EXHIBIT 10.2
On September 16, 1998, the Company entered into Note Purchase Agreements with four separate entities. The Note Purchase Agreement between Converse and Foothill Partners III, L.P. dated September 16, 1998 is attached hereto. The following three Note Purchase Agreements have been omitted as exhibits in accordance with Item 601, Instruction 2, of Regulation S-K, and are identical on all material respects, except for the parties thereto and the differences set forth below:
1. Note Purchase Agreement dated September 16, 1998 between the Company
and BIII Capital Partners, L.P.
A. Aggregate principal amount of Series A Secured Notes Purchased:
$6,311,920.
B. Aggregate Principal Amount of Series B Secured Notes Purchased:
$2,306,700.
C. Shares of Common Stock Purchasable upon exercise of warrants:
91,412.
D. Fees payable to purchaser in connection with the sale of Secured
Notes: $0.
2. Note Purchase Agreement dated September 16, 1998 between the Company
and DDJ Canadian High Yield Fund
A. Aggregate principal amount of Series A Secured Notes Purchased:
$4,045,408.
B. Aggregate Principal Amount of Series B Secured Notes Purchased:
$1,478,400.
C. Shares of Common Stock Purchasable upon exercise of warrants:
58,588.
D. Fees payable to purchaser in connection with the sale of Secured
Notes: $0.
3. Note Purchase Agreement dated September 16, 1998 between the Company
and Libra Investments, Inc.
A. Aggregate principal amount of Series A Secured Notes Purchased:
$4,142,931.
B. Aggregate Principal Amount of Series B Secured Notes Purchased:
$0.
C. Shares of Common Stock Purchasable upon exercise of warrants:
60,000.
D. Fees payable to purchaser in connection with the sale of Secured
Notes: $100,000.
EXHIBIT 10.2
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CONVERSE INC.
$28,642,687
15% SENIOR SECURED NOTES
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NOTE PURCHASE AGREEMENT
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DATED AS OF SEPTEMBER 16, 1998
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TABLE OF CONTENTS
SECTION PAGE - ------ ---- 1. THE SECURED NOTES........................................................................................................ 5 1.1. Authorization of Secured Notes....................................................................................... 5 1.2. Interest on the Secured Notes........................................................................................ 5 1.3. Initial Maturity Date; First Extended Maturity Date; Final Maturity Date............................................. 6 2. SALE AND PURCHASE OF SECURED NOTES....................................................................................... 6 3. CLOSING.................................................................................................................. 7 4. CONDITIONS TO CLOSING.................................................................................................... 7 4.1. Representations and Warranties....................................................................................... 7 4.2. Performance; No Default.............................................................................................. 7 4.3. Documents Required................................................................................................... 8 4.4. Opinions of Counsel.................................................................................................. 9 4.5. Purchase Permitted by Applicable Law, etc............................................................................ 9 4.6. No Litigation or Other Proceedings................................................................................... 9 4.7. Sale of Other Secured Notes.......................................................................................... 10 4.8. No Material Adverse Change........................................................................................... 10 4.9. No Material Adverse Change to Financial Markets...................................................................... 10 4.10. Fees and Expenses................................................................................................... 10 4.11. Ancillary Documents and Perfection of Security Interest............................................................. 10 4.12. Revolving Credit Agreement.......................................................................................... 11 4.13. Proceedings and Documents........................................................................................... 11 4.14. Warrant Agreement and the Warrants.................................................................................. 11 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................................ 11 5.1. Corporate Existence; Qualification; Power; Licenses and Permits...................................................... 11 5.2. Corporate and Governmental Authorization; Contravention.............................................................. 12 5.3. Binding Effect....................................................................................................... 12 5.4. Information.......................................................................................................... 12 5.5. Litigation and Judgments............................................................................................. 13 5.6. Compliance with ERISA................................................................................................ 13 5.7. Taxes................................................................................................................ 14 5.8. Subsidiaries......................................................................................................... 15 5.9. Not an Investment Company............................................................................................ 15 5.10. No Conflicting Requirements......................................................................................... 15 5.11. Debt................................................................................................................ 16 5.12. Title to Properties and Assets...................................................................................... 16 5.13. Compliance with Law................................................................................................. 17 5.14. Compliance with Environmental Laws.................................................................................. 18 5.15. Security Interests and Liens; Inventory and Equipment............................................................... 19 5.16. Labor Relations..................................................................................................... 19 5.17. UCC Filing Information.............................................................................................. 20 5.18. Solvency............................................................................................................ 20 5.19. Fictitious Business Names........................................................................................... 20
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5.20. Use of Proceeds..................................................................................................... 21 5.21. Margin Security..................................................................................................... 21 5.22. Survival of Representations......................................................................................... 21 5.23. Affiliate Transactions.............................................................................................. 21 5.24. Accuracy and Completeness of Information............................................................................ 21 5.25. Status of Accounts.................................................................................................. 22 6. REPRESENTATIONS OF THE PURCHASER......................................................................................... 22 6.1. Purchase for Investment.............................................................................................. 22 6.2. Source of Funds...................................................................................................... 22 6.3. Placement Agent...................................................................................................... 23 7. PREPAYMENT OF THE SECURED NOTES.......................................................................................... 24 7.1. Voluntary Prepayments................................................................................................ 24 7.2. Mandatory Prepayments................................................................................................ 24 7.3. Allocation of Partial Prepayments.................................................................................... 25 7.4. Maturity; Surrender, etc............................................................................................. 25 7.5. Purchase of Secured Notes............................................................................................ 26 8. AFFIRMATIVE COVENANTS.................................................................................................... 26 8.1. Information.......................................................................................................... 26 8.2. Payment of Obligations............................................................................................... 28 8.3. Maintenance of Property; Insurance................................................................................... 29 8.4. Compliance with Laws................................................................................................. 30 8.5. Inspection of Property, Books and Records; Change of Name, Principal Place of Business, Location of Collateral, Etc.. 30 8.6. Compliance with Note Documents....................................................................................... 31 8.7. Covenant to Mortgage After-Acquired Property......................................................................... 31 8.8. Corporate Existence.................................................................................................. 32 8.9. ERISA................................................................................................................ 32 8.10. Environmental Matters............................................................................................... 34 8.11. Collateral Records.................................................................................................. 35 8.12. Security Interests.................................................................................................. 35 8.13. Taxes............................................................................................................... 36 8.14. Collection of Accounts.............................................................................................. 36 8.15. Notice; Credit Memoranda; Returned Goods............................................................................ 37 8.16. Trademarks.......................................................................................................... 37 8.17. Patents............................................................................................................. 37 9. NEGATIVE COVENANTS....................................................................................................... 37 9.1. Debt and Guarantees.................................................................................................. 38 9.2. Restricted Payments.................................................................................................. 39 9.3. Investments.......................................................................................................... 39 9.4. Negative Pledge...................................................................................................... 40 9.5. Consolidations, Mergers and Sales of Assets.......................................................................... 41 9.6. Capital Expenditures................................................................................................. 42 9.7. Minimum EBITDA....................................................................................................... 43 9.8. Transactions with Affiliates......................................................................................... 44 9.9. Restrictions on Foreign Subsidiary Support........................................................................... 44
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9.10. Environmental Matters............................................................................................... 45 9.11. Amendments to Certificates of Incorporation and By-Laws and Revolving Credit Agreement.............................. 45 9.12. No Prohibited Transactions Under ERISA.............................................................................. 45 9.13. No Additional Bank Accounts......................................................................................... 46 9.14. No Additional Subsidiaries.......................................................................................... 46 10. EVENTS OF DEFAULT....................................................................................................... 47 10.1. Events of Default................................................................................................... 47 10.2. Acceleration........................................................................................................ 49 10.3. Remedies on Default................................................................................................. 50 11. REGISTRATION; EXCHANGE; SUBSTITUTION OF SECURED NOTES................................................................... 51 11.1. Registration of Secured Notes....................................................................................... 52 11.2. Transfer and Exchange of Secured Notes.............................................................................. 52 11.3. Replacement of Secured Notes........................................................................................ 53 12. PAYMENTS ON SECURED NOTES............................................................................................... 53 13. EXPENSES AND INDEMNIFICATION............................................................................................ 54 13.1. Transaction Expenses................................................................................................ 54 13.2. Indemnification..................................................................................................... 54 13.3. Survival............................................................................................................ 56 14. ENTIRE AGREEMENT........................................................................................................ 56 15. AMENDMENT AND WAIVER.................................................................................................... 56 15.1. Requirements........................................................................................................ 56 15.2. Solicitation of Holders of Secured Notes............................................................................ 57 15.3. Binding Effect, etc................................................................................................. 57 15.4. Secured Notes Held by Company, Etc.................................................................................. 57 16. NOTICES................................................................................................................. 58 17. REPRODUCTION OF DOCUMENTS............................................................................................... 58 18. CONFIDENTIAL INFORMATION................................................................................................ 59 19. SUBSTITUTION OF PURCHASER............................................................................................... 60 20. MISCELLANEOUS........................................................................................................... 60 20.1. Successors and Assigns.............................................................................................. 60 20.2. Payments Due on Non-Business Days................................................................................... 60 20.3. Satisfaction Requirement............................................................................................ 60 20.4. Severability........................................................................................................ 61 20.5. Construction........................................................................................................ 61 20.6. Counterparts........................................................................................................ 61 20.7. Governing Law....................................................................................................... 61 20.8. Consent to Jurisdiction; Release of Collateral...................................................................... 61 20.9. Waiver of Jury Trial................................................................................................ 63
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SCHEDULES
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Schedule I - Information Relating to the Purchasers Schedule II - Defined Terms Schedule 5.5 - Litigation and Judgments Schedule 5.6 - Compliance with ERISA Schedule 5.7 - Taxes Schedule 5.8 - Subsidiaries Schedule 5.12(a) - Real Property Owned and Leased Schedule 5.12(b) - Patents and Trademarks Schedule 5.14 - Compliance with Environmental Laws Schedule 5.15 - Security Interests and Liens; Inventory and
Equipment Schedule 5.17 - UCC Filing Information Schedule 5.19 - Fictitious Business Names Schedule 5.23 - Affiliate Transactions Schedule 9.1 - Debt and Guarantees Schedule 9.3 - Investments Schedule 9.13 - Bank Accounts
EXHIBITS
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Exhibit A - Form of Secured Note Exhibit B - Form of Security Agreement Exhibit C - Form of Trademark Security Agreement Exhibit D - Form of Patent Security Agreement Exhibit E - Form of Pledge Agreement Exhibit F - Form of Opinion of Counsel to the Company Exhibit G - Form of Opinion of Special Counsel to the Company Exhibit H - Form of Compliance Certificate
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CONVERSE INC.
ONE FORDHAM ROAD
NORTH READING, MA 01864
15% SENIOR SECURED NOTES
As of September 16, 1998
TO EACH OF THE PURCHASERS LISTED
ON THE ATTACHED SCHEDULE I:
Ladies and Gentlemen:
Converse Inc., a Delaware corporation (the "COMPANY"), agrees with you, as "PURCHASER", as follows:
1. THE SECURED NOTES.
1.1. AUTHORIZATION OF SECURED NOTES.
The Company will authorize the issue and sale of $28,642,687 aggregate principal amount of its 15% Senior Secured Notes due September 16, 2000 (the "INITIAL MATURITY DATE"), as such due date may be extended as provided in Section 1.3 hereof (the Notes delivered pursuant to Section 2 of this Agreement and the Other Agreements (as hereinafter defined) and any such Note issued in substitution therefor pursuant to Section 11 of this Agreement being, collectively, the "SECURED NOTES"). The Secured Notes shall be issued in two series: Series A will be in the aggregate principal amount of $24,857,587 (the "SERIES A SECURED NOTES") and Series B will be in the aggregate principal amount of $3,785,100 (the "SERIES B SECURED NOTES"). The Secured Notes shall be substantially in the form set out in Exhibit A, with such changes therefrom, if any, as may be approved by Purchaser and the Company. Certain capitalized terms used in this Agreement are defined in Schedule II; references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.
1.2. INTEREST ON THE SECURED NOTES.
The Company shall pay interest on the unpaid principal amount of the Secured Notes from their respective date of issuance until such Secured Notes are paid in full at a rate of 15% per annum, payable in arrears quarterly on March 31, June 30, September 30 and December 31 of each year beginning on the first such date after the respective date of issuance and on the Initial Maturity Date (unless one or two elections have been made by the Company under Section 1.3 hereof, in which case, and on the First Extended Maturity Date or the Final Maturity Date, as
the case may be), provided that upon the occurrence and during the continuance of any Event of Default, interest shall accrue on the unpaid principal amount of the Secured Notes at a rate of 18% per annum and shall be payable from time to time on such quarterly dates or, at the option of the Purchaser, on demand. Interest on the Secured Notes shall be computed on the basis of a 360-day year for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.
1.3. INITIAL MATURITY DATE; FIRST EXTENDED MATURITY DATE; FINAL MATURITY DATE.
The Secured Notes shall be due and payable in full on the Initial Maturity Date, provided, that not less than 60 days, and not more than 90 days,
-------- prior to the Initial Maturity Date, the Company, at its option and provided that no Default or Event of Default is continuing at the time of such notice or of the contemplated extension thereunder, may elect to extend the maturity date of the Secured Notes by twelve (12) months by giving written notice to the Agent and to the holders of the Secured Notes that the Company intends to make such an extension to such extended maturity date (the "FIRST EXTENDED MATURITY DATE") and the Initial Maturity Date shall be extended to the First Extended Maturity Date provided that on or before the Initial Maturity Date the Company shall have paid to each holder of the Secured Notes an additional amount equal to 3% of the then outstanding principal amount of the Secured Notes held by such holder. In addition, not less than 60 days, and not more than 90 days, prior to the First Extended Maturity Date, the Company, at its option and provided that no Default or Event of Default is continuing at the time of such notice or of the contemplated extension thereunder, may elect to extend the maturity date of the Secured Notes to May 21, 2002 (the "FINAL MATURITY DATE") by giving written notice to the holders of the Secured Notes that it intends to make such an extension and the First Extended Maturity Date shall be extended to the Final Maturity Date provided that on or before the First Extended Maturity Date the Company shall have paid to each holder of Secured Notes an additional amount equal to 3% of the then outstanding principal amount of the Secured Notes held by such holder.
2. SALE AND PURCHASE OF SECURED NOTES.
Subject to the terms and conditions of this Agreement, the Company will issue and sell to Purchaser and Purchaser will purchase from the Company, at the Closing provided for in Section 3, Series A Secured Notes in the principal amount specified opposite Purchaser's name on Schedule I at the purchase price of 96.55% of the principal amount thereof. Contemporaneously with entering into this Agreement, the Company is entering into separate Note Purchase Agreements (the "OTHER AGREEMENTS") substantially identical to this Agreement with each of the other purchasers named in Schedule I (the "OTHER PURCHASERS" and, together with the Purchaser, the "PURCHASERS"), providing for the sale at such Closing to each of the Other Purchasers of Series A Secured Notes in the principal amount specified opposite its name on Schedule I and for the sale of the Series B Secured Notes in the principal amount of $3,785,100. Purchaser's obligation hereunder and the obligations of the Other Purchasers under the Other Agreements are several and not joint obligations and Purchaser shall have no
obligation under any Other Agreement and no liability to any Person for the performance or nonperformance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Series A Secured Notes and the sale and purchase of the Series B Secured Notes to be purchased by the Purchasers shall occur at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022 at 10:00 a.m., New York City time, at a closing (the "CLOSING") on September 17, 1998 or on such other Business Day thereafter on or prior to September 30, 1998 as may be agreed upon by the Company and the Purchasers (the "CLOSING DATE"). At the Closing the Company will deliver to Purchaser the Series A Secured Notes to be purchased by Purchaser in the form of a single Secured Note (or such greater number of Secured Notes in denominations of at least $500,000 as Purchaser may request) dated the Closing Date and registered in Purchaser's name (or in the name of Purchaser's nominee), against delivery in the case of the Series A Secured Notes to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to such account or accounts in the United States as shall be designated in writing by the Company to the Purchaser and in the case of the Series B Secured Notes to the Company of Subordinated Notes in the aggregate principal amount of $5,735,000. If at the Closing the Company shall fail to tender such Secured Notes to Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to Purchaser's satisfaction, Purchaser shall, at Purchaser's election, be relieved of all further obligations under this Agreement, without thereby waiving any rights Purchaser may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
