmative insurance as the Administrative
Agent in its discretion may require, including but not limited to (a)
comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury
endo
rsement, (d) revolving credit endorsement, (e) tie-in endorsement, (f) doing
business endorsement and (g) ALTA form 3.1 zoning endorsement.
Total Commitment. The sum of the Commitments of the Lenders to make the
Term Loan hereunder in the original principal amount of $40,000,000.
Trademark Agreement. The Trademark Collateral Security and Pledge
Agreement, made in favor of the Administrative Agent, on behalf of itself and
the Lenders, by each applicable Credit Party.
U.K. Debenture. The Debenture granted or to be granted on or about the
date hereof, entered into by and among the Administrative Agent, on behalf of
itself and the Lenders, and ICON Fitness Holdings, which shall include, without
limitation, a charge over 65% of the Capital Stock of ICON Health & Fitness
Limited.
Universal. Universal Technical Services, a Utah corporation.
Versalite. Versalite Systems Co., Ltd., a British Virgin Islands
company.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
World Fitness. World Fitness Sales, a Cayman Islands corporation.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such document
or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Credit Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) Unless otherwise expressly indicated, a reference to any law or
regulation includes any amendment or modification to such law or regulation.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by GAAP applied on a consistent basis by the accounting entity
to which they refer.
(f) The words "include", "includes" and "including" are not limiting.
(g) All terms not specifically defined herein or by GAAP, which terms are
defined in the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts, have the meanings assigned to them therein, with the term
"instrument" being that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular refers to that section of this Credit
Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like import
shall refer to this Credit Agreement as a whole and not to any particular
section or subdivision of this Credit Agreement.
(j) Unless otherwise expressly indicated, in the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including," the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including."
(k) This Credit Agreement and the other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are, however, cumulative
and are to be performed in accordance with the terms thereof.
(l) This Credit Agreement and the other Loan Documents are the result of
negotiation among, and have been reviewed by counsel to, among others, the
Administrative Agent and the Borrower and are the product of discussions and
negotiations among all parties. Accordingly, this Credit Agreement and the
other Loan Documents are not intended to be construed against the Administrative
Agent or any of the Lenders merely on account of the Administrative Agent's or
any Lender's involvement in the preparation of such documents.
2. THE TERM LOAN.
2.1. Commitment to Lend. Subject to the terms and conditions set forth
in this Credit Agreement, each of the Lenders severally agrees to lend to the
Borrower upon the Closing Date the Term Loan, in the amount of the Total
Commitment. The Term Loan shall be made pro rata in accordance with each
Lender's Commitment Percentage.
2.2. The Term Notes. The Term Loan shall be evidenced by separate
promissory notes of the Borrower in the form of Exhibit C hereto (each a "Term
Note"), dated as of the Closing Date (or such other date on which a Lender may
become a party hereto in accordance with 18 hereof) and completed with
appropriate insertions. One Term Note shall be payable to the order of each
Lender in a principal amount equal to such Lender's Commitment.
2.3. Interest on the Term Loan. Except as otherwise provided in 5.5,
the outstanding balance of the Term Loan shall bear interest at a rate per annum
(the "Applicable Rate") equal to the greater of (a) twelve and one half percent
(12.50%) and (b) the Base Rate plus the Applicable Margin, based on a 360 day
year. Interest shall accrue commencing with the Closing Date and be due and
payable, monthly in arrears on the first day of each month, commencing on
December 1, 2005, and continuing until such time as the full outstanding
principal balance of the Term Loan shall have been paid in full.
2.4. Payments of Principal. The outstanding principal balance of the
Term Loan shall be paid as follows:
(a) Subject to the terms of Section 8.16 of the Senior Credit Facility
Loan Agreement as in effect on the Closing Date, within seven (7) Business Days
following delivery of the Borrower's audited financial statements pursuant to
7.4(a) hereof for each Fiscal Year, commencing with the Fiscal Year ending May
31, 2006 and continuing through the Maturity Date, the Borrower shall repay the
principal balance of the Term Loan in an amount equal to fifty percent (50%) of
the Borrower's Excess Cash Flow for the Fiscal Year then ended.
(b) The entire remaining outstanding principal balance, together with all
accrued and unpaid interest and all other outstanding Obligations, shall be paid
in full upon the Maturity Date, unless due sooner as a result of acceleration or
demand hereunder.
2.5. Intentionally Omitted
2.6. Fees.
2.6.1. Commitment Fee. The Borrower agrees to pay to the Administrative
Agent the Commitment Fee as provided in the Fee Letter.
2.6.2. Monitoring Fee. The Borrower agrees to pay to the Administrative
Agent the Monitoring Fee as provided in the Fee Letter.
2.6.3. Early Termination Fee. If the principal amount of the Term Loan
is prepaid at any time, in whole or in part, whether voluntarily or by
acceleration, of the Borrower shall pay an early termination fee (the "Early
Termination Fee"), as follows:
(a) If the Term Loan is prepaid for any reason during the period
commencing with the Closing Date and prior to the Maturity Date, the Borrower
shall pay to the Lenders an Early Termination Fee in an amount equal to the
greater of (i) the calculated interest to have accrued on the outstanding
principal balance of the Term Loan, assuming the fixed rate of interest at
12.75% during the fifteen (15) month period following the Closing Date, less
actual payments of interest made by Borrower on account of the Term Loan, and
(b) one percent (1.0%) of the principal amount prepaid.
(b) Notwithstanding anything to the contrary contained herein, so long
as there has not occurred and there is not continuing any Default or Event of
Default at the time of prepayment, the Early Termination Fee shall be calculated
solely with respect to the amount of prepayments in excess of the initial
$15,000,000 prepaid, which amount shall be determined exclusive of payments made
in accordance with Section 2.4(a). In addition, Borrower shall not be required
to pay any Early Termination Fee with respect to payments of principal on the
Term Loan pursuant to Section 2.4(a) above.
The Borrower acknowledges that a prepayment may result in the
Administrative Agent and Lenders incurring additional costs, expenses or
liabilities, and that it is difficult to ascertain the full extent of such
costs, expenses or liabilities. The Borrower therefore agrees that said Early
Termination Fee represents a reasonable estimate of the prepayment costs,
expenses or liabilities of the Administrative Agent and Lenders.
3. ADDITIONAL TERM LOAN PAYMENTS.
3.1. Mandatory Repayments of Term Loans. Subject to mandatory
repayments of the Senior Credit Facility Loan due under the Senior Credit
Facility Loan Agreement and as otherwise provided in the Intercreditor Agreement
which may preclude any of the following:
3.1.1. Immediately upon receipt by any Credit Party of net cash proceeds
from any asset disposition (excluding dispositions of inventory in the ordinary
course of business), which, together with other asset dispositions in a Fiscal
Year results in net cash proceeds in excess of $400,000 in the aggregate during
such Fiscal Year, the Borrower shall prepay the Obligations in an amount equal
to such proceeds. Notwithstanding the foregoing, the proceeds of asset
dispositions which are reinvested in Capital Expenditures within 180 days after
the date of receipt thereof need not be used to prepay the Obligations. The
Borrower shall report to the Administrative Agent in writing its intention to
reinvest such proceeds concurrently with each asset disposition and shall also
report the dates and amounts of such reinvestments concurrently therewith. All
prepayments made hereunder shall be applied in accordance with 3.1.4.
3.1.2. If any Credit Party issues Capital Stock (other than issuances of
Capital Stock to employees of Holdings and its Subsidiaries), no later than the
first Business Day following the date of receipt of the net cash proceeds
thereof, the Borrower shall prepay the Obligations in an amount equal to all
such net cash proceeds. Any such prepayment shall be applied in accordance with
3.1.4.
3.1.3. The Borrower shall prepay the Obligations in an amount equal to
all net cash proceeds received by any Credit Party from Casualty Events which
have not been utilized by such Credit Party within 180 days of receipt of such
proceeds to the repair or replacement of the property so damaged, destroyed or
taken; provided, however, if (i) the amount of such proceeds exceeds $10,000,000
or (ii) a Default or Event of Default has occurred and is continuing, the
Borrower shall immediately prepay the Obligations in an amount equal to such net
cash proceeds. Any such prepayment shall be applied in accordance with 3.1.4.
3.1.4. All payments made pursuant to 3.1.1, 3.1.2 and 3.1.3 shall be
applied to the Obligations as follows: first, to Fees, costs and expenses due
the Administrative Agent and the Lenders; second, to accrued and unpaid
interest; and third, to the outstanding principal balance of the Term Loan.
Each prepayment of the Term Loan shall be allocated among the Lenders, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Lender's Term Note, with adjustments to the extent practicable to
equalize any prior payments or repayments not exactly in proportion. The
provisions of this 3.1.4 shall not impair any restrictions set forth in the
Loan Documents with respect to the incurrence of Indebtedness or asset
dispositions by any Credit Party. Notwithstanding anything to the contrary
contained above in this Section 3.1, to the extent that any prepayment of the
Term Loan is required under Section 3.1.1, 3.1.2 and/or 3.1.3 and a
corresponding provision of the Senior Credit Facility Loan Agreement, the
prepayment by the Borrower of the Senior Credit Facility Loan as provided in the
corresponding provisions of the Senior Credit Facility Loan Agreement as in
effect on the Closing Date, shall satisfy Borrower's obligation under Section
3.1.1, 3.1.2 and/or 3.1.3 hereof.
3.2. Optional Prepayments of the Term Loan. The Borrower shall have the
right, at its election, to prepay the outstanding principal amount of the Term
Loan, in whole or in part, at any time, subject to the payment of the Early
Termination Fee, if applicable. The Borrower shall provide to the
Administrative Agent, no later than 12:00 p.m., Boston time, at least three (3)
Business Days prior written notice of any proposed prepayment pursuant to this
3.2, specifying the proposed date of prepayment and the principal amount to be
prepaid. Each such partial prepayment of the Term Loan shall be accompanied by
the payment of accrued interest on the principal prepaid to the date of
prepayment and any applicable Early Termination Fee. Each partial prepayment
shall be allocated among the Lenders, in proportion, as nearly as practicable,
to the respective unpaid principal amount of each such Lender's Term Note, with
adjustments to the extent practicable to equalize any prior repayments not
exactly in propor
tion. Any portion of the Term Loan prepaid by the Borrower may not be
reborrowed hereunder.
4. INTENTIONALLY OMITTED.
5. CERTAIN GENERAL PROVISIONS.
5.1. Fees. The Borrower shall pay to the Administrative Agent, for the
pro rata accounts of the Lenders, such fees as shall have been separately agreed
upon in writing in the amounts and at the times referred to therein. Such fees
shall be fully earned when paid and shall not be refundable for any reason
whatsoever.
5.2. Funds for Payments.
5.2.1. Intentionally Omitted.
5.2.2. No Offset, etc.
All payments by any Credit Party hereunder and under any of the other
Loan Documents shall be made without recoupment, setoff or counterclaim and free
and clear of and without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans, restrictions or
conditions of any nature now or hereafter imposed or levied by any jurisdiction
or any political subdivision thereof or taxing or other authority therein unless
such Credit Party is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon any Credit Party with respect to any amount
payable by it hereunder or under any of the other Loan Documents, the Borrower
will pay to the Administrative Agent, for the account of the Lenders or (as the
case may be) the Administrative Agent, on the date on which such amount is due
and payable hereunder or under such other Loan Document, such additional amount
in Dollars as shall be necessary to enable the Lenders or the Administrativ
e Agent to receive the same net amount which the Lenders or the Administrative
Agent would have received on such due date had no such obligation been imposed
upon the Credit Parties. The Borrower will deliver promptly to the
Administrative Agent certificates or other valid vouchers for all taxes or other
charges deducted from or paid with respect to payments made by the Borrower
hereunder or under such other Loan Document.
5.2.3. Non-U.S. Lenders. Each Lender and the Administrative Agent that
is not a U.S. Person as defined in Section 7701(a)(30) of the Code for federal
income tax purposes (a "Non-U.S. Lender") hereby agrees that, if and to the
extent it is legally able to do so, it shall, prior to the date on which it
becomes a Lender hereunder, deliver to the Borrower and the Administrative
Agent, as applicable, such certificates, documents or other evidence, as and
when required by the Code or Treasury Regulations issued pursuant thereto,
including (a) in the case of a Non-U.S. Lender that is a "bank" for purposes of
Section 881(c)(3)(A) of the Code, two (2) duly completed copies of Internal
Revenue Service Form W-8BEN or Form W-8ECI and any other certificate or
statement of exemption required by Treasury Regulations, or any subsequent
versions thereof or successors thereto, properly completed and duly executed by
such Lender or the Administrative Agent establishing that with respect to
payments of principal, interest or fees hereunder it is (i) not subject to U.S.
federal withholding tax under the Code because such payment is effectively
connected with the conduct by such Lender or Administrative Agent of a trade or
business in the U.S. or (ii) totally exempt from U.S. federal withholding tax
under a provision of an applicable tax treaty and (b) in the case of a Non-U.S.
Lender that is not a "bank" for purposes of Section 881(c)(3)(A) of the Code, a
certificate in form and substance reasonably satisfactory to the Administrative
Agent and the Borrower and to the effect that (i) such Non-U.S. Lender is not a
"bank" for purposes of Section 881(c)(3)(A) of the Code, is not subject to
regulatory or other legal requirements as a bank in any jurisdiction, and has
not been treated as a bank for purposes of any tax, securities law or other
filing or submission made to any governmental authority, any application made to
a rating agency or qualification for any exemption from any tax, securities law
or other legal requirements, (ii) is not a ten (10) percent shareholder for
purposes of Section 881(c)(3)(B) of the Code and (iii) is not a controlled
foreign corporation receiving interest from a related person for purposes of
Section 881(c)(3)(C) of the Code, together with a properly completed Internal
Revenue Service Form W-8 or W-9, as applicable (or successor forms). Each
Lender agrees that it shall, promptly upon a change of its lending office or the
selection of any additional lending office, to the extent the forms previously
delivered by it pursuant to this section are no longer effective, and promptly
upon the Borrower's or the Administrative Agent's reasonable request after the
occurrence of any other event (including the passage of time) requiring the
delivery of a Form W-8BEN, Form W-8ECI, Form W-8 or W-9 in addition to or in
replacement of the forms previously delivered, deliver to the Borrower and the
Administrative Agent, as applicable, if and to the extent it is properly
entitled to do so, a properly completed and executed Form W-8BEN, Form W-8ECI,
Form W-8 or W-9, as applicable (or any successor forms thereto).
5.3. Computations. All computations of interest on Loans, any Fees or
any other amount due hereunder shall, unless otherwise expressly provided
herein, be based on a 360-day year and paid for the actual number of days
elapsed. Whenever a payment hereunder or under any of the other Loan Documents
becomes due on a day that is not a Business Day, the due date for such payment
shall be extended to the next succeeding Business Day, and interest and fees
shall accrue during such extension.
5.4. Interest Limitation. Notwithstanding any other term of this Credit
Agreement or any other document referred to herein or therein, the maximum
amount of interest which may be charged to or collected from any person liable
hereunder by the Lenders shall be absolutely limited to, and shall in no event
exceed, the maximum amount of interest which could lawfully be charged or
collected under applicable law (including, to the extent applicable, the
provisions of Section 5197 of the Revised Statutes of the United States of
America, as amended, 12 U.S.C. Section 85, as amended or the Criminal Code
(Canada), as amended), so that the maximum of all amounts constituting interest
under applicable law, howsoever computed, shall never exceed as to any Person
liable therefor such lawful maximum, and any term of this Credit Agreement or
any other document referred to herein or therein which could be construed as
providing for interest in excess of such lawful maximum shall be and hereby is
made expressly subject to and modified by the provisions of this paragraph.
5.5. Interest After Default. Immediately upon the occurrence and during
the continuance of an Event of Default, the Borrower shall pay interest on the
principal amount of all outstanding Obligations at a fluctuating interest rate
per annum at all times equal to the Default Rate to the fullest extent permitted
by applicable laws.
5.6. Collateral Security and Guaranty Documents.
(a) Each Credit Party covenants and agrees that (a) pursuant to the terms
of the Security Documents, the Obligations shall be secured by a perfected
second priority security interest (subject only to Permitted Liens) in the
Collateral and (b) the Obligations shall also be guaranteed pursuant to the
terms of the Guaranties.
(b) If at any time any Credit Party grants any security interest to the
Senior Credit Facility Agent or any lender party to the Senior Credit Facility
Loan Agreement in respect of the Senior Credit Facility Loan, or any of their
respective successors, assigns or transferees, on any property of such Credit
Party or such other party, then such Credit Party or such other party, as the
case may be, shall simultaneously grant to the Administrative Agent a security
interest in such property, and such security interest shall be subject to the
terms of the Intercreditor Agreement.
6. REPRESENTATIONS AND WARRANTIES.
Each Credit Party represents and warrants to the Lenders and the
Administrative Agent as follows:
6.1. Corporate Authority, Etc.
6.1.1. Existence, Good Standing.
(a) Each Credit Party (i) is a corporation (or similar business entity)
duly organized or incorporated (in the case of any Credit Party organized in
England and Wales), validly existing and in good standing under the laws of its
jurisdiction of incorporation or formation, (ii) has taken all actions which, by
reason of its ownership of property or carrying on of business, are required to
be taken by it under the laws of any jurisdiction, wherein it owns property or
carries on business, except where the failure to do so would not materially and
adversely affect the Credit Parties (taken as a whole) and (iii) has all
corporate authority (or the equivalent company) power to own its property and
conduct its business as now conducted and as presently contemplated.
(b) Each Credit Party has adequate power and authority and has full legal
right to enter into each of the Loan Documents to which it is or is to become a
party, to perform, observe and comply with all of its agreements and obligations
under each of such documents, and to make all of the borrowings and obtain the
extensions of credit contemplated by this Credit Agreement.
6.1.2. Authorization. The execution and delivery by each Credit Party
of each of the Loan Documents executed and delivered on the Closing Date to
which, by the terms of such document, it is a party, the performance by each
Credit Party of all of its agreements and obligations under each of such
documents, and the making by the Borrower of all of the borrowings contemplated
by this Credit Agreement, are within the corporate (or the equivalent company)
authority of each Credit Party, as applicable, have been duly authorized by all
necessary corporate or other action on the part of such Credit Party, as
applicable, and do not and will not (i) except as otherwise expressly
contemplated by the Loan Documents, conflict with, or result in a breach of any
material term, condition or provision of, or constitute a default under or
result in the creation of any mortgage, lien, pledge, charge, security interest
or other encumbrance upon any of the property of such Credit Party, under any
agreement, trust deed, indenture, mortgage or other instrument to which such
Credit Party is a party or by which such Credit Party or any of its property is
bound, the consequences of which would have a material and adverse effect on the
financial condition, assets or operations of the Credit Parties (taken as a
whole), (ii) violate or contravene any provision of any law, regulation, order,
ruling or interpretation thereunder or any decree, order or judgment of any
court or governmental or regulatory authority, bureau, agency or official (all
as from time to time in effect and applicable to such Credit Party) except where
such violation or contravention would not materially and adversely affect the
financial condition, assets or operations of the Credit Parties (taken as a
whole), (iii) require any waivers, consents or approvals by any of the creditors
of such Credit Party which have not been obtained (except when failure to do so
would not materially and adversely affect the financial condition, assets or
operations of the Credit Parties, taken as a whole), (iv) in the case of such
Credit Party, require any consents or approvals by any shareholders or members
of such Credit Party,(except such as will be obtained on or prior to the Closing
Date and will be in full force and effect on and as of the Closing Date), (v)
require any approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to, any governmental or
regulatory authority or agency under any provision of any law applicable to such
Credit Party, except those actions which have been taken or will be taken prior
to the Closing Date and except where failure to take such actions would not
materially and adversely affect the financial condition, assets or operations of
the Credit Parties (taken as a whole), or (vi) conflict with any provision of
the Governing Documents of such Credit Party.
6.1.3. Delivery. Each Credit Party has duly executed and delivered each
of the Loan Documents to which it is a party and each of such documents is in
full force and effect.
6.1.4. Enforceability. The execution and delivery of this Credit
Agreement and the other Loan Documents to which any Credit Party is or is to
become a party will result in valid and legally binding obligations of such
Person enforceable against it in accordance with the respective terms and
provisions hereof and thereof, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to the
extent that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.
6.2. Financial Statements; Projections. There has been furnished to
each of the Lenders a consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries> as of the Balance Sheet Date, and a consolidated
and consolidating statement of income and cash flow of the Borrower and its
Subsidiaries for the Fiscal Year then ended, and in the case of the consolidated
balance sheet statement and income and cash flow, certified by
PriceWaterhouseCoopers, LLP. Such balance sheet and statement of income and cash
flow have been prepared in accordance with GAAP and fairly present the financial
condition of the Borrower and its Subsidiaries as at the close of business on
the date thereof and the results of operations for the Fiscal Year then ended.
There are no contingent liabilities of any Credit Party as of such date
involving material amounts, known to the officers of any Credit Party, required
to be disclosed in such balance sheet and the notes related thereto in
accordance with GAAP, which were not disclosed in such balance sheet and the
notes related thereto.
(b) There has been furnished to the Administrative Agent and each of the
Lenders an unaudited consolidated and consolidating balance sheet of the
Borrower and its Subsidiaries as of the close of such Fiscal Month ended
September 3, 2005 and unaudited consolidated and consolidating statements of
income and cash flow of the Credit Parties as of the close of such Fiscal Month,
in each case, certified by the Chief Financial Officer of the Borrower. Such
balance sheet and statements of income and cash flow have been prepared in
accordance with GAAP and fairly present the financial condition of the Borrower
and its Subsidiaries as at the close of business on the date thereof and the
results of operations subject to year end adjustments. There are no contingent
liabilities of any Credit Party as of such date involving material amounts,
known to the officers of any Credit Party, which were not disclosed in such
balance sheet and the notes related thereto.
(c) There has also been furnished to each of the Lenders projections for
the 2006, 2007, 2008, 2009 and 2010 Fiscal Years. To the knowledge of the
Credit Parties, as of the date hereof, no facts exist that (individually or in
the aggregate) would result in any material change in any of such projections
(taken as a whole). The projections are based upon reasonable estimates and
assumptions and reflect the reasonable estimates of the Credit Parties of the
results of operations and other information projected therein (it being
understood that such projections are not a guarantee of future performance).
6.3. Solvency. As of the Closing Date and after giving effect to the
Loans hereunder and the other transactions contemplated hereby:
(a) the aggregate value of all assets of the Credit Parties, on a
consolidated basis, at their present fair saleable value exceeds the total
amount of all the probable debts and liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of the Credit Parties as
they become absolute and mature;
(b) the present fair saleable value of the assets of the Credit Parties,
on a consolidated basis, is not less than the amount that will be required to
pay the probable liability on their existing debts as they become absolute and
mature;
(c) the Credit Parties will not, on a consolidated basis, have an
unreasonably small capital with which to conduct their business operations as
heretofore conducted; and
(d) the Credit Parties do not, on a consolidated basis, intend to incur
debts or liabilities beyond their ability to pay such debts and liabilities as
they mature.
6.4. No Material Adverse Change; Distributions. Since the Balance Sheet
Date, there has occurred no material adverse change in the financial condition
or business of the Credit Parties. Since the Balance Sheet Date, no Credit
Party has made any Restricted Payment (other than Restricted Payments permitted
under 8.4).
6.5. Absence of Mortgages and Liens. Except with respect to Permitted
Liens, there is no financing statement, security agreement, chattel mortgage,
real estate mortgage or other document filed or recorded with any filing
records, registry or other public office, that purports to cover, affect or give
notice of any present or possible future Lien on, or security interest in, any
of the material assets or property of the Credit Parties (taken as a whole) or
of any of the rights relating thereto.
6.6. Franchises, Patents, Copyrights, etc. Each Credit Party possesses
all franchises, patents, copyrights, trademarks, trade names, licenses and
permits, and rights in respect of the foregoing, adequate for the conduct of its
business substantially as now conducted without known conflict with any rights
of others. Attached hereto as Schedule 6.6 is a true, correct and complete list
of all patents, patent applications, federally registered copyrights, trademarks
and trademark applications owned by any Credit Party as of the Closing Date.
6.7. Litigation. Except as set forth in Schedule 6.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending, or, to the
best knowledge of the Senior Management after all due investigation appropriate
under the circumstances, threatened against any Credit Party, before any court,
tribunal or administrative agency or board that would be likely to, either in
any case or in the aggregate, materially adversely affect the properties,
assets, financial condition or business of the Credit Parties, taken as a whole,
or materially impair the right of the Credit Parties, taken as a whole, to carry
on business substantially as now conducted by them, or that questions the
validity of this Credit Agreement or any of the other Loan Documents.
6.8. No Materially Adverse Contracts, etc. Except as set forth on
Schedule 6.8, no Credit Party is subject to any charter, partnership or other
legal restriction, or any judgment, decree, order, law, statute, rule or
regulation that has or is expected in the future to have a material adverse
effect on the business, assets or financial condition of the Credit Parties,
taken as a whole. Except as listed on Schedule 6.8 hereto, no Credit Party is a
party to any contract or agreement that has or is expected, in the judgment of
any Credit Party's officers, to have any material adverse effect on the business
of the Credit Parties, taken as a whole.
6.9. Compliance with Other Instruments, Laws, etc. No Credit Party is
in violation of any provision of its Governing Documents, or any agreement or
instrument to which it may be subject or by which it or any of its properties
may be bound or any decree, order, judgment, statute, license, rule or
regulation, in any of the foregoing cases in a manner that could reasonably be
expected to materially and adversely affect the financial condition, properties
or business of the Credit Parties taken as a whole.
6.10. Tax Status. The Credit Parties (i) have made or filed all
national, federal, provincial and all material state, provincial and foreign
income and all other material tax returns, reports and declarations required by
any jurisdiction to which any of them is subject, (ii) have paid all material
taxes and other governmental assessments and charges imposed on them, except
those being contested in good faith and by appropriate proceedings and for which
the Credit Parties have set aside on their books reasonably adequate provisions
therefor (unless foreclosure or other enforcement action has been commenced in
respect thereof or any Lien has been filed or otherwise perfected therefor, in
which case such exception does not apply), and (iii) have set aside on their
books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, except those being contested in good faith and as
to which adequate reserves are maintained, and the officers of the Credit
Parties know of no basis for any such claim.
6.11. No Default or Event of Default. No Default or Event of Default
has occurred and is continuing.
6.12. Holding Company and Investment Company Acts. No Credit Party is a
"holding company", or a "subsidiary company" of a "holding company", or an
affiliate" of a "holding company", as such terms are defined in the Public
Utility Holding Company Act of 1935; nor is it an "investment company", or an
"affiliated company" or a "principal underwriter" of an "investment company", as
such terms are defined in the Investment Company Act of 1940.
6.13. Employee Benefit Plans.
6.13.1. In General. Each Employee Benefit Plan and each Guaranteed
Pension Plan has been maintained and operated in compliance in all material
respects with applicable law including without limitation the provisions of
ERISA and all Applicable Pension Legislation and, to the extent applicable, the
Code, including but not limited to the provisions thereunder respecting
prohibited transactions, other than as set forth on Schedule 6.13 attached
hereto. The Credit Parties have heretofore delivered to the Administrative Agent
the most recently completed annual report, Form 5500, with all required
attachments, and actuarial statement required to be submitted under 103(d) of
ERISA, with respect to each Guaranteed Pension Plan.
6.13.2. Terminability of Welfare Plans. Under each Employee Benefit
Plan which is an employee welfare benefit plan within the meaning of 3(1) or
3(2)(B) of ERISA, no benefits are due unless the event giving rise to the
benefit entitlement occurs prior to plan termination (except as required by
Title I, Part 6 of ERISA). The Credit Parties or an ERISA Affiliate, as
appropriate, may terminate each such Plan at any time (or at any time subsequent
to the expiration of any applicable bargaining agreement) in the discretion of
the Credit Parties or such ERISA Affiliate without liability to any Person,
other than for benefits which have accrued prior to termination.
6.13.3. Guaranteed Pension Plans. Each contribution required to be made
to a Guaranteed Pension Plan, whether required to be made to avoid the
incurrence of an accumulated funding deficiency, the notice or lien provisions
of 302(f) of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods has been
received with respect to any Guaranteed Pension Plan and none of the Credit
Parties nor any ERISA Affiliate is obligated to or has posted security in
connection with an amendment to a Guaranteed Pension Plan pursuant to 307 of
ERISA or 401(a)(29) of the Code. No liability to the PBGC (other than required
insurance premiums, all of which have been paid) has been incurred by any Credit
Party or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event, or any other event or condition
which presents a material risk of termination of any Guaranteed Pension Plan by
the PBGC. Based on the latest valuation of each Guaranteed Pension Plan (which
in each case occurred within twelve months of the date of this representation),
and on the actuarial methods and assumptions employed for that valuation, the
aggregate benefit liabilities of all such Guaranteed Pension Plans within the
meaning of 4001 of ERISA did not exceed the aggregate value of the assets of all
such Guaranteed Pension Plans. With respect to the Canadian Subsidiaries, all
pension plans are duly registered where required by, and are in compliance with
all applicable laws including the Income Tax Act (Canada) and there are no
actions, claims or proceedings pending or threatened (other than routine claims
for benefits) relating to any of the pension plans. All required employer and
employee contributions and premiums under the pension plans have been made, the
pension plans are fully funded on a going concern and solvency basis in
accordance with applicable laws and with the actuarial methods and assumptions
used in the most recent actuarial reports therefor, and there have been no
surplus withdrawals or contribution holidays except as permitted by law and the
terms of the pension plans.
6.13.4. Multiemployer Plans. None of the Credit Parties nor any ERISA
Affiliate has incurred any material liability (including secondary liability) to
any Multiemployer Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan under 4201 of ERISA or as a result of a sale of assets
described in 4204 of ERISA. None of the Credit Parties nor any ERISA Affiliate
has been notified that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of 4241 or 4245 of ERISA or is at risk of
entering reorganization or becoming insolvent, or that any Multiemployer Plan
intends to terminate or has been terminated under 4041A of ERISA.
6.14. Regulations U and X. The proceeds of the Loans shall be used
solely for the purposes specified in 7.11. No portion of any Loan is to be
used for the purpose of purchasing or carrying any "margin security" or "margin
stock" as such terms are used in Regulations U and X of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
6.15. True Copies of Governing Documents. As of the Closing Date, the
Credit Parties have furnished or caused to be furnished to each of the Lenders
true and complete copies of the Governing Documents (together with any
amendments thereto) of each Credit Party.
6.16. Fiscal Year. The Credit Parties have a fiscal year ending May 31
of each year.
6.17. Perfection of Security Interest. All filings, assignments,
pledges and deposits of documents or instruments have been made (or, in the case
of the U.K. Debenture and the International Pledge Agreement referred to in
paragraph (b) of the "International Pledge Agreements", will be made within five
(5) days of the grant of such security), and all other actions have been taken
that are necessary or advisable, under applicable law, to establish and perfect
the Administrative Agent's second-priority Lien and security interest in the
Collateral. The Collateral and the Administrative Agent's rights with respect
to the Collateral are not subject to any setoff, claims, withholdings or other
defenses. Each Credit Party as party to one of the Security Agreements is the
owner of its Collateral free from any Lien, except for Permitted Liens.
6.18. Subsidiaries, etc. Holdings does not have any Subsidiaries except
as set forth on Schedule 6.18 hereto.
6.19. Environmental Compliance. With respect to the past and present
condition and usage of the Real Estate and the operations conducted thereon:
(a) none of the Credit Parties or any operator of the Real Estate or any
operations thereon is in violation, or alleged violation, of any judgment,
decree, order, law, license, rule, permit or regulation pertaining to
environmental matters, including without limitation, those arising under the
Resource Conservation and Recovery Act ("RCRA"), the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 as amended ("CERCLA"), the
Superfund Amendments and Reauthorization Act of 1986 ("SARA"), the Federal Clean
Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or any
other state, local or foreign or common law, statute, regulation, ordinance,
order, decree or any other binding requirement of any Governmental Authority
relating to health, safety or the environment (all of the foregoing,
collectively, the "Environmental Laws"), which violation could reasonably be
expected to have a material adverse effect on the business, assets, operations
or financial condition of the Credit Parties (taken as a whole), or the ability
of any Credit Party to fulfill its obligations under this Credit Agreement or
the other Loan Documents;
(b) except as set forth on Schedule 6.19 hereto, no Credit Party has
received notice from any third party including, without limitation, any
Governmental Authority, (i) that any one of them has been identified by the
United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B; (ii) that any hazardous waste,
as defined by 42 U.S.C. 6903(5), any hazardous substances as defined by 42
U.S.C. 9601(14), any pollutant or contaminant as defined by 42 U.S.C. 9601(33)
and any toxic substances, oil or hazardous materials or other chemicals or
substances regulated by any Environmental Laws ("Hazardous Substances") which
any one of them has generated, transported or disposed of has been found at any
site at which a Governmental Authority has conducted or has ordered that any
Credit Party conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a named party
to any claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Substances;
(c) except as set forth on Schedule 6.19 attached hereto: (i) no portion
of the Real Estate is used for the handling, processing, storage or disposal of
Hazardous Substances except in material accordance with applicable Environmental
Laws; and, to the best of the Credit Parties' knowledge, no underground tank or
other underground storage receptacle for Hazardous Substances is located on any
portion of the Real Estate; (ii) in the course of any activities conducted by
the Credit Parties or operators of its properties, no Hazardous Substances have
been generated or are being used on the Real Estate except in material
accordance with applicable Environmental Laws; (iii) there have been no releases
(i.e. any past or present releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, disposing or dumping) or
threatened releases of Hazardous Substances on, upon, into or from the
properties of the Credit Parties, which releases could reasonably be expected to
have a material adverse effect on the value of any Real Estate or on the
business, assets, operations or financial condition of the Credit Parties (taken
as a whole), or the ability of any Credit Party to fulfill its obligations
under this Credit Agreement or the other Loan Documents; (iv) to the best of the
Credit Parties knowledge, there have been no releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on, and which could
reasonably be expected to have a material adverse effect on the value of any of
the Real Estate or adjacent properties or the environment or on the business,
assets, operations or financial condition of Credit Parties (taken as a whole),
or the ability of any Credit Party to fulfill its obligations under this Credit
Agreement or the other Loan Documents; and (v) in addition, to the best of the
Credit Parties knowledge, any Hazardous Substances that have been generated on
any of the Real Estate have been transported offsite only by carriers having an
identification number issued by the EPA (or the equivalent thereof in any
foreign jurisdiction), treated or disposed of only by treatment or disposal
facilities maintaining valid permits as required under applicable Environmental
Laws, which transporters and facilities have been and are, to the best of the
Credit Parties' knowledge, operating in compliance with such permits and
applicable Environmental Laws;
(d) none of the Credit Parties, any Mortgaged Property or any of the
other Real Estate is subject to any applicable Environmental Law requiring the
performance of Hazardous Substances site assessments, or the removal or
remediation of Hazardous Substances, or the giving of notice to any Governmental
Authority or the recording or delivery to other Persons of an environmental
disclosure document or statement by virtue of the transactions set forth herein
and contemplated hereby, or as a condition to the recording of any Mortgage or
to the effectiveness of any other transactions contemplated hereby; and
(e) to the best of their knowledge after due inquiry, the Credit Parties
have furnished the Administrative Agent's Special Counsel with copies of all
material environmental reports relating to the Credit Parties and their
properties and operations.
6.20. Bank Accounts. Schedule-6.20 sets forth the account numbers and
location of all bank accounts of the Credit Parties.
6.21. Labor Contracts. Except as set forth on Schedule 6.21, none of
the Credit Parties is party to any collective bargaining agreement. There are
no material grievances, disputes or controversies with any union or other
organization of any Credit Party's employees, or threats of strikes or work
stoppages that could reasonably be expected to materially and adversely affect
the financial condition, properties or business of the Credit Parties taken as a
whole.
6.22. Disclosure. The information prepared or furnished by the Credit
Parties in connection with this Credit Agreement or any other Loan Document
taken as a whole does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements contained therein
or herein not misleading. There is no fact known to the Credit Parties which
could reasonably be expected to have a material adverse effect on the business,
assets, operations or financial condition of Credit Parties (taken as a whole),
or the ability of any Credit Party to fulfill its obligations under this Credit
Agreement or the other Loan Documents, exclusive of effects resulting from
changes in general economic conditions, legal standards or regulatory
conditions.
6.23. Title to Properties. The Credit Parties own all of the assets
reflected in the consolidated balance sheet of the Credit Parties delivered to
the Administrative Agent pursuant to 10.23, subject to no Liens, except
Permitted Liens.
6.24. Certain Transactions. Except for agreements listed on Schedule
6.24, services by individuals as employees, officers and directors and
transactions between the Borrower and Subsidiary Guarantors otherwise permitted
hereunder, no Credit Party is engaged in any transaction with any Affiliate,
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate, on terms more favorable to such Person than would have been
obtainable on an arm's-length basis in the ordinary course of business.
6.25. Foreign Assets Control Regulations, Etc.. None of the requesting
or borrowing of the Loans or the use of the proceeds of any thereof will violate
the Trading With the Enemy Act (50 U.S.C. 1 et seq., as amended) (the "Trading
With the Enemy Act") or any of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
(the "Foreign Assets Control Regulations") or any enabling legislation or
executive order relating thereto (which for the avoidance of doubt shall
include, but shall not be limited to (a) Executive Order 13224 of September 21,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) (the
"Executive Order") and (b) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Public Law 107-56)). Furthermore, no Credit Party nor any Affiliate of a
Credit Party (a) is or will become a "blocked person" as described in the
Executive Order, the Trading With the Enemy Act or the Foreign Assets Control
Regulations or (b) engages or will engage in any dealings or transactions, or be
otherwise associated, with any such "blocked person".
6.26. Subordinated Debt. (a) No Credit Party is in violation of any
provision of the Subordinated Debt Documents or CS First Boston Debt, and (b)
the Term Loan, the Loan Documents, the Senior Credit Facility Loan, the Senior
Credit Facility Loan Documents, and the transactions contemplated hereby and
thereby do not violate and/or conflict with any provision of the Subordinated
Debt Documents or CS First Boston Debt. After giving effect to the making of
each advance of credit under the Senior Credit Facility Loan Agreement
(including the issuance, extension or renewal of any letter of credit
thereunder), the aggregate amount of all Indebtedness (as defined in the
Subordinated Indenture) of the Credit Parties incurred pursuant to Sections
4.09(b)(1) and 4.09(b)(13) of the Subordinated Indenture, including, without
limitation, the Senior Credit Facility Loan and the Term Loan, shall not exceed
the amount permitted to be incurred at such time pursuant to such Sections
4.09(b)(1) and 4.09(b)(13).
7. AFFIRMATIVE COVENANTS OF THE CREDIT PARTIES.
Each Credit Party covenants and agrees that, so long as the Term Loan is
outstanding:
7.1. Punctual Payment. Each Credit Party will duly and punctually pay
or cause to be paid when due all principal and interest on the Term Loan, the
Fees and all other Obligations and amounts provided for in this Credit Agreement
and the other Loan Documents to which it is a party and will cause to be paid
any amounts owing by any Credit Party, all in accordance with the terms of this
Credit Agreement and such other Loan Documents.
7.2. Maintenance of Office. Each Credit Party will maintain its chief
executive office in the location identified in the Perfection Certificate
delivered by such Credit Party to the Administrative Agent, or at such other
place as the Borrower shall designate upon written notice to the Administrative
Agent, where notices, presentations and demands to or upon any Credit Party in
respect of the Loan Documents to which such Credit Party is a party may be given
or made.
7.3. Records and Accounts. Each Credit Party will (i) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with, and all financial statements provided for
herein shall be prepared in accordance with GAAP consistently applied; (ii)
maintain adequate accounts and reserves for all taxes (including incomes taxes),
depreciation, depletion, obsolescence and amortization of its properties,
contingencies, and other reserves; and (iii) at all times, maintain independent
certified public accountants as the Credit Parties' accountants which shall be
reasonably satisfactory to the Administrative Agent.
7.4. Financial Statements, Certificates and Information. The Credit
Parties will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than ninety (90)
days after the end of each Fiscal Year, the consolidated and unaudited
consolidating balance sheet of the Borrower and its Subsidiaries, as at the end
of such year, and the related consolidated and consolidating statements of
income and retained earnings and consolidated and unaudited consolidating
statement of cash flow for such year, each setting forth in comparative form the
figures for the previous Fiscal Year and all such consolidated and consolidating
financial statements to be in reasonable detail, prepared in accordance with
GAAP consistently applied, and, with respect to the consolidated financial
statements, certified without qualification and without expression of
uncertainty as to the ability of the Borrower and its Subsidiaries to continue
as going concerns, by PricewaterhouseCoopers or by other independent certified
public accountants satisfactory to the Administrative Agent, together with (i) a
written statement from such accountants to the effect that, in making the
examination necessary to said certification, nothing has come to their attention
to cause them to believe that any Default or Event of Default has occurred or
specifying those Defaults or Events of Defaults that they have become aware of
(it being understood that such audit examination extended only to accounting
matters and that no special investigation was made with respect to the existence
of a Default or an Event of Default); provided that such accountants shall not
be liable to the Lenders for failure to obtain knowledge or become aware of any
Default or Event of Default; and (ii) a copy of their accountants' management
letter (if any) for such Fiscal Year;
(b) as soon as practicable, but in any event within thirty-five (35) days
after the end of each Fiscal Month, unaudited monthly consolidated and
consolidating financial statements of the Credit Parties for such Fiscal Month
(i.e., the consolidated and consolidating balance sheet of the Credit Parties,
as at the end of such Fiscal Month, and the related consolidated and
consolidating statements of income and retained earnings and consolidated and
consolidating statement of cash flow for such month) and the unaudited
consolidated and consolidating financial statements of the Credit Parties for
the period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Month, each, prepared in accordance with GAAP consistently
applied, together with a certification by the principal financial or accounting
officer(s) of the Borrower that the information contained in such financial
statements fairly presents in all material respects the financial condition of
the Credit Parties (as a whole) on the date thereof (subject to year-end
adjustments);
(c) as soon as practicable, but in any event within forty-five (45) days
after the end of each Fiscal Quarter and together with the delivery of the
audited financial statements referred to in paragraph (a) above, a statement
certified by the chief financial officer or cash manager of the Borrower in
substantially the form of Exhibit B hereto (a "Compliance Certificate") (i)
setting forth in reasonable detail (A) the average Excess Availability and Total
Outstandings for such Fiscal Quarter and (B) computations evidencing compliance
with the covenants contained in 9 and (if applicable) reconciliations to
reflect changes in GAAP since the Balance Sheet Date and (ii) stating that such
officer has caused this Credit Agreement and the other Loan Documents to be
reviewed and has no knowledge of any Default or Event of Default during such
fiscal quarter or at the end of such year, or if such officer has such
knowledge, specifying each Default or Event of Default and the nature thereof;
(d) as soon as available and in any event no later than within fifteen
(15) days after the end of each calendar month, (i) a Collateral Update
Certificate, (ii) an Accounts receivable aging report, (iii) a summary of
inventory by type and location, and (v) such other information relating to the
Collateral as the Administrative Agent shall reasonably request, in each case,
accompanied by such supporting detail and documentation as the Administrative
Agent shall reasonably request;
(e) as soon as available and in any event no later than 1:00 p.m. (Boston
time) on Wednesday of each week (or, if such Wednesday is not a Business Day, on
Thursday of such week) (or with greater frequency as the Administrative Agent
may request), (i) an Excess Availability Report, (ii) the Borrowing Base Report
delivered by Borrower to the Senior Credit Facility Agent, together with all
supporting information delivered to the Senior Credit Facility Agent, if any,
and (iii) an accounts receivable aging report; provided that, from and after
March 1, 2006, so long as (A) the Borrower has demonstrated Consolidated EBITDA
as of the end of the most recently ended Fiscal Quarter (for the period of four
Fiscal Quarters then ending) of at least $35,000,000, and (B) Excess
Availability is not less than $50,000,000, the Borrower shall be entitled to
deliver such Borrowing Base Report and accounts receivable aging report not
later than 1:00 p.m. (Boston time) on the fifteenth (15th) day of each month,
with such Borrowing Base Report to be calculated as of the last Business Day of
the preceding month (it being understood that, in the event that either of the
conditions set forth in clauses (A) and (B) of this proviso are not satisfied,
the Borrower shall be required to deliver weekly Borrowing Base Reports and
accounts receivable aging reports);
(f) as soon as available and in any event no later than five (5) Business
Days after the last day of each Fiscal Quarter (or with greater frequency to the
extent required under the terms of the Subordinated Debt Documents), an
Indenture Borrowing Base Report as of the last day of such Fiscal Quarter;
(g) not later than June 1 of each Fiscal Year, updated projections for
the Credit Parties for the following Fiscal Year on a monthly basis (such
projections to include consolidated balance sheets, consolidated statements of
cash flows, and consolidated and consolidating income statements, in each case
prepared on a month-by-month basis);
(h) promptly after the sending or filing thereof, copies of all reports
and registration statements which any Credit Party files with the Securities and
Exchange Commission or any national securities exchange (including, without
limitation, all 10-K, 10-Q and 8-K reports);
(i) promptly after delivery or receipt thereof, copies of all notices and
other communications delivered or received by any of the Credit Parties in
connection with the Subordinated Debt Documents;
(j) promptly after delivery or receipt thereof, copies of all notices and
other communication delivered or received by any of the Credit Facilities in
connection with the Senior Credit Facility Loan, including, without limitation,
concurrently with delivery of the same to the Senior Credit Facility Agent
and/or the lenders under the Senior Credit Facility Loan Agreement, copies of
all Loan Requests (as defined in the Senior Credit Facility Loan Agreement), and
all other reports and information relative to the Collateral delivered by
Borrower and the other Credit Parties pursuant to the Senior Credit Facility
Loan Documents; and
(k) from time to time such other financial data and information
(including accountants' management letters) as the Administrative Agent or any
Lender may reasonably request.
7.5. Notices.
7.5.1. Defaults. The Credit Parties will promptly notify the
Administrative Agent in writing of the occurrence of any Default or Event of
Default. If any Person shall give any notice to any Credit Party or take any
other action in respect of a claimed default (whether or not constituting an
Event of Default) under this Credit Agreement or any other note, evidence of
indebtedness, indenture or other obligation for borrowed money to which or with
respect to which such Credit Party is a party or obligor, whether as principal,
guarantor, surety or otherwise, the Credit Parties shall forthwith give written
notice thereof to the Administrative Agent, describing the notice or action and
the nature of the claimed default.
7.5.2. Material Adverse Changes. The Credit Parties shall disclose in
writing to the Administrative Agent, within five (5) Business Days of any member
of Senior Management becoming aware of it, any fact that materially and
adversely affects, or which would, in the judgment of Senior Management, in the
future materially and adversely affect the financial position, business,
operations, or affairs of the Credit Parties (taken as a whole) and, within ten
(10) Business Days of such time as the Credit Parties provide such disclosure to
the Lenders, the Credit Parties shall also deliver to the Administrative Agent
its proposal for addressing such material adverse effect.
7.5.3. Notice of Litigation and Judgments. The Credit Parties will give
notice to the Administrative Agent in writing within ten (10) days of Senior
Management becoming aware of any litigation or proceedings threatened in writing
or any pending litigation and proceedings affecting any Credit Party or to which
any Credit Party is or becomes a party involving (i) an uninsured claim against
any Credit Party that would reasonably be expected to result in damages of more
than $1,000,000 against the Credit Parties or have a material adverse effect on
the Credit Parties taken as a whole or (ii) any litigation proceeding against
Persons with which any Credit Party has a business relationship which is likely
to materially and adversely affect the business, financial condition, assets or
operations of the Credit Parties (taken as a whole) and stating the nature and
status of such litigation or proceedings. The Credit Parties will give notice
to the Administrative Agent, in writing, in form and detail satisfa
ctory to the Administrative Agent, within ten (10) days of any judgment not
covered by insurance, final or otherwise, against any Credit Party in an amount
in excess of $1,000,000.
7.5.4. Notification of Claim against Collateral. The Credit Parties
will, immediately upon becoming aware thereof, notify the Administrative Agent
and each of the Lenders in writing of any setoff, claims (including, with
respect to the Real Estate, environmental claims), withholdings or other
defenses in amounts greater than $100,000, or the Administrative Agent's rights
with respect to the Collateral, are subject.
7.5.5. Notices Concerning Inventory Collateral. The Credit Parties
shall provide to the Administrative Agent prompt notice of (a) any physical
count of any Credit Party's inventory, together with a copy of the results
thereof certified by the Borrower, (b) any determination by the Credit Parties
that the aggregate inventory levels of the Credit Parties are not adequate to
meet the sales projections of the Credit Parties, and (c) any failure of any
Credit Party or any of its Subsidiaries to pay rent at any leased location where
inventory is located, which failure continues for more than ten (10) days
following the day on which such payment rent is due and payable.
7.5.6. Notification of Additional Intellectual Property Rights. Within
ten (10) days of the end of each Fiscal Quarter, the Credit Parties will notify
the Administrative Agent in writing of any patents, patent applications, patent
application disclosures filed with any patent office during such Fiscal Quarter,
registered copyrights or mask works registered during such Fiscal Quarter,
applications for registration of copyrights or mask works filed during such
Fiscal Quarter and trademark and service mark registrations during such Fiscal
Quarter, trademark and service mark registration applications filed during such
Fiscal Quarter, all of the foregoing whether a foreign or United States right,
to the extent not listed on Schedule 6.6.
7.5.7. Environmental Events. The Credit Parties will promptly give
notice to the Administrative Agent and each of the Lenders (a) of any violation
of any Environmental Law that any Credit Party reports in writing or is
reportable by such Person in writing (or for which any written report
supplemental to any oral report is made) to any Governmental Authority and (b)
upon Senior Management becoming aware thereof, of any inquiry, proceeding,
investigation, or other action, including a notice from any agency of potential
environmental liability, of any Governmental Authority that, in the case of
clauses (a) or (b) above, could reasonably be expected to have a material and
adverse affect on the financial position, business, operations, or affairs of
the Credit Parties (taken as a whole).
7.6. Legal Existence; Maintenance of Properties. Except as permitted
by 8.5, each Credit Party will do all things necessary to (i) maintain in full
force and effect its legal existence and good standing (or due incorporation and
valid existence in the case of any Credit Party incorporated in England and
Wales) under the laws of its jurisdiction of organization or incorporation, (ii)
maintain its qualification to do business in each state or other jurisdiction in
which the failure to do so would have a material adverse effect on the
condition, financial or otherwise, of the Credit Parties (taken as a whole), and
(iii) maintain all of its rights and franchises, except where the failure to
maintain such right or franchise would not have a material adverse effect on the
conduct of the business of the Credit Parties, taken as a whole.
(b) Each Credit Party (i) will cause all of its properties used or useful
in the conduct of its business to be maintained and kept in good condition,
repair and working order and supplied with all necessary equipment, (ii) will
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Credit Parties may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, and (iii) will continue to
engage primarily in the businesses now conducted by them and in related or
complementary businesses; provided that nothing in this section 7.6(b) shall
prevent any Credit Party from discontinuing the operation and maintenance of any
of its properties if such discontinuance is, in the judgment of the Credit
Parties, desirable in the conduct of its or their business and that do not in
the aggregate materially adversely affect the business of the Credit Parties on
consolidated basis.
7.7. Insurance. Each Credit Party will maintain with financially sound
and reputable insurers insurance with respect to its properties and business
against such casualties and contingencies as shall be in accordance with the
general practices of businesses engaged in similar activities in similar
geographic areas and in amounts, containing such terms, in such forms and for
such periods as may be reasonable and prudent and in accordance with the terms
of the Security Documents. Each Credit Party will maintain insurance, in form,
substance and amounts satisfactory to the Administrative Agent, on the Mortgaged
Properties in accordance with the terms of the Mortgages.
7.8. Taxes. Each Credit Party will (a) duly pay and discharge, or cause
to be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon it and its real
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or supplies that
if unpaid might by law become a Lien or charge upon any of its property;
provided that any such tax, assessment, charge, levy or claim need not be paid
if the validity or amount thereof shall currently be contested in good faith by
appropriate proceedings and such Credit Party shall have set aside on its books
adequate reserves with respect thereto; and provided further that the Credit
Parties will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose or otherwise enforce
any Lien that may have attached as security therefor, (b) will withhold from
each payment to be made to any of its past or present employees, officers or
directors, and to any non-resident of the country in which it is a resident, the
amount of all taxes and all other deductions required to be withheld therefrom
and pay the same to the proper tax or other receiving officers within the time
required under any applicable law and (c) collect from all Persons the amount of
all taxes required to be collected from them and remit the same to the proper
tax or other receiving officers within the time required under any applicable
law.
7.9. Compliance with Laws, Contracts, Licenses, and Permits. Each of
the Credit Parties will comply with (i) the applicable laws and regulations
wherever its business is conducted, including all environmental laws, (ii) the
provisions of its Governing Documents, (iii) all agreements and instruments by
which it or any of its properties may be bound and (iv) all applicable decrees,
orders, and judgments, provided, that in each case, such compliance shall be
required by this Credit Agreement only where noncompliance with sections
7.9(i)-(iv)would have a material adverse effect on the business, assets,
operations or financial condition of the Credit Parties (taken as a whole), or
the ability of any Credit Party to fulfill its obligations under this Credit
Agreement or the other Loan Documents. If any authorization, consent, approval,
permit or license from any officer, agency or instrumentality of any government
or any central bank or other fiscal or monetary authority shall become necessary
or required in order that any Credit Party may fulfill any of its obligations
hereunder or any of the other Loan Documents to which such Credit Party is a
party, each Credit Party will promptly take or cause to be taken all reasonable
steps within the power of such Credit Party to obtain such authorization,
consent, approval, permit or license, and upon request of the Administrative
Agent, to furnish the Administrative Agent and the Lenders with evidence
thereof.
7.10. Employee Benefit Plans. Each Credit Party will (i) promptly upon
filing (if required by applicable law) the same with the Department of Labor or
Internal Revenue Service upon request of the Administrative Agent, furnish to
the Administrative Agent a copy of the most recent actuarial statement required
to be submitted under 103(d) of ERISA and Annual Report, Form 5500, with all
required attachments, in respect of each Guaranteed Pension Plan and (ii)
promptly upon receipt or dispatch, furnish to the Administrative Agent any
notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA, or in
respect of a Multiemployer Plan, under 4041A, 4202, 4219, 4242, or 4245 of
ERISA. The Credit Parties will also, in respect of each Guaranteed Pension
Plan which is required to be registered with the Financial Services Commission
of Ontario, Canada or the Regie des Rentes du Quebec (i) upon request of the
Administrative Agent, furnish the Administrative Agent with a copy of the most
recent actuarial report and annual report required to be filed with the
Financial Services Commission of Ontario, Canada, the Regie des Rentes du Quebec
or the Canada Revenue Agency and (ii) promptly upon receipt or dispatch,
furnish to the Administrative Agent any notice, report or demand sent or
received in respect of such Guaranteed Pension Plan.
7.11. Use of Proceeds. The proceeds of the Loans shall be used solely
for (i) the repayment in full of all amounts owing under the Existing Credit
Agreement and (ii) for working capital and general corporate purposes, subject
to the restrictions set forth in this Credit Agreement.
7.12. Certain Changes. Each Credit Party shall notify the
Administrative Agent, in writing, not less than thirty (30) days prior (i) to
any change in its chief executive office, its name or the type of its
organization, (ii) the acquisition of any Real Estate pursuant to 7.16 or (iii)
the acquisition of any asset in any jurisdiction other than those jurisdictions
located in the United States of America or jurisdictions specified on such
Credit Party's Perfection Certificate.
7.13. Conduct of Business. Except as permitted by 8.5, each Credit
Party will continue to engage primarily in the businesses engaged in by such
Credit Party on the Closing Date, or such businesses as are reasonably related
or complementary to the businesses engaged in by such Credit Party on the
Closing Date.
7.14. Further Assurances. Each Credit Party will cooperate with the
Lenders and the Administrative Agent and execute such further instruments and
documents as the Lenders or the Administrative Agent shall reasonably request to
carry out to their satisfaction the transactions contemplated by this Credit
Agreement and the other Loan Documents.
7.15. Inspection of Properties and Books, etc.
7.15.1. General.
Each Credit Party shall permit the Lenders, through the Administrative
Agent or any of the Lenders' other designated representatives, at the Borrower's
expense, to visit and inspect any of the properties of any Credit Party, to
examine the books of account of such Credit Party (and to make copies thereof
and extracts therefrom), and to discuss the affairs, finances and accounts of
such Credit Party with, and to be advised as to the same by, its and their
officers, all at such reasonable times and intervals and with prior or
contemporaneous notice as the Administrative Agent or any Lender may reasonably
request. The Administrative Agent may at the Borrower's expense, participate in
or observe any physical count of any inventory of any Credit Party which
constitutes a part of the Collateral.
7.15.2. Collateral Reports.
In the event that the Administrative Agent shall not have received such
information from the Senior Credit Facility Agent pursuant to the Intercreditor
Agreement following the Administrative Agent's request therefor, or following
the occurrence of an Event of Default, upon the request of the Administrative
Agent or the Required Lenders, which requests may be made no more than three
times annually (or with such other frequency as the Administrative Agent shall
request upon the occurrence and continuation of a Default or an Event of
Default), the Credit Parties will obtain and deliver to the Administrative Agent
and Lenders, or, if the Administrative Agent so elects, will cooperate with the
Administrative Agent in the Administrative Agent's obtaining, a report of an
independent collateral auditor satisfactory to the Administrative Agent (which
may be affiliated with one of the Lenders) with respect to the accounts
receivable and inventory components included in the Collateral. All such
collateral value reports shall be conducted and made at the expense of the
Borrower.
7.15.3. Appraisals.
In the event that the Administrative Agent shall not have received such
information from the Senior Credit Facility Agent pursuant to the Intercreditor
Agreement following the Administrative Agent's request therefor, or following
the occurrence of an Event of Default, at the request of the Administrative
Agent or the Required Lenders, which requests may be made no more frequently
than annually (or with such other frequency as the Administrative Agent shall
request upon the occurrence and continuation of a Default or an Event of
Default) the Credit Parties will obtain and deliver to the Administrative Agent
and the Lenders appraisal reports in form and substance and from appraisers
satisfactory to the Administrative Agent, stating the then current fair market,
Net Orderly Liquidation and forced liquidation values of all or any portion of
the inventory, equipment machinery or Real Estate owned by the Credit Parties.
Each such appraisal shall be conducted and made at the expense of the Borrower.
7.15.4. Communications with Accountants.
Each Credit Party authorizes the Administrative Agent and, if accompanied
by the Administrative Agent, the Lenders to communicate directly with such
Credit Party's independent certified public accountants and authorizes such
accountants to disclose to the Administrative Agent and the Lenders any and all
financial statements and other supporting financial documents and schedules
including copies of any management letter with respect to the business,
financial condition and other affairs of such Credit Party or, provided that in
each case the Administrative Agent notifies the Credit Parties in advance that
such communications will occur. At the request of the Administrative Agent,
each Credit Party shall deliver a letter addressed to such accountants
authorizing them to communicate directly with the Administrative Agent and
Lenders.
7.15.5. Environmental Assessments. In the event that the Administrative
Agent shall not have received such information from the Senior Credit Facility
Agent pursuant to the Intercreditor Agreement following the Administrative
Agent's request therefor, upon the occurrence and continuation of an Event of
Default, the Administrative Agent may, for the purpose of assessing and ensuring
the value of any Mortgaged Property, obtain one or more environmental
assessments or audits of such Mortgaged Property prepared by a hydrogeologist,
an independent engineer or other qualified consultant or expert approved by the
Administrative Agent to evaluate or confirm (a) whether any Hazardous Materials
are present in the soil or water at such Mortgaged Property and (b) whether the
use and operation of such Mortgaged Property complies with all Environmental
Laws. Environmental assessments may include without limitation detailed visual
inspections of such Mortgaged Property including any and all storage areas,
storage tanks, drains, dry wells and leaching areas, and the taking of soil
samples, surface water samples and ground water samples, as well as such other
investigations or analyses as the Administrative Agent deems appropriate. All
such environmental assessments shall be conducted and made at the expense of the
Borrower.
7.16. Additional Mortgaged Property.
Any Credit Party which acquires or leases any new parcel of Real Estate
after the Closing Date shall promptly provide notice thereof to the
Administrative Agent and, upon request of the Administrative Agent, each Credit
Party shall forthwith (but in any event within thirty (30) days following any
such request therefor) deliver to the Administrative Agent for the benefit of
the Lenders a fully executed mortgage or deed of trust over any or all such
parcels of Real Estate acquired or leased by such Credit Party after the Closing
Date, each of which shall be in form and substance satisfactory to the
Administrative Agent and shall be deemed to be a Security Document hereunder,
together with such title insurance policies, surveys, environmental site
assessments, evidences of insurance with the Administrative Agent named as loss
payee and additional insured, legal opinions and other documents and
certificates with respect to such Real Estate as the Administrative Agent may
reasonably request. Each Credit Party further agrees that, following the taking
of such actions with respect to such Real Estate, the Administrative Agent shall
have, for the benefit of the Lenders, a valid and enforceable second priority
mortgage or deed of trust over such Real Estate, free and clear of all defects
and encumbrances except for Permitted Liens, including the liens securing the
Senior Credit Facility Obligations.
7.17. Bank Accounts.
(a) Each Credit Party will maintain its principal accounts for operation,
administration, cash management and other deposit accounts for the conduct of
such Credit Party's business with the Cash Management Bank.
(b) On or prior to the Closing Date, the Borrower will establish and
maintain so long as the Obligations are outstanding, a depository account (the
"Concentration Account") under the control of the Senior Credit Facility
Administrative Agent, in accordance with the terms and conditions of the Senior
Credit Facility Loan Documents, and upon terms and conditions satisfactory to
the Administrative Agent. In the event that the Senior Credit Facility
Obligations are satisfied and the Obligations to the Lenders hereunder remain
outstanding, the Credit Parties shall then establish a Concentration Account
under the control of the Administrative Agent or as the Administrative Agent may
otherwise direct.
8. NEGATIVE COVENANTS OF THE CREDIT PARTIES.
Each Credit Party covenants and agrees that, so long as the Term Loan is
outstanding :
8.1. Investments. The Credit Parties will not make any Investment in
any Person, except for Investments which consist of:
(a) Investments comprised of notes payable, or stock or other securities
issued by account debtors to such Credit Parties pursuant to negotiated
agreements with respect to settlement of such account debtor's accounts in the
ordinary course of business;
(b) Investments in its Subsidiaries as of the Closing Date;
(c) Investments consisting of intercompany loans by the Borrower to any
Subsidiary Guarantor (provided, however that in the case of ICON New Brunswick,
such intercompany loans may only be reloaned to ICON du Canada) in accordance
with 8.2;
(d) Investments by the Borrower after the Closing Date in International
Holdings not to exceed $25,000 per year;
(e) Investments consisting of the Guaranties;
(f) so long as no Default or Event of Default has occurred and is
continuing and there is no outstanding Senior Credit Facility Loan balance,
Investments by the Borrower, subject to Control Letters in favor of the
Administrative Agent for the benefit of Lenders in (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency thereof maturing within one year from the date of acquisition
thereof; (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Group or Moody's Investors Service, Inc.; (iii)
certificates of deposit maturing no more than one year from the date of creation
thereof issued by commercial banks incorporated under the laws of the United
States of America, each having combined capital, surplus and undivided profits
of not less than $300,000,000 and having a senior unsecured rating of "A" or
better by a nationally re
cognized rating agency (an "A Rated Bank"); (iv) time deposits maturing no more
than 30 days from the date of creation thereof with A Rated Banks; and (v)
mutual funds that invest solely in one or more of the investments described in
clauses (i) through (iv) above;
(g) Investments in European Subsidiaries permitted under 8.2;
(h) Investments consisting of loans to its respective employees on an
arm's-length basis in the ordinary course of business consistent with past
practices for travel expenses, relocation costs and similar purposes up to a
maximum of $1,200,000 in the aggregate at any one time outstanding; and
(i) Investments consisting of loans to Scott Watterson and Gary Stevenson
existing as of the Closing Date and listed on Schedule 8.1.
8.2. Restrictions on Indebtedness. The Credit Parties will not incur,
assume, guarantee or be or remain liable, contingently or otherwise, with
respect to any Indebtedness other than:
(a) Indebtedness secured by purchase money security interests and
Capitalized Leases permitted in 8.3;
(b) Indebtedness of the Credit Parties consisting of the Obligations
under the Loan Documents;
(c) Indebtedness of the Credit Parties in respect of the Senior Credit
Facility Loan;
(d) Indebtedness of the Credit Parties in respect of the Subordinated
Debt;
(e) Indebtedness of any Credit Party outstanding as of date hereof and
reflected on Schedule 8.2(e) hereto and any refinancing thereof or amendments or
modifications thereof that do not have the effect of increasing the principal
amount thereof or changing the amortization thereof (other than to extend the
same) and that are otherwise on terms and conditions no less favorable to any
Credit Party, the Administrative Agent or any Lender, as determined by the
Administrative Agent in its reasonable discretion, than the terms of the
Indebtedness being refinanced, amended or modified;
(f) Indebtedness in respect of Derivative Agreements specifically
permitted under 8.17;
(g) Indebtedness (i) of the Borrower's European Subsidiaries and any
guarantees thereof provided by Bank of America, N.A. or its affiliates
consisting of local working capital facilities and/or factoring arrangements;
provided that the principal amount of such Indebtedness will reduce the amount
of credit extensions available hereunder; and (ii) of the Borrower's European
Subsidiaries to third parties consisting of local working capital facilities
and/or factoring arrangements, provided that the principal amount of such
Indebtedness outstanding at any one time will not exceed $750,000;
(h) Indebtedness of the Borrower's European Subsidiaries to the Borrower
(including the transfer of inventory for which Borrower has not been paid) (i)
outstanding on the Closing Date in an aggregate amount not in excess of
$32,000,000 (excluding accrued interest and fess on such advances) and (ii) made
after the Closing Date in an aggregate amount not to exceed $5,000,000
(excluding accrued interest and fees on such advances); provided that, such
Indebtedness is evidenced by an intercompany note in form and substance
satisfactory to the Administrative Agent and such note is pledged to the
Administrative Agent under the Collateral Assignment of Intercompany Notes as
security for the Obligations;
(i) other unsecured Indebtedness not to exceed $1,000,000 in the
aggregate at any time outstanding;
(j) Indebtedness consisting of intercompany loans and advances made by
the Borrower to Subsidiary Guarantors (provided, however, that (i) in the case
of ICON New Brunswick, such intercompany loans are for the sole purpose of
reloaning the proceeds thereof to ICON du Canada, and (ii) in the case of ICON
IP, subject to 8.19, such intercompany loans do not exceed the amount necessary
for ICON IP to conduct its business in the ordinary course as presently
conducted by ICON IP as of the Closing Date) in an amount not to exceed
$20,000,000 in the aggregate (provided that, such intercompany loans to Canadian
Subsidiaries shall not exceed $10,000,000 in the aggregate); and provided
further, that: (A) each Subsidiary Guarantor shall have executed and delivered
to the Borrower, on the Closing Date, a demand note (an "Intercompany Note") to
evidence any such intercompany Indebtedness owing by such Subsidiary Guarantor
to the Borrower, which Intercompany Notes shall be in form and substance
satisfactory to the A
dministrative Agent and shall be pledged and delivered to the Administrative
Agent as additional collateral security for the Obligations, pursuant to the
Collateral Assignment of Intercompany Notes; (B) the Borrower shall record all
intercompany transactions on its books and records in a manner reasonably
satisfactory to the Administrative Agent; (C) the obligations of each Subsidiary
Guarantor under such Intercompany Notes shall be subordinated to the Obligations
of such Subsidiary Guarantor as a Guarantor in a manner satisfactory to the
Administrative Agent; and (D) with the exception of an amount not to exceed
$500,000 in each Fiscal Year, the amount of any royalty or license fee received
by ICON IP from the Borrower or any Subsidiary of the Borrower shall promptly be
loaned back to the Borrower or such Subsidiary of the Borrower, which
intercompany loan shall be evidenced by Intercompany Notes and shall be
subordinated to the Obligations of the Borrower or such Subsidiary of the
Borrower as a Guarantor i
n a manner satisfactory to the Administrative Agent;
(k) Indebtedness incurred by Holdings in respect of the CS First Boston
Debt;
(l) Indebtedness consisting of a guaranties by the Borrower in connection
with guarantying certain lease financing obtained by certain of the Borrower's
commercial equipment customers relating to certain equipment manufactured by
NordicTrack or Free Motion in an aggregate amount not to exceed $15,000,000 at
any time; and
(m) Indebtedness secured by Liens permitted under 8.3.1(j).
8.3. Restrictions on Liens.
8.3.1. Permitted Liens. The Credit Parties will not (i) create or incur
or suffer to be created or incurred or to exist any Lien upon any of their
respective property or assets of any character whether now owned or hereafter
acquired, or upon the income or profits therefrom; (ii) transfer any of such
property or assets or the income or profits therefrom for the purpose of
subjecting the same to the payment of Indebtedness or performance of any other
obligation in priority to payment of its general creditors; (iii) acquire, or
agree or have an option to acquire, any property or assets upon conditional sale
or other title retention or purchase money security agreement, device or
arrangement; (iv) suffer to exist for a period of more than thirty (30) days
after the same shall have been incurred any Indebtedness or claim or demand
against it that if unpaid might by law or upon bankruptcy or insolvency, or
otherwise, be given any priority whatsoever over its general creditors; or (v)
sell, assign, pledge or otherwise transfer any "receivables" as defined in
clause (g) of the definition of the term "Indebtedness," with or without
recourse; provided that any Credit Party may create or incur or suffer to be
created or incurred or to exist:
(a) so long as no foreclosure or other enforcement action has been
commenced, pledges, security interests, Liens and other encumbrances arising
from attachments or similar proceedings, pending litigation, judgments or taxes
or assessments or government charges not yet delinquent in any such event whose
validity or amount is being contested in good faith by appropriate proceedings
and for which adequate reserves have been established and are maintained in
accordance with GAAP, or taxes and assessments which are not due and delinquent;
(b) Liens of carriers, warehousemen, mechanics and materialmen and other
like Liens and Liens imposed by law, created in the ordinary course of business,
for amounts not yet due or which are being contested in good faith by
appropriate proceedings and as to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(c) pledges or deposits made in connection with worker's compensation,
employee benefit plans, unemployment or other insurance, old age pensions, or
other Social Security benefits, and good faith deposits in connection with
tenders, contracts, bids, statutory obligations or leases to which it is a party
or deposits to secure, or in lieu of, surety, penalty or appeal bonds,
performance bonds, letters of credit and other similar obligations or arising as
a result of progress payments under government contracts or contracts with
public utilities;
(d) such minor defects, irregularities, encumbrances, easements, rights
of way, and clouds on title as normally exist with respect to similar properties
which do not materially interfere with the present or proposed use of the
applicable property;
(e) landlords' Liens under leases for rent which is not delinquent;
(f) Liens in favor of the Administrative Agent or any of the Lenders
securing any of the Obligations, including Liens on cash collateral;
(g) Liens granted to the Senior Credit Facility Administrative Agent
under the Senior Credit Facility Loan Documents to secure the Senior Credit
Facility Loan and subject to the Intercreditor Agreement;
(h) Liens in existence on the date hereof and listed on Schedule 8.3;
(i) Liens created after the date hereof by conditional sale or other
title retention agreements (including Capitalized Leases) or in connection with
purchase money Indebtedness with respect to equipment and fixtures acquired by
any Credit Party, involving the incurrence of an aggregate amount of purchase
money Indebtedness and obligations with respect to Capitalized Leases of not
more than $6,000,000 outstanding at any one time for all such Liens (provided
that such Liens attach only to the assets subject to such purchase money debt
and such Indebtedness is incurred within one hundred twenty (120) days following
such purchase and does not exceed 100% of the purchase price of the subject
assets); and
(j) other Liens securing other Indebtedness not exceeding $250,000 in the
aggregate at any time outstanding, so long as such Liens do not attach to any
accounts or inventory.
8.3.2. Restrictions on Negative Pledges and Upstream Limitations. The
Credit Parties will not to (a) enter into or permit to exist any arrangement or
agreement (excluding the Credit Agreement and the other Loan Documents and the
Senior Credit Facility Loan Documents) which directly or indirectly prohibits
any Credit Party from creating, assuming or incurring any Lien upon its
properties, revenues or assets whether now owned or hereafter acquired, or (b)
enter into any agreement, contract or arrangement (excluding the Credit
Agreement and the other Loan Documents and the Senior Credit Facility Loan
Agreement) restricting the ability of any Subsidiary of any Credit Party to pay
or make dividends or distributions in cash or kind to any Credit Party, to make
loans, advances or other payments of whatsoever nature to any Credit Party, or
to make transfers or distributions of all or any part of its assets to any
Credit Party in each case other than customary anti-assignment provisions
contained in leases a
nd licensing agreements entered into by any Credit Party in the ordinary course
of its business, but only if such anti-assignment provisions do not impair the
perfection or enforceability of the security interests granted to the
Administrative Agent.
8.4. Restricted Payments. No Credit Party shall make any Restricted
Payment, except (a) the making of intercompany loans and advances between the
Borrower and its domestic and Canadian Subsidiaries that are Subsidiary
Guarantors, to the extent permitted by 8.2; (b) dividends and distributions by
Subsidiaries of the Borrower paid directly or indirectly to the Borrower; (c)
employee loans permitted under 8.1; (d) payments of principal and interest of
Intercompany Notes issued in accordance with 8.2; (e) scheduled payments of
interest with respect to Subordinated Notes, provided that no Payment Blockage
Period (as defined in the Subordinated Notes Documents) is in effect at the time
any payment otherwise permitted under this clause (e) is to be made; (f)
payments of management fees pursuant to the Management Agreements, not to exceed
$900,000 in the aggregate in any Fiscal Year or $225,000 in the aggregate in any
Fiscal Quarter (plus an amount not in excess of $225,000 consisting of accrued
and unpa
id management fees as of the Closing Date) to all of Bain Capital, Inc. and CS
First Boston; provided, however, that (1) no such management fees shall be paid
so long as any Event of Default has occurred and is continuing or would result
therefrom and (2) management fees shall be payable in four equal quarterly
installments sixty (60) days after the end of each Fiscal Quarter; (g) payments
to Holdings necessary to enable Holdings: (1) to satisfy its federal, state and
local income tax obligations that are the result of consolidated net income of
the Borrower and its Subsidiaries being attributed to Holdings; (2) to pay the
fees and expenses necessary to maintain Holdings' corporate existence and good
standing; (3) to pay accounting fees attributable to the Borrower and its
Subsidiaries; and (4) to buy back the Holdings' stock of any employee who has
died or whose employment with the Borrower or its Subsidiaries has otherwise
terminated, such repurchase payments not to exceed $500,000 in the aggregate in
any
Fiscal Year in cash payments; and (h) bonuses and other payments (including the
forgiveness of Indebtedness) to Affiliates of the Borrower as set forth on
Schedule 8.4 hereto.
8.5. Merger, Consolidation and Disposition of Assets.
8.5.1. Mergers and Acquisitions. None of the Credit Parties will become
a party to any merger or consolidation, or agree to or effect any asset
acquisition or stock acquisition (other than the acquisition of assets in the
ordinary course of business consistent with past practices) except for (i) the
merger or consolidation of one or more of the Subsidiaries of the Borrower
(other than ICON IP and International Holdings) with and into the Borrower
(provided that the Borrower shall be the surviving entity), (ii) Permitted
Acquisitions and (iii) acquisitions of assets in the ordinary course of business
consistent with past practices.
8.5.2. Disposition of Assets. No Credit Party shall dissolve,
liquidate, sell, transfer, convey, assign or otherwise dispose of any of its
properties or other assets, including the Capital Stock of any of its
Subsidiaries (whether in a public or a private offering or otherwise) or any of
its Accounts Receivable, other than (a) the sale of inventory in the ordinary
course of business, (b) the sale, transfer, conveyance or other disposition for
cash by a Credit Party of (i) equipment or fixtures that are obsolete or no
longer used or useful in such Credit Party's business and having a value not
exceeding $500,000 in the aggregate in any Fiscal Year and (ii) other equipment
and fixtures having a value not exceeding $1,000,000 in the aggregate in any
Fiscal Year, (c) non-recourse sales of consumer Accounts Receivable on terms
approved in advance in writing by the Administrative Agent, (d) non-recourse
sales not to exceed $10,000,000 in any 12-month period of Accounts Receivable
owing by account debtors that are in bankruptcy, or whose Accounts Receivable
are excluded from "Eligible Accounts Receivable", as such term is defined under
the Senior Credit Facility Loan Agreement, for reasons related to the account
debtor's creditworthiness, on terms approved in advance in writing by the
Administrative Agent, (e) sale-leasebacks permitted under 8.6 and (f) licenses
of intellectual property in the ordinary course of business and (g) the
dissolution and liquidation of Jumpking, Versalite and World Fitness. Without
limiting the generality of the foregoing, no Credit Party will sell any of its
patents or trademarks or license any of its patents or trademarks to third
parties under licenses that restrict the ability of the Credit Party (or the
Administrative Agent) to sell or license the subject patent or trademark or
impair the security interests granted to the Administrative Agent. With respect
to any disposition of assets or other properties permitted pursuant to clause
(b) above, the Administrative Agent agrees on reasonable prior written notice to
release its Lien on such assets or other properties in order to permit the
applicable Credit Party to effect such disposition and shall execute and deliver
to the Borrower, at the Borrower's expense, appropriate UCC-3 termination
statements and other releases as reasonably requested by the Borrower.
8.6. Sale and Leaseback. No Credit Party shall engage in any
sale-leaseback, Synthetic Lease or similar transaction involving any of its
assets, except sale-leaseback transactions with respect to items of equipment
(other than computer equipment and software) on terms reasonably satisfactory to
the Administrative Agent in amounts not to exceed $2,000,000 in the aggregate in
any Fiscal Year.
8.7. Change of Fiscal Year. The Credit Parties will not at any time
change their Fiscal Year.
8.8. Employee Benefit Plans. None of the Credit Parties or any ERISA
Affiliate will:
(a) engage in any "prohibited transaction" within the meaning of 406 of
ERISA or 4975 of the Code which could result in a material liability for the
Credit Parties; or
(b) permit any Guaranteed Pension Plan to incur an "accumulated funding
deficiency", as such term is defined in 302 of ERISA, whether or not such
deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an extent which,
or terminate any Guaranteed Pension Plan in a manner which, could result in the
imposition of a lien or encumbrance on the assets of the Credit Parties pursuant
to 302(f) or 4068 of ERISA.
8.9. Compliance With Environmental Laws. The Credit Parties will not
(a) use any of the Real Estate or any portion thereof for the handling,
processing, storage or disposal of Hazardous Substances, (b) cause or permit to
be located on any of the Real Estate any underground tank or other underground
storage receptacle for Hazardous Substances, (c) generate any Hazardous
Substances on any of the Real Estate, (d) conduct any activity at any Real
Estate or use any Real Estate in any manner so as to cause a release (i.e.
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing or dumping) or threatened release of
Hazardous Substances on, upon or into the Real Estate or (e) otherwise conduct
any activity at any Real Estate or use any Real Estate in any manner that would
violate any Environmental Law or bring such Real Estate in violation of any
Environmental Law, unless, in each case, such violation, use, condition,
generation or activity could not reasonably be expected to have a material
adverse effect on the value of such Real Estate or the business, assets,
operations or financial condition of the Credit Parties (taken as a whole), or
the ability of any Credit Party to fulfill its obligations under this Credit
Agreement or the other Loan Documents.
8.10. Change in Terms of Governing Documents.
The Credit Parties shall not effect or permit any change in or amendment
to any Governing Document of any Credit Party which could reasonably be expected
to adversely affect the Lenders.
8.11. Creation of Subsidiaries. None of the Credit Parties shall create
or permit to exist any Subsidiary unless (a) one hundred percent (100%) of the
Capital Stock or other equity interests of such Subsidiary are owned by a Credit
Party, (b) prior to the formation of such Subsidiary, the Borrower shall notify
the Administrative Agent and the Lenders thereof in writing, and (c) within ten
(10) Business Days of the formation of such Subsidiary, the Credit Parties
shall, (i) take all steps as may be necessary or advisable in the opinion of the
Administrative Agent to pledge to the Administrative Agent, for the benefit of
the Lenders and the Agent, on a perfected, first-priority basis, all of the
Capital Stock of such Subsidiary (limited, in the case of any foreign Subsidiary
that is a "controlled foreign corporation" under Section 957 of the Internal
Revenue Code, to a pledge of 65% of the Capital Stock of each such Subsidiary to
the extent the pledge of any greater percentage would result in material
adverse tax consequences to the Borrower) pursuant to a pledge agreement in
form and substance satisfactory to the Administrative Agent, which such pledge
agreement shall be a Pledge Agreement and a Security Document hereunder, (ii)
cause any such Subsidiary to guaranty all of the Obligations hereunder pursuant
to a guaranty in form and substance satisfactory to the Administrative Agent,
which such guaranty shall be a Guaranty and a Security Document hereunder, (iii)
cause any such Subsidiary to take all steps as may be necessary or advisable in
the opinion of the Administrative Agent to grant to the Administrative Agent,
for the benefit of the Lenders and the Administrative Agent, a second priority,
perfected security interest (subject only to the concurrent pledge in favor of
the Senior Credit Facility Agent) in substantially all of its assets as
collateral security for such guaranty, pursuant to security documents,
mortgages, pledges and other documents in form and substance satisfactory to the
Administrative Agent, each of which documents shall be Security Documents
hereunder, and (iv) deliver to the Administrative Agent all such evidence of
corporate or other authorization, legal opinions (including local counsel
opinions where applicable) and other documentation as the Administrative Agent
may request.
8.12. Transactions with Affiliates.
(a) Except as otherwise permitted in this 8.12 and 8.4(f), the Credit
Parties will not engage in any transaction with any Affiliate (other than (a)
for services by individuals as employees, officers and directors and (b)
transactions between the Borrower and Subsidiary Guarantors otherwise permitted
hereunder), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any such
Affiliate, on terms more favorable to such Person than would have been
obtainable on an arm's-length basis in the ordinary course of business.
(b) The Credit Parties shall not pay compensation as salaries or
otherwise in excess of $3,600,000 in the aggregate per year and $900,000 in the
aggregate per Fiscal Quarter (plus an amount not in excess of $891,000
consisting of accrued and unpaid management fees as of the Closing Date) to
Scott Watterson and Gary Stevenson; provided, however, that no such compensation
shall be paid so long as any Event of Default has occurred and is continuing or
would result therefrom.
8.13. Agency Account. The Credit Parties will not (a) establish any
bank accounts other than those listed on Schedule 6.20, without the
Administrative Agent's prior written consent, (b) violate directly or indirectly
any Agency Account Agreement or other bank agency or lock box agreement in favor
of the Senior Credit Facility Administrative Agent, (c) deposit into any of the
payroll accounts listed on Schedule 6.20 any amounts in excess of amounts
necessary to pay current payroll obligations from such accounts (other than
balances not in excess of $150,000 in accordance with the Credit Parties' usual
practices), or (d) cause the aggregate balance maintained in all deposit
accounts (other than payroll accounts referred to in clause (c)) which are not
subject to an Agency Account Agreement in favor of the Administrative Agent to
exceed $350,000.
8.14. Cancellation of Indebtedness. No Credit Party shall cancel any
claim or debt owing to it, except in the ordinary course of its business
consistent with past practices.
8.15. Subordinated Debt. The Credit Parties will not amend, supplement
or otherwise modify the terms of any of the Subordinated Debt or prepay, redeem
or repurchase any of the Subordinated Debt. The Credit Parties will not amend,
supplement or otherwise modify the terms of any of the CS First Boston Debt or
prepay, redeem or repurchase, or pay any cash interest with respect to, any of
the CS First Boston Debt.
8.16. Intentionally Omitted.
8.17. No Speculative Transactions. No Credit Party shall engage in any
transaction involving commodity options, futures contracts or similar
transactions, except in connection with Derivative Agreements entered into
solely to hedge against fluctuations in the prices of commodities owned or
purchased by it and the values of foreign currencies receivable or payable by it
and interest swaps, caps or collars.
8.18. Changes Relating to Certain Agreements. No Credit Party shall (a)
change or amend the terms of the Management Agreements, the Employment
Agreements or the Stockholders Agreement, except changes or amendments that do
not adversely affect the rights or interests of Lenders and (b) change or amend
the terms of the Senior Credit Facility Loan Agreement or any other Senior
Credit Facility Loan Document unless such change or amendment is permitted under
the Intercreditor Agreement.
8.19. Credit Parties other than the Borrower. Holdings shall not engage
in any trade or business, or own any assets (other than the Capital Stock of the
Borrower) or incur any Indebtedness (other than the Obligations, the Senior
Credit Facility Loan and the CS First Boston Debt). ICON New Brunswick shall not
engage in any trade or business, or own any assets (other than a Local Account)
or incur any Indebtedness (other than guarantees of the Obligations, the Senior
Credit Facility Loan and the Subordinated Notes). International Holdings shall
not engage in any trade or business or incur any Indebtedness (other than
guarantees of the Obligations, the Senior Credit Facility Loan and the
Subordinated Notes) or own any assets (other than the Capital Stock of the
European Subsidiaries and Canadian Subsidiaries, Versalite and World Fitness).
ICON IP shall not engage in any trade or business, own any assets or incur any
Indebtedness (other than guarantees of the Obligations, the Senior Credit
Facility Loan and the Subordinated Notes), unless, in each case, such trade,
business, ownership of assets or incurrence of Indebtedness consists of owning
intellectual property and intercompany transactions related thereto. Jumpking,
Versalite and World Fitness shall not engage in any trade or business, own any
assets or incur any Indebtedness
9. FINANCIAL COVENANTS OF THE CREDIT PARTIES.
Each Credit Party covenants and agrees that, so long as the Term Loan is
outstanding, the Credit Parties shall not permit violation of the financial
covenants presented below:
9.1. Consolidated EBITDA. The Borrower will achieve Consolidated EBITDA
during each period described below of not less than the amount set forth for
each such fiscal period:
Period Consolidated EBITDA
------ -------------------
Seven (7) fiscal month period ending 12/31/05 $17,000,000
Nine (9) fiscal month period ending 2/28/06 $38,000,000
Twelve (12) fiscal month period ending 5/31/06 $40,300,000
Twelve (12) fiscal month period ending 8/31/06 $41,550,000
Twelve (12) fiscal month period ending 11/30/06 $42,800,000
Twelve (12) fiscal month period ending 2/28/07 $44,050,000
Twelve (12) fiscal month period ending 5/31/07 $45,300,000
Twelve (12) fiscal month period ending 8/31/07 $47,050,000
Twelve (12) fiscal month period ending 11/30/07 $48,800,000
Twelve (12) fiscal month period ending 2/28/08 $50,550,000
Twelve (12) fiscal month period ending 5/31/08 $52,300,000
Twelve (12) fiscal month period ending on each
fiscal quarter ended after 5/31/08 $52,300,000
Notwithstanding the foregoing, until the occurrence of an EBITDA Test
Event, the Borrower shall not be required to comply with the minimum
Consolidated EBITDA covenant set forth above in this Section 9.1. Upon the
occurrence of an EBITDA Test Event, the first covenant compliance period for
such Consolidated EBITDA covenant shall be the Borrower's most recently ended
fiscal period preceding occurrence of the EBITDA Test Event as set forth above.
If an EBITDA Test Event occurs prior to February 28, 2006, testing of the
Consolidated EBITDA covenant shall commence with the seven (7) month period
ending on December 31, 2005 at the level set forth above.
If, after an EBITDA Test Event has occurred, the Borrower maintains
Excess Availability of Forty Million Dollars ($40,000,000) or more for a period
of thirty (30) consecutive Business Days, then testing of Borrower's compliance
with the Consolidated EBITDA covenant shall again be suspended until an EBITDA
Test Event shall thereafter occur.
For the avoidance of doubt, for each period indicated above, Consolidated
EBITDA shall be measured as of the last day of the Fiscal Month or Fiscal
Quarter ending on or about the date indicated in the table above.
9.2. Average Secured Funded Debt to Consolidated EBITDA. The Borrower
will not permit the ratio of Average Secured Funded Debt to Consolidated EBITDA
to exceed the ratio set forth below for each period indicated:
Twelve Month Period Ending Ratio
- -------------------------- -----
May 31, 2006 4.25:1
August 31, 2006 4.25:1
November 30, 2006 4.10:1
February 28, 2007 3.90:1
May 31, 2007 3.75:1
August 31, 2007 3.75:1
November 30, 2007 3.60:1
February 28, 2008 3.50:1
May 31, 2008 3.35:1
Each fiscal quarter
ended after May 31, 2008 3.35:1
For the avoidance of doubt, for each period indicated above, Consolidated
EBITDA shall be measured as of the last day of the Fiscal Month or Fiscal
Quarter ending on or about the date indicated in the table above.
9.3. Combined Facility Borrowing Base. The Borrower shall not permit the
aggregate of all Indebtedness (as such term is defined in the Subordinated
Indenture) of the Credit Parties incurred pursuant to Sections 4.09(b)(1) and
4.09(b)(13) of the Subordinated Indenture, including, without limitation, the
Term Loan and the Senior Credit Facility Loan, to exceed at any time an amount
equal to the amount permitted to be incurred at such time pursuant to such
Sections 4.09(b)(1) and 4.09(b)(13).
10. CLOSING CONDITIONS.
The obligations of the Lenders to make the Term Loan shall be subject to
the satisfaction of the following conditions precedent, in each case, in form
and substance satisfactory to the Administrative Agent and the Lenders:
10.1. Loan Documents. Each of the Loan Documents shall have been duly
executed and delivered by the respective parties thereto, shall be in full force
and effect and shall be in form and substance satisfactory to each of the
Lenders. Each Lender shall have received a fully executed copy of each such
document.
10.2. Certified Copies of Governing Documents. Each of the Lenders
shall have received from the Credit Parties a copy, certified by a duly
authorized officer of such Person or other appropriate Person to be true and
complete on the Closing Date, of each of its Governing Documents as in effect on
such date of certification.
10.3. Corporate or Other Action. All corporate (or other) action
necessary for the valid execution, delivery and performance by each of the
Credit Parties of this Credit Agreement and the other Loan Documents to which it
is or is to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Lenders shall have been provided to each of
the Lenders. The Articles of Association of each of ICON Health & Fitness
(Holdings) Limited, ICON Health & Fitness Limited shall have been amended to
provide that the directors thereof may not refuse a request to register a
transfer of shares on enforcement of the applicable Security Documents.
10.4. Incumbency Certificate. The Administrative Agent shall have
received from each Credit Party an incumbency certificate, dated as of the
Closing Date, signed by a duly authorized officer of such Credit Party, and
giving the name and bearing a specimen signature of each individual who shall be
authorized: (a) to sign, in the name and on behalf of each such Person, each of
the Loan Documents and to which such Credit Party is or is to become a party;
and (b) in the case of the Borrower, to make Loan Requests and Conversion
Requests and to apply for Letters of Credit.
10.5. Validity of Liens. The Security Documents shall be effective to
create in favor of the Administrative Agent a legal, valid and enforceable
second priority perfected security interest in and Lien upon the Collateral
(subject only to the Liens granted therein in favor of the Senior Credit
Facility Agent to secure the Senior Credit Facility Loan). All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Administrative Agent to protect and preserve such security
interests shall have been duly effected (or, in the case of the U.K. Debenture
and the International Pledge Agreement referred to in paragraph (b) of
"International Pledge Agreements", will be made within five (5) days of the
grant of such security). The Administrative Agent shall have received evidence
thereof in form and substance satisfactory to the Administrative Agent.
10.6. Perfection Certificates and Collateral Search Results. The
Administrative Agent shall have received from each of the Credit Parties, a
completed and fully executed Perfection Certificate and the results of UCC and
intellectual property searches (and the equivalent thereof in all applicable
foreign jurisdictions) with respect to the Collateral, indicating no Liens other
than Permitted Liens and otherwise in form and substance reasonably satisfactory
to the Administrative Agent.
10.7. Certificates of Insurance. The Administrative Agent shall have
received (a) a certificate of insurance from an independent insurance broker
dated as of the Closing Date, naming the Administrative Agent as loss payee
and/or additional insured, as applicable, identifying insurers, types of
insurance, insurance limits, and policy terms, and otherwise describing the
insurance obtained in accordance with the provisions of the Security Agreements
and (b) certified copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind the
insurer).
10.8. Agency Account Agreements. The Credit Parties shall have
established the Concentration Account and such other deposit account control
agreements relating to their respective domestic deposit accounts reasonably
required by the Administrative Agent.
10.9. Borrowing Base Report and Minimum Availability. The
Administrative Agent shall have received an executed Borrowing Base Report,
which Borrowing Base Report shall demonstrate Excess Availability of not less
than $50,000,000, prior to application of the Availability Reserve (as set forth
in the Senior Credit Facility Loan Agreement), after giving effect to the
funding of the initial loans and extensions of credit under the Senior Credit
Facility Loan Agreement.
10.10. Accounts Receivable Aging Report. The Administrative Agent shall
have received from the Borrower the most recent Accounts Receivable aging report
of the Borrower dated as of a date which shall be no more than fifteen (15) days
prior to the Closing Date and the Borrower shall have notified the
Administrative Agent in writing on the Closing Date of any material deviation
from the Accounts Receivable values reflected in such Accounts Receivable aging
report and shall have provided the Administrative Agent with such supplementary
documentation as the Administrative Agent may reasonably request.
10.11. Inventory Appraisal. The Agent shall have received and be
satisfied with the results of an appraisal of the inventory, machinery,
equipment and Real Estate of the Borrower and its domestic and Canadian
Subsidiaries.
10.12. Payment of Closing Fees. The Borrower shall have paid to the
Administrative Agent the fees required to be paid by it on the Closing Date.
10.13. Payoff Letter. The Administrative Agent shall have received a
copy of a payoff letter from General Electric Capital Corporation ("GECC"),
indicating the amount of the loan obligations of the Credit Parties under the
Existing Credit Agreement to be discharged on the Closing Date and an
acknowledgment by GECC that the commitments have been terminated and upon
receipt of such funds, it will authorize the filing of all termination
statements and take such other actions as may be necessary to discharge any and
all mortgages, deeds of trust and security interests granted by the Credit
Parties in favor of GECC.
10.14. Opinions of Counsel. Each of the Lenders and the Administrative
Agent shall have received a favorable legal opinion addressed to the Lenders and
the Administrative Agent, dated as of the Closing Date, in form and substance
satisfactory to the Lenders and the Administrative Agent, from:
(a) Weil, Gotshal & Manges LLP, special counsel to the Credit Parties;
(b) Bearnson & Peck L.C., special Utah counsel to the Credit Parties;
(c) McInnes Cooper, special New Brunswick counsel to the Credit Parties;
(d) Holmested & Associates, special Quebec counsel to the Credit Parties;
and
(e) Cobbetts Solicitors, special English counsel to certain Credit
Parties.
10.15. Intentionally Omitted.
10.16. Title Insurance. The Administrative Agent shall have received a
Title Policy covering each Mortgaged Property (or commitments to issue such
policies, with all conditions to issuance of the Title Policy deleted by an
authorized agent of the Title Insurance Company) together with proof of payment
of all fees and premiums for such policies, from the Title Insurance Company and
in amounts satisfactory to the Administrative Agent, insuring the interest of
the Administrative Agent and each of the Lenders as mortgagee under the
Mortgages.
10.17. Hazardous Waste Assessments. The Administrative Agent shall have
received hazardous waste site assessments from environmental engineers and in
form and substance satisfactory to the Administrative Agent, covering all Real
Estate and all other real property in respect of which any Credit Party may have
material liability, whether contingent or otherwise, for dumping or disposal of
Hazardous Substances.
10.18. Solvency Certificate. The Administrative Agent shall have
received an officer's certificate of Holdings and the Borrower dated as of the
Closing Date as to the solvency of the Credit Parties following the consummation
of the transactions contemplated herein and in form and substance satisfactory
to the Lenders.
10.19. No Material Adverse Change. Since the Balance Sheet Date, as
determined by the Administrative Agent, there has occurred no material adverse
change in the financial condition, business, assets, liabilities or business
prospects of the Credit Parties, taken as a whole.
10.20. Landlord Waivers. The Administrative Agent shall have received
landlord waivers, each in form and substance satisfactory to the Administrative
Agent, relating to each of the leased properties listed on Schedule 10.20
hereto.
10.21. Intentionally Omitted.
10.22. Collateral Examinations/Appraisals. The Administrative Agent
shall have received the results of collateral examinations and appraisals
performed with respect to the Collateral, each in form and substance
satisfactory to the Administrative Agent.
10.23. Financial Statements and Projections. The Administrative Agent
shall have received the financial statements and projections referred to in
section 6.2, each in form and substance satisfactory to the Administrative
Agent.
10.24. Intercreditor Agreement; Senior Credit Facility Loan Documents.
(a) The Intercreditor Agreement shall have been duly executed and delivered by
the respective parties thereto, shall be in full force and effect and shall be
in form and substance satisfactory to the Administrative Agent, and (b) the
Administrative Agent shall have received certified copies of the Senior Credit
Facility Loan Documents.
10.25. Subordinated Debt. The Administrative Agent shall have received
a certified copy of the Subordinated Debt Documents, together with written
confirmation of the notice address for the trustee thereunder.
11. ADDITIONAL CONDITIONS .
The obligations of the Lenders to fund the Term Loan on the Closing Date
shall also be subject to the satisfaction of the following conditions precedent:
11.1. Representations True; No Default or Event of Default. Each of the
representations and warranties of any Credit Party contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan, with the same effect as if made at and as of that time
(except to the extent of changes resulting from transactions contemplated or
permitted by this Credit Agreement and the other Loan Documents and changes
occurring in the ordinary course of business that singly or in the aggregate are
not materially adverse, and to the extent that such representations and
warranties relate expressly to an earlier date) and no Default or Event of
Default shall have occurred and be continuing, and no condition shall exist on
such date which constitutes an Event of Default.
11.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to fund its Commitment
Percentage of the Term Loan.
11.3. Governmental Regulation. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
11.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Lenders and to the Administrative Agent and the Administrative
Agent's Special Counsel, and the Lenders, the Administrative Agent and such
counsel shall have received all information and such counterpart originals or
certified or other copies of such documents as the Administrative Agent may
reasonably request.
11.5. Payment of Fees. The Credit Parties shall have complied with
their obligations to pay all Fees and each other amount arising hereunder.
11.6. Exchange Limitations. There exists no reason whatsoever,
including, without limitation, by reason of the application of any so-called
"currency exchange" laws, rules or regulations (as in effect at the time of any
proposed borrowings hereunder) which could reasonably be expected to interfere
with the Borrower satisfying any of its Obligations in full at such time as such
Obligations become due and payable pursuant to the terms hereof.
11.7. Validity of Liens. The Security Documents shall be effective to
create in favor of the Administrative Agent a legal, valid and enforceable
second priority perfected security interest in and Lien upon the Collateral
(subject only to the Liens granted therein in favor of the Senior Credit
Facility Agent to secure the Senior Credit Facility Loan). All filings,
recordings, deliveries of instruments and other actions necessary or desirable
in the opinion of the Administrative Agent to protect and preserve such security
interests shall have been duly effected. The Administrative Agent shall have
received evidence thereof in form and substance satisfactory to the
Administrative Agent.
12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any installment of principal of the
Term Loan when the same shall become due and payable, whether at the stated date
of maturity or any accelerated date of maturity or at any other date fixed for
payment;
(b) the Borrower shall fail to pay any interest on the Term Loan, the
Fees, or other sums due hereunder or under any of the other Loan Documents, when
the same shall become due and payable, whether at the stated date of maturity or
any accelerated date of maturity or at any other date fixed for payment and such
failure shall continue for three (3) days after written notice of such failure
has been given to the Borrower by the Administrative Agent;
(c) any Credit Party shall fail to comply with any of its covenants
contained in 7.1, 7.4, 7.5, 7.6, 7.7, 7.10, 7.11, 7.12, 7.13, 7.15, 7.16,
7.17, 8 or 9;
(d) any Credit Party shall fail to perform any term, covenant or
agreement contained herein or in any of the other Loan Documents (other than
those specified elsewhere in this section 12.1) for thirty (30) days after
written notice of such failure has been given to the Borrower by the
Administrative Agent;
(e) any representation or warranty of any Credit Party in this Credit
Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall prove to have been false in any material respect upon the date when made
or deemed to have been made or repeated;
(f) any Credit Party shall make an assignment for the benefit of
creditors, or shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of such Credit Party or of any substantial
part of the assets of any Credit Party or shall commence any case or other
proceeding relating to any Credit Party under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any such
petition or application (including a bankruptcy application) shall be filed or
any such case or other proceeding shall be commenced against any Credit Party
and such Credit Party shall indicate its approval thereof, consent thereto or
acquiescence therein or such petition or application shall not have been
dismissed or stayed within sixty (60) days following the filing thereof; or a
receiver, trustee or other similar official shall be appointed for any Canadian
Subsidiary or for any substantial part of the assets any Canadian Subsidiary;
(g) a decree or order (including a bankruptcy order) is entered
appointing any such trustee, custodian, liquidator or receiver or adjudicating
any Credit Party bankrupt or insolvent, or approving a petition or a bankruptcy
application in any such case or other proceeding, or a decree or order
(including a bankruptcy order) for relief is entered in respect of any Credit
Party in an involuntary case under federal bankruptcy laws as now or hereafter
constituted;
(h) there shall remain in force, undischarged, unsatisfied, unbonded and
unstayed, for more than sixty (60) days, whether or not consecutive, any final
judgment against any Credit Party (considered collectively) that exceeds in the
aggregate $1,000,000, which are not covered by insurance policies as to which
coverage has been accepted;
(i) (A) any Credit Party or any ERISA Affiliate (considered collectively)
incurs any liability to the PBGC or a Guaranteed Pension Plan pursuant to Title
IV of ERISA in an aggregate amount exceeding $1,000,000, or any Credit Party or
any ERISA Affiliate (considered collectively)is assessed withdrawal liability
pursuant to Title IV of ERISA by a Multiemployer Plan requiring aggregate annual
payments exceeding $1,000,000, or any of the following occurs with respect to a
Guaranteed Pension Plan: (i) an ERISA Reportable Event, or a failure to make a
required installment or other payment (within the meaning of 302(f)(1) of
ERISA), provided that the Administrative Agent determines in its reasonable
discretion that such event (x) could be expected to result in liability of the
Credit Parties to the PBGC or such Guaranteed Pension Plan in an aggregate
amount exceeding $1,000,000 and (y) could constitute grounds for the termination
of such Guaranteed Pension Plan by the PBGC, for the appointment by the approp
riate United States District Court of a trustee to administer such Guaranteed
Pension Plan or for the imposition of a lien in favor of such Guaranteed Pension
Plan; or (ii) the appointment by a United States District Court of a trustee to
administer such Guaranteed Pension Plan; or (iii) the institution by the PBGC of
proceedings to terminate such Guaranteed Pension Plan; (B) a Canadian Subsidiary
terminates any Guaranteed Pension Plan applicable to it, (C) any event occurs
providing grounds to terminate or wind-up a Guaranteed Pension Plan applicable
to any Canadian Borrower Subsidiary in whole or in part by order of any
applicable pension regulatory authority or (D) any event or condition occurs or
exists which would require the appointment by the applicable regulator of a
trustee or similar Person to administer a Guaranteed Pension applicable to any
Canadian Subsidiary;
(j) any Credit Party shall fail to pay at maturity, or within any
applicable period of grace, any obligation for Indebtedness in excess of
$500,000, or fail to observe or perform any material term, covenant or agreement
contained in any agreement by which it is bound, evidencing or securing
Indebtedness in excess of $500,000 for such period of time as would permit
(assuming the lapse of time and/or giving of appropriate notice if required and
assuming such breach has not been cured within the applicable grace period
thereunder) the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(k) if any of the Loan Documents shall be cancelled, terminated, revoked
or rescinded or the Administrative Agent's security interests, mortgages or
liens in all or a material portion of the Collateral shall cease to be
perfected, or shall cease to have the priority contemplated by the Security
Documents and the Intercreditor Agreement, in each case otherwise than in
accordance with the terms thereof or with the express prior written agreement,
consent or approval of the Lenders, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan Documents
shall be commenced by or on behalf of any Credit Party or any of their
respective equity holders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination that,
or issue a judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof;
(l) if any material covenant, agreement or obligation of any Credit Party
contained in or evidenced by the Loan Documents shall cease to be legal, valid,
binding, or enforceable in accordance with the terms thereof other than as a
result of a default or waiver thereof by the Administrative Agent;
(m) a Change of Control shall occur;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, expropriation, act of God or public enemy,
or other casualty, which in any such case causes, for more than fifteen (15)
consecutive days, the cessation or substantial curtailment of revenue producing
activities at any facility of any Credit Party if such event or circumstance is
not covered by business interruption insurance and would have a material adverse
effect on the business, assets, operation or financial condition of the Credit
Parties (taken as a whole), or the ability of any Credit Party to fulfill its
obligations under the Credit Agreement or the other Loan Documents;
(o) any Credit Party shall be enjoined, restrained or in any way
prevented by the order of any Governmental Authority from conducting any part of
their business and such order shall continue in effect for more than thirty (30)
days unless such order would not have a material adverse effect on the business,
assets, operation or financial condition of the Credit Parties (taken as a
whole), or the ability of any Credit Party to fulfill its obligations under this
Credit Agreement or the other Loan Documents;
(p) there shall occur the loss, suspension or revocation of, or failure
to renew, any license or permit now held or hereafter acquired by any Credit
Party if such loss, suspension, revocation or failure to renew would have a
material adverse effect on the business, assets, operation or financial
condition of the Credit Parties (taken as a whole), or the ability of any Credit
Party to fulfill its obligations under this Credit Agreement or the other Loan
Documents;
(q) (i) the holders of all or any part of the Subordinated Debt shall
accelerate the maturity of all or any part of the Subordinated Debt, the
Subordinated Debt shall be prepaid, redeemed or repurchased in whole or in part
or an offer to prepay, redeem or repurchase the Subordinated Debt in whole or in
part shall be required to be made or (ii) any Credit Party shall fail to observe
or perform any material term, covenant or agreement contained in any
Subordinated Debt Document as would permit (assuming the lapse of time and/or
giving of appropriate notice if required and assuming such breach has not been
cured within the applicable grace period thereunder) the holders thereof to
accelerate the maturity thereof;
(r) any "event of default" under the Senior Credit Facility Loan
Agreement shall occur or the holders of all or any part of the Senior Credit
Facility Loan shall accelerate the maturity of all or any part of the Senior
Credit Facility Loan;
(s) the Obligations shall cease for any reason rank senior in right of
payment to any Subordinated Debt;
(t) the provisions in the Intercreditor Agreement shall cease, in whole
or in part, to be effective or cease to be legally valid, binding and
enforceable against the holders of the Senior Credit Facility Loan; or
(u) any Credit Party shall be indicted for a state or federal crime, or
any civil or criminal action shall otherwise have been brought against any
Credit Party, a punishment for which in any such case could include the
forfeiture of any assets of any Credit Party having a fair market value in
excess of $1,000,000; then, and in any such event, so long as the same may be
continuing, the Administrative Agent may, and upon the request of the Required
Lenders shall, by notice in writing to the Borrower, declare all amounts owing
with respect to this Credit Agreement and the other Loan Documents to be, and
they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by each Credit Party; provided that in the event of any
Event of Default specified in sections 12.1(f) or 12.1(g), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Administrative Agent or any Lender.
12.2. Intentionally Omitted
12.3. Remedies. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Lenders shall have
accelerated the maturity of the Term Loan pursuant to section 12.1, each Lender
if owed any amount with respect to the Term Loan, may proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Lender are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Lender. No remedy herein conferred upon any
Lender or the Administrative Agent is intended to be exclusive of any other
remedy and each and every remedy shall be cumulative and shall be in addition to
every other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or any other provision of law.
12.4. Distribution of Collateral Proceeds. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Administrative Agent or any Lender, as the case may be, receives any monies in
connection with the enforcement of any of the Security Documents, or otherwise
with respect to the realization upon any of the Collateral, such monies shall be
distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the reimbursement
of the Administrative Agent for or in respect of all amounts in respect of all
fees, indemnities, costs, expenses, disbursements and other amounts (including
charges and disbursements of counsel to the Administrative Agent) and losses
payable to the Administrative Agent or incurred or sustained by the
Administrative Agent in its capacity as such, including, without limitation, in
connection with the collection of such monies by the Administrative Agent, for
the exercise, protection or enforcement by the Administrative Agent of all or
any of the rights, remedies, powers and privileges of the Administrative Agent
under this Credit Agreement or any of the other Loan Documents or in respect of
the Collateral or in support of any provision of adequate indemnity to the
Administrative Agent against any taxes or Liens which by law shall have, or may
have, priority over the rights of the Administrative Agent to such monies;
(b) Second, to the payment of that portion of the Obligations
constituting fees, indemnities, costs, expenses, disbursements and other amounts
(including charges and disbursements of counsel to the Lenders but excluding
principal and interest) payable to the Lenders, ratably among them in proportion
to the amounts described in this clause Second payable to them;
(c) Third, to the payment of that portion of the Obligations constituting
accrued and unpaid interest on the Term Loan and other Obligations, ratably
among the Lenders in proportion to the respective amounts described in this
clause Third payable to them;
(d) Fourth, to the payment of that portion of the Obligations
constituting unpaid principal of the Term Loan, ratably among the Lenders in
proportion to the respective amounts described in this clause Fourth payable to
them;
(e) Fifth, to all other Obligations in such order or preference as the
Required Lenders may determine; provided, however, that (i) distributions shall
be made with respect to each type of Obligation owing to the Lenders, among the
Lenders pro rata, and (ii) the Administrative Agent may in its discretion make
proper allowance to take into account any Obligations not then due and payable;
(f) Sixth, upon payment and satisfaction in full or other provisions for
payment in full satisfactory to the Lenders and the Administrative Agent of all
of the Obligations, to the payment of any obligations required to be paid
pursuant to section 9-608(a)(1)(C) or 9-615(a)(3) of the Uniform Commercial Code
of the Commonwealth of Massachusetts; and
(g) Seventh, the excess, if any, shall be returned to the Borrower or to
such other Persons as are entitled thereto.
13. SETOFF.
Regardless of the adequacy of any collateral, if any of the Obligations
are due and payable and have not been paid or any Event of Default shall have
occurred, any deposits or other sums credited by or due from any of the Lenders
to any Credit Party and any securities or other property of any Credit Party in
the possession of such Lender or any of its Affiliates may, at any time, without
demand or notice (any such notice being expressly waived by each Credit Party),
in whole or in part, be applied to or set off by such Lender against the payment
of Obligations and any and all other liabilities or obligations, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of any Credit Party to such Lender regardless of the adequacy
of any other collateral securing the Loan. Each of the Lenders agrees with each
other Lender that (i) if an amount to be set off is to be applied to
Indebtedness of any Credit Party to such Lender, such amount shall be applied
ratably to such other Indebtedness and to the Indebtedness evidenced by the Term
Note of such Lender, and (ii) if such Lender shall receive from any Credit
Party or any other source, whether by voluntary payment, exercise of the right
of setoff, counterclaim, cross action, enforcement of the claim evidenced by the
Term Notes in the name of such Lender by proceedings against a Credit Party at
law or in equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of its Term Note any amount in excess of its ratable portion of the
payments received by all of the Lenders with respect to the debt evidenced by
the Term Notes corresponding to all of the Lenders, such Lender will make such
disposition and arrangements with the other Lenders with respect to such excess,
either by way of distribution, pro tanto assignment of claims, subrogation or
otherwise as shall result in each Lender receiving in respect of the debt evi
denced by the Term Note in its name, its proportionate payment as contemplated
by this Credit Agreement; provided that if all or any part of such excess
payment is thereafter recovered from such Lender, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest. ANY AND ALL RIGHTS TO REQUIRE ANY LENDER TO
EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH
SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO
SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF ANY CREDIT PARTY ARE HEREBY
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.
14. THE AGENT.
14.1. Authorization.
(a) The Administrative Agent is authorized to take such action on behalf
of each of the Lenders and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents delegated to the
Administrative Agent, together with such powers as are reasonably incident
thereto, including the authority, without the necessity of any notice to or
further consent of the Lenders, from time to time to take any action with
respect to any Collateral or the Security Documents which may be necessary to
perfect, maintain perfected or insure the priority of the security interest in
and liens upon the Collateral granted pursuant to the Security Documents, and,
provided that no duties or responsibilities not expressly assumed herein or
therein shall be implied to have been assumed by the Administrative Agent.
(b) The relationship between the Administrative Agent and each of the
Lenders is that of an independent contractor. The use of the term
"Administrative Agent" is for convenience only and is used to describe, as a
form of convention, the independent contractual relationship between the
Administrative Agent and each of the Lenders. Nothing contained in this Credit
Agreement nor the other Loan Documents shall be construed to create an agency,
trust or other fiduciary relationship between the Administrative Agent and any
of the Lenders, provided that the Administrative Agent shall act as security
trustee pursuant to, and in accordance with, certain of the Security Documents
governed by English law.
(c) As an independent contractor empowered by the Lenders to exercise
certain rights and perform certain duties and responsibilities hereunder and
under the other Loan Documents, the Administrative Agent is nevertheless a
"representative" of the Lenders, as that term is defined in Article 1 of the
Uniform Commercial Code, for purposes of actions for the benefit of the Lenders
and the Administrative Agent with respect to all collateral security and
guaranties contemplated by the Loan Documents. Such actions include the
designation of the Administrative Agent as "secured party", "mortgagee" or the
like on all financing statements and other documents and instruments, whether
recorded or otherwise, relating to the attachment, perfection, priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security intended to secure the payment or performance of any of the
Obligations, all for the benefit of the Lenders and the Administrative Agent.
(d) The Administrative Agent is authorized and directed to consent to any
sale or other disposition of Collateral permitted to be sold or disposed of
hereunder, and to release its Liens on such Collateral, and the Administrative
Agent is authorized to rely on a certification from the Borrower that such sale
or disposition is permitted hereunder.
(e) The Administrative Agent is authorized and directed to execute and
deliver the Intercreditor Agreement on behalf of the Lenders and to act in
accordance with the provisions thereof. Each of the Lenders agrees to be bound
by the provisions thereof.
(f) Each Lender appoints the Administrative Agent to act as its agent and
security trustee under and in accordance with the Security Documents.
14.2. Foreign Appointments.
14.2.1. Quebec Appointment. Each Lender, or its representative duly
authorized on its behalf, hereby appoints the Administrative Agent as its fonde
de pouvoir to take, receive and hold on behalf of, and for the benefit of, each
of the Bondholders, all rights and hypothecs created hereby as continuing
security for the payment of the Bonds from time to time issued and outstanding
from time to time under the Deed of Hypothec, and to exercise any and all powers
and rights and to perform any and all duties conferred upon it under the Deed of
Hypothec or by Bondholders' Instrument. Each party hereto agrees that,
notwithstanding Section 32 of An Act Respecting Special Powers of Legal Persons
(Quebec), the Administrative Agent shall also be entitled to act as Bondholder
and to acquire and/or be the pledgee of any Bond or other titles of indebtedness
to be issued under any such Deed of Hypothec.
14.2.2. English Appointment. Each Lender, or its representative duly
authorized on its behalf, hereby appoints the Administrative Agent to act as its
agent and security trustee under and in connection with the English law governed
Security Documents.
14.2.3. Italy Appointment. Each Lender, or its representative duly
authorized on its behalf, hereby appoints the Administrative Agent to act as its
agent and security trustee under and in connection with the Italian law governed
Security Documents.
14.2.4. France Appointment. Each Lender, or its representative duly
authorized on its behalf, hereby appoints the Administrative Agent to act as its
agent and security trustee under and in connection with the French law governed
Security Documents.
14.2.5. German Appointment. Each Lender, or its representative duly
authorized on its behalf, hereby appoints the Administrative Agent to act as its
agent and security trustee under and in connection with the German law governed
Security Documents.
14.3. Employees and Administrative Agents. The Administrative Agent may
exercise its powers and execute its duties by or through employees or agents and
shall be entitled to take, and to rely on, advice of counsel concerning all
matters pertaining to its rights and duties under this Credit Agreement and the
other Loan Documents. The Administrative Agent may utilize the services of such
Persons as the Administrative Agent in its sole discretion may reasonably
determine, and all reasonable fees and expenses of any such Persons shall be
paid by the Borrower
14.4. No Liability. Neither the Administrative Agent nor any of its
shareholders, directors, officers or employees nor any other Person assisting
them in their duties nor any agent or employee thereof, shall be liable to any
Lender for any waiver, consent or approval given or any action taken, or omitted
to be taken, in good faith by it or them hereunder or under any of the other
Loan Documents, or in connection herewith or therewith, or be responsible for
the consequences of any oversight or error of judgment whatsoever, except that
the Administrative Agent or such other Person, as the case may be, may be liable
for losses due to its willful misconduct or gross negligence.
14.5. No Representations.
14.5.1. General. The Administrative Agent shall not be responsible for
the execution or validity or enforceability of this Credit Agreement, any of the
other Loan Documents or any instrument at any time constituting, or intended to
constitute, collateral security for any of the Loan Documents, or for the value
of any such collateral security or for the validity, enforceability, or
collectibility of any such amounts owing with respect to any of the Loan
Documents, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of any Credit Party, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for any of the Loan
Documents or to inspect any of the properties, books or records of any Credit
Party. The Administrative Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by any Credit Party shall
have been duly authorized or is true, accurate and complete. The Administrative
Agent has not made nor does it now make any representations or warranties,
express or implied, nor does it assume any liability to the Lenders, with
respect to the credit worthiness or financial conditions of any Credit Party.
Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent or any other Lender, and based upon such information
and documents as it has deemed appropriate, made its own credit analysis and
decision to enter into this Credit Agreement.
14.5.2. Closing Documentation, etc. For purposes of determining
compliance with the conditions set forth in secion 10, each Lender that has
executed this Credit Agreement shall be deemed to have consented to, approved or
accepted, or to be satisfied with, each document and matter either sent, or made
available, by the Administrative Agent to such Lender for consent, approval,
acceptance or satisfaction, or required thereunder to be to be consent to or
approved by or acceptable or satisfactory to such Lender, unless an officer of
the Administrative Agent active upon the Borrower's account shall have received
notice from such Lender not less than one (1) Business Day prior to the Closing
Date specifying such Lender's objection thereto and such objection shall not
have been withdrawn by notice to the Administrative Agent to such effect on or
prior to the Closing Date.
14.6. Payments.
14.6.1. Payments to Agent. A payment by the Borrower to the
Administrative Agent hereunder or under any of the other Loan Documents for the
account of any Lender shall constitute a payment to such Lender. The
Administrative Agent agrees promptly to distribute to each Lender such Lender's
pro rata share of payments received by the Administrative Agent for the account
of such Lender except as otherwise expressly provided herein or in any of the
other Loan Documents.
14.6.2. Distribution by Administrative Agent. If in the opinion of the
Administrative Agent the distribution of any amount received by it in such
capacity hereunder or under any of the other Loan Documents might involve it in
liability, it may refrain from making distribution until its right to make
distribution shall have been adjudicated by a court of competent jurisdiction.
If a court of competent jurisdiction shall adjudge that any amount received and
distributed by the Administrative Agent is to be repaid, each Person to whom any
such distribution shall have been made shall either repay to the Administrative
Agent its proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be determined by
such court.
14.6.3. Intentionally Omitted
14.7. Intentionally Omitted.
14.8. Indemnity. The Lenders ratably agree hereby to indemnify and hold
harmless the Administrative Agent from and against any and all claims, actions
and suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Administrative Agent has not been
reimbursed by the Borrower as required by section 15), and liabilities of every
nature and character arising out of or related to this Credit Agreement or any
of the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Administrative Agent's actions taken hereunder or thereunder,
except to the extent that any of the same shall be directly caused by the
Administrative Agent's willful misconduct or gross negligence.
14.9. Administrative Agent as Lender. In its individual capacity, the
Administrative Agent shall have the same obligations and the same rights, powers
and privileges in respect to its Commitment and the Loans made by it, as it
would have were it not also the Administrative Agent.
14.10. Resignation; Removal. The Administrative Agent may resign at any
time by giving sixty (60) days prior written notice thereof to the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent. Unless a Default or Event of
Default shall have occurred and be continuing, such successor Administrative
Agent shall be reasonably acceptable to the Borrower. If no successor
Administrative Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within sixty (60) days after the retiring
Administrative Agent's giving of notice of resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a financial institution having a rating of
not less than A or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative A gent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After any
retiring Administrative Agent's resignation, the provisions of this Credit
Agreement and the other Loan Documents shall continue in effect for its benefit
in respect of any actions taken or omitted to be taken by it while it was acting
as Administrative Agent.
14.11. Notification of Defaults and Events of Default. Each Lender
hereby agrees that, upon learning of the existence of a Default or Event of
Default, it shall promptly notify the Administrative Agent thereof; provided
that no Lender shall be liable for failure to deliver such notice. The
Administrative Agent hereby agrees that upon receipt of any notice under this
section 14.11 or section 7.5 it shall promptly notify the other Lenders thereof.
14.12. Duties in the Case of Enforcement. In case one or more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Administrative Agent shall, if (a)
so requested by the Required Lenders and (b) the Lenders have provided to the
Administrative Agent such additional indemnities and assurances against expenses
and liabilities as the Administrative Agent may reasonably request, proceed to
enforce the provisions of the Security Documents authorizing the sale or other
disposition of all or any part of the Collateral and exercise all or any such
other legal and equitable and other rights or remedies as it may have in respect
of such Collateral. The Required Lenders may direct the Administrative Agent in
writing as to the method and the extent of any such sale or other disposition,
the Lenders hereby agreeing to indemnify and hold the Administrative Agent,
harmless from all liabilities incurred in respect of all actions taken o
r omitted in accordance with such directions, provided that the Administrative
Agent need not comply with any such direction to the extent that the
Administrative Agent reasonably believes the Administrative Agent's compliance
with such direction to be unlawful or commercially unreasonable in any
applicable jurisdiction.
14.13. Administrative Agent May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial, administrative or like proceeding or any assignment for the benefit of
creditors relative to any Credit Party, the Administrative Agent (irrespective
of whether the principal of any Loan shall then be due and payable as herein
expressed or by declaration or otherwise and irrespective of whether the
Administrative Agent shall have made any demand on the Borrower) shall be
entitled and empowered, by intervention in such proceeding, under any such
assignment or otherwise:
(i) to file and prove a claim for the whole amount of the principal and
interest owing and unpaid in respect of the Loan and all other Obligations that
are owing and unpaid and to file such other documents as may be necessary or
advisable in order to have the claims of the Lenders and the Administrative
Agent (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Lenders and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders and the
Administrative Agent under section s2.6, 5.1 and 15) allowed in such proceeding
or under any such assignment; and
(ii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
(b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator
or other similar official in any such proceeding or under any such assignment is
hereby authorized by each Lender to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders, nevertheless to pay to the
Administrative Agent any amount due for the reasonable compensation, expenses,
disbursements and advances of the Administrative Agent and its agents and
counsel, and any other amounts due the Administrative Agent under sections 2.6,
5.1 and 15).
(c) Nothing contained herein shall authorize the Administrative Agent to
consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the Obligations
owed to such Lender or the rights of any Lender or to authorize the
Administrative Agent to vote in respect of the claim of any Lender in any such
proceeding or under any such assignment.
15. EXPENSES.
The Borrower agrees to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (ii) any taxes (including any
interest and penalties in respect thereto) payable by the Administrative Agent,
or any of the Lenders (other than taxes based upon the Administrative Agent's or
any Lender's net income) on or with respect to the transactions contemplated by
this Credit Agreement (the Borrower hereby agreeing to indemnify the
Administrative Agent and each Lender with respect thereto), (iii) the fees,
expenses and disbursements of the Administrative Agent's Special Counsel or any
local counsel to the Administrative Agent incurred in connection with the
preparation, administration or interpretation of the Loan Documents and other
instruments mentioned herein, the closing hereunder, amendments, modifications,
approvals, consents or waivers hereto or hereunder, and proposed amendments,
modifications, approvals, consents or waivers hereto or hereunder, (iv) the
fees, expenses and disbursements of the Administrative Agent incurred by the
Administrative Agent in connection with the administration or interpretation of
the Loan Documents and other instruments mentioned herein, including, without
limitation, collateral examination, appraisal expenses and environmental audits,
inspections, testing and reports, (v) all out-of-pocket expenses (including
without limitation reasonable attorneys' fees and costs and reasonable
consulting, accounting, appraisal, investment banking and similar professional
fees and charges) incurred by the Administrative Agent or any Lender in
connection with (A) the enforcement of or preservation of rights under any of
the Loan Documents against any Credit Party or the administration thereof after
the occurrence of a Default or Event of Default, and (B) any litigation,
proceeding or dispute whether arising hereunder or otherwise, in any way related
to any Lender's or the Administrative Agent's relationship with any Credit
Party, (vi) any fees, costs, expenses and bank charges, including bank charges
for returned checks, incurred by the Administrative Agent, the Lenders or any of
their Affiliates in establishing, maintaining or handling of any accounts for
the collection of any of the Collateral, (vii) all fees, expenses and
disbursements of the Administrative Agent incurred in connection with UCC
searches, UCC filings, intellectual property searches, intellectual property
filings, mortgage recordings and other personal and real property searches and
filings and (viii) all title insurance premiums and surveyor, engineering,
appraisal and examination charges. The Borrower and each of the Guarantors
authorizes the Administrative Agent and the Lenders to debit any account
maintained by such Persons with the Administrative Agent, the Lenders, or any of
their Affiliates, in payment of amounts due hereunder. The covenants of this
section 15 shall survive payment or satisfaction of all other Obligations.
16. INDEMNIFICATION.
The Borrower agrees to indemnify and hold harmless the Administrative
Agent and the Lenders, together with each of their Related Parties, from and
against any and all claims, actions and suits whether groundless or otherwise,
and from and against any and all liabilities, losses, damages and expenses of
every nature and character arising out of this Credit Agreement or any of the
other Loan Documents or the transactions contemplated hereby including, without
limitation, (i) any actual or proposed use by the Borrower or any other Credit
Party of the proceeds of the Term Loan, (ii) the reversal or withdrawal of any
provisional credits granted by the Administrative Agent, the Lenders, or any of
their Affiliates upon the transfer of funds from bank agency or lock box
accounts or in connection with the provisional honoring of checks or other
items, (iii) any Credit Party entering into or performing this Credit Agreement
or any of the other Loan Documents, (iv) any actual or alleged infringement of
any patent, copyright, trademark, service mark or similar right of any Credit
Party comprised in the Collateral, or (v) with respect to the Credit Parties and
their respective properties and assets, the violation of any environmental law,
the presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened release of any Hazardous Substances or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Substances (including, but not limited to, claims with respect to wrongful
death, personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding,
provided, however, that the Borrower shall not be liable to the Administrative
Agent, the Lenders, or any of their Related Parties for any of the foregoing to
the extent that they arise from such Person's gross negligence, breach of
contract or willful misconduct. In litigation, or the preparation therefor, the
Lenders and the Administrative Agent shall be entitled to select their own
counsel and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this section 16 are
unenforceable for any reason, the Borrower hereby agrees to make the maximum
contribution to the payment in satisfaction of such obligations which is
permissible under applicable law. The covenants contained in this section 16
shall survive payment or satisfaction in full of all other Obligations.
17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
any of the other Loan Documents or in any documents or other papers delivered by
or on behalf of any Credit Party pursuant hereto shall be deemed to have been
relied upon by the Lenders and the Administrative Agent, notwithstanding any
investigation heretofore or hereafter made by any of them, and shall survive the
making by the Lenders of the Term Loan, as herein contemplated, and shall
continue in full force and effect so long as any amount due under this Credit
Agreement or any of the other Loan Documents remains outstanding and for such
further time as may be otherwise expressly specified in this Credit Agreement.
All statements contained in any certificate or other paper delivered to any
Lender or the Administrative Agent at any time by or on behalf any Credit Party
pursuant hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by such Credit Party hereunder.
18. ASSIGNMENT AND PARTICIPATION.
18.1. General Conditions. The provisions of this Credit Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that no Credit Party
may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (a) to an
Eligible Assignee in accordance with the provisions of section 18.2, (b) by way
of participation in accordance with the provisions of section 18.5 or (c) by way
of pledge or assignment of a security interest subject to the restrictions of
section 18.8 (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Credit Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in section 18.5 and, to the extent expressly contemplated
hereby, the Related Parties of each of the Administrative Agent and the Lenders)
any legal or equitable right, remedy or claim under or by reason of this Credit
Agreement or any of the other Loan Documents.
18.2. Assignments. Any Lender may at any time assign to one or more
Eligible Assignees all or a portion of its rights and obligations under this
Credit Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it); provided that:
(a) except in the cases of an assignment of the full amount of the
assigning Lender's Commitment and the portion of the Term Loan at the time owing
to it or of an assignment to a Lender or a Lender Affiliate, the principal
outstanding balance of the Term Loan of the assigning Lender subject to each
such assignment (determined as of the date on which the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 unless each of the Administrative Agent
and, so long as no Default or Event of Default has occurred and is continuing,
the Borrower otherwise consents (each such consent not to be unreasonably
withheld or delayed);
(b) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Credit Agreement with respect to the Term Loan;
(c) any assignment of a Lender's Commitment must be approved by the
Administrative Agent (whether or not the proposed assignee is itself a Lender
with a commitment or would otherwise qualify as an Eligible Assignee), such
approvals not to be unreasonably withheld or delayed; and
(d) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance, together with a processing
and recordation fee of $3,500.
Subject to acceptance and recording thereof by the Administrative Agent
pursuant to section 18.3, from and after the effective date specified in each
Assignment and Acceptance, the Eligible Assignee thereunder shall be a party to
this Credit Agreement and, to the extent of the interest assigned by such
Assignment and Acceptance have the rights and obligations of a Lender under this
Credit Agreement, and the assigning Lender thereunder shall, to the extent of
the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Credit Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Credit Agreement, such Lender shall cease to be a party hereto) but shall
continue to be entitled to the benefits of (i) section 5.2.2 with respect to
facts and circumstances occurring prior to the effective date of such assignment
and (ii) section 16 notwithstanding such assignment. Any assignment or transfer
by a Lender of rights or obligations under this Credit Agreement that does not
comply with this paragraph shall be treated for purposes of this Credit
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with section 18.5
18.3. Register. The Administrative Agent, acting solely for this
purpose as an agent of the Borrower, shall maintain at the Administrative
Agent's Office a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the
Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
the Register shall be conclusive, and the Borrower, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Credit Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
18.4. New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Term Note subject
to such assignment, the Administrative Agent shall (a) record the information
contained therein in the Register, and (b) give prompt notice thereof to the
Borrower and the Lenders (other than the assigning Lender). Within five (5)
Business Days after receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Administrative Agent, in exchange for each
surrendered Term Note, a new Term Note to the order of such Assignee in an
amount equal to the amount assumed by such Assignee pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained some portion of its
obligations hereunder, a new Term Note to the order of the assigning Lender in
an amount equal to the amount retained by it hereunder. Such new Term Notes
shall provide that they are replacements for the surrendered Notes, shall be in
an aggregate principal amount equal to the aggregate principal amount of the
surrendered Term Notes, shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of the assigned Term
Notes.
18.5. Participations. Any Lender may at any time, without the consent
of, or notice to, any Credit Party or the Administrative Agent, sell
participations to any Person (other than a natural person) (each, a
"Participant") in all or a portion of such Lender's rights and/or obligations
under this Credit Agreement (including all or a portion of the Term Loan owing
to it); provided that (a) such Lender's obligations under this Credit Agreement
shall remain unchanged, (b) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (c) the Credit
Parties and the Administrative Agent and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Credit Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Credit Agreement and to
approve any amendment, modification or waiver of any provision of this Credit
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any amendment,
modification or waiver that would reduce the principal of or the interest rate
on the Term Loan, extend the Maturity Date , reduce the amount of any
Commitment Fee or other Fees to which such Participant is entitled or extend any
regularly scheduled payment date for principal or interest. Subject to section
18.6, the Credit Parties agree that each Participant shall be entitled to the
benefits of section 5.2.2 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to section 18.2. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
section 13 as though it were a Lender, provided such Participant agrees to be
subject to section 13 as though it were a Lender.
18.6. Payments to Participants. A Participant shall not be entitled to
receive any greater payment under section 5.2.2 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such
Participant.
18.7. Assignee or Participant Affiliated with the Credit Parties. If
any assignee Lender is an Affiliate any Credit Party, then any such assignee
Lender shall have no right to vote as a Lender hereunder or under any of the
other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Administrative Agent
pursuant to section 12.1, and the determination of the Required Lenders shall
for all purposes of this Credit Agreement and the other Loan Documents be made
without regard to such assignee Lender's interest in any of the Loans. If any
Lender sells a participating interest in any of the Loans to a Participant, and
such Participant is a Credit Party or an Affiliate of a Credit Party, then such
transferor Lender shall promptly notify the Administrative Agent of the sale of
such participation. A transferor Lender shall have no right to vote as a Lender
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or modifications
to any of the Loan Documents or for purposes of making requests to the
Administrative Agent pursuant to section 12.1, to the extent that such
participation is beneficially owned by a Credit Party or any Affiliate of a
Credit Party, and the determination of the Required Lenders shall for all
purposes of this Credit Agreement and the other Loan Documents be made without
regard to the interest of such transferor Lender in the Loan to the extent of
such participation.
18.8. Miscellaneous Assignment Provisions. A Lender may at any time
grant a security interest in all or any portion of its rights under this Credit
Agreement to secure obligations of such Lender, including without limitation (a)
any pledge or assignment to secure obligations to any of the twelve Federal
Reserve Banks organized under section 4 of the Federal Reserve Act, 12 U.S.C.
section 341 and (b) with respect to any Lender that is a Fund, to any lender or
any trustee for, or any other representative of, holders of obligations owed or
securities issued by such Fund as security for such obligations or securities or
any institutional custodian for such Fund or for such lender; provided that no
such grant shall release such Lender from any of its obligations hereunder,
provide any voting rights hereunder to the secured party thereof, substitute any
such secured party for such Lender as a party hereto or affect any rights or
obligations of any Credit Party or the Administrative Agent hereunder.
19. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement shall be in writing and shall be (i) delivered in hand, (ii)
mailed by United States registered or certified first class mail, postage
prepaid, (iii) sent by overnight courier, or (iv) sent by telegraph, telecopy,
facsimile or telex and confirmed by delivery via courier or postal service,
addressed as follows:
(a) if to any Credit Party, c/o ICON Health & Fitness, Inc., 1500 South,
1000 West, Logan, Utah 84321, Attention: S. Fred Beck, or at such other address
as shall last have furnished in writing to the Person giving the notice;
(b) if to the Administrative Agent, at 40 Broad Street, Boston, MA 02109,
Attention: Michael L. Pizette, Managing Director, or such other address for
notice as the Administrative Agent shall last have furnished in writing to the
Person giving the notice; and
(c) if to any Lender, at such Lender's address set forth on Schedule 1
hereto, or such other address for notice as such Lender shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
20. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH CREDIT
PARTY AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND CONSENTS TO THE
NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT
BEING MADE UPON SUCH CREDIT PARTIES BY MAIL AT THE ADDRESS SPECIFIED IN SECTION
19. EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS
BROUGHT IN AN INCONVENIENT COURT.
21. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
22. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought. Delivery by facsimile by any of the
parties hereto of an executed counterpart hereof or of any amendment or waiver
hereto shall be as effective as an original executed counterpart hereof or of
such amendment or waiver and shall be considered a representation that an
original executed counterpart hereof or such amendment or waiver, as the case
may be, will be delivered.
23. ENTIRE AGREEMENT, ETC.
The Loan Documents are intended by the parties as the final, complete and
exclusive statement of the transactions evidenced by the Loan Documents. All
prior or contemporaneous promises, agreements and understandings, whether oral
or written, are deemed to be superseded by the Loan Documents, and no party is
relying on any promise, agreement or understanding not set forth in the Loan
Documents.
24. WAIVER OF JURY TRIAL.
EACH PARTY HERETO MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR
CLAIM BASED HEREON ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS OR ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING ANY COURSE OF CONDUCT, COURSE OF DEALINGS,
STATEMENTS OR ACTIONS OF THE ADMINISTRATIVE AGENT OR ANY LENDER RELATING TO THE
ADMINISTRATION OF THE LOANS OR ENFORCEMENT OF THE LOAN DOCUMENTS AND AGREES THAT
IT WILL NOT SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A
JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED. Except as prohibited by law, each
party hereto hereby waives any right it may have to claim or recover in any
litigation referred to in the preceding sentence any special, exemplary,
punitive or consequential damages or any damages other than, or in addition to,
actual damages. Each Credit Party (i) certifies that no representative, agent
or attorney of any Lender or the Administrative Agent has represented, expressly
or otherwise, that such Lender or the Administrative Agent would not, in the
event of litigation, seek to enforce the foregoing waivers and (ii) acknowledges
that this waiver constitutes a material inducement for the Administrative Agent
and the Lenders to execute this Credit Agreement and make the Loans.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by all of the Lenders may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by any Credit
Party of any terms of this Credit Agreement, the other Loan Documents or such
other instrument or the continuance of any Default or Event of Default may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Required Lenders.
Notwithstanding the foregoing, no amendment, modification or waiver shall:
(a) without the written consent of each Credit Party and each Lender
directly affected thereby:
(i) reduce or forgive the principal amount of the Term Loan, or reduce
the rate of interest on the Term Loan (other than interest accruing pursuant to
section 5.5 following the effective date of any waiver by the Required Lenders
of the Default or Event of Default relating thereto) or the amount of the Early
Termination Fee;
(ii) postpone or extend the Loan Maturity Date or any other regularly
scheduled dates for payments of principal of, or interest on, the Term Loan or
any fees or other amounts payable to such Lender or waive any Event of Default
relating thereto (it being understood that (A) a waiver of the application of
the Default Rate, (B) any vote to rescind any acceleration made pursuant to
section 12.1 of amounts owing with respect to the Loan and other Obligations and
(C)any modifications of the provisions relating to amounts or timing of
prepayments of the Loan and other Obligations shall require only the approval of
the Required Lenders); or
(iii) release any Credit Party from any Obligations consisting of
principal, interest, fees, reimbursement obligations, expenses, or indemnities,
release all or substantially all of the Collateral or release all or
substantially all of the Guarantors from their guaranty obligations under the
Guaranties (excluding, if a Credit Party becomes a debtor under the federal
Bankruptcy Code, the release of "cash collateral", as defined in Section 363(a)
of the federal Bankruptcy Code pursuant to a cash collateral stipulation with
the debtor approved by the Required Lenders);
(b) without the written consent of all of the Lenders, (i) amend or waive
this section 25 or the definition of Required Lenders, or (ii) amend or waive
section 12.4;
(c) without the written consent of the Administrative Agent, amend or
waive section 2.6.1, section 2.6.2, section 14, or any other provision
applicable to the Administrative Agent;
(d) in the event of any change in the Person acting as the Administrative
Agent, without the written consent of the Administrative Agent, amend or waive
any provision of this Credit Agreement accruing to the benefit of such Person in
respect of all actions taken or omitted to be taken by either of them prior to
such change.
No waiver shall extend to or affect any obligation not expressly waived
or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Administrative Agent or any Lender in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto. No
notice to or demand upon any Credit Party shall entitle any Credit Party to
other or further notice or demand in similar or other circumstances.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent, together with the Borrower, shall have the sole authority to amend or
modify any provision of the Fee Letter.
26. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction. The
parties agree that they will negotiate in good faith to replace any provision
hereof so held invalid or unenforceable with a valid provision which is as
similar as possible to the invalid or unenforceable provision.
27. CONFIDENTIALITY.
Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its Affiliates and to its and its Affiliates' respective
partners, directors, officers, employees, agents, advisors and representatives
(it being understood that the Persons to whom such disclosure is made will be
informed of the confidential nature of such Information and instructed to keep
such Information confidential), (b) to the extent requested by any regulatory
authority purporting to have jurisdiction over it (including any self-regulatory
authority, such as the National Association of Insurance Commissioners), (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any
action or proceeding relating to this Credit Agreement or any other Loan Docu
ment or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Article
27, to (i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Credit Agreement or
(ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to any Credit Party and its obligations, (g)
with the consent of the Borrower or (h) to the extent such Information (x)
becomes publicly available other than as a result of a breach of this Article 30
or (y) becomes available to the Administrative Agent and any Lender or any of
their respective Affiliates on a nonconfidential basis from a source other than
the Credit Parties.
For purposes of this Section, "Information" means all information
received from the Credit Parties relating to the Credit Parties or any of their
respective businesses, other than any such information that is available to the
Administrative Agent and any Lender on a nonconfidential basis prior to
disclosure by a Credit Party. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Each of the Administrative Agent and the Lenders acknowledges that (a)
the Information may include material non-public information concerning the
Credit Parties, as the case may be, (b) it has developed compliance procedures
regarding the use of material non-public information and (c) it will handle such
material non-public information in accordance with applicable Law, including
Federal and state securities Laws.
Each Credit Party hereby acknowledges that (a) the Administrative Agent
will make available to the Lenders materials and/or information provided by or
on behalf of such Credit Party hereunder (collectively, "Borrower Materials") by
posting the Borrower Materials on IntraLinks or another similar electronic
system (the "Platform") and (b) certain of the Lenders may be "public-side"
Lenders (i.e., Lenders that do not wish to receive material non-public
information with respect to any the Credit Parties or their securities) (each, a
"Public Lender"). Each Credit Party hereby agrees that (w) all Borrower
Materials that are to be made available to Public Lenders shall be clearly and
conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word
"PUBLIC" shall appear prominently on the first page thereof; (x) by marking
Borrower Materials "PUBLIC," each Credit Party shall be deemed to have
authorized the Administrative Agent and the Lenders to treat such Borrower
Materials as not containing any material non-public information with respect to
such Credit Party or its securities for purposes of United States Federal and
state securities laws (provided, however, that to the extent such Borrower
Materials constitute Information, they shall be treated as set forth in this
Article 30); (y) all Borrower Materials marked "PUBLIC" are permitted to be made
available through a portion of the Platform designated "Public Investor;" and
(z) the Administrative Agent shall be entitled to treat any Borrower Materials
that are not marked "PUBLIC" as being suitable only for posting on a portion of
the Platform not designated "Public Investor."
Notwithstanding the foregoing, with the prior written consent of the
Borrower (which approval shall not be unreasonably withheld) the Administrative
Agent may issue a "tombstone" notice of the establishment of the credit facility
contemplated by this Credit Agreement and may make reference to the Borrower or
any other Credit Party (and may utilize any logo or other distinctive symbol
associated with the Borrower or any other Credit Party) in connection with any
advertising, promotion, or marketing undertaken by the Administrative Agent.
28. USA PATRIOT ACT.
Each Lender hereby notifies the Credit Parties that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the "Act"), it is required to obtain, verify and record
information that identifies each Credit Party, which information includes the
name and address of each Credit Party and other information that will allow such
Lender to identify each Credit Party in accordance with the Act.
29. DESIGNATION OF PERMITTED LIENS.
The designation of a Lien as a Permitted Lien is not, and shall not be
deemed to be, an acknowledgment by the Administrative Agent or the Lenders to
any Person that the Lien shall have priority over any Lien of the Administrative
Agent granted in any Loan Document.
IN WITNESS WHEREOF, the undersigned have duly executed this Junior Term Loan
Credit Agreement as a sealed instrument as of the date first set forth above.
ICON HEALTH & FITNESS, INC.
By: /s/ S Fred Beck
---------------
Name: S. Fred Beck
Title: Chief Financial and Accounting Officer
BACK BAY CAPITAL FUNDING LLC individually and As Administrative Agent and Lender
By: /s/ Michael L. Pizette
----------------------
Name: Michael L. Pizette
Title: Managing Director
HF HOLDINGS, INC.
By: /s/ S. Fred Beck
----------------
Name: S. Fred Beck
Title: Chief Financial and Accounting Officer
ICON INTERNATIONAL HOLDINGS, INC.
By: /s/ Brad H. Bearnson
--------------------
Name: Brad H. Bearnson
Title: Secretary
UNIVERSAL TECHNICAL SERVICES
By: Brad H. Bearnson
----------------
Name: Brad H. Bearnson
Title: Secretary
ICON DU CANADA INC./ ICON OF CANADA INC.
By: /s/ Brad H. Bearnson
--------------------
Name: Brad H. Bearnson
Title: Secretary
510152 N.B. LTD.
By: /s/ Brad H. Bearnson
--------------------
Name: Brad H. Bearnson
Title: Secretary
NORDICTRACK, INC.
By:/s/ Brad H. Bearnson
--------------------
Name: Brad H. Bearnson
Title: Secretary
ICON IP, INC.
By: /s/ S. Fred Beck
----------------
Name: S. Fred Beck
Title: President
FREE MOTION FITNESS, INC.
By: /s/ Brad H. Bearnson
--------------------
Name: Brad H. Bearnson
Title: Secretary
Exhibit A
Form of Assignment and Acceptance
This Assignment and Acceptance (the "Assignment and Acceptance") is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the "Assignor") and [Insert name of Assignee] (the
"Assignee"). Capitalized terms used but not defined herein shall have the
meanings given to them in the Junior Term Loan Credit Agreement identified below
(as amended, the "Credit Agreement"), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in
Annex 1 attached hereto are hereby agreed to and incorporated herein by
reference and made a part of this Assignment and Acceptance as if set forth
herein in full.
For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (a) all of the Assignor's rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including without limitation any letters of credit,
guarantees, and swing line loans included in such facilities) and (b) to the
extent permitted to be assigned under applicable law, all claims, suits, causes
of action and any other right of the Assignor (in its capacity as a Lender)
against any Perso
n, whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (a)
above (the rights and obligations sold and assigned pursuant to clauses (a) and
(b) above being referred to herein collectively as, the "Assigned Interest").
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Acceptance, without representation or
warranty by the Assignor.
1. Assignor:
2. Assignee: [and is an Affiliate/Approved Fund of [identify Lender]1]
3. Borrower: ICON Health & Fitness, Inc.
4. Administrative Agent: Back Bay Capital Funding LLC, as the
Administrative Agent under the Credit Agreement.
5. Credit Agreement: Junior Term Loan Credit Agreement dated as of
October [__], 2005, by and among the Borrower, the other Credit Parties thereto,
Back Bay Capital Funding LLC and the other Lenders from time to time party
thereto (collectively, the "Lenders"), the Administrative Agent for itself and
the other Lenders, and the other agents party thereto
6. Assigned Interest:
Aggregate Amount of Amount of Percentage Assigned of
Commitment/Term Loan Commitment/Term Commitment/Term
for all Lenders* Loan Assigned* Loan2
- --------------------- ---------------- ----------------------
$ $ %
$ $ %
$ $ %
Effective Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]
[7. Trade Date: ______________]3
[Remainder of page intentionally left blank]
The terms set forth in this Assignment and Acceptance are hereby agreed to:
ASSIGNOR
[NAME OF ASSIGNOR]
By:______________________________
Title:
ASSIGNEE
[NAME OF ASSIGNEE]
By:______________________________
Title:
[Consented to and]4 and Accepted:
BACK BAY CAPITAL FUNDING LLC, as
Administrative Agent
By: ______________________________
Title:
[Consented to:]5
[NAME OF RELEVANT PARTY]
By: ______________________________
Title:
ANNEX 1
STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ACCEPTANCE
1. Representations and Warranties.
1.1 Assignor. The Assignor (a) represents and warrants that
(i) it is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates, any other
Credit Party or any other Person obligated in respect of any Loan Document or
(iv) the performance or observance by the Borrower, any of its Subsidiaries or
Affiliates, any other Credit Party or any other Person of any of their
respective obligations under any Loan Document.
1.2. Assignee. The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Acceptance and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required under
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant to sections
6.2 and 7.4 thereof, as applicable, and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender, and (v) if it is a
Non-U.S. Lender6, attached to the Assignment and Acceptance is any documentation
required to be delivered by it pursuant to the terms of the Credit Agreement,
duly completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Loan Documents, and (ii) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents (including, without limitation, the Intercreditor Agreement) are
required to be performed by it as a Lender.
2. Payments. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned Interest
(including payments of principal, interest, fees and other amounts) to the
Assignee whether such amounts have accrued prior to, on or after the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
3. General Provisions. This Assignment and Acceptance shall
be binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns. This Assignment and Acceptance may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Acceptance by telecopy shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance. This
Assignment and Acceptance shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts.
Exhibit B
Form of Collateral Update Certificate
Company Name:
Date:
1. Period End Accounts Receivable as of ____ /____ /____
2. Accounts Receivable Ineligibles as of ____ /____ /____
$
(CIRCLE ONE)
Accounts over_____days from Due / Invoice Date $
Intercompany Accounts $
Government Accounts $
Contra Accounts $
Foreign Accounts $
_____% Cross-aging Exclusion $
Other _________________________ $
Other _________________________ $
TOTAL INELIGIBLES $
3. Eligible Accounts Receivable (Line 1 minus Line 2) $
4. Accounts Receivable Advance Rate
5. Accounts Receivable Availability (Line 3 times Line 4) $
6. Inventory as of / / Source:
Type Gross Amount (-) Ineligible (X) Adv.Rate Total Inventory Availability
7. Other Availability _____________________________________________ $
8. Other Availability _____________________________________________ $
9. Total Gross Availability
(The lesser of the total of Lines 5, 6, 7 and 8 $
or Credit Line of $___________________)
10. Loan Balance $
11. Trade L/Cs Outstanding
12. Total of FX, SBLC, BA, and Bill of Lading Guarantee Exposures
13. Net Availability (Line 9 minus the total of Lines 10, 11, & 12)
_______________________________________
Prepared by
The Company named in the box above labeled "Company Name" (the "Company"), by
its duly authorized officer signing below,
hereby certifies that (a) the information set forth in this certificate is true
and correct as of the date(s) indicated herein and (b) the
Company is in compliance with all terms and provisions in (i) the loan or other
agreement between the Company and Back Bay Capital
Funding LLC, as agent, pursuant to which this certificate is delivered (the
"Agreement") and (ii) any and all documents, instruments
and agreements evidencing, governing or securing the Agreement or otherwise
executed in connection therewith.
Exhibit C
Form of Term Note
SECURED PROMISSORY NOTE
$40,000,000.00 October __, 2005
Boston, Massachusetts
FOR VALUE RECEIVED, the undersigned, ICON HEALTH & FITNESS, INC., a Delaware
corporation (the "Borrower") promises to pay to the order of BACK BAY CAPITAL
FUNDING LLC (the "Lender"), at the office of the Lender located at 40 Broad
Street, Boston, MA 02109 or such other office as the holder hereof may from time
to time designate in writing, in lawful money of the United States of America
and in immediate available funds, the principal amount of Forty Million Dollars
($40,000,000.00), together with interest from and after the date hereof on the
unpaid principal balance outstanding at a variable rate per annum as set forth
in the Junior Term Loan Credit Agreement between Borrower and Lender, as
Administrative Agent and as a Lender thereunder, of even date herewith
(hereinafter, as amended from time to time, the "Credit Agreement").
This Promissory Note (the "Note") is the Term Note referred to in, and is issued
pursuant to the Credit Agreement and is entitled to all of the benefits and
security of the Credit Agreement. All of the terms, covenants and conditions of
the Credit Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full. All capitalized terms used
herein, unless otherwise specifically defined in this Note, shall have the
meanings ascribed to them in the Credit Agreement.
The rate of interest in effect hereunder shall be calculated with reference to
the Applicable Rate, as more specifically provided in the Credit Agreement. The
interest due shall be computed in the manner provided in the Credit Agreement.
The principal and accrued interest of this Note shall be due and payable on the
dates and in the manner set forth in the Credit Agreement.
Notwithstanding the forgoing, the entire unpaid principal balance and any
accrued interest on this Note shall be due and payable immediately upon any
termination of the Credit Agreement.
This Note shall be subject to mandatory prepayment in accordance with the
provisions of Section 3.1 of the Credit Agreement. Borrower may also terminate
the Credit Agreement and, in connection with such termination, prepay this Note
in the manner provided in Section 2.6.3 of the Credit Agreement.
Upon the occurrence of an Event of Default, Lender shall have all rights and
remedies set forth in Section 12 of the Credit Agreement.
Time is of the essence of this Note. To the fullest extent permitted by
applicable law, The Borrower and every endorser and guarantor of this Note or
the obligation represented hereby waives presentment, demand, notice, protest
and all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assents to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
Wherever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or remaining provisions of this
Note. No delay or failure on the part of Lender in the exercise of any right or
remedy hereunder shall operate as a waiver thereof, nor as an acquiescence in
any default, nor shall any single or partial exercise by Lender of any right or
remedy preclude any other right or remedy. Lender, at its option, may enforce
its rights against any collateral securing this Note without enforcing its
rights against Borrower, any guarantor of the indebtedness evidenced hereby or
any other property or indebtedness due or to become due to Borrower. Borrower
agrees that, without releasing or impairing Borrower's liability hereunder,
Lender may at any time release, surrender, substitute or exchange any collateral
securing this Note and may at any time release any party primarily or
secondarily liable for the indebtedness evidenced by this Note.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL PURPOSES
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF
MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE
BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT
SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT
AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL
AT THE ADDRESS SPECIFIED IN SECTION 19 OF THE CREDIT AGREEMENT. THE BORROWER
HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF
ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT
COURT.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
This Note shall be deemed to take effect as a sealed instrument under the laws
of the Commonwealth of Massachusetts.
Attest/Witness:
ICON HEALTH & FITNESS, INC.
(Seal)
By:
Name:
Title:
By:
Name:
Title:
Exhibit D
Form of Compliance Certificate
Financial Statement Date: ________________
To: Back Bay Capital Funding LLC, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Junior Term Loan Credit Agreement, dated
as of October 31, 2005 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement;" the
terms therein being used herein as therein defined), by and among ICON Health &
Fitness, Inc., a Delaware corporation (the "Borrower"), the other Credit Parties
party thereto, the Lenders from time to time party thereto, and Back Bay Capital
Funding LLC, as Administrative Agent for itself and the other Lenders party
thereto.
The undersigned officer hereby certifies that s/he is the [chief financial
officer or cash manager] of the Borrower, and that, as such, s/he is authorized
to execute and deliver this certificate (this "Certificate") to the
Administrative Agent on the behalf of the Borrower, and that, after due inquiry:
1. The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and [select one:] has no knowledge of any Default or Event
of Default which has occurred and continues to exist as of the date of this
Certificate, or has knowledge of a Default or Event of Default and the
following is a list of each such Default or Event of Default and its nature and
status: [Insert Details]
2. The financial covenant analyses and information set forth on Schedule
1 attached hereto is true and accurate on and as of the date of this Certificate
and all computations therein were made in accordance with GAAP.
3. [Select one:] There is no event for which the Borrower or any other
Credit Party is required to give notice to the Administrative Agent or Lenders
pursuant to Section 7.5 of the Credit Agreement or the Borrower hereby gives
the Administrative Agent and Lenders notice of the following:
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
_____________ __, _____.
ICON HEALTH & FITNESS, INC.
By: ____________________________
Name:
Title:
Schedule 1 to Compliance Certificate
For the Period ended _______________________ ("Statement Date")
1. Section 9.1. Minimum Consolidated EBITDA [Select One]:
___ (i) No EBITDA Test Event has occurred; or
___ (ii) An EBITDA Test Event has occurred but the Borrower has
maintained Excess Availability of Forty Million Dollars ($40,000,000) or more
for a period of thirty (30) consecutive Business Days since the occurrence of
the EBITDA Test Event; or
___ (iii) The Borrower's Consolidated EBITDA for the relative period(s)
was as presented below (the calculations for which follow on Schedule 2):
Period Minimum Consolidated Actual Consolidated
EBITDA Required EBITDA
- ---------------------- -------------------- -------------------
Seven (7) fiscal month
period ending 12/31/05 $17,000,000
Nine (9) fiscal month
period ending 2/28/06 $38,000,000
Twelve (12) fiscal month
period ending 5/31/06 $40,300,000
Twelve (12) fiscal month
period ending 8/31/06 $41,550,000
Twelve (12) fiscal month
period ending 11/30/06 $42,800,000
Twelve (12) fiscal month
period ending 2/28/07 $44,050,000
Twelve (12) fiscal month
period ending 5/31/07 $45,300,000
Twelve (12) fiscal month
period ending 8/31/07 $47,050,000
Twelve (12) fiscal month
period ending 11/30/07 $48,800,000
Twelve (12) fiscal month
period ending 2/28/08 $50,550,000
Twelve (12) fiscal month
period ending 5/31/08 $52,300,000
Twelve (12) fiscal month
period ending on each fiscal
quarter period ended after
5/31/05 $52,300,000
2. Section 9.2. Ratio of Average Secured Funded Debt to
Consolidated EBITDA:
Twelve Month Period Ending Maximum Ratio Actual Ratio
- -------------------------- ------------- ------------
May 31, 2006 4.25:1
August 31, 2006 4.25:1
November 30, 2006 4.10:1
February 28, 2007 3.90:1
May 31, 2007 3.75:1
August 31, 2007 3.75:1
November 30, 2007 3.60:1
February 28, 2008 3.50:1
May 31, 2008 3.35:1
Each Fiscal quarter ended after
May 31, 2008 3.35:1
3. Pursuant to Section 9.3 of the Credit Agreement, as of the date of
this Certificate, the aggregate of all Indebtedness (as such term is defined in
the Subordinated Indenture) of the Credit Parties incurred pursuant to Sections
4.09(b)(1) and 4.09(b)(13) of the Subordinated Indenture, including, without
limitation, the Term Loan and the Senior Credit Facility Loan, does not exceed
the amount permitted to be incurred pursuant to such Sections 4.09(b)(1) and
4.09(b)(13).
Schedule 2 to Compliance Certificate
A. The Consolidated EBITDA for the ________ month period ending _________:
1. Consolidated net income of the Credit Parties: $_________________
plus
(without duplication):
2. Provision for income taxes: $_________________
3. Consolidated Interest Expense: $_________________
4. non-cash loss from extraordinary items: $_________________
5. non-cash charges (including depreciation
and amortization): $_________________
6. amortized debt discount: $_________________
7. deduction to consolidated net income as
the result of grants of capital stock to
management: $________________
minus
(without duplication):
8. income tax credits: $_________________
9. interest income: $_________________
10. gain from extraordinary items: $_________________
11. aggregate net gain arising from the
sale, exchange or other disposition of
capital assets by an Credit Party: $_________________
12. other non-cash gains added in determining
consolidated net income: $_________________
13. Consolidated EBITDA: $_________________
B. The Average Secured Funded Debt to Consolidated EBITDA for the twelve month
period ending _____________________:
1. Average Secured Funded Debt $________________
2. Consolidated EBITDA $________________
3. Ratio of Item 1 to Item 2 _______:_________
Exhibit E
Form of Indenture Borrowing Base Report
[Date]_________ __, ____
To: Back Bay Capital Funding LLC, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Junior Term Loan Credit Agreement, dated
as of October 31, 2005 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement"), by and
among ICON Health & Fitness, Inc., a Delaware corporation (the "Borrower"), the
other Credit Parties party thereto, the Lenders from time to time party thereto,
and Back Bay Capital Funding LLC, as Administrative Agent for itself and the
other Lenders. Capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Credit Agreement.
The undersigned officer hereby certifies, in such capacity and not
individually, that s/he is the [chief financial officer or cash manager] of the
Borrower, and that, as such, s/he is authorized to execute and deliver this
Indenture Borrowing Base Report to the Administrative Agent on behalf of the
Borrower, and that:
1. All the information set forth in this Indenture Borrowing Base Report
is true and correct as of the date(s) indicated herein; and
2. As of the date hereof, the Borrower is in compliance with all terms
and provisions contained in the Credit Agreement and the other Loan Documents
IN WITNESS WHEREOF, the undersigned has executed this Indenture Borrowing
Base Report pursuant to section 7.4(f) of the Credit Agreement, as of the date
first written above.
ICON HEALTH & FITNESS, INC.
By: ____________________________
Name:
Title:
INDENTURE BORROWING BASE REPORT
As of _______________ __, ____
(To be calculated as set forth in the Credit Agreement with reference to the
Subordinated Indenture)
For the Fiscal Quarter ending on the date set forth above:
AR Per Aging
Less
Over 90
Intercompany
AR Less Ineligibles
AR Advance Rate (85%)
Available AR
Inventory per perpetual
Inventory Advance Rate
[60% or 70%]
Indenture Borrowing Base
Additional Allowable Debt
Total amount of "Senior Debt"
Exhibit F
Excess Availability Report
[Date]_________ __, 20__
To: Back Bay Capital Funding LLC, as Administrative Agent
Ladies and Gentlemen:
Reference is made to that certain Junior Term Loan Credit Agreement, dated
as of October 31, 2005 (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the "Credit Agreement"), by and
among ICON Health & Fitness, Inc., a Delaware corporation (the "Borrower"), the
other Credit Parties party thereto, the Lenders from time to time party thereto,
and Back Bay Capital Funding LLC, as Administrative Agent for itself and the
other Lenders. Capitalized terms used herein and not defined herein shall have
the meanings ascribed to them in the Credit Agreement.
The undersigned officer hereby certifies, in such capacity and not
individually, that s/he is the [chief financial officer or cash manager] of the
Borrower, and that, as such, s/he is authorized to execute and deliver this
Excess Availability Report to the Administrative Agent on behalf of the
Borrower, and that:
1. Attached hereto as Schedule 1 is a calculation of Excess
Availability as of each Business Day since the date of the last Excess
Availability Report delivered by the Borrower to the Administrative Agent.
2. The calculations set forth on Schedule 1 attached hereto are true
and accurate as of the date of this Report, and to the extent applicable and
required under the terms of the Credit Agreement, were determined by reference
to the Senior Credit Facility Loan Agreement (as defined in the Credit
Agreement), as in effect as of the Closing Date.
IN WITNESS WHEREOF, the undersigned has executed this Excess Availability
Report pursuant to section 7.4(e) of the Credit Agreement, as of the date first
written above.
ICON HEALTH & FITNESS, INC.
By:_____________________
Name:
Title:
Schedule 1 to Excess Availability Report
For the Period ended _______ __, 20__
1. Date
2. Total Commitment1
3. Borrowing Base
4. Lesser of Column (2) and Column (3)
5. Revolving Credit Exposure
6. Excess Availability (Difference between Column 4 and Column 5)
1 Select as applicable.
* Amount to be adjusted by the counterparties to take into account any payments
or prepayments made between the Trade Date and the Effective Date.
2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.
3 To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.
4 To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.
5 To be added only if the consent of the Borrower and/or other parties is
required by the terms of the Credit Agreement.
6 The concept of "Non-U.S. Lender" should be conformed to the section in the
Credit Agreement governing withholding taxes and gross-up.
1 Unless otherwise indicated, capitalized terms used in this Excess Availability
Report have the respective meanings ascribed to such terms in the Senior Credit
Facility Loan Agreement, as in effect on the Closing Date, without giving effect
to subsequent amendments.