SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
January 12, 1996 (December 29, 1995)
INTERCO INCORPORATED
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(Exact name of Registrant as specified in charter)
Delaware I-91 43-0337683
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(State of (Commission (IRS Employer
Incorporation) File Number) Identification Number)
101 South Hanley Road, St. Louis, Missouri 63105
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(Address of principal executive offices)
(314) 863-1100
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(Registrant's telephone number)<PAGE>
Item 2. Acquisition of Assets
(a) On December 29, 1995, the Company purchased from a
subsidiary of Armstrong World Industries, Inc. all of the issued and
outstanding common stock of Thomasville Furniture Industries, Inc., a
Pennsylvania corporation ("Thomasville"), in exchange for
approximately $331 million in cash at closing. The Company also
assumed $8 million in long-term debt of Thomasville.
In connection with the acquisition, the Company entered into a
new senior secured credit agreement with a syndicate of financial
institutions led by Bankers Trust Company, Credit Lyonnais New York
Branch and NationsBank, N.A. The credit agreement consists of three
term loan facilities totaling $450 million and a $180 million
revolving credit facility. In addition, the Company's existing
receivables securitization facility with Credit Lyonnais has been
increased from $150 million to $225 million. Proceeds from the new
term loan facilities, an initial funding of $71 million from the
revolving credit facility and an additional $55 million from the
receivables securitization facility have been used to finance the
purchase of Thomasville and to repay the balance under the Company's
previous $285 million secured credit agreement.
b) Thomasville, based in Thomasville, North Carolina,
manufactures and markets residential wood and upholstered furniture
under the Thomasville name as well as a separate line of promotional
and ready-to-assemble furniture. The Company intends that Thomasville
will continue its furniture business.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired
It is impracticable to provide the required financial statements
on the date this report is filed. The Company intends to file
such financial statements as soon as practicable, but in any
event within 60 days after this report is filed.
(b) Pro forma financial information
It is impracticable to provide the required pro forma financial
information on the date this report is filed. The Company
intends to file such pro forma financial information as soon as
practicable, but in any event within 60 days after this report is
filed.
(c) 2 Stock Purchase Agreement by and among Armstrong World
Industries, Inc., Armstrong Enterprises, Inc. and the
Company, dated as of November 18, 1995.
99 (a) Credit Agreement among the Company, Broyhill Furniture
Industries, Inc., The Lane Company, Incorporated,
Thomasville Furniture Industries, Inc., Various Banks,
Credit Lyonnais New York Branch, as Documentation
Agent, Nationsbank, N.A., as Syndication Agent, and
Bankers Trust Company, as Administration Agent, dated
as of November 17, 1994 and amended and restated as of
December 29, 1995.
99(b) Receivables Purchase Agreement, dated as of November
15, 1994, as amended and restated as of December 29,
1995, among Interco Receivables Corp., as the Seller,
and Atlantic Asset Securitization Corp., as an
Investor, and Credit Lyonnais New York Branch, as the
Agent.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
INTERCO INCORPORATED
BY: Steven W. Alstadt
------------------------
Steven W. Alstadt
Controller and Chief
Accounting Officer
January 12, 1996<PAGE>
CREDIT AGREEMENT
among
INTERCO INCORPORATED,
BROYHILL FURNITURE INDUSTRIES, INC.,
THE LANE COMPANY, INCORPORATED,
THOMASVILLE FURNITURE INDUSTRIES, INC.,
VARIOUS BANKS,
CREDIT LYONNAIS NEW YORK BRANCH,
as DOCUMENTATION AGENT,
NATIONSBANK, N.A.,
as SYNDICATION AGENT,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
Dated as of November 17 , 1994
and
Amended and Restated as of December 29, 1995<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit . . . . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . . . . 6
1.03 Notice of Borrowing . . . . . . . . . . . . . . 6
1.04 Disbursement of Funds . . . . . . . . . . . . . 7
1.05 Notes . . . . . . . . . . . . . . . . . . . . . 8
1.06 Conversions . . . . . . . . . . . . . . . . . . 10
1.07 Pro Rata Borrowings . . . . . . . . . . . . . . 11
1.08 Interest . . . . . . . . . . . . . . . . . . . . 11
1.09 Interest Periods . . . . . . . . . . . . . . . . 12
1.10 Increased Costs, Illegality, etc. . . . . . . . 13
1.11 Compensation . . . . . . . . . . . . . . . . . . 16
1.12 Change of Lending Office . . . . . . . . . . . . 16
1.13 Replacement of Banks . . . . . . . . . . . . . . 16
SECTION 2. Letters of Credit . . . . . . . . . . . . . . . 18
2.01 Letters of Credit . . . . . . . . . . . . . . . 18
2.02 Minimum Stated Amount . . . . . . . . . . . . . 20
2.03 Letter of Credit Requests . . . . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . . . . 21
2.05 Agreement to Repay Letter of Credit Drawings and
Acceptance Payments . . . . . . . . . . . . . . . . . . 23
2.06 Increased Costs . . . . . . . . . . . . . . . . 24
SECTION 3. Commitment Commission; Fees; Reductions of Commit-
ment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.01 Fees . . . . . . . . . . . . . . . . . . . . . . 25
3.02 Voluntary Termination of Unutilized Commitments 26
3.03 Mandatory Reduction of Commitments . . . . . . . 27
SECTION 4. Prepayments; Payments; Taxes . . . . . . . . . . 28
4.01 Voluntary Prepayments . . . . . . . . . . . . . 28
4.02 Mandatory Repayments, Cash Collateralizations and
Commitment Reductions . . . . . . . . . . . . . . . . . 30
4.03 Method and Place of Payment . . . . . . . . . . 39
4.04 Net Payments . . . . . . . . . . . . . . . . . . 39
SECTION 5. Conditions Precedent to Initial Credit Events . 41
5.01 Execution of Agreement; Notes . . . . . . . . . 42
5.02 Fees, etc. . . . . . . . . . . . . . . . . . . . 42
5.03 Opinions of Counsel . . . . . . . . . . . . . . 42
5.04 Corporate Documents; Proceedings; etc. . . . . . 42
5.05 Shareholders' Agreements; Collective Bargaining
Agree ments; Permitted Debt Agreements; Tax Sharing
Agreements . . . . . . . . . . . . . . . . . . . . . . . 43
5.06 Solvency; Environmental Analyses; Insurance
Matters . . . . . . . . . . . . . . . . . . . . 44
5.07 Receivables Facility . . . . . . . . . . . . . . 44
5.08 Subsidiary Guaranty . . . . . . . . . . . . . . 44
5.09 Pledge Agreement . . . . . . . . . . . . . . . . 44
5.10 Security Agreement . . . . . . . . . . . . . . . 45
5.11 Mortgages; Title Insurance; Surveys; etc. . . . 46
5.12 Consent Letter . . . . . . . . . . . . . . . . . 47
5.13 Adverse Change; Governmental Approvals; etc. . . 47
5.14 Litigation . . . . . . . . . . . . . . . . . . . 48
5.15 Pro Forma Balance Sheet; Financial Statements;
Projections . . . . . . . . . . . . . . . . . . . . 48
5.16 Acquisition; etc. . . . . . . . . . . . . . . . 49
5.17 Original Credit Agreement; etc. . . . . . . . . 49
SECTION 6. Conditions Precedent to All Credit Events . . . 50
6.01 No Default; Representations and Warranties . . . 50
6.02 Notice of Borrowing; Letter of Credit Request . 50
SECTION 7. Representations, Warranties and Agreements . . . 51
7.01 Corporate Status . . . . . . . . . . . . . . . . 51
7.02 Corporate Power and Authority . . . . . . . . . 51
7.03 No Violation . . . . . . . . . . . . . . . . . . 52
7.04 Governmental Approvals . . . . . . . . . . . . . 52
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc. . . . . . . . 52
7.06 Litigation . . . . . . . . . . . . . . . . . . . 54
7.07 True and Complete Disclosure . . . . . . . . . . 55
7.08 Use of Proceeds; Margin Regulations . . . . . . 55
7.09 Tax Returns and Payments . . . . . . . . . . . . 56
7.10 Compliance with ERISA . . . . . . . . . . . . . 57
7.11 The Security Documents . . . . . . . . . . . . . 58
7.12 Representations and Warranties in Other Documents 59
7.13 Properties . . . . . . . . . . . . . . . . . . . 59
7.14 Capitalization . . . . . . . . . . . . . . . . . 60
7.15 Subsidiaries . . . . . . . . . . . . . . . . . . 61
7.16 Compliance with Statutes, etc. . . . . . . . . . 61
7.17 Investment Company Act . . . . . . . . . . . . . 61
7.18 Public Utility Holding Company Act . . . . . . . 61
7.19 Environmental Matters . . . . . . . . . . . . . 61
7.20 Labor Relations . . . . . . . . . . . . . . . . 62
7.21 Patents, Licenses, Franchises and Formulas . . . 63
7.22 Indebtedness . . . . . . . . . . . . . . . . . . 63
7.23 Transaction . . . . . . . . . . . . . . . . . . 63
7.24 Special Purpose Corporation . . . . . . . . . . 63
SECTION 8. Affirmative Covenants . . . . . . . . . . . . . 64
8.01 Information Covenants . . . . . . . . . . . . . 64
8.02 Books, Records and Inspections . . . . . . . . . 68
8.03 Maintenance of Property; Insurance . . . . . . . 68
8.04 Corporate Franchises . . . . . . . . . . . . . . 69
8.05 Compliance with Statutes, etc. . . . . . . . . . 70
8.06 Compliance with Environmental Laws . . . . . . . 70
8.07 ERISA . . . . . . . . . . . . . . . . . . . . . 71
8.08 End of Fiscal Years; Fiscal Quarters . . . . . . 72
8.09 Performance of Obligations . . . . . . . . . . . 73
8.10 Payment of Taxes . . . . . . . . . . . . . . . . 73
8.11 Additional Security; Further Assurances; Required
Appraisals . . . . . . . . . . . . . . . . . . . . . . . 73
8.12 Interest Rate Protection . . . . . . . . . . . . 75
8.13 Ownership of Subsidiaries . . . . . . . . . . . 76
8.14 Permitted Acquisitions . . . . . . . . . . . . . 76
8.15 Maintenance of Corporate Separateness . . . . . 77
8.16 Cash Management System . . . . . . . . . . . . . 77
SECTION 9. Negative Covenants . . . . . . . . . . . . . . 78
9.01 Liens . . . . . . . . . . . . . . . . . . . . . 78
9.02 Consolidation, Merger, Purchase or Sale of Assets,
etc. . . . . . . . . . . . . . . . . . . . . . 81
9.03 Dividends . . . . . . . . . . . . . . . . . . . 83
9.04 Indebtedness . . . . . . . . . . . . . . . . . . 84
9.05 Investments; etc. . . . . . . . . . . . . . . . 87
9.06 Transactions with Affiliates and Unrestricted
Subsidiaries . . . . . . . . . . . . . . . . . 89
9.07 Capital Expenditures . . . . . . . . . . . . . . 90
9.08 Consolidated Net Interest Coverage Ratio . . . . 91
9.09 Consolidated EBITDA; Cumulative Consolidated
EBITDA . . . . . . . . . . . . . . . . . . . . 92
9.10 Maximum Leverage Ratio . . . . . . . . . . . . . 94
9.11 Limitation on Modifications of and Payments on
Indebtedness and Qualified Preferred Stock;
Modifications of Certificate of Incorporation,
By-Laws and Certain Other Agreements; Surviving
Guaranty Payments, etc. . . . . . . . . . . . . 95
9.12 Limitation on Creation or Acquisition of Sub-
sidiaries and Restricted Subsidiaries . . . 97
9.13 Limitation on Issuance of Capital Stock . . . . 97
9.14 Business . . . . . . . . . . . . . . . . . . . . 99
9.15 Limitation on Certain Restrictions on
Subsidiaries . . . . . . . . . . . . . . . . . . 99
9.16 Limitation on Receivables and Receivables
Facility . . . . . . . . . . . . . . . .. . . .100
SECTION 10. Events of Default . . . . . . . . . . . . . . . 100
10.01 Payments . . . . . . . . . . . . . . . . . . . 100
10.02 Representations, etc. . . . . . . . . . . . . . 100
10.03 Covenants . . . . . . . . . . . . . . . . . . . 101
10.04 Default Under Other Agreements . . . . . . . . 101
10.05 Bankruptcy, etc. . . . . . . . . . . . . . . . 101
10.06 ERISA . . . . . . . . . . . . . . . . . . . . . 102
10.07 Security Documents . . . . . . . . . . . . . . 102
10.08 Subsidiary Guaranty . . . . . . . . . . . . . . 103
10.09 Judgments . . . . . . . . . . . . . . . . . . . 103
10.10 Change of Control . . . . . . . . . . . . . . . 103
10.11 Tax Sharing Agreement . . . . . . . . . . . . . 103
10.12 Receivables Repurchases . . . . . . . . . . . . 103
SECTION 11. Definitions and Accounting Terms . . . . . . . 104
11.01 Defined Terms . . . . . . . . . . . . . . . . . 104
SECTION 12. The Agents . . . . . . . . . . . . . . . . . . 150
12.01 Appointment . . . . . . . . . . . . . . . . . . 150
12.02 Nature of Duties . . . . . . . . . . . . . . . 150
12.03 Lack of Reliance on the Administrative Agent, the
Documentation Agent and the Syndication
Agent . . . . . . . . . . . . . . . . . . . 151
12.04 Certain Rights of the Administrative Agent, the
Documentation Agent and the Syndication
Agent . . . . . . . . . . . . . . . . . . . 151
12.05 Reliance . . . . . . . . . . . . . . . . . . . 152
12.06 Indemnification . . . . . . . . . . . . . . . . 152
12.07 The Administrative Agent, the Documentation Agent
and the Syndication Agent in its Individual Capacity . 152
12.08 Holders . . . . . . . . . . . . . . . . . . . . 153
12.09 Resignation by the Agents . . . . . . . . . . . 153
SECTION 13. Miscellaneous . . . . . . . . . . . . . . . . 154
13.01 Payment of Expenses, etc. . . . . . . . . . . . 154
13.02 Right of Setoff . . . . . . . . . . . . . . . . 155
13.03 Notices . . . . . . . . . . . . . . . . . . . . 155
13.04 Benefit of Agreement . . . . . . . . . . . . . 156
13.05 No Waiver; Remedies Cumulative . . . . . . . . 158
13.06 Payments Pro Rata . . . . . . . . . . . . . . . 158
13.07 Calculations; Computations . . . . . . . . . . 159
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE;
WAIVER OF JURY TRIAL . . . . . . . . . . . . 160
13.09 Counterparts . . . . . . . . . . . . . . . . . 161
13.10 Effectiveness . . . . . . . . . . . . . . . . . 161
13.11 Headings Descriptive . . . . . . . . . . . . . 162
13.12 Amendment or Waiver; etc. . . . . . . . . . . . 162
13.13 Survival . . . . . . . . . . . . . . . . . . . 164
13.14 Domicile of Loans . . . . . . . . . . . . . . . 164
13.15 Limitation on Additional Amounts, etc. . . . . 165
13.16 Confidentiality . . . . . . . . . . . . . . . . 165
13.17 Register . . . . . . . . . . . . . . . . . . . 166
13.18 Addition of New Banks; Conversion of Original Loans
of Continuing Banks; Termination of Commitments
of Non-Continuing Banks . . . . . . . . . . 166
13.19 Post Closing Actions . . . . . . . . . . . . . 168<PAGE>
CREDIT AGREEMENT, dated as of November 17, 1994 and amended
and restated as of December 29, 1995, among INTERCO INCORPORATED,
a Delaware corporation ("INTERCO"), BROYHILL FURNITURE
INDUSTRIES, INC., a North Carolina corporation ("Broyhill"), THE
LANE COMPANY, INCORPORATED, a Virginia corporation ("Lane"),
THOMASVILLE FURNITURE INDUSTRIES, INC., a Pennsylvania
corporation ("Thomasville" and together with INTERCO, Broyhill
and Lane, each a "Borrower," and, collectively, the "Borrowers"),
the Banks party hereto from time to time, CREDIT LYONNAIS NEW
YORK BRANCH ("Credit Lyonnais"), as Documentation Agent,
NATIONSBANK, N.A. ("NationsBank"), as Syndication Agent, and
BANKERS TRUST COMPANY, as Administrative Agent (all capitalized
terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, the Borrowers (other than Thomasville), the
Original Banks and the Administrative Agent are party to a Credit
Agreement, dated as of November 17, 1994 (as in effect
immediately prior to the Restatement Effective Date, the
"Original Credit Agreement");
WHEREAS, as part of the Acquisition, INTERCO is acquiring
Thomasville and its Subsidiaries pursuant to the Stock Purchase
Agreement;
WHEREAS, the Borrowers, the Banks, the Documentation Agent,
the Syndication Agent and the Administrative Agent desire to
amend and restate the Original Credit Agreement in the form of
this Agreement to, inter alia, permit the Acquisition and the
financing therefor on the terms and subject to the conditions
provided herein and make available to the Borrowers, on a joint
and several basis, the respective credit facilities provided for
herein;
NOW, THEREFORE, the parties hereto agree that the Original
Credit Agreement shall be and hereby is amended and restated in
its entirety as follows:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon
the terms and conditions set forth herein, each Bank with an A
Term Loan Commitment severally agrees, (A) in the case of each
Continuing Bank, to convert into A Term Loans (as hereinafter
defined), on the Restatement Effective Date, Original Term Loans
made by such Continuing Bank pursuant to the Original Credit
Agreement and outstanding on the Restatement Effective Date in an
aggregate principal amount equal to the lesser of (x) the
aggregate principal amount of such Original Term Loans made by
such Continuing Bank and so outstanding or (y) such Continuing
Bank's A Percentage (immediately after giving effect to the
occurrence of the Restatement Effective Date) of the aggregate
principal amount of Original Term Loans made by all Original
Banks and outstanding on the Restatement Effective Date and/or
(B) to make on the Restatement Effective Date a term loan (each,
an "A Term Loan" and, collectively, the "A Term Loans") to the
Borrowers, which A Term Loans (i) shall, at the option of the
Borrowers, be Base Rate Loans or Eurodollar Loans, provided that
(A) except as otherwise specifically provided in Section 1.10(b),
all Term Loans comprising the same Borrowing shall at all times
be of the same Type and (B) no more than two Borrowings of A Term
Loans to be maintained as Eurodollar Loans may be incurred or
maintained prior to the 60th day after the Restatement Effective
Date or, if later, the last day of the Interest Period applicable
to the second Borrowing of Eurodollar Loans referred to in the
succeeding parenthetical (each of which Borrowings of Eurodollar
Loans may only have an Interest Period of one month, and the
first of which Borrowings may only be made on a single date, on
or after the Restatement Effective Date and on or prior to the
fourth Business Day following the Restatement Effective Date and
the second of which Borrowings may only be made on the last day
of the Interest Period of the first such Borrowing), (ii) shall
equal for each Bank, in initial aggregate principal amount, an
amount (which, in the case of each Continuing Bank, shall include
the principal amount of Loans converted pursuant to clause (A)
above) which equals the A Term Loan Commitment of such Bank on
the Restatement Effective Date (before giving effect to any
reductions thereto on such date pursuant to Section 3.03(b)(i)
but after giving effect to any reductions thereto on or prior to
such date pursuant to Section 3.03(b)(ii)) and (iii) shall be
joint and several obligations of each of the Borrowers. Once
repaid, A Term Loans incurred hereunder may not be reborrowed.
(b) Subject to and upon the terms and
conditions set forth herein, each Bank with a B Term Loan
Commitment severally agrees to make on the Restatement Effective
Date a term loan (each, a "B Term Loan" and, collectively, the "B
Term Loans") to the Borrowers, which B Term Loans (i) shall, at
the option of the Borrowers, be Base Rate Loans or Eurodollar
Loans, provided that (A) except as otherwise specifically
provided in Section 1.10(b), all Term Loans comprising the same
Borrowing shall at all times be of the same Type and (B) no more
than two Borrowings of B Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 60th day after the
Restatement Effective Date or, if later, the last day of the
Interest Period applicable to the second Borrowing of Eurodollar
Loans referred to in the succeeding parenthetical (each of which
Borrowings of Eurodollar Loans may only have an Interest Period
of one month, and the first of which Borrowings may only be made
on the same date as the initial Borrowing of A Term Loans that
are maintained as Eurodollar Loans and the second of which
Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing), (ii) shall equal for each
Bank, in initial aggregate principal amount, that amount which
equals the B Term Loan Commitment of such Bank on the Restatement
Effective Date (before giving effect to any reductions thereto on
such date pursuant to Section 3.03(c)(i) but after giving effect
to any reductions thereto on or prior to such date pursuant to
Section 3.03(c)(ii)) and (iii) shall be joint and several
obligations of each of the Borrowers. Once repaid, B Term Loans
incurred hereunder may not be reborrowed.
(c) Subject to and upon the terms and
conditions set forth herein, each Bank with a C Term Loan
Commitment severally agrees to make on the Restatement Effective
Date a term loan (each, a "C Term Loan" and, collectively, the "C
Term Loans") to the Borrowers, which C Term Loans (i) shall, at
the option of the Borrowers, be Base Rate Loans or Eurodollar
Loans, provided that (A) except as otherwise specifically
provided in Section 1.10(b), all Term Loans comprising the same
Borrowing shall at all times be of the same Type and (B) no more
than two Borrowings of C Term Loans to be maintained as
Eurodollar Loans may be incurred prior to the 60th day after the
Restatement Effective Date or, if later, the last day of the
Interest Period applicable to the second Borrowing of Eurodollar
Loans referred to in the succeeding parenthetical (each of which
Borrowings of Eurodollar Loans may only have an Interest Period
of one month, and the first of which Borrowings may only be made
on the same date as the initial Borrowing of A Term Loans
incurred on or after the Restatement Effective Date that are
maintained as Eurodollar Loans and the second of which Borrowings
may only be made on the last day of the Interest Period of the
first such Borrowing), (ii) shall equal for each Bank, in initial
aggregate principal amount, that amount which equals the C Term
Loan Commitment of such Bank on the Restatement Effective Date
(before giving effect to any reductions thereto on such date
pursuant to Section 3.03(d)(i) but after giving effect to any
reductions thereto on or prior to such date pursuant to Section
3.03(d)(ii)) and (iii) shall be joint and several obligations of
each of the Borrowers. Once repaid, C Term Loans incurred
hereunder may not be reborrowed.
(d) Subject to and upon the terms and
conditions set forth herein, each Bank with a Revolving Loan
Commitment severally agrees, at any time and from time to time on
and after the Restatement Effective Date and prior to the
Revolving Loan Maturity Date, to make a revolving loan or
revolving loans (each, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrowers, which Revolving Loans (i)
shall, at the option of the Borrowers, be Base Rate Loans or
Eurodollar Loans, provided that (A) except as otherwise
specifically provided in Section 1.10(b), all Revolving Loans
comprising the same Borrowing shall at all times be of the same
Type and (B) no more than two Borrowings of Revolving Loans to be
maintained as Eurodollar Loans may be incurred prior to the 60th
day after the Restatement Effective Date or, if later, the last
day of the Interest Period applicable to the second Borrowing of
Eurodollar Loans referred to in the succeeding parenthetical
(each of which Borrowings of Eurodollar Loans may only have an
Interest Period of one month, and the first of which Borrowings
may only be made on the same date as the initial Borrowing of A
Term Loans incurred on or after the Restatement Effective Date
that are maintained as Eurodollar Loans and the second of which
Borrowings may only be made on the last day of the Interest
Period of the first such Borrowing), (ii) may be repaid and
reborrowed in accordance with the provisions hereof, (iii) shall
not exceed for any Bank at any time outstanding that aggregate
principal amount which, when added to the product of (x) such
Bank's Adjusted Percentage and (y) the sum of (I) the aggregate
amount of all Letter of Credit Outstandings (exclusive of Unpaid
Drawings which are repaid with the proceeds of, and simultan-
eously with the incurrence of, the respective incurrence of
Revolving Loans) at such time and (II) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which
are repaid with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving Loans) then
outstanding, equals the Revolving Loan Commitment of such Bank at
such time, (iv) shall not exceed for all Banks at any time out-
standing that aggregate principal amount which, when added to (x)
the aggregate amount of all Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (y) the aggregate
principal amount of all Swingline Loans (exclusive of Swingline
Loans which are repaid with the proceeds of, and simultaneously
with the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Total Revolving Loan
Commitment at such time, (v) shall not exceed in aggregate
principal amount on the Restatement Effective Date, when added to
the aggregate principal amount of Swingline Loans incurred on
such date, an amount equal to $75,000,000 and (vi) shall be the
joint and several obligations of each of the Borrowers.
(e) Subject to and upon the terms and
conditions herein set forth, BTCo in its individual capacity
agrees to make at any time and from time to time on and after the
Restatement Effective Date and prior to the Swingline Expiry
Date, a revolving loan or revolving loans (each, a "Swingline
Loan" and, collectively, the "Swingline Loans") to the Borrowers,
which Swingline Loans (i) shall be made and maintained as Base
Rate Loans, (ii) may be repaid and reborrowed in accordance with
the provisions hereof, (iii) shall not exceed in aggregate prin-
cipal amount at any time outstanding, when combined with the
aggregate principal amount of all Revolving Loans made by Non-
Defaulting Banks then outstanding and the Letter of Credit
Outstandings at such time, an amount equal to the Adjusted Total
Revolving Loan Commitment at such time (after giving effect to
any reductions to the Adjusted Total Revolving Loan Commitment on
such date), (iv) shall not exceed at any time outstanding the
Maximum Swingline Amount, (v) shall not exceed in aggregate
principal amount on the Restatement Effective Date, when added to
the aggregate principal amount of Revolving Loans incurred on
such date, an amount equal to $75,000,000, and (vi) shall be the
joint and several obligations of each of the Borrowers.
(f) On any Business Day, BTCo may, in its sole
discretion, give notice to the Banks that its outstanding
Swingline Loans shall be funded with a Borrowing of Revolving
Loans (provided that such notice shall be deemed to have been
automatically given upon the occurrence of a Default or an Event
of Default under Section 10.05 or upon the exercise of any of the
remedies provided in the last paragraph of Section 10), in which
case a Borrowing of Revolving Loans constituting Base Rate Loans
(each such Borrowing, a "Mandatory Borrowing") shall be made on
the immediately succeeding Business Day by all Banks with a
Revolving Loan Commitment (without giving effect to any
reductions thereto pursuant to the last paragraph of Section 10)
pro rata based on each Bank's Adjusted Percentage (determined
before giving effect to any termination of the Revolving Loan
Commitments pursuant to the last paragraph of Section 10) and the
proceeds thereof shall be applied directly to BTCo to repay BTCo
for such outstanding Swingline Loans. Each such Bank hereby
irrevocably agrees to make Revolving Loans upon one Business
Day's notice pursuant to each Mandatory Borrowing in the amount
and in the manner specified in the preceding sentence and on the
date specified in writing by BTCo notwithstanding that (i) the
amount of the Mandatory Borrowing may not comply with the minimum
amount for Borrowings otherwise required hereunder, (ii) whether
any conditions specified in Section 6 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the amount of the Total
Revolving Loan Commitment or the Adjusted Total Revolving Loan
Commitment at such time; provided that, in no event shall such
Bank be required to make Revolving Loans in excess of such Bank's
Revolving Loan Commitment. In the event that any Mandatory
Borrowing cannot for any reason be made on the date otherwise
required above (including, without limitation, as a result of the
commencement of a proceeding under the Bankruptcy Code with
respect to any of the Borrowers), then each such Bank hereby
agrees that it shall forthwith purchase (as of the date the
Mandatory Borrowing would otherwise have occurred, but adjusted
for any payments received from the Borrowers on or after such
date and prior to such purchase) from BTCo such participations in
the outstanding Swingline Loans as shall be necessary to cause
such Banks to share in such Swingline Loans ratably based upon
their respective Adjusted Percentages (determined before giving
effect to any termination of the Revolving Loan Commitments
pursuant to the last paragraph of Section 10), provided that (x)
all interest payable on the Swingline Loans shall be for the
account of BTCo until the date as of which the respective
participation is required to be purchased and, to the extent
attributable to the purchased participation, shall be payable to
the participant from and after such date and (y) at the time any
purchase of participations pursuant to this sentence is actually
made, the purchasing Bank shall be required to pay BTCo interest
on the principal amount of participation purchased for each day
from and including the day upon which the Mandatory Borrowing
would otherwise have occurred to but excluding the date of
payment for such participation, at the overnight Federal Funds
Rate for the first three days and at the rate otherwise
applicable to Revolving Loans maintained as Base Rate Loans here-
under for each day thereafter.
1.02 Minimum Amount of Each Borrowing. The aggregate
principal amount of each Borrowing of any Term Loans shall not be
less than $5,000,000 and, if greater, shall be in an integral
multiple of $1,000,000. The aggregate principal amount of each
Borrowing of Revolving Loans shall be not less than $1,000,000
and, if greater, shall be in an integral multiple of $500,000,
provided that Mandatory Borrowings shall be made in the amounts
required by Section 1.01(f). The aggregate principal amount of
each Borrowing of Swingline Loans shall not be less than $500,000
and, if greater, shall be in an integral multiple of $100,000.
More than one Borrowing may occur on the same date, but at no
time shall there be outstanding more than twelve Borrowings of
Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Borrowers
desire to make a Borrowing hereunder (excluding Borrowings of
Swingline Loans and Mandatory Borrowings), an Authorized
Representative of the Borrowers shall give the Administrative
Agent at its Notice Office at least one Business Day's prior
written (or telephonic notice promptly confirmed in writing)
notice of each Base Rate Loan and at least three Business Days'
prior written (or telephonic notice promptly confirmed in writ-
ing) notice of each Eurodollar Loan to be made hereunder,
provided that any such notice shall be deemed to have been given
on a certain day only if given before 11:00 A.M. (New York
time) (12:00 Noon (New York time) in the case of a Borrowing of
Base Rate Loans) on such day. Each such written notice or
written confirmation of telephonic notice (each a "Notice of
Borrowing"), except as otherwise expressly provided in Section
1.10, shall be irrevocable and shall be given by the Borrowers in
the form of Exhibit A, appropriately completed to specify the
aggregate principal amount of the Loans to be made pursuant to
such Borrowing, the date of such Borrowing (which shall be a
Business Day), whether the Loans being made pursuant to such
Borrowing shall constitute A Term Loans, B Term Loans, C Term
Loans or Revolving Loans and whether the Loans being made
pursuant to such Borrowing are to be initially maintained as Base
Rate Loans or Eurodollar Loans and, if Eurodollar Loans, the
initial Interest Period to be applicable thereto. The
Administrative Agent shall promptly give each Bank which is re-
quired to make Loans of the Tranche specified in the respective
Notice of Borrowing, notice of such proposed Borrowing, of such
Bank's proportionate share thereof and of the other matters re-
quired by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b) (i) Whenever the Borrowers desire to make a
Borrowing of Swingline Loans hereunder, an Authorized
Representative of the Borrowers shall give BTCo not later than
12:00 Noon (New York time) on the date that a Swingline Loan is
to be made, written notice or telephonic notice promptly
confirmed in writing of each Swingline Loan to be made hereunder.
Each such notice shall be irrevocable and specify in each case
(A) the date of Borrowing (which shall be a Business Day) and (B)
the aggregate principal amount of the Swingline Loans to be made
pursuant to such Borrowing.
(ii) Mandatory Borrowings shall be made upon the notice
specified in Section 1.01(f), with each Borrower irrevocably
agreeing, by its incurrence of any Swingline Loan, to the making
of the Mandatory Borrowings as set forth in Section 1.01(f).
(c) Without in any way limiting the obligation of the
Borrowers to confirm in writing any telephonic notice of any
Borrowing of Loans, the Administrative Agent may act without
liability upon the basis of telephonic notice of such Borrowing,
believed by the Administrative Agent in good faith to be from an
Authorized Representative of any Borrower prior to receipt of
written confirmation. In each such case, each Borrower hereby
waives the right to dispute the Administrative Agent's record of
the terms of such telephonic notice of such Borrowing of Loans.
1.04 Disbursement of Funds. Except as otherwise
specifically provided in the immediately succeeding sentence, no
later than 12:00 Noon (New York time) on the date specified in
each Notice of Borrowing (or (x) in the case of Swingline Loans,
not later than 2:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory
Borrowings, not later than 12:00 Noon (New York time) on the date
specified in Section 1.01(f)), each Bank with a Commitment of the
respective Tranche will make available its pro rata portion of
each such Borrowing requested to be made on such date (or in the
case of Swingline Loans, BTCo shall make available the full
amount thereof). All such amounts shall be made available in
Dollars and in immediately available funds at the Payment Office
of the Administrative Agent, and the Administrative Agent will
make available to the Borrowers at the Payment Office the
aggregate of the amounts so made available by the Banks (prior to
1:00 P.M. (New York time)) on such day, to the extent of funds
actually received by the Administrative Agent prior to 12:00 Noon
(New York time) on such day). Unless the Administrative Agent
shall have been notified by any Bank prior to the date of
Borrowing that such Bank does not intend to make available to the
Administrative Agent such Bank's portion of any Borrowing to be
made on such date, the Administrative Agent may assume that such
Bank has made such amount available to the Administrative Agent
on such date of Borrowing and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such corresponding amount is not in
fact made available to the Administrative Agent by such Bank, the
Administrative Agent shall be entitled to recover such corre-
sponding amount on demand from such Bank. If such Bank does not
pay such corresponding amount forthwith upon the Administrative
Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrowers to immediately pay such corresponding amount
to the Administrative Agent. The Administrative Agent shall also
be entitled to recover on demand from such Bank or the Borrowers,
as the case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount was
made available by the Administrative Agent to the Borrowers until
the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if
recovered from such Bank, the overnight Federal Funds Rate and
(ii) if recovered from the Borrowers, the rate of interest appli-
cable to the respective Borrowing, as determined pursuant to Sec-
tion 1.08. Nothing in this Section 1.04 shall be deemed to
relieve any Bank from its obligation to make Loans hereunder or
to prejudice any rights which the Borrowers may have against any
Bank as a result of any failure by such Bank to make Loans here-
under.
1.05 Notes. (a) The Borrowers' obligation to pay the
principal of, and interest on, the Loans made by each Bank shall
be evidenced (i) if A Term Loans, by a promissory note duly
executed and delivered by the Borrowers substantially in the form
of Exhibit B-1 with blanks appropriately completed in conformity
herewith (each, an "A Term Note" and, collectively, the "A Term
Notes"), (ii) if B Term Loans, by a promissory note duly executed
and delivered by the Borrowers substantially in the form of Exhi-
bit B-2 with blanks appropriately completed in conformity
herewith (each, a "B Term Note" and, collectively, the "B Term
Notes"), (iii) if C Term Loans, by a promissory note duly
executed and delivered by the Borrowers substantially in the form
of Exhibit B-3 with blanks appropriately completed in conformity
herewith (each, a "C Term Note" and, collectively, the "C Term
Notes"), (iv) if Revolving Loans, by a promissory note duly
executed and delivered by the Borrowers substantially in the form
of Exhibit B-4, with blanks appropriately completed in conformity
herewith (each, a "Revolving Note" and, collectively, the
"Revolving Notes") and (v) if Swingline Loans, by a promissory
note duly executed and delivered by the Borrowers substantially
in the form of Exhibit B-5, with blanks appropriately completed
in conformity herewith (the "Swingline Note").
(b) The A Term Note issued to each Bank shall (i) be
executed by the Borrowers, (ii) be payable to the order of such
Bank or its registered assigns and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to
the aggregate principal amount of A Term Loans made by such Bank
on the Restatement Effective Date and be payable in the principal
amount of A Term Loans evidenced thereby, (iv) mature on the A
Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(c) The B Term Note issued to each Bank shall (i) be
executed by the Borrowers, (ii) be payable to the order of such
Bank or its registered assigns and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to
the aggregate principal amount of B Term Loans made by such Bank
on the Restatement Effective Date and be payable in the principal
amount of B Term Loans evidenced thereby, (iv) mature on the B
Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) The C Term Note issued to each Bank shall (i) be
executed by the Borrowers, (ii) be payable to the order of such
Bank or its registered assigns and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to
the aggregate principal amount of C Term Loans made by such Bank
on the Restatement Effective Date and be payable in the principal
amount of C Term Loans evidenced thereby, (iv) mature on the C
Term Loan Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate
Loans and Eurodollar Loans, as the case may be, evidenced
thereby, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(e) The Revolving Note issued to each Bank shall (i)
be executed by the Borrowers, (ii) be payable to the order of
such Bank or its registered assigns and be dated the Restatement
Effective Date, (iii) be in a stated principal amount equal to
the Revolving Loan Commitment of such Bank and be payable in the
principal amount of the Revolving Loans evidenced thereby, (iv)
mature on the Revolving Loan Maturity Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of
the Base Rate Loans and Eurodollar Loans, as the case may be,
evidenced thereby, (vi) be subject to mandatory repayment as pro-
vided in Section 4.02 and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents.
(f) The Swingline Note issued to BTCo shall (i) be
executed by the Borrowers, (ii) be payable to the order of BTCo
or its registered assigns and be dated the Restatement Effective
Date, (iii) be in a stated principal amount equal to the Maximum
Swingline Amount and be payable in the principal amount of the
outstanding Swingline Loans evidenced thereby from time to time,
(iv) mature on the Swingline Expiry Date, (v) bear interest as
provided in the appropriate clause of Section 1.08 in respect of
the Base Rate Loans evidenced thereby and (vi) be entitled to the
benefits of this Agreement and the other Credit Documents.
(g) Each Bank will note on its internal records the
amount of each Loan made by it and each payment in respect
thereof and will prior to any transfer of any of its Notes
endorse on the reverse side thereof the outstanding principal
amount of Loans evidenced thereby. Failure to make any such
notation or any error in any such notation or endorsement shall
not affect the Borrowers' obligations in respect of such Loans.
1.06 Conversions. The Borrowers shall have the option to
convert, on any Business Day occurring after the Restatement
Effective Date, all or a portion equal to at least (1) in the
case of a conversion of Term Loans, $5,000,000 (and, if greater,
in an integral multiple of $1,000,000) and (2) in the case of a
conversion of Revolving Loans, $1,000,000 (and, if greater, in an
integral multiple of $500,000), of the outstanding principal
amount of Loans made pursuant to one or more Borrowings (so long
as of the same Tranche) of one or more Types of Loans into a
Borrowing (of the same Tranche) of another Type of Loan, provided
that (i) except as otherwise provided in Section 1.10(b), Euro-
dollar Loans may be converted into Base Rate Loans only on the
last day of an Interest Period applicable to the Loans being
converted and no such partial conversion of Eurodollar Loans
shall reduce the outstanding principal amount of such Eurodollar
Loans made pursuant to a single Borrowing to less than (x) in the
case of Term Loans, $5,000,000 and (y) in the case of Revolving
Loans, $1,000,000, (ii) Base Rate Loans may only be converted
into Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion, (iii) prior to the 60th
day after the Restatement Effective Date, conversions of Base
Rate Loans into Eurodollar Loans may only be made if the
conversion is effective on the first day of an Interest Period
referred to in clause (B) of the respective provisos to Sections
1.01(a)(i), 1.01(b)(i), 1.01(c)(i) and 1.01(d)(i) and so long as
such conversion does not result in a greater number of Borrowings
of Eurodollar Loans prior to the 60th day after the Restatement
Effective Date or, if later, the last day of the Interest Period
applicable to the second Borrowing of Eurodollar Loans referred
to in said clauses, as are permitted under Sections 1.01(a)
through (d), (iv) no conversion pursuant to this Section 1.06
shall result in a greater number of Borrowings of Eurodollar
Loans than is permitted under Section 1.02 and (v) Swingline
Loans may not be converted pursuant to this Section 1.06. Each
such conversion shall be effected by the Borrowers by giving the
Administrative Agent at its Notice Office prior to 12:00 Noon
(New York time) at least three Business Days' prior notice (each
a "Notice of Conversion") specifying the Loans to be so con-
verted, the Borrowing or Borrowings pursuant to which such Loans
were made and, if to be converted into Eurodollar Loans, the
Interest Period to be initially applicable thereto. The
Administrative Agent shall give each Bank prompt notice of any
such proposed conversion affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of Term Loans and
Revolving Loans under this Agreement shall be incurred from the
Banks pro rata on the basis of their A Term Loan Commitments, B
Term Loan Commitments, C Term Loan Commitments or Revolving Loan
Commitments, as the case may be, provided that all Borrowings of
Revolving Loans made pursuant to a Mandatory Borrowing shall be
incurred from the Banks pro rata on the basis of their Adjusted
Percentages. It is understood that no Bank shall be responsible
for any default by any other Bank of its obligation to make Loans
hereunder and that each Bank shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of
any other Bank to make its Loans hereunder.
1.08 Interest. (a) The Borrowers jointly and severally
agree to pay interest in respect of the unpaid principal amount
of each Base Rate Loan from the date the proceeds thereof are
made available to the Borrowers until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Base Rate
Loan and (ii) the conversion of such Base Rate Loan to a
Eurodollar Loan pursuant to Section 1.06, at a rate per annum
which shall be equal to the sum of the Applicable Margin plus the
Base Rate in effect from time to time.
(b) The Borrowers jointly and severally agree to pay
interest in respect of the unpaid principal amount of each
Eurodollar Loan from the date the proceeds thereof are made
available to the Borrowers until the earlier of (i) the maturity
(whether by acceleration or otherwise) of such Eurodollar Loan
and (ii) the conversion of such Eurodollar Loan to a Base Rate
Loan pursuant to Section 1.06 or 1.10, as applicable, at a rate
per annum which shall, during each Interest Period applicable
thereto, be equal to the sum of the Applicable Margin plus the
Eurodollar Rate for such Interest Period.
(c) Overdue principal and, to the extent permitted by
law, overdue interest in respect of each Loan and any other
overdue amount payable hereunder shall, in each case, bear
interest at a rate per annum equal to the greater of (x) 2% per
annum in excess of the rate otherwise applicable to Base Rate
Loans from time to time and (y) the rate which is 2% in excess of
the rate then borne by such Loans, in each case with such
interest to be payable on a joint and several basis by the
Borrowers on demand.
(d) Accrued (and theretofore unpaid) interest shall be
payable (i) in respect of each Base Rate Loan, quarterly in
arrears on each Quarterly Payment Date, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period
applicable thereto and, in the case of an Interest Period in
excess of three months, on each date occurring at three month
intervals after the first day of such Interest Period and (iii)
in respect of each Loan other than Swingline Loans and Revolving
Loans which are Base Rate Loans, on any repayment or prepayment
(on the amount repaid or prepaid), and in respect of each Loan,
at maturity (whether by acceleration or otherwise) and, after
such maturity, on demand.
(e) Upon each Interest Determination Date, the
Administrative Agent shall determine the Eurodollar Rate for the
respective Interest Period or Interest Periods and shall promptly
notify the Borrowers and the Banks thereof. Each such deter-
mination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.09 Interest Periods. At the time the Borrowers give any
Notice of Borrowing or Notice of Conversion in respect of the
making of, or conversion into, any Eurodollar Loan (in the case
of the initial Interest Period applicable thereto) or on the
third Business Day prior to the expiration of an Interest Period
applicable to such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrowers shall have the right to elect, by
having an Authorized Representative of the Borrowers give the
Administrative Agent notice thereof, the interest period (each an
"Interest Period") applicable to such Eurodollar Loan, which
Interest Period shall, at the option of the Borrowers, be a one,
two, three or six-month period, provided that:
(i) all Eurodollar Loans comprising a Borrowing shall
at all times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Loan
shall commence on the date of Borrowing of such Eurodollar
Loan (including the date of any conversion thereto from a
Loan of a different Type) and each Interest Period occurring
thereafter in respect of such Eurodollar Loan shall commence
on the day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Eurodollar
Loan begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last
Business Day of such calendar month;
(iv) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall
expire on the next succeeding Business Day; provided,
however, that if any Interest Period for a Eurodollar Loan
would otherwise expire on a day which is not a Business Day
but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire
on the next preceding Business Day;
(v) no Interest Period may be selected at any time when
a Default or an Event of Default is then in existence;
(vi) no Interest Period in respect of any Borrowing
shall be selected which extends beyond (w) the A Term Loan
Maturity Date, in the case of A Term Loans, (x) the B Term
Loan Maturity Date, in the case of B Term Loans, (y) the C
Term Loan Maturity Date, in the case of C Term Loans or (z)
the Revolving Loan Maturity Date, in the case of Revolving
Loans; and
(vii) no Interest Period in respect of any Borrowing of A
Term Loans, B Term Loans or C Term Loans shall be selected
which extends beyond any date upon which a mandatory
repayment of A Term Loans, B Term Loans or C Term Loans, as
the case may be, will be required to be made under Sections
4.02(b), (c) or (d) if the aggregate principal amount of A
Term Loans, B Term Loans or C Term Loans, as the case may
be, which have Interest Periods which will expire after such
date will be in excess of the aggregate principal amount of
such Tranche of Term Loans then outstanding less the aggre-
gate amount of such required prepayment.
If upon the expiration of any Interest Period applic-
able to a Borrowing of Eurodollar Loans, the Borrowers have
failed to elect, or are not permitted to elect, a new Interest
Period to be applicable to such Eurodollar Loans as provided
above, the Borrowers shall be deemed to have elected to convert
such Eurodollar Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In the event
that any Bank shall have determined (which determination shall,
absent manifest error, be final and conclusive and binding upon
all parties hereto but, with respect to clause (i) below, may be
made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason
of any changes arising after the date of this Agreement
affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest
rate on the basis provided for in the definition of
Eurodollar Rate; or
(ii) at any time, that such Bank shall incur increased
costs or reductions in the amounts received or receivable
hereunder with respect to any Eurodollar Loan because of (x)
any change since the date of this Agreement in any
applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of
law) or in the interpretation or administration thereof and
including the introduction of any new law or governmental
rule, regulation, order, guideline or request, such as, for
example, but not limited to: (A) a change in the basis of
taxation of payment to any Bank of the principal of or
interest on such Eurodollar Loan or any other amounts
payable hereunder (except for changes in the rate of tax on,
or determined by reference to, the net income or net profits
of such Bank, or any franchise tax based on the net income
or net profits of such Bank, in either case pursuant to the
laws of the United States of America, the jurisdiction in
which it is organized or in which its principal office or
applicable lending office is located or any subdivision
thereof or therein), but without duplication of any amounts
payable in respect of Taxes pursuant to Section 4.04(a), or
(B) a change in official reserve requirements, but, in all
events, excluding reserves required under Regulation D to
the extent included in the computation of the Eurodollar
Rate and/or (y) other circumstances since the date of this
Agreement affecting such Bank or the interbank Eurodollar
market or the position of such Bank in such market (except
as a result of a deterioration in the creditworthiness of
such Bank subsequent to the date hereof); or
(iii) at any time, that the making or continuance of any
Eurodollar Loan has been made (x) unlawful by any law or
governmental rule, regulation or order, (y) impossible by
compliance by any Bank in good faith with any governmental
request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after
the date of this Agreement which materially and adversely
affects the interbank Eurodollar market;
then, and in any such event, such Bank (or the Administrative
Agent, in the case of clause (i) above) shall promptly give
notice (by telephone confirmed in writing) to the Borrowers and,
except in the case of clause (i) above, to the Administrative
Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks).
Thereafter (x) in the case of clause (i) above, Eurodollar Loans
shall no longer be available until such time as the
Administrative Agent notifies the Borrowers and the Banks that
the circumstances giving rise to such notice by the
Administrative Agent no longer exist, and any Notice of Borrowing
or Notice of Conversion given by the Borrowers with respect to
Eurodollar Loans which have not yet been incurred (including by
way of conversion) shall be deemed rescinded by the Borrowers,
(y) in the case of clause (ii) above, the Borrowers jointly and
severally agree to, subject to the provisions of Section 13.15
(to the extent applicable), pay to such Bank, upon written demand
therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or
otherwise as such Bank in its sole discretion shall determine) as
shall be required to compensate such Bank for such increased
costs or reductions in amounts received or receivable hereunder
(a written notice as to the additional amounts owed to such Bank,
showing the basis for the calculation thereof, submitted to the
Borrowers by such Bank in good faith shall, absent manifest
error, be final and conclusive and binding on all the parties
hereto) and (z) in the case of clause (iii) above, the Borrowers
shall take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time period
required by law. Each of the Administrative Agent and each Bank
agrees that if it gives notice to the Borrowers of any of the
events described in clause (i) or (iii) above, it shall promptly
notify the Borrowers and, in the case of any such Bank, the
Administrative Agent, if such event ceases to exist. If any such
event described in clause (iii) above ceases to exist as to a
Bank, the obligations of such Bank to make Eurodollar Loans and
to convert Base Rate Loans into Eurodollar Loans on the terms and
conditions contained herein shall be reinstated.
(b) At any time that any Eurodollar Loan is affected
by the circumstances described in Section 1.10(a)(ii) or (iii),
the Borrowers may (and in the case of a Eurodollar Loan affected
by the circumstances described in Section 1.10(a)(iii) shall)
either (x) if the affected Eurodollar Loan is then being made
initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice
(confirmed in writing) on the same date that the Borrowers were
notified by the affected Bank or the Administrative Agent
pursuant to Section 1.10(a)(ii) or (iii) or (y) if the affected
Eurodollar Loan is then outstanding, upon at least three Business
Days' written notice to the Administrative Agent, require the
affected Bank to convert such Eurodollar Loan into a Base Rate
Loan, provided that, if more than one Bank is affected at any
time, then all affected Banks must be treated the same pursuant
to this Section 1.10(b).
(c) If at any time after the date of this Agreement
any Bank determines that the introduction of or any change in any
applicable law or governmental rule, regulation, order,
guideline, directive or request (whether or not having the force
of law) concerning capital adequacy, or any change in
interpretation or administration thereof by any governmental
authority, central bank or comparable agency, will have the
effect of increasing the amount of capital required or expected
to be maintained by such Bank or any corporation controlling such
Bank based on the existence of such Bank's Commitments hereunder
or its obligations hereunder, then the Borrowers jointly and
severally agree, subject to the provisions of Section 13.15 (to
the extent applicable), to pay to such Bank, upon its written
demand therefor, such additional amounts as shall be required to
compensate such Bank or such other corporation for the increased
cost to such Bank or such other corporation or the reduction in
the rate of return to such Bank or such other corporation as a
result of such increase of capital. In determining such
additional amounts, each Bank will act reasonably and in good
faith and will use averaging and attribution methods which are
reasonable, provided that such Bank's reasonable good faith
determination of compensation owing under this Section 1.10(c)
shall, absent manifest error, be final and conclusive and binding
on all the parties hereto. Each Bank, upon determining that any
additional amounts will be payable pursuant to this Section
1.10(c), will give written notice thereof to the Borrowers, which
notice shall show the basis for calculation of such additional
amounts.
1.11 Compensation. The Borrowers jointly and severally
agree, subject to the provisions of Section 13.15 (to the extent
applicable), to compensate each Bank, upon its written request
(which request shall set forth the basis for requesting such com-
pensation), for all reasonable losses, expenses and liabilities
(including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits
or other funds required by such Bank to fund its Eurodollar Loans
but excluding any loss of anticipated profit) which such Bank may
sustain: (i) if for any reason (other than a default by such
Bank or the Administrative Agent) a Borrowing of, or conversion
from or into, Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion
(whether or not withdrawn by the Borrowers or deemed withdrawn
pursuant to Section 1.10(a)); (ii) if any repayment (including
any repayment made pursuant to Section 4.02 or as a result of an
acceleration of the Loans pursuant to Section 10) or conversion
of any of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period with respect thereto; (iii) if any
prepayment of any of its Eurodollar Loans is not made on any date
specified in a notice of prepayment given by the Borrowers; or
(iv) as a consequence of (x) any other default by the Borrowers
to repay its Loans when required by the terms of this Agreement
or any Note held by such Bank or (y) any election made pursuant
to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees that upon
the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or
Section 4.04 with respect to such Bank, it will, if requested by
the Borrowers, use reasonable efforts (subject to overall policy
considerations of such Bank) to designate another lending office
for any Loans or Letters of Credit affected by such event,
provided that such designation is made on such terms that such
Bank and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the
consequence of the event giving rise to the operation of such
Section. Nothing in this Section 1.12 shall affect or postpone
any of the obligations of the Borrowers or the rights of any Bank
provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. (x) If any Bank becomes a
Defaulting Bank or otherwise defaults in its obligations to make
Loans or fund Unpaid Drawings, (y) upon the occurrence of any
event giving rise to the operation of Section 1.10(a)(ii) or
(iii), Section 1.10(c), Section 2.06 or Section 4.04 with respect
to any Bank which results in such Bank charging to the Borrowers
increased costs in excess of those being generally charged by the
other Banks or (z) as provided in Section 13.12(b) in the case of
certain refusals by a Bank to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the
Borrowers shall have the right, if no Default or Event of Default
will exist immediately after giving effect to the respective re-
placement, to either replace such Bank (the "Replaced Bank") with
one or more other Eligible Transferee or Transferees, none of
whom shall constitute a Defaulting Bank at the time of such
replacement (collectively, the "Replacement Bank") reasonably
acceptable to the Administrative Agent or, at the option of the
Borrowers, to replace only (a) the Revolving Loan Commitment (and
outstandings pursuant thereto) of the Replaced Bank with an
identical Revolving Loan Commitment provided by the Replacement
Bank or (b) in the case of a replacement as provided in Section
13.12(b) where the consent of the respective Bank is required
with respect to less than all Tranches of its Loans or
Commitments, the Commitments and/or outstanding Term Loans of
such Bank in respect of each Tranche where the consent of such
Bank would otherwise be individually required, with identical
Commitments and/or Loans of the respective Tranche provided by
the Replacement Bank, provided that (i) at the time of any
replacement pursuant to this Section 1.13, the Replacement Bank
shall enter into one or more Assignment and Assumption Agreements
pursuant to Section 13.04(b) (and with all fees payable pursuant
to said Section 13.04(b) to be paid by the Replacement Bank) pur-
suant to which the Replacement Bank shall acquire all of the
Commitments and outstanding Loans of, and participations in
Letters of Credit by (or, in the case of the replacement of only
(a) the Revolving Loan Commitment, the Revolving Loan Commitment
and outstanding Revolving Loans and participations in Letters of
Credit or (b) any Tranche of Term Loans, the outstanding Term
Loans of such Tranche), the Replaced Bank and, in connection
therewith, shall pay to (x) the Replaced Bank in respect thereof
an amount equal to the sum of (A) an amount equal to the
principal of, and all accrued interest on, all outstanding Loans
(or, in the case of the replacement of only (I) the Revolving
Loan Commitment, the outstanding Revolving Loans or (II) any
Tranche of the Term Loans, the outstanding Term Loans of such
Tranche) of the Replaced Bank, (B) except in the case of the
replacement of only outstanding Term Loans of a Replaced Bank, an
amount equal to all Unpaid Drawings that have been funded by (and
not reimbursed to) such Replaced Bank, together with all then
unpaid interest with respect thereto at such time and (C) an
amount equal to all accrued, but theretofore unpaid, Fees owing
to the Replaced Bank (but only with respect to the relevant
Tranche or Tranches, in the case of the replacement of less than
all Tranches of Loans then held by the respective Replaced Bank)
pursuant to Section 3.01 and (y) except in the case of the
replacement of only outstanding Term Loans of a Replaced Bank,
BTCo an amount equal to such Replaced Bank's Adjusted Percentage
(for this purpose, determined as if the adjustment described in
clause (y) of the immediately succeeding sentence had been made
with respect to such Replaced Bank) of (1) any Unpaid Drawing
(which at such time remains an Unpaid Drawing) and (2) any
portion of any Swingline Loan for which BTCo has given a notice
of a Mandatory Borrowing pursuant to Section 1.01(f) and such
Replaced Bank has not provided a Revolving Loan which it was
obligated to provide to the extent such amount was not
theretofore funded by such Replaced Bank, and (ii) all obli-
gations of the Borrowers owing to the Replaced Bank (other than
those (a) specifically described in clause (i) above in respect
of which the assignment purchase price has been, or is concur-
rently being, paid or (b) relating to any Tranche of Loans and/or
Commitments of the respective Replaced Bank which will remain
outstanding after giving effect to the respective replacement)
shall be paid in full to such Replaced Bank concurrently with
such replacement. Upon the execution of the respective
Assignment and Assumption Agreements, the payment of amounts
referred to in clauses (i) and (ii) above and, if so requested by
the Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the Borrowers, (x) the
Replacement Bank shall become a Bank hereunder and, unless the
respective Replaced Bank continues to have outstanding Term Loans
or a Revolving Loan Commitment hereunder, the Replaced Bank shall
cease to constitute a Bank hereunder, except with respect to
indemnification provisions under this Agreement (including,
without limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and
13.06), which shall survive as to such Replaced Bank and (y) in
the case of a replacement of a Defaulting Bank with a Non-
Defaulting Bank, the Adjusted Percentages of the Banks shall be
automatically adjusted at such time to give effect to such
replacement (and to give effect to the replacement of a
Defaulting Bank with one or more Non-Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and upon the terms
and conditions herein set forth, the Borrowers may request that
any Issuing Bank issue, at any time and from time to time on and
after the Restatement Effective Date and prior to the Revolving
Loan Maturity Date, for the joint and several account of the
Borrowers, one or more irrevocable letters of credit denominated
in Dollars or, in the case of Trade Letters of Credit, through
the creation thereunder by the respective Issuing Bank of accept-
ances or any other customary agreement or method for providing
for deferred payment under letters of credit ("Acceptances"), and
otherwise in a form customarily used by such Issuing Bank or in
such other form as has been approved by such Issuing Bank (each
such letter of credit, a "Letter of Credit") in support of
obligations described in the definitions of Standby Letter of
Credit or Trade Letter of Credit and any other obligations of the
Borrowers or any of their Restricted Subsidiaries that are
reasonably acceptable to the Administrative Agent and otherwise
permitted to exist pursuant to this Agreement. On the
Restatement Effective Date, all Existing Letters of Credit shall
be deemed to have been issued under this Agreement and shall for
all purposes constitute "Letters of Credit" hereunder.
(b) Each Issuing Bank may agree, in its sole dis-
cretion, and BTCo hereby agrees that in the event a requested
Letter of Credit is not issued by one of the other Issuing Banks,
it will (subject to the terms and conditions contained herein),
at any time and from time to time on or after the Restatement
Effective Date and prior to the Revolving Maturity Date,
following its receipt of the respective Letter of Credit Request,
issue for the account of the Borrowers one or more Letters of
Credit in support of such obligations described in the
definitions of Standby Letter of Credit and Trade Letter of
Credit of the Borrowers or any of their Restricted Subsidiaries
as is permitted to exist pursuant to this Agreement without giv-
ing rise to a Default or Event of Default hereunder, provided
that the respective Issuing Bank shall be under no obligation to
issue any Letter of Credit of the types described above if at the
time of such issuance:
(i) any order, judgment or decree of any governmental
authority or arbitrator shall purport by its terms to enjoin
or restrain such Issuing Bank from issuing such Letter of
Credit or any requirement of law applicable to such Issuing
Bank or any request or directive (whether or not having the
force of law) from any governmental authority with
jurisdiction over such Issuing Bank shall prohibit, or
request that such Issuing Bank refrain from, the issuance of
letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Bank with
respect to such Letter of Credit any restriction or reserve
or capital requirement (for which such Issuing Bank is not
otherwise compensated) not in effect on the date hereof, or
any unreimbursed loss, cost or expense which was not applic-
able, in effect or known to such Issuing Bank as of the date
hereof and which such Issuing Bank in good faith deems
material to it; or
(ii) such Issuing Bank shall have received notice from
any Bank prior to the issuance of such Letter of Credit of
the type described in the penultimate sentence of Section
2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter of
Credit shall be issued the Stated Amount of which, when added to
the Letter of Credit Outstandings (exclusive of Unpaid Drawings
which are repaid on the date of, and prior to the issuance of,
the respective Letter of Credit) at such time would exceed either
(x) $60,000,000 or (y) when added to the aggregate principal
amount of all Revolving Loans made by Non-Defaulting Banks and
then outstanding and Swingline Loans then outstanding, an amount
equal to the Adjusted Total Revolving Loan Commitment at such
time, (ii) no Acceptance shall be created the Stated Amount of
which, when added to the amount of all Acceptances outstanding at
such time, would exceed $15,000,000 and (iii) each Letter of
Credit shall by its terms terminate or be terminable by the
Issuing Bank on such date that would result in all drawings
thereunder, or any Acceptances created thereunder, being funded
pursuant to the terms thereof prior to (x) (A) in the case of
Standby Letters of Credit, the date which occurs 12 months after
the date of the issuance thereof (although any such Letter of
Credit may be extendable for successive periods of up to 12
months, but not beyond the Revolving Loan Maturity Date, on terms
acceptable to the Issuing Bank thereof) and (B) in the case of
Trade Letters of Credit, the date which occurs six months (or up
to one year with the consent of the respective Issuing Bank)
after the date of the issuance thereof or (y) (A) in the case of
Standby Letters of Credit, the date which is five Business Days
prior to the Revolving Loan Maturity Date and (B) in the case of
Trade Letters of Credit, the date which is thirty Business Days
prior to the Revolving Loan Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount of each
Letter of Credit shall be not less than $10,000 or such lesser
amount as is acceptable to the respective Issuing Bank.
2.03 Letter of Credit Requests. (a) Whenever any Borrower
desires that a Letter of Credit be issued by the Administrative
Agent as Issuing Bank for its account, it shall have (i) executed
and delivered the Letter of Credit Service Agreement in the form
of Exhibit C-1 attached hereto (as amended, modified or
supplemented from time to time, the "Letter of Credit Service
Agreement"), which Letter of Credit Service Agreement shall be in
full force and effect and (ii) made a request for the issuance of
such Letter of Credit in accordance with the terms of the Letter
of Credit Service Agreement. Whenever any Borrower desires that
a Trade Letter of Credit be issued by an Issuing Bank other than
the Administrative Agent for its account, it shall have (x)
executed and delivered to the respective Issuing Bank (with
copies having been sent to the Administrative Agent) at least
five Business Days prior to the issuance thereof, a Trade Letter
of Credit Request in the form of Exhibit C-2 attached hereto
(each a "Trade Letter of Credit Request") and (y) completed and
executed a letter of credit application in the form customarily
used by such Issuing Bank for Trade Letters of Credit or in such
other form as the Administrative Agent and the Issuing Bank shall
request. Whenever any Borrower desires that a Standby Letter of
Credit be issued by an Issuing Bank other than the Administrative
Agent for its account it shall have executed and delivered to the
respective Issuing Bank (with copies having been sent to the
Administrative Agent) at least five Business Days prior to the
issuance thereof, a Standby Letter of Credit Request in the form
of Exhibit C-3 attached hereto (each a "Standby Letter of Credit
Request"). Letter of Credit Requests shall be given in writing,
or in the case of requests of Trade Letters of Credit, by
telephone, if promptly confirmed in writing, or, if the
Administrative Agent is the Issuing Bank, as otherwise provided
in the Letter of Credit Service Agreement, provided that (I) if
the express provisions of any letter of credit application
conflict with the express provisions of this Agreement, the
provisions of this Agreement shall control to the extent of such
conflict and (II) no event (other than the failure to reimburse
Letter of Credit Drawings as provided for in Section 2.05) which
constitutes a default under any application shall constitute an
Event of Default hereunder solely by reason of any default
provisions contained in such application.
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Borrowers that
such Letter of Credit may be issued in accordance with, and will
not violate the requirements of, Section 2.01(c). Unless the
respective Issuing Bank has received notice from any Bank before
it issues a Letter of Credit that one or more of the conditions
specified in Section 6 are not then satisfied, or that the
issuance of such Letter of Credit would violate Section 2.01(c),
then such Issuing Bank may issue the requested Letter of Credit
for the account of the Borrowers in accordance with such Issuing
Bank's usual and customary practices. Upon its issuance of any
Letter of Credit, such Issuing Bank shall promptly notify each
Bank of such issuance.
2.04 Letter of Credit Participations. (a) Immediately upon
the issuance by any Issuing Bank of any Letter of Credit, such
Issuing Bank shall be deemed to have sold and transferred to each
Bank with a Revolving Loan Commitment, other than such Issuing
Bank (each such Bank, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed irrevo-
cably and unconditionally to have purchased and received from
such Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Participant's
Adjusted Percentage in such Letter of Credit, each drawing made
thereunder and Acceptances created thereunder and the obligations
of the Borrowers under this Agreement with respect thereto, and
any security therefor or guaranty pertaining thereto. Upon any
change in the Revolving Loan Commitments or Adjusted Percentages
of the Banks pursuant to Section 1.13 or 13.04 or as a result of
a Bank Default, it is hereby agreed that, with respect to all
outstanding Letters of Credit, Acceptances and Unpaid Drawings,
there shall be an automatic adjustment to the participations
pursuant to this Section 2.04 to reflect the new Adjusted
Percentages of the assignor and assignee Bank or of all Banks
with Revolving Loan Commitments, as the case may be.
(b) In determining whether to pay or create an
Acceptance under any Letter of Credit, such Issuing Bank shall
have no obligation relative to the other Banks other than to
confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they
appear to substantially comply on their face with the
requirements of such Letter of Credit. Any action taken or
omitted to be taken by any Issuing Bank under or in connection
with any Letter of Credit if taken or omitted in the absence of
gross negligence or willful misconduct, shall not create for such
Issuing Bank any resulting liability to the Borrowers or any
Bank.
(c) In the event that any Issuing Bank makes any payment
under any Letter of Credit issued by it or any Acceptance created
thereunder and the Borrowers shall not have reimbursed such
amount in full to such Issuing Bank pursuant to Section 2.05(a),
such Issuing Bank shall promptly notify the Administrative Agent,
which shall promptly notify each Participant of such failure, and
each Participant shall promptly and unconditionally pay to such
Issuing Bank the amount of such Participant's Adjusted Percentage
of such unreimbursed payment in Dollars and in same day funds.
If the Administrative Agent so notifies, prior to 11:00 A.M. (New
York time) on any Business Day, any Participant required to fund
a payment under a Letter of Credit, such Participant shall make
available to such Issuing Bank in Dollars such Participant's
Adjusted Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such
Participant shall not have so made its Adjusted Percentage of the
amount of such payment available to such Issuing Bank, such
Participant agrees to pay to such Issuing Bank, forthwith on
demand, such amount, together with interest thereon, for each day
from such date until the date such amount is paid to such Issuing
Bank at the overnight Federal Funds Rate. The failure of any
Participant to make available to such Issuing Bank its Adjusted
Percentage of any payment under any Letter of Credit shall not
relieve any other Participant of its obligation hereunder to make
available to such Issuing Bank its Adjusted Percentage of any
Letter of Credit or Acceptance created thereunder on the date
required, as specified above, but no Participant shall be
responsible for the failure of any other Participant to make
available to such Issuing Bank such other Participant's Adjusted
Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment of a
reimbursement obligation as to which it has received any payments
from the Participants pursuant to clause (c) above, such Issuing
Bank shall pay to each Participant which has paid its Adjusted
Percentage thereof, in Dollars and in same day funds, an amount
equal to such Participant's share (based upon the proportionate
aggregate amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the principal
amount of such reimbursement obligation and interest thereon
accruing after the purchase of the respective participations.
(e) Upon the request of any Participant, each Issuing
Bank shall furnish to such Participant copies of any Letter of
Credit issued by it and such other documentation as may
reasonably be requested by such Participant.
(f) The obligations of the Participants to make payments
to each Issuing Bank with respect to Letters of Credit and
Acceptances issued thereunder shall be irrevocable and not
subject to any qualification or exception whatsoever and shall be
made in accordance with the terms and conditions of this
Agreement under all circumstances, including, without limitation,
any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrowers or any of their Subsidiaries
may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any holder
of an Acceptance, the Administrative Agent, any Participant,
or any other Person, whether in connection with this
Agreement, any Letter of Credit, any Acceptance, the transac-
tions contemplated herein or any unrelated transactions
(including any underlying transaction between any Borrower and
the beneficiary named in any such Letter of Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the
Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.05 Agreement to Repay Letter of Credit Drawings and
Acceptance Payments. (a) The Borrowers hereby jointly and
severally agree to reimburse the respective Issuing Bank, by
making payment to the Administrative Agent in immediately
available funds at the Payment Office, for any payment or
disbursement made by such Issuing Bank under any Letter of Credit
or Acceptance created thereunder (each such amount, so paid until
reimbursed, an "Unpaid Drawing"), immediately after, and in any
event on the date of such payment or disbursement, with interest
on the amount so paid or disbursed by such Issuing Bank, to the
extent not reimbursed prior to 12:00 Noon (New York time) on the
date of such payment or disbursement, from and including the date
paid or disbursed to but excluding the date such Issuing Bank was
reimbursed by the Borrowers therefor at a rate per annum which
shall be the Base Rate in effect from time to time plus the
Applicable Margin for Base Rate Loans, provided, however, to the
extent such amounts are not reimbursed prior to 12:00 Noon (New
York time) on the second Business Day following such payment or
disbursement, interest shall thereafter accrue on the amounts so
paid or disbursed by such Issuing Bank (and until reimbursed by
the Borrowers) at a rate per annum which shall be the Base Rate
in effect from time to time plus the Applicable Margin for Base
Rate Loans plus 2%, in each such case, with interest to be
payable by the Borrowers on demand. The respective Issuing Bank
shall give the Borrowers prompt notice of each Drawing under any
Letter of Credit or payment under any Acceptance created
thereunder, provided that the failure to give any such notice
shall in no way affect, impair or diminish the Borrowers'
obligations hereunder.
(b) The obligations of the Borrowers under this Section
2.05 to reimburse the respective Issuing Bank with respect to
drawings on Letters of Credit and payments under any Acceptance
created thereunder (each, a "Drawing") (including interest
thereon) shall be joint and several and shall be absolute and
unconditional under any and all circumstances and irrespective of
any setoff, counterclaim or defense to payment which any Borrower
may have or have had against any Bank (including in its capacity
as issuer of the Letter of Credit or as Participant), or any
nonapplication or misapplication by the beneficiary of the
proceeds of such Drawing, the respective Issuing Bank's only
obligation to the Borrowers being to confirm that any documents
required to be delivered under such Letter of Credit appear to
have been delivered and that they appear to substantially comply
on their face with the requirements of such Letter of Credit.
Any action taken or omitted to be taken by any Issuing Bank under
or in connection with any Letter of Credit or any Acceptance
created thereunder if taken or omitted in the absence of gross
negligence or willful misconduct, shall not create for such
Issuing Bank any resulting liability to the Borrowers.
2.06 Increased Costs. If at any time after the date of
this Agreement, the introduction of or any change in any
applicable law, rule, regulation, order, guideline or request or
in the interpretation or administration thereof by any
governmental authority charged with the interpretation or
administration thereof, or compliance by any Issuing Bank or any
Participant with any request or directive by any such authority
(whether or not having the force of law), or any change in
generally acceptable accounting principles, shall either (i)
impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued,
or Acceptances created, by any Issuing Bank or participated in by
any Participant, or (ii) impose on any Issuing Bank or any
Participant any other conditions relating, directly or
indirectly, to this Agreement, any Letter of Credit or any
Acceptance created thereunder; and the result of any of the
foregoing is to increase the cost to any Issuing Bank or any
Participant of issuing, maintaining or participating in any
Letter of Credit or any Acceptance created thereunder, or reduce
the amount of any sum received or receivable by any Issuing Bank
or any Participant hereunder or reduce the rate of return on its
capital with respect to Letters of Credit and Acceptances created
thereunder (except for changes in the rate of tax on, or
determined by reference to, the net income or net profits of such
Issuing Bank or such Participant, or any franchise tax based on
the net income or net profits of such Bank or Participant, in
either case pursuant to the laws of the United States of America,
the jurisdiction in which it is organized or in which its
principal office or applicable lending office is located or any
subdivision thereof or therein), but without duplication of any
amounts payable in respect of Taxes pursuant to Section 4.04(a),
then, upon demand to the Borrowers by such Issuing Bank or any
Participant (a copy of which demand shall be sent by such Issuing
Bank or such Participant to the Administrative Agent) and subject
to the provisions of Section 13.15 (to the extent applicable),
the Borrowers jointly and severally agree to pay to such Issuing
Bank or such Participant such additional amount or amounts as
will compensate such Bank for such increased cost or reduction in
the amount receivable or reduction on the rate of return on its
capital. Any Issuing Bank or any Participant, upon determining
that any additional amounts will be payable pursuant to this
Section 2.06, will give prompt written notice thereof to the Bor-
rowers, which notice shall include a certificate submitted to the
Borrowers by such Issuing Bank or such Participant (a copy of
which certificate shall be sent by such Issuing Bank or such
Participant to the Administrative Agent), setting forth in
reasonable detail the basis for the calculation of such
additional amount or amounts necessary to compensate such Issuing
Bank or such Participant. The certificate required to be
delivered pursuant to this Section 2.06 shall, if delivered in
good faith and absent manifest error, be final and conclusive and
binding on the Borrowers.
SECTION 3. Commitment Commission; Fees; Reductions of
Commitment.
3.01 Fees. (a) The Borrowers jointly and severally
agree to pay to the Administrative Agent for distribution to each
Non-Defaulting Bank with a Revolving Loan Commitment a commitment
commission (the "Commitment Commission") for the period from the
Restatement Effective Date to but excluding the Revolving Loan
Maturity Date (or such earlier date as the Total Revolving Loan
Commitment shall have been terminated), computed at a rate for
each day equal to 1/2 of 1% (3/8 of 1% at any time that the
Reduction Percentage equals an amount other than zero) per annum
on the daily average Unutilized Revolving Loan Commitment of such
Non-Defaulting Bank. Accrued Commitment Commission shall be due
and payable quarterly in arrears on each Quarterly Payment Date
and on the Revolving Loan Maturity Date or such earlier date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrowers jointly and severally agree to pay to
the Administrative Agent for pro rata distribution to each Non--
Defaulting Bank with a Revolving Loan Commitment (based on their
respective Adjusted Percentages) a fee in respect of (x) each
Letter of Credit issued hereunder (the "Letter of Credit Fee"),
for the period from and including the date of issuance of such
Letter of Credit to the termination of such Letter of Credit,
computed at a rate per annum equal to the Applicable Margin for
Revolving Loans maintained as Eurodollar Loans as in effect from
time to time on the daily average Stated Amount of such Letter of
Credit and (y) each Acceptance (the "Acceptance Fee") for the
period from and including the date of creation of such Acceptance
to and including the maturity of such Acceptance, computed at a
rate per annum equal to the Applicable Margin for Revolving Loans
maintained as Eurodollar Loans as in effect from time to time on
the daily average Stated Amount of such Acceptance. Accrued
Letter of Credit Fees and Acceptance Fees shall be due and
payable quarterly in arrears on each Quarterly Payment Date and
upon the first day on or after the termination of the Total
Revolving Loan Commitment upon which no Letters of Credit or
Acceptances remain outstanding.
(c) The Borrowers jointly and severally agree to pay to
the respective Issuing Bank, for its own account, a facing fee in
respect of (x) each Standby Letter of Credit issued for its
account hereunder (the "Letter of Credit Facing Fee") for the
period from and including the date of issuance of such Standby
Letter of Credit to and including the termination of such Standby
Letter of Credit, computed at a rate equal to 1/4 of 1% per annum
of the daily average Stated Amount of such Standby Letter of
Credit, provided that in any event the minimum amount of the
Letter of Credit Facing Fee payable in any 12 month period for
any Standby Letter of Credit shall be $500 (it being agreed that,
on each anniversary of the issuance of any Standby Letter of
Credit or upon any earlier termination or expiration of a Standby
Letter of Credit, if $500 exceeds the amount of Letter of Credit
Facing Fees theretofore paid or then accrued with respect to such
Standby Letter of Credit, in either case after the date of the
issuance thereof or, if later, after the date of the last
anniversary of the issuance thereof (but excluding any amounts
paid after such anniversary with respect to periods ending on or
prior to such anniversary, including, without limitation, as a
result of the operation of this parenthetical), the amount of
such excess shall be payable on the next date upon which accrued
Letter of Credit Facing Fees are otherwise payable with respect
to Standby Letters of Credit as provided in the following
sentence) and (y) each Acceptance created by it (the "Acceptance
Facing Fee", and together with the Letter of Credit Facing Fees,
the "Facing Fees") for the period from and including the date of
creation of such Acceptance to and including the maturity of such
Acceptance, computed at a rate equal to 1/4 of 1% per annum of
the daily average Stated Amount of such Acceptance. Accrued
Facing Fees shall be due and payable quarterly in arrears on each
Quarterly Payment Date and on the date upon which the Total
Revolving Loan Commitment has been terminated and all Letters of
Credit and Acceptances have been terminated in accordance with
their terms.
(d) The Borrowers jointly and severally agree to pay,
upon each drawing under, issuance of, or amendment to any Letter
of Credit, such amount as shall at the time of such event be the
administrative charge and out-of-pocket expenses which the
respective Issuing Bank is generally imposing in connection with
such occurrence with respect to letters of credit.
(e) The Borrowers jointly and severally agree to pay to
the Agents, for their own account, such other fees as have been
agreed to in writing by the Borrowers and the Agents.
3.02 Voluntary Termination of Unutilized Commitments.
(a) Upon at least two Business Days' prior notice from an
Authorized Representative of the Borrowers to the Administrative
Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks), the Borrowers
shall have the right, at any time or from time to time, without
premium or penalty, to terminate the Total Unutilized Revolving
Loan Commitment, in whole or in part, in integral multiples of
$1,000,000, provided that (i) each such reduction shall apply
proportionately to permanently reduce the Revolving Loan
Commitment of each Bank with such a Commitment and (ii) the
reduction to the Total Unutilized Revolving Loan Commitment shall
in no case be in an amount which would cause the Revolving Loan
Commitment of any Bank to be reduced (as required by preceding
clause (i)) by an amount which exceeds the remainder of (x) the
Unutilized Revolving Loan Commitment of such Bank as in effect
immediately before giving effect to such reduction minus (y) such
Bank's Adjusted Percentage of the aggregate principal amount of
Swingline Loans then outstanding.
(b) In the event of certain refusals by a Bank as
provided in Section 13.12(b) to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the
Borrowers may, subject to their compliance with the requirements
of said Section 13.12(b), upon five Business Days' written notice
to the Administrative Agent at its Notice Office (which notice
the Administrative Agent shall promptly transmit to each of the
Banks) terminate all of the Revolving Loan Commitment of such
Bank so long as all Revolving Loans, together with accrued and
unpaid interest, Fees and all other amounts, owing to such Bank
(other than amounts owing in respect of the Tranche of Term Loans
maintained by such Bank, if such Term Loans are not being repaid
pursuant to Section 13.12(b)) are repaid concurrently with the
effectiveness of such termination (at which time Schedule I shall
be deemed modified to reflect such changed amounts), and at such
time, unless the respective Bank continues to have outstanding
Term Loans hereunder, such Bank shall no longer constitute a
"Bank" for purposes of this Agreement, except with respect to
indemnifications under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06),
which shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a) The Total
Commitment (and the Term Loan Commitment and the Revolving Loan
Commitment of each Bank) shall terminate in its entirety on
February 15, 1996 unless the Restatement Effective Date shall
have occurred on or prior to such date.
(b) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total A Term Loan
Commitment (and the A Term Loan Commitment of each Bank) shall
(i) terminate in its entirety on the Restatement Effective Date
(after giving effect to the making of the A Term Loans on such
date) and (ii) prior to the termination of the A Term Loan
Commitment as provided in clause (i) above, be reduced from time
to time to the extent required by Section 4.02.
(c) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total B Term Loan
Commitment (and the B Term Loan Commitment of each Bank) shall
(i) terminate in its entirety on the Restatement Effective Date
(after giving effect to the making of the B Term Loans on such
date) and (ii) prior to the termination of the B Term Loan
Commitment as provided in clause (i) above, be reduced from time
to time to the extent required by Section 4.02.
(d) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total C Term Loan
Commitment (and the C Term Loan Commitment of each Bank) shall
(i) terminate in its entirety on the Restatement Effective Date
(after giving effect to the making of the C Term Loans on such
date) and (ii) prior to the termination of the C Term Loan
Commitment as provided in clause (i) above, be reduced from time
to time to the extent required by Section 4.02.
(e) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, the Total Revolving
Loan Commitment (and the Revolving Loan Commitment of each Bank)
shall terminate in its entirety on the Revolving Loan Maturity
Date.
(f) In addition to any other mandatory commitment
reductions pursuant to this Section 3.03, on each date after the
Restatement Effective Date upon which a mandatory prepayment of
Term Loans pursuant to any of Sections 4.02(e), (f), (g), (h),
(i) and (j) is required (and exceeds in amount the aggregate
principal amount of Term Loans then outstanding) or would be
required if Term Loans were then outstanding, the Total Revolving
Loan Commitment shall be permanently reduced by the amount, if
any, by which the amount required to be applied pursuant to said
Section (determined as if an unlimited amount of Term Loans were
actually outstanding) exceeds the aggregate principal amount of
Term Loans then outstanding.
(g) Each reduction to the Total A Term Loan Commitment,
the Total B Term Loan Commitment, the Total C Term Loan
Commitment and the Total Revolving Loan Commitment pursuant to
this Section 3.03 (or pursuant to Section 4.02) shall be applied
proportionately to reduce the A Term Loan Commitment, the B Term
Loan Commitment, the C Term Loan Commitment or the Revolving Loan
Commitment, as the case may be, of each Bank with such a Com-
mitment.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. (a) The Borrowers shall
have the right to prepay the Loans, and the right to allocate
such prepayments to Revolving Loans and/or Term Loans as the
Borrowers elect, without premium or penalty, in whole or in part
at any time and from time to time on the following terms and
conditions: (i) an Authorized Representative of the Borrowers
shall give the Administrative Agent prior to 12:00 Noon (New York
time) at its Notice Office (x) at least one Business Day's prior
written notice (or telephonic notice promptly confirmed in
writing) of the Borrowers' intent to prepay Base Rate Loans (or
same day notice in the case of Swingline Loans provided such
notice is given prior to 11:00 A.M. (New York time)) and (y) at
least three Business Days' prior written notice (or telephonic
notice promptly confirmed in writing) of their intent to prepay
Eurodollar Loans, whether A Term Loans, B Term Loans, C Term
Loans, Revolving Loans or Swingline Loans shall be prepaid, the
amount of such prepayment and the Types of Loans to be prepaid
and, in the case of Eurodollar Loans, the specific Borrowing or
Borrowings pursuant to which made, which notice the
Administrative Agent shall promptly transmit to each of the
Banks; (ii) each prepayment shall be in an aggregate principal
amount of at least $1,000,000 (or $500,000 in the case of
Swingline Loans), provided that if any partial prepayment of
Eurodollar Loans made pursuant to any Borrowing shall reduce the
outstanding Eurodollar Loans made pursuant to such Borrowing to
an amount less than (1) in the case of Term Loans, $5,000,000 and
(2) in the case of Revolving Loans, $1,000,000, then such
Borrowing may not be continued as a Borrowing of Eurodollar Loans
and any election of an Interest Period with respect thereto given
by the Borrowers shall have no force or effect; (iii) at the time
of any prepayment of Eurodollar Loans pursuant to this Section
4.01 on any date other than the last day of the Interest Period
applicable thereto, the Borrowers shall pay the amounts required
pursuant to Section 1.11; (iv) except as otherwise provided in
clause (vi) below of this Section 4.01(a) and in Section 4.01(b),
each prepayment in respect of any Term Loans made pursuant to
this Section 4.01(a) shall be allocated among the A Term Loans,
the B Term Loans and the C Term Loans on a pro rata basis (based
upon the then relative aggregate outstanding principal amounts of
A Term Loans, B Term Loans and C Term Loans after giving effect
to all prior reductions thereto), provided that, at the option of
the Borrowers, any voluntary prepayments of Term Loans pursuant
to this Section 4.01(a) shall be applied (A) first, to reduce in
direct order of maturity the A Term Loan Scheduled Repayments, B
Term Loan Scheduled Repayments and C Term Loan Scheduled
Repayments which will be due and payable within six months after
the date of such prepayment (and, if the amount to be applied
pursuant to this clause (A) to the Scheduled Repayments which
will be due and payable on any Scheduled Repayment Date is
insufficient to repay in full all such Scheduled Repayments which
will be due and payable on such Scheduled Repayment Date, then
such amount shall be applied to the Scheduled Repayments which
will be due on such Scheduled Repayment Date on a pro rata basis,
based upon the relative amounts of the Scheduled Repayments of
the various Tranches which will be due on such Scheduled
Repayment Date) and (B) second, to the extent in excess thereof,
as provided above in this clause (iv) without regard to this
proviso; provided further, that at the option of the Borrowers,
if a public offering of INTERCO Common Stock is consummated
within nine months after the Restatement Effective Date, the
balance of the Net Cash Proceeds thereof in an aggregate amount
not to exceed $100 million which shall not be applied as
mandatory prepayments of Term Loans pursuant to the second
proviso to Section 4.02(k) below (it being understood and agreed
that the aggregate amount applied pursuant to this proviso and
the second proviso to Section 4.02(k) shall in no event exceed
$100 million), may be applied (A) first, to any combination of
the Scheduled Repayments of (x) the A Term Loans due within 12
months after the date of the receipt of such Net Cash Proceeds in
direct order of maturity, (y) the B Term Loans (with such
repayments to be applied to such Scheduled Repayments as elected
by the Borrowers) or (z) the C Term Loans (with such repayments
to be applied to such Scheduled Repayments as elected by the
Borrowers) and (B) second, to the extent in excess thereof, as
provided above in this clause (iv) without regard to this
proviso; (v) except as otherwise expressly provided in clauses
(A) to the first and second provisos to clause (iv) above, each
prepayment of any Tranche of Term Loans pursuant to this Section
4.01(a) shall be applied to reduce the then remaining Scheduled
Repayments of the respective Tranche of Term Loans on a pro rata
basis (based upon the then remaining principal amounts of
Scheduled Repayments of the respective Tranche of Term Loans
after giving effect to all prior reductions thereto); and (vi) at
the Borrowers' election in connection with any prepayment of
Revolving Loans, such prepayment shall not be applied to the
prepayment of Revolving Loans of a Defaulting Bank.
(b) In the event of certain refusals by a Bank as
provided in Section 13.12(b) to consent to certain proposed
changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks, the
Borrowers may, upon five Business Days' written notice by an
Authorized Representative of the Borrowers to the Administrative
Agent at its Notice Office (which notice the Administrative Agent
shall promptly transmit to each of the Banks) repay all Loans,
together with accrued and unpaid interest, Fees, and other
amounts owing to such Bank (or owing to such Bank with respect to
each Tranche which gave rise to the need to obtain such Bank's
individual consent) in accordance with, and subject to the re-
quirements of, said Section 13.12(b) so long as (A) in the case
of the repayment of Revolving Loans of any Bank pursuant to this
clause (b) the Revolving Loan Commitment of such Bank is
terminated concurrently with such repayment (at which time
Schedule I shall be deemed modified to reflect the changed
Revolving Loan Commitments) and (B) the consents required by Sec-
tion 13.12(b) in connection with the repayment pursuant to this
clause (b) have been obtained.
4.02 Mandatory Repayments, Cash Collateralizations and
Commitment Reductions. (a)(i) On any day on which the sum of
the aggregate outstanding principal amount of the Revolving Loans
made by Non-Defaulting Banks, Swingline Loans and the Letter of
Credit Outstandings exceeds the Adjusted Total Revolving Loan
Commitment as then in effect, the Borrowers jointly and severally
agree to prepay principal of Swingline Loans and, after the
Swingline Loans have been repaid in full, Revolving Loans of Non-
Defaulting Banks in an amount equal to such excess. If, after
giving effect to the prepayment of all outstanding Swingline
Loans and Revolving Loans of Non-Defaulting Banks, the aggregate
amount of the Letter of Credit Outstandings exceeds the Adjusted
Total Revolving Loan Commitment as then in effect, the Borrowers
jointly and severally agree to pay to the Administrative Agent at
the Payment Office on such date an amount of cash or Cash
Equivalents equal to the amount of such excess (up to a maximum
amount equal to the Letter of Credit Outstandings at such time),
such cash or Cash Equivalents to be held as security for all
obligations of the Borrowers to Non-Defaulting Banks hereunder in
a cash collateral account to be established by the Administrative
Agent.
(ii) On any day on which the aggregate outstanding
principal amount of the Revolving Loans made by any Defaulting
Bank exceeds the Revolving Loan Commitment of such Defaulting
Bank, the Borrowers jointly and severally shall prepay prin-
cipal of Revolving Loans of such Defaulting Bank in an amount
equal to such excess.
(b) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
set forth below, the Borrowers jointly and severally shall be
required to repay that principal amount of A Term Loans, to the
extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(k) and (l), an "A Term Loan Scheduled
Repayment"):
Scheduled Repayment Date Amount
------------------------ -----------
Last Business Day in June, 1996 $ 7,500,000
Last Business Day in December, 1996 $ 7,500,000
Last Business Day in June, 1997 $10,000,000
Last Business Day in December, 1997 $10,000,000
Last Business Day in June, 1998 $12,500,000
Last Business Day in December, 1998 $12,500,000
Last Business Day in June, 1999 $25,000,000
Last Business Day in December, 1999 $25,000,000
Last Business Day in June, 2000 $32,500,000
Last Business Day in December, 2000 $32,500,000
Last Business Day in June, 2001 $37,500,000
A Term Loan Maturity Date $37,500,000
(c) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
set forth below, the Borrowers jointly and severally shall be
required to repay that principal amount of B Term Loans, to the
extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(k) and (l), a "B Term Loan Scheduled
Repayment"):
Scheduled Repayment Date Amount
------------------------ ------
Last Business Day in June, 1996 $ 500,000
Last Business Day in December, 1996 $ 500,000
Last Business Day in June, 1997 $ 500,000
Last Business Day in December, 1997 $ 500,000
Last Business Day in June, 1998 $ 500,000
Last Business Day in December, 1998 $ 500,000
Last Business Day in June, 1999 $ 500,000
Last Business Day in December, 1999 $ 500,000
Last Business Day in June, 2000 $ 500,000
Last Business Day in December, 2000 $ 500,000
Last Business Day in June, 2001 $ 500,000
Last Business Day in December, 2001 $ 500,000
Last Business Day in March, 2002 $18,800,000
Last Business Day in June, 2002 $18,800,000
Last Business Day in September, 2002 $18,800,000
Last Business Day in December, 2002 $18,800,000
B Term Loan Maturity Date $18,800,000
(d) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
set forth below, the Borrowers jointly and severally shall be
required to repay that principal amount of C Term Loans, to the
extent then outstanding, as is set forth opposite such date (each
such repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(k) and (l), a "C Term Loan Scheduled
Repayment"):
Scheduled Repayment Date Amount
------------------------ ------
Last Business Day in June, 1996 $ 500,000
Last Business Day in December, 1996 $ 500,000
Last Business Day in June, 1997 $ 500,000
Last Business Day in December, 1997 $ 500,000
Last Business Day in June, 1998 $ 500,000
Last Business Day in December, 1998 $ 500,000
Last Business Day in June, 1999 $ 500,000
Last Business Day in December, 1999 $ 500,000
Last Business Day in June, 2000 $ 500,000
Last Business Day in December, 2000 $ 500,000
Last Business Day in June, 2001 $ 500,000
Last Business Day in December, 2001 $ 500,000
Last Business Day in June, 2002 $ 500,000
Last Business Day in December, 2002 $ 500,000
Last Business Day in June, 2003 $23,250,000
Last Business Day in September, 2003 $23,250,000
Last Business Day in December, 2003 $23,250,000
C Term Loan Maturity Date $23,250,000
(e) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
after the Restatement Effective Date upon which INTERCO or any of
its Restricted Subsidiaries receives any cash proceeds from any
sale or issuance of its equity (including, without limitation,
proceeds received from Preferred Stock but excluding (i) up to
$1,000,000 of proceeds received during any Fiscal Year from the
issuance of shares of INTERCO Common Stock as a result of the
exercise of options issued pursuant to the Employee Stock Option
Plan, (ii) proceeds received during any Fiscal Year from any
exercise of INTERCO Warrants, (iii) proceeds received from the
issuance of shares of INTERCO Common Stock or Qualified Preferred
Stock as payment of consideration pursuant to a Permitted
Acquisition or as consideration in connection with the creation,
acquisition or Investment in an Unrestricted Subsidiary (to the
extent INTERCO does not receive any cash proceeds from the
issuance thereof), (iv) any amount of equity proceeds actually
used, at the time of the receipt thereof, to make Guaranty
Payments pursuant to Section 9.11(b)(ii)(y)(C), and (v) so long
as no Default or Event of Default then exists (x) proceeds of
Disqualified Preferred Stock issued pursuant to Section
9.13(b)(iii) which are used to repay or otherwise replace the
Receivables Facility in accordance with the terms hereof, (y)
subject to compliance with the proviso to Section 9.13(b) on the
date of the respective issuance of Disqualified Preferred Stock,
up to $50,000,000 of proceeds received from the issuance of
Disqualified Preferred Stock pursuant to Section 9.13(b)(i),
minus the sum of the aggregate liquidation preference or amount
of Disqualified Preferred Stock directly issued after the
Restatement Effective Date as consideration in connection with
Permitted Acquisitions and the aggregate principal amount of
Permitted Subordinated Indebtedness incurred on or prior to the
date of the issuance of such Disqualified Preferred Stock
pursuant to Section 9.04(ii)(x) and issued as consideration in
connection with one or more Permitted Acquisitions or otherwise
not required to be used to repay Term Loans as a result of clause
(w)(ii) of the first parenthetical of Section 4.02(g), to the
extent all such proceeds from the issuance of Disqualified
Preferred Stock are or were used to effect Permitted Acquisitions
so long as an Authorized Representative of the Borrowers has
delivered a certificate to the Administrative Agent on or prior
to such date stating that such proceeds shall be committed to be
used to make Permitted Acquisitions within six months following
the date of such issuance of Disqualified Preferred Stock, and so
long as such proceeds are so used in such time frame, it being
understood and agreed that any amount of proceeds not so used
within such time frame shall at the end of such six month period
be required to be applied as otherwise provided in this clause
(e) and (z) subject to compliance with the proviso to Section
9.13(b) on the date of the respective issuance of Disqualified
Preferred Stock, up to $25,000,000 of proceeds of Disqualified
Preferred Stock issued pursuant to Section 9.13(b)(ii), minus the
aggregate principal amount of Permitted Unsecured Indebtedness
incurred on or prior to such date of issuance pursuant to Section
9.04(iii)), an amount equal to 50% (or 100% with respect to
proceeds of Disqualified Preferred Stock not otherwise excluded
above) of the Net Cash Proceeds of the respective sale or
issuance shall be applied as a mandatory repayment of principal
of outstanding Term Loans (or, if the Restatement Effective Date
has not yet occurred, such amounts shall be applied as a
mandatory reduction to the Total Term Loan Commitment) in
accordance with the requirements of Section 4.02(k) and (l).
(f) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
after the Restatement Effective Date upon which INTERCO receives
any proceeds from the exercise of the INTERCO Warrants, an amount
equal to 25% of the Net Cash Proceeds of such exercise shall be
applied as a mandatory repayment of principal of outstanding Term
Loans (or, if the Restatement Effective Date has not yet
occurred, such amount shall be applied as a mandatory reduction
to the Total Term Loan Commitment) in accordance with the
requirements of Section 4.02(k) and (l).
(g) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
after the Restatement Effective Date upon which INTERCO or any of
its Restricted Subsidiaries receives any cash proceeds from any
incurrence by INTERCO or any of its Restricted Subsidiaries of
Indebtedness for borrowed money ((w) including Permitted
Subordinated Indebtedness, but excluding, so long as no Default
or Event of Default then exists (i) an amount of Permitted
Subordinated Indebtedness incurred and simultaneously used to
repay, refinance or otherwise replace the Receivables Facility in
accordance with the terms hereof and (ii) subject to compliance
with the proviso to Section 9.04(ii) on the date of the
incurrence of such Indebtedness, up to $50,000,000 of Permitted
Subordinated Indebtedness issued pursuant to Section 9.04(ii)(x),
less the sum of the aggregate principal amount of Permitted
Subordinate Indebtedness issued after the Restatement Effective
Date as consideration in connection with Permitted Acquisitions
and the aggregate amount of Disqualified Preferred Stock issued
on or prior to the date of the incurrence of such Permitted
Subordinated Indebtedness pursuant to Section 9.13(b)(i) and
issued as consideration in connection with one or more Permitted
Acquisitions or otherwise not required to repay Term Loans as a
result of clause (v)(y) of Section 4.02(e), to the extent such
proceeds of the incurrence of Permitted Subordinated Indebtedness
are or were used to effect Permitted Acquisitions so long as an
Authorized Representative of the Borrowers has delivered a
certificate to the Administrative Agent on or prior to such date
stating that such proceeds shall be committed to be used to make
such Permitted Acquisitions within six months following the date
of such incurrence of Permitted Subordinated Indebtedness, and so
long as such proceeds are so used within such time frame, it
being understood and agreed that any amount of proceeds not so
used within such time frame shall at the end of such six month
period be required to be applied as otherwise provided in this
clause (g), (x) subject to compliance with the proviso to Section
9.04(iii) on the date of the incurrence of such Indebtedness,
excluding up to $25,000,000 of proceeds of Permitted Unsecured
Indebtedness incurred pursuant to Section 9.04(iii), minus the
aggregate amount of Disqualified Preferred Stock issued on or
prior to the date of the incurrence of such Permitted Unsecured
Indebtedness pursuant to Section 9.13(b)(ii) and not required to
repay Term Loans as a result of clause (v)(z) of Section 4.02(e),
(y) including Attributed Receivables Facility Indebtedness
incurred pursuant to the Receivables Facility which in aggregate
principal amount exceeds $240,000,000 outstanding at any time
(but excluding other Attributed Receivables Facility
Indebtedness) and (z) excluding any other Indebtedness for
borrowed money permitted to be incurred pursuant to Section 9.04
(excluding, however, clauses (ii), (iii) and (xi) thereof) as
such Section is in effect on the Restatement Effective Date), an
amount equal to 100% of the Net Cash Proceeds of the respective
incurrence of Indebtedness shall be applied as a mandatory
repayment of principal of outstanding Term Loans (or, if the
Restatement Effective Date has not yet occurred, such amounts
shall be applied as a mandatory reduction to the Total Term Loan
Commitment) in accordance with the requirements of Section
4.02(k) and (l).
(h) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, on each date
after the Restatement Effective Date upon which INTERCO or any of
its Restricted Subsidiaries (other than the Receivables
Subsidiary) receives proceeds from any sale or other disposition
of assets (including capital stock and securities held thereby,
but excluding (i) sales or transfers of inventory in the ordinary
course of business, (ii) sales or transfers of assets with a fair
market value less than (A) $100,000 per such sale or disposition
(or in a series of related sales or dispositions) and (B) with
respect to any sale or transfer in an amount in excess of the
amount referred to in clause (A) above, $1,000,000 in the
aggregate for all such transfers in any Fiscal Year, (iii) sales
or transfers of assets permitted pursuant to Sections 9.02 (v)
and (vi), and (iv) sales of Excluded Assets, the Net Sales
Proceeds of which do not exceed $7,000,000), an amount equal to
100% (or 80% if no Default or Event of Default is then in
existence or will exist immediately after giving effect to the
respective sale and so long as the Leverage Ratio on the date of
the respective sale is less than 3.50:1.0) of the Net Sale
Proceeds therefrom shall be applied as a mandatory repayment of
principal of outstanding Term Loans (or, if the Restatement
Effective Date has not yet occurred, such amounts shall be
applied as a mandatory reduction to the Total Term Loan
Commitment) in accordance with the requirements of Sections
4.02(k) and (l).
(i) In addition to any other mandatory repayments
pursuant to this Section 4.02, on each Excess Cash Flow Payment
Date, an amount equal to 75% (or 50% if no Default or Event of
Default exists on the respective Excess Cash Flow Payment Date
and if the Leverage Ratio on such date is less than 3.50:1.0) of
the Excess Cash Flow for the relevant Excess Cash Flow Payment
Period shall be applied as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements of
Sections 4.02(k) and (l).
(j) In addition to any other mandatory repayments or
commitment reductions pursuant to this Section 4.02, within 10
days following each date after the Restatement Effective Date on
which INTERCO or any of its Restricted Subsidiaries receives any
proceeds from any Recovery Event (other than proceeds from
Recovery Events in an amount less than (A) $100,000 per each
Recovery Event and (B) with respect to any Recovery Event with
proceeds in excess of the amount referred to in clause (A) above,
$1,000,000 in the aggregate for all such Recovery Events in any
Fiscal Year), an amount equal to 100% of the proceeds of such
Recovery Event (net of reasonable costs including, without
limitation, legal costs and expenses, and taxes incurred in
connection with such Recovery Event) shall be applied as a
mandatory repayment of principal of outstanding Term Loans (or,
if the Restatement Effective Date has not yet occurred, such
amounts shall be applied as a mandatory reduction to the Total
Term Loan Commitment in accordance with the requirements of
Sections 4.02(k) and (l)), provided that (x) so long as no
Default or Event of Default then exists and such proceeds do not
exceed $5,000,000, such proceeds shall not be required to be so
applied on such date to the extent that an Authorized Representa-
tive of the Borrowers has delivered a certificate to the
Administrative Agent on or prior to such date stating that such
proceeds shall be used or shall be committed to be used to
replace or restore any properties or assets in respect of which
such proceeds were paid within one year following the date of
such Recovery Event (which certificate shall set forth the esti-
mates of the proceeds to be so expended) and (y) so long as no
Default or Event of Default then exists and to the extent that
(a) the amount of such proceeds exceeds $5,000,000, (b) the
amount of such proceeds, together with other cash available to
the Borrowers and permitted to be spent by them or their Re-
stricted Subsidiaries on Capital Expenditures during the relevant
period pursuant to Section 9.07, equals at least 100% of the cost
of replacement or restoration of the properties or assets in
respect of which such proceeds were paid as determined by the
Borrowers and as supported by such estimates or bids from
contractors or subcontractors or such other supporting
information as the Administrative Agent may reasonably request,
(c) an Authorized Representative of the Borrower has delivered to
the Administrative Agent a certificate on or prior to the date
the application would otherwise be required pursuant to this
Section 4.02(j) in the form described in clause (x) above and
also certifying its determination as required by preceding clause
(b) and certifying the sufficiency of business interruption
insurance as required by succeeding clause (d), and (d) an
Authorized Representative of the Borrower has delivered to the
Administrative Agent such evidence as the Administrative Agent
may reasonably request in form and substance reasonably satisfac-
tory to the Administrative Agent establishing that the Borrowers
have sufficient business interruption insurance and that the
Borrowers will receive payment thereunder in such amounts and at
such times as are necessary to satisfy all obligations and
expenses of the Borrowers (including, without limitation, all
debt service requirements, including pursuant to this Agreement)
without any delay or extension thereof, for the period from the
date of the respective casualty, condemnation or other event
giving rise to the Recovery Event and continuing through the
completion of the replacement or restoration of respective
properties or assets, then the entire amount of the proceeds of
such Recovery Event and not just the portion in excess of
$5,000,000 shall be deposited with the Administrative Agent
pursuant to a cash collateral arrangement reasonably satisfactory
to the Administrative Agent whereby such proceeds shall be
disbursed to the Borrowers from time to time as needed to pay
actual costs incurred by them in connection with the replacement
or restoration of the respective properties or assets (pursuant
to such certification requirements as may be established by the
Administrative Agent), provided further, that at any time while
an Event of Default has occurred and is continuing, the Required
Banks may direct the Administrative Agent (in which case the
Administrative Agent shall, and is hereby authorized by the Bor-
rowers to, follow said directions) to apply any or all proceeds
then on deposit in such collateral account to the repayment of
Obligations hereunder in the same manner as proceeds would be
applied pursuant to the Security Agreement, and provided further,
that if all or any portion of such proceeds not required to be
applied to the repayment of Term Loans pursuant to the second
preceding proviso (whether pursuant to clause (x) or (y) thereof)
are either (A) not so used or committed to be so used within one
year after the date of the respective Recovery Event or (B) if
committed to be used within one year after the date of receipt of
such Net Sale Proceeds and not so used within 18 months after the
date of respective Recovery Event then, in either such case, such
remaining portion not used or committed to be used in the case of
preceding clause (A) and not used in the case of preceding clause
(B) shall be applied on the date which is the first anniversary
of the date of the respective Recovery Event in the case of
clause (A) above or the date occurring 18 months after the date
of the respective Recovery Event in the case of clause (B) above
as a mandatory repayment of principal of outstanding Term Loans
in accordance with the requirements of Sections 4.02(k) and (l).
(k) Any amount required to be applied to Term Loans
pursuant to this Section 4.02 (other than Scheduled Repayments
pursuant to Sections 4.02(b), (c) and (d)) shall, except as
provided below, be allocated among the A Term Loans, the B Term
Loans and the C Term Loans on a pro rata basis (based upon the
relative aggregate outstanding principal amounts of A Term Loans,
B Term Loans and C Term Loans after giving effect to all prior
repayments thereof); provided that, at the option of the
Borrowers, any mandatory repayments pursuant to Sections 4.02(e)
and (i) above may be applied (x) first, in direct order of
maturity to the A Term Loan Scheduled Repayments, B Term Loan
Scheduled Repayments and C Term Loan Scheduled Repayments which
will be due and payable within six months after the date of such
repayment (and, if the amount to be applied pursuant to this
clause (x) to the Scheduled Repayments which will be due and
payable on any Scheduled Repayment Date is insufficient to repay
in full all such Scheduled Repayments which will be due and pay-
able on such Scheduled Repayment Date, then such amount shall be
applied to the Scheduled Repayments which will be due on such
Scheduled Repayment Date on a pro rata basis, based upon the
relative amounts of the Scheduled Repayments of the various
Tranches which will be due on such Scheduled Repayment Date) (y)
second, to the extent in excess thereof, as provided above in
this paragraph (k) without regard to this proviso; provided
further, that, at the option of the Borrowers, if a public
offering of INTERCO Common Stock is consummated within nine
months after the Restatement Effective Date, Net Cash Proceeds
thereof applied as required by Section 4.02(e) in an aggregate
amount not to exceed $100 million (less any amount applied
pursuant to the second proviso to Section 4.01(a)(iv)) may be
applied to any combination of the Scheduled Repayments of (x) the
A Term Loans due within 12 months after the date of the receipt
of such Net Cash Proceeds in direct order of maturity, (y) the B
Term Loans (with such repayments to be applied to such Scheduled
Repayments as elected by the Borrowers) or (z) the C Term Loans
(with such repayments to be applied to such Scheduled Repayments
as elected by the Borrowers). All amounts to be applied to any
Tranche of Term Loans as provided above shall be applied (except
as otherwise expressly provided in clause (x) of the first
proviso and clauses (x), (y) and (z) of the second proviso to the
immediately preceding sentence) to reduce the then remaining
Scheduled Repayments of the respective Tranche of Term Loans on a
pro rata basis (based upon the then remaining principal amounts
of Scheduled Repayments of the respective Tranche of Term Loans
after giving effect to all prior reductions thereto).
(l) With respect to each repayment of Loans required
by this Section 4.02, the Borrowers may designate the Types of
Loans of the respective Tranche which are to be repaid and, in
the case of Eurodollar Loans, the specific Borrowing or
Borrowings of the respective Tranche pursuant to which made,
provided that: (i) repayments of Eurodollar Loans pursuant to
this Section 4.02 may only be made on the last day of an Interest
Period applicable thereto unless all Eurodollar Loans of the
respective Tranche with Interest Periods ending on such date of
required repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of
Eurodollar Loans made pursuant to a single Borrowing shall reduce
the outstanding Eurodollar Loans made pursuant to such Borrowing
to an amount less than (x) in the case of Term Loans, $5,000,000
and (y) in the case of Revolving Loans, $1,000,000, such
Borrowing shall be converted at the end of the then current
Interest Period into a Borrowing of Base Rate Loans; and (iii)
each repayment of Loans required by this Section 4.02 shall,
except as otherwise expressly set forth in Sections 4.02(a),
4.02(b), 4.02(c), 4.02(d) and 4.02(k), be applied pro rata among
such Loans. In the absence of a designation by the Borrowers as
described in the preceding sentence, the Administrative Agent
shall, subject to the above, make such designation in its sole
discretion with a view, but no obligation, to minimize breakage
costs owing under Section 1.11.
(m) Notwithstanding anything to the contrary contained
elsewhere in this Agreement, (i) all then outstanding A Term
Loans shall be repaid in full on the A Term Loan Maturity Date,
(ii) all then outstanding B Term Loans shall be repaid in full on
the B Term Loan Maturity Date, (iii) all then outstanding C Term
Loans shall be repaid in full on the C Term Loan Maturity Date,
(iv) all then outstanding Revolving Loans shall be repaid in full
on the Revolving Loan Maturity Date and (v) all Swingline Loans
shall be repaid on the Swingline Expiry Date.
4.03 Method and Place of Payment. Except as otherwise
specifically provided herein, all payments under this Agreement
or any Note shall be made to the Administrative Agent for the
account of the Bank or Banks entitled thereto not later than
12:00 Noon (New York time) on the date when due and shall be made
in Dollars in immediately available funds at the Payment Office
of the Administrative Agent. Any payments received by the
Administrative Agent after such time shall be deemed to have been
received on the next Business Day. Whenever any payment to be
made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to
payments of principal, interest shall be payable at the
applicable rate during such extension.
4.04 Net Payments. (a) All payments made by the
Borrowers hereunder or under any Note will be made without
setoff, counterclaim or other defense. Except as provided in
Section 4.04(b), all such payments will be made free and clear
of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any
jurisdiction or by any political subdivision or taxing authority
thereof or therein with respect to such payments (but excluding,
except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or net profits of a Bank
pursuant to the laws of the jurisdiction in which it is organized
or the jurisdiction in which the principal office or applicable
lending office of such Bank is located or any subdivision thereof
or therein) and all interest, penalties or similar liabilities
with respect thereto (all such non-excluded taxes, levies,
imports, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the Borrowers jointly and severally agree to pay the
full amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under this
Agreement or under any Note, after withholding or deduction for
or on account of any Taxes, will not be less than the amount
provided for herein or in such Note. If any amounts are payable
in respect of Taxes pursuant to the preceding sentence, the
Borrowers agree to reimburse each Bank, upon the written request
of such Bank, for taxes imposed on or measured by the net income
or net profits of such Bank pursuant to the laws of the
jurisdiction in which the principal office or applicable lending
office of such Bank is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which
the principal office or applicable lending office of such Bank is
located and for any withholding of income or similar taxes
imposed by the United States of America as such Bank shall deter-
mine are payable by, or withheld from, such Bank in respect of
such amounts so paid to or on behalf of such Bank pursuant to the
preceding sentence and in respect of any amounts paid to or on
behalf of such Bank pursuant to this sentence. The Borrowers
will furnish to the Administrative Agent within 45 days after the
date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the
Borrowers. The Borrowers jointly and severally agree to
indemnify and hold harmless each Bank, and reimburse such Bank
upon its written request, for the amount of any Taxes so levied
or imposed and paid by such Bank.
(b) Each Bank that is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) agrees
to deliver to the Borrowers and the Administrative Agent on or
prior to the Restatement Effective Date, or in the case of a Bank
that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Bank was already a Bank hereunder immediately prior to
such assignment or transfer), on the date of such assignment or
transfer to such Bank, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or
successor forms) certifying to such Bank's entitlement to a
complete exemption from United States withholding tax with
respect to payments to be made under this Agreement and under any
Note, or (ii) if the Bank is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i)
above, (x) a certificate substantially in the form of Exhibit D
(any such certificate, a "Section 4.04(b)(ii) Certificate") and
(y) two accurate and complete original signed copies of Internal
Revenue Service Form W-8 (or successor form) certifying to such
Bank's entitlement to a complete exemption from United States
withholding tax with respect to payments of interest to be made
under this Agreement and under any Note. In addition, each Bank
agrees that from time to time after the Restatement Effective
Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material
respect, it will deliver to the Borrowers and the Administrative
Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a
Section 4.04(b)(ii) Certificate, as the case may be, and such
other forms as may be required in order to confirm or establish
the entitlement of such Bank to a continued exemption from or
reduction in United States withholding tax with respect to
payments under this Agreement and any Note, or it shall
immediately notify the Borrowers and the Administrative Agent of
its inability to deliver any such Form or Certificate. Notwith-
standing anything to the contrary contained in Section 4.04(a),
but subject to Section 13.04(b) and the immediately succeeding
sentence, (x) the Borrowers shall be entitled, to the extent they
are required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any political sub-
division or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any
Bank which is not a United States person (as such term is defined
in Section 7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Bank has not provided to the
Borrowers U.S. Internal Revenue Service Forms that establish a
complete exemption from such deduction or withholding and (y) the
Borrowers shall not be obligated pursuant to Section 4.04(a)
hereof to gross-up payments to be made to a Bank in respect of
income or similar taxes imposed by the United States if (I) such
Bank has not provided to the Borrowers the Internal Revenue
Service Forms required to be provided to the Borrowers pursuant
to this Section 4.04(b) or (II) in the case of a payment, other
than interest, to a Bank described in clause (ii) above, to the
extent that such forms do not establish a complete exemption from
withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this
Section 4.04 and except as set forth in Section 13.04(b), the
Borrowers agree to pay additional amounts and to indemnify each
Bank in the manner set forth in Section 4.04(a) (without regard
to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it
as described in the immediately preceding sentence as a result of
any changes after the Effective Date in any applicable law,
treaty, governmental rule, regulation, guideline or order, or in
the interpretation thereof, relating to the deducting or with-
holding of income or similar Taxes.
(c) The provisions of this Section 4.04 are subject to
the provisions of Section 13.15 (to the extent applicable).
SECTION 5. Conditions Precedent to Initial Credit
Events. The obligation of each Bank to make Loans, and the
obligation of each Issuing Bank to issue Letters of Credit, on
the Restatement Effective Date, is subject at the time of the
making of such Loans or the issuance of such Letters of Credit to
the satisfaction of the following conditions:
5.01 Execution of Agreement; Notes. On or prior to
the Restatement Effective Date (i) this Agreement shall have been
executed and delivered as provided in Section 13.10 and (ii)
there shall have been delivered to the Administrative Agent for
the account of each of the Banks the appropriate A Term Note, B
Term Note, C Term Note and/or Revolving Note executed by the
Borrowers, and to BTCo the Swingline Note executed by the Bor-
rowers, in each case in the amount, maturity and as otherwise
provided herein.
5.02 Fees, etc. On the Restatement Effective Date,
all costs, fees and expenses (including, without limitation,
legal fees and expenses) payable to the Agents and the Banks
shall have been paid to the extent then due.
5.03 Opinions of Counsel. On the Restatement Ef-
fective Date, the Administrative Agent shall have received (i)
from the General Counsel to INTERCO and its Restricted
Subsidiaries, an opinion addressed to the Agents and each of the
Banks and dated the Restatement Effective Date covering the
matters set forth in Exhibit E-1, (ii) from Bryan Cave, special
counsel to INTERCO and its Restricted Subsidiaries, an opinion
addressed to the Agents and each of the Banks and dated the
Restatement Effective Date covering the matters set forth in
Exhibit E-2 and (iii) from local counsel satisfactory to the
Administrative Agent, opinions each of which shall be in form and
substance reasonably satisfactory to the Administrative Agent and
the Required Banks and shall cover the perfection of the security
interests granted pursuant to the Security Agreement and the
Mortgages and such other matters incident to the transactions
contemplated herein as the Administrative Agent may reasonably
request.
5.04 Corporate Documents; Proceedings; etc. (a) On
the Restatement Effective Date, the Administrative Agent shall
have received a certificate, dated the Restatement Effective
Date, signed by the President, any Executive Vice President or
any Vice President of Thomasville and each Subsidiary of
Thomasville that is a Subsidiary Guarantor and attested to by the
Secretary or any Assistant Secretary of Thomasville or the
respective such Subsidiary, in the form of Exhibit F with
appropriate insertions, together with copies of the Certificate
of Incorporation and By-Laws of Thomasville or the respective
such Subsidiary and the resolutions of Thomasville or the
respective such Subsidiary referred to in such certificate, and
the foregoing shall be acceptable to the Administrative Agent in
its reasonable discretion.
(b) On the Restatement Effective Date, the
Administrative Agent shall have received bring-down certificates
of all Credit Parties (other than Thomasville and its
Subsidiaries) (x) certifying that there were no changes, or
providing the text of any changes, to the Certificate of
Incorporation and By-Laws of such Credit Parties as delivered
pursuant to Section 5.04 of the Original Credit Agreement and (y)
to the effect that each such Credit Party is in good standing in
its respective state of incorporation and in those states where
each such Credit Party conducts business.
(c) All corporate and legal proceedings and all
instruments and agreements in connection with the transactions
contemplated by this Agreement and the other Documents shall be
reasonably satisfactory in form and substance to the
Administrative Agent and the Administrative Agent shall have
received all information and copies of all documents and papers,
including records of corporate proceedings, governmental appro-
vals, good standing certificates and bring-down telegrams, if
any, which the Administrative Agent reasonably may have requested
in connection therewith, such documents and papers where appro-
priate to be certified by proper corporate or governmental
authorities.
5.05 Shareholders' Agreements; Collective Bargaining
Agreements; Permitted Debt Agreements; Tax Sharing Agreements.
(a) On the Restatement Effective Date, there shall have been
delivered to the Administrative Agent true and correct copies,
certified as true and complete by an appropriate officer of
INTERCO or Thomasville of (i) all agreements entered into by
Thomasville or any of its Subsidiaries governing the terms and
relative rights of its capital stock and any agreements entered
into by shareholders relating to any such entity with respect to
its capital stock (collectively, together with any agreements
referred to in Section 5.05(a)(i) of the Original Credit
Agreement, and any amendments thereto referred in succeeding
Section 5.05(b), the "Shareholders' Agreements"), (ii) all
collective bargaining agreements applying or relating to any
employee of Thomasville or any of its Restricted Subsidiaries
(collectively, together with any agreements referred to in
Section 5.05(a)(ii) of the Original Credit Agreement, and any
amendments thereto referred in succeeding Section 5.05(b), the
"Collective Bargaining Agreements"), (iii) all agreements
evidencing or relating to Existing Indebtedness of Thomasville or
any of its Subsidiaries (collectively, together with any
agreements referred to in Section 5.05(a)(iii) of the Original
Credit Agreement, and any amendments thereto referred in
succeeding Section 5.05(b), the "Permitted Debt Agreements"), and
(iv) all information requested by the Administrative Agent with
respect to the Surviving Guaranties and the Tax Sharing
Agreements; all of which Shareholders' Agreements, Collective
Bargaining Agreements and Permitted Debt Agreements shall, except
to the extent such agreements are of no force or effect on the
Restatement Effective Date, be in form and substance reasonably
satisfactory to the Administrative Agent and the Required Banks.
(b) On or prior to the Restatement Effective Date, the
Administrative Agent shall have received (i) a certification from
an Authorized Representative of INTERCO that all agreements and
plans referenced in Section 5.05(a) of the Original Credit
Agreement, previously delivered to the Administrative Agent by
each Credit Party (other than Thomasville and its Subsidiaries),
remain in full force and effect (or specifying which of such
agreements and plans do not remain in full force and effect) and
(ii) any amendments thereto or additional such agreements.
5.06 Solvency; Environmental Analyses; Insurance
Matters. On or prior to the Restatement Effective Date, the
Borrowers shall cause to be delivered to the Administrative Agent
(i) a solvency letter in form and substance satisfactory to the
Administrative Agent from Houlihan Lokey Howard & Zukin, setting
forth its conclusions that, after giving effect to the
Transaction and the incurrence of all the financings contemplated
herein, INTERCO and its Subsidiaries (on a consolidated basis),
is not insolvent, and has not been rendered insolvent by the
Indebtedness in connection therewith, will not be left with
unreasonably small capital with which to engage in its and/or
their businesses and will not have incurred debts beyond its
and/or their ability to pay such debts as they mature, (ii)
environmental review and reports prepared by Jordan Jones &
Goulding, Inc., the results of which will be in scope, form and
substance acceptable to the Agents, and (iii) evidence of
insurance complying with the requirements of Section 8.03 for the
business and properties of INTERCO and its Restricted
Subsidiaries, in scope, form and substance reasonably
satisfactory to the Agents and naming the Collateral Agent as an
additional insured and/or loss payee, and stating that such
insurance shall not be cancelled or revised without 30 days'
prior written notice by the insurer to the Administrative Agent.
5.07 Receivables Facility. On or prior to the
Restatement Effective Date, (i) the Borrowers shall have entered
into amendments to the Original Receivables Facility which will
(x) extend the maturity thereof to five years from the
Restatement Effective Date and (y) increase the commitments
thereunder to $225 million, (ii) a sale of receivables (including
receivables originated by Thomasville) shall have been effected
pursuant to the Receivables Facility, as so amended, which sale
shall have generated net cash proceeds of at least $55,000,000
and (iii) there shall have been delivered to the Administrative
Agent true and correct copies of all Receivables Documents
(including, without limitation, the amendments executed pursuant
to clause (i) above) which shall be in full force and effect and
shall be in form and substance satisfactory to the Administrative
Agent and the Required Banks, and all conditions set forth in the
Receivables Documents shall have been satisfied and not waived
(unless waived with the consent of the Administrative Agent).
5.08 Subsidiary Guaranty. On the Restatement Ef-
fective Date, each Subsidiary Guarantor shall have duly autho-
rized, executed and delivered the Amended and Restated Subsidiary
Guaranty in the form of Exhibit G hereto (as modified, supple-
mented or amended from time to time, the "Subsidiary Guaranty").
5.09 Pledge Agreement. On the Restatement Effective
Date, each Credit Party shall have duly authorized, executed and
delivered an Amended and Restated Pledge Agreement in the form of
Exhibit H (as modified, supplemented or amended from time to
time, the "Pledge Agreement") and shall have delivered to the
Collateral Agent, as Pledgee, all the Pledged Securities referred
to therein then owned by such Credit Party, (x) endorsed in blank
in the case of promissory notes constituting Pledged Securities
and (y) together with executed and undated stock powers, in the
case of capital stock constituting Pledged Securities.
5.10 Security Agreement. On the Restatement Effective
Date, each Credit Party shall have duly authorized, executed and
delivered an Amended and Restated Security Agreement in the form
of Exhibit I (as modified, supplemented or amended from time to
time, the "Security Agreement") covering all of such Credit
Party's present and future Security Agreement Collateral,
together with:
(a) proper Financing Statements (Form UCC-1) fully
executed for filing under the UCC or other appropriate
filing offices of each jurisdiction as may be necessary or,
in the reasonable opinion of the Collateral Agent, desirable
to perfect the security interests purported to be created by
the Security Agreement and evidence satisfactory to the
Collateral Agent that such Financing Statements shall be
filed prior to any Financing Statements filed pursuant to
the Receivables Facility;
(b) certified copies of Requests for Information or
Copies (Form UCC-11), or equivalent reports, listing all
effective financing statements that name any Credit Party as
debtor and that are filed in the jurisdictions referred to
in clause (a) above, together with copies of such other
financing statements (none of which shall cover the
Collateral except to the extent evidencing Permitted Liens
or in respect of which the Collateral Agent shall have re-
ceived termination statements (Form UCC-3) or such other
termination statements as shall be required by local law)
fully executed for filing;
(c) evidence of the completion of all other recordings
and filings of, or with respect to, the Security Agreement
as may be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security
interests intended to be created by the Security Agreement;
(d) lockbox agreements and other agreements from
deposit banks utilized pursuant to the Cash Management
System, recognizing the security interests granted pursuant
thereto and directing payments from deposit accounts to be
made to the Concentration Account; and
(e) evidence that all other actions necessary or, in
the reasonable opinion of the Collateral Agent, desirable to
perfect and protect the security interests purported to be
created by the Security Agreement have been taken.
5.11 Mortgages; Title Insurance; Surveys; etc. On the
Restatement Effective Date, the Collateral Agent shall have
received:
(i) fully executed counterparts of amendments (the
"Mortgage Amendments"), in form and substance satisfactory
to the Administrative Agent and the Required Banks, to each
of the Existing Mortgages, together with evidence that
counterparts of each of the Mortgage Amendments have been
delivered to the title company insuring the Lien of the
Existing Mortgages for recording in all places to the extent
necessary or desirable, in the judgment of the Collateral
Agent, effectively to maintain a valid and enforceable first
priority mortgage lien (subject to Permitted Encumbrances
relating thereto) on the Existing Mortgaged Properties in
favor of the Collateral Agent (or such other trustee as may
be required or desired under local law) for the benefit of
the Secured Creditors;
(ii) endorsements of the authorized issuing agent for
title insurers reasonably satisfactory to the Collateral
Agent to each Existing Mortgage Policy assuring the
Collateral Agent that each Existing Mortgage is a valid and
enforceable first priority mortgage lien on the respective
Existing Mortgaged Properties, free and clear of all defects
and encumbrances except Permitted Encumbrances;
(iii) fully executed counterparts of New Mortgages, in
form and substance reasonably satisfactory to the
Administrative Agent, covering such of the Real Property
owned or leased by the Borrowers, Thomasville or any of
their Subsidiaries as shall be designated as a New Mortgaged
Property on Schedule III (each a "New Mortgaged Property"
and, collectively, the "New Mortgaged Properties"), together
with evidence that counterparts of the New Mortgages have
been delivered to the title insurance company insuring the
Lien of the New Mortgages for recording in all places to the
extent necessary or desirable, in the judgment of the
Collateral Agent, effectively to create a valid and enforce-
able first priority mortgage lien (subject to Permitted
Encumbrances relating thereto) on each New Mortgaged
Property in favor of the Collateral Agent (or such other
trustee as may be required or desired under local law) for
the benefit of the Secured Creditors;
(iv) New Mortgage Policies on each New Mortgaged
Property issued by title insurers reasonably satisfactory to
the Collateral Agent and assuring the Collateral Agent that
the New Mortgages are valid and enforceable first priority
mortgage Liens on the respective New Mortgaged Properties,
free and clear of all defects and encumbrances except
Permitted Encumbrances and such New Mortgage Policies shall
otherwise be in form and substance reasonably satisfactory
to the Collateral Agent and shall include, as appropriate,
an endorsement for future advances under this Agreement and
the Notes and for any other matter that the Collateral Agent
in its discretion may reasonably request, shall not include
an exception for mechanics' liens, and shall provide for
affirmative insurance and such reinsurance as the Collateral
Agent in its discretion may request; and
(v) a perimeter survey (including, without limitation,
notations identifying any encroachments or overlaps) in form
and substance reasonably satisfactory to the Collateral
Agent, of each owned New Mortgaged Property, certified by a
licensed professional surveyor satisfactory to the
Collateral Agent, provided that in the event such perimeter
surveys shall not be available as of the Restatement
Effective Date, the requirement that the same be delivered
as a condition precedent under this Article 5 shall be
waived if the Borrowers shall agree in writing to provide
the same within 60 days after the Restatement Effective
Date.
5.12 Consent Letter. On the Restatement Effective
Date, the Administrative Agent shall have received a letter from
CT Corporation System, presently located at 1633 Broadway, New
York, New York 10019, substantially in the form of Exhibit J,
indicating its consent to its appointment by each Credit Party as
its agent to receive service of process as specified in Section
13.08 or in the respective Security Document.
5.13 Adverse Change; Governmental Approvals; etc. (a)
On the Restatement Effective Date, nothing shall have occurred
(and the Banks shall have become aware of no facts, conditions or
other information not previously known) which the Administrative
Agent or the Required Banks reasonably believe could have a
material adverse effect on the rights or remedies of the
Administrative Agent or the Banks, or on the ability of the
Credit Parties to perform their respective obligations to the
Administrative Agent and the Banks or which the Administrative
Agent or the Required Banks reasonably believe would have a
material adverse effect on the operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of
the Borrowers taken as a whole or the Borrowers and their
Restricted Subsidiaries taken as a whole.
(b) On the Restatement Effective Date, there shall not
have occurred and be continuing material adverse change to the
syndication market for credit facilities similar in nature to
this Agreement and there shall not have occurred and be
continuing a material disruption of or a material adverse change
in financial, banking or capital markets that would have a
material adverse effect on the syndication, in each case as
determined by the Administrative Agent in its sole discretion.
(c) On or prior to the Restatement Effective Date, all
necessary and material governmental (domestic and foreign) and
third party approvals in connection with the Transaction shall
have been obtained and remain in effect, and all applicable
waiting periods shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of the
Transaction. Additionally, there shall not exist any judgment,
order, injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or notified
prohibiting or imposing materially adverse conditions upon the
making of any Loan, issuance of any Letter of Credit or the
consummation of the Transaction.
5.14 Litigation. On the Restatement Effective Date,
no litigation by any entity (private or governmental) shall be
pending or threatened with respect to the Transaction or any
documentation executed in connection therewith (including any
Credit Document), or which the Administrative Agent or the
Required Banks shall reasonably believe could have a materially
adverse effect on the Transaction or the business, property,
assets, nature of assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole or the
Borrowers and their Restricted Subsidiaries taken as a whole.
5.15 Pro Forma Balance Sheet; Financial Statements;
Projections. (a) On or prior to the Restatement Effective Date,
there shall have been delivered to the Administrative Agent an
unaudited pro forma consolidated and consolidating balance sheet
of INTERCO and its Subsidiaries as of September 30, 1995 and
after giving effect to the Transaction and prepared in accordance
with generally accepted accounting principles, together with (w)
historical consolidated and consolidating financial statements of
INTERCO and its Subsidiaries, in each case, for the nine-month
period ended September 30, 1995, (x) historical consolidated and
consolidating financial statements of INTERCO and its
Subsidiaries for the five Fiscal Years ended December 31, 1994,
which historical statements shall (i) be audited, in the case of
the income and cash flow statements for the three most recent
Fiscal Years and in the case of the balance sheets for the two
most recent Fiscal Years and (ii) be certified by an officer of
either INTERCO or the other Borrowers, as the case may be, in the
case of the five most recent Fiscal Years and (y) historical
consolidated financial statements of Thomasville and its
Subsidiaries for the three Fiscal Years ended December 31, 1994,
the balance sheets of Thomasville and its Subsidiaries as of
December 31, 1993 and December 31, 1994, the income and cash flow
statement of Thomasville and its Subsidiaries for the ten-month
period ended October 31, 1995, and the balance sheet of
Thomasville and its Subsidiaries as of October 31, 1995.
(b) On or prior to the Restatement Effective Date
there shall have been delivered to the Administrative Agent
"management case" projected financial statements of INTERCO and
its Restricted Subsidiaries after giving effect to the
Transaction, as set forth in the Confidential Memorandum dated
November, 1995, for the period from January 1, 1996 to December
31, 2003 (the "Projections"), which Projections (x) shall reflect
the forecasted financial conditions and income and expenses of
INTERCO and its Restricted Subsidiaries after giving effect to
the Transaction and the related financing thereof and the other
transactions contemplated hereby and (y) shall be satisfactory in
form and substance to the Administrative Agent.
5.16 Acquisition; etc. (a) On or prior to the
Restatement Effective Date, (i) INTERCO shall have acquired 100%
of the capital stock of Thomasville and its Subsidiaries (the
"Acquisition") pursuant to the Stock Purchase Agreement and (ii)
the Banks shall have received true and correct copies of all
agreements and other documents relating to such acquisition (the
"Acquisition Documents"), all of which Acquisition Documents
shall be in form and substance reasonably satisfactory to the
Administrative Agent and the Required Banks (it being understood
that the Stock Purchase Agreement delivered to the Administrative
Agent and the Banks prior to the Restatement Effective Date is in
form and substance reasonably satisfactory to the Administrative
Agent and the Required Banks). All conditions precedent to
INTERCO's obligations in respect of the consummation of the
Acquisition as set forth in the Stock Purchase Agreement and the
other Acquisition Documents shall have been satisfied and not
waived (unless waived with the consent of the Administrative
Agent and except that the landlord consent with respect to the
leased property in Appomattox, Virginia need not be obtained) and
the Acquisition shall have been consummated in accordance with
all applicable law and the Acquisition Documents.
(b) On the Restatement Effective Date and concurrently
with the consummation of the Acquisition, all existing
Indebtedness of Thomasville and its Subsidiaries shall have been
repaid in full (other than the Existing IRBs), and all security
interests and Liens on the capital stock of, and assets owned by,
Thomasville and its Subsidiaries shall have been terminated and
released, other than Permitted Liens, and the Administrative
Agent shall have received evidence in form, scope and substance
satisfactory to it that the matter set forth in this clause (b)
have been satisfied on such date.
5.17 Original Credit Agreement; etc. On the
Restatement Effective Date, (i) unless otherwise agreed by the
Administrative Agent and INTERCO, each Original Bank shall have
surrendered to the Administrative Agent for cancellation the
promissory notes issued to it pursuant to the Original Credit
Agreement in respect of its Original Term Loans, Original
Revolving Loans and Original Swingline Loans, (ii) each
Continuing Bank shall have converted its Original Term Loan as
contemplated by Section 1.01(a), (iii) all Original Term Loans
being converted as described in preceding clause (ii) which were
outstanding as Eurodollar Loans shall, at the time of such con-
version, be converted into Base Rate Loans or borrowed as
Eurodollar Loans in accordance with Section 1.01(a) and the
Borrowers shall pay all breakage costs in accordance with the
provisions of Section 1.11 of the Original Credit Agreement in
connection therewith, (iv) all Original Revolving Loans shall be
repaid in full on the Restatement Effective Date (although
Revolving Loans may be incurred hereunder on the Restatement
Effective Date in accordance with the provisions hereof) and, if
any such Original Revolving Loans were at such time maintained as
Eurodollar Loans, all breakage costs owing in connection
therewith shall have been paid as contemplated by Section 1.11 of
the Original Credit Agreement, (v) each Original Bank shall have
received payment in full of all amounts then due and owing to it
under the Original Credit Agreement, (vi) the Borrowers shall
have paid all accrued and unpaid interest and fees owing under
the Original Credit Agreement through the Restatement Effective
Date, and (vii) the Administrative Agent shall have received
evidence in form, scope and substance satisfactory to it that the
matters set forth in this Section 5.17 have been satisfied on
such date.
SECTION 6. Conditions Precedent to All Credit Events.
The obligation of each Bank to make Loans (including Loans made
on the Restatement Effective Date but excluding Mandatory
Borrowings made thereafter, which shall be made as provided in
Section 1.01(f)), and the obligation of an Issuing Bank to issue
any Letter of Credit, is subject, at the time of each such Credit
Event (except as hereinafter indicated), to the satisfaction of
the following conditions:
6.01 No Default; Representations and Warranties. At
the time of each such Credit Event and also after giving effect
thereto (i) there shall exist no Default or Event of Default and
(ii) all representations and warranties contained herein or in
any other Credit Document shall be true and correct in all
material respects with the same effect as though such
representations and warranties had been made on the date of the
making of such Credit Event (it being understood and agreed that
any representation or warranty which by its terms is made as of a
specified date shall be required to be true and correct in all
material respects only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Request.
(a) Prior to the making of each Loan (excluding Swingline
Loans), the Administrative Agent shall have received the notice
required by Section 1.03(a). Prior to the making of any
Swingline Loan, BTCo shall have received the notice required by
Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit,
the Administrative Agent and the respective Issuing Bank shall
have received a Letter of Credit Request meeting the requirements
of Section 2.03.
The acceptance of the benefit of each Credit Event
shall constitute a representation and warranty by the Borrowers
to the Agents and each of the Banks that all the conditions spec-
ified in Section 5 and in this Section 6 and applicable to such
Credit Event exist as of that time (except to the extent that any
of the conditions specified in Section 5 are required to be
satisfactory to or determined by any Bank, the Required Banks
and/or the Administrative Agent). All of the Notes, certifi-
cates, legal opinions and other documents and papers referred to
in Section 5 and in this Section 6, unless otherwise specified,
shall be delivered to the Administrative Agent at the Notice
Office for the account of each of the Banks and, except for the
Notes, in sufficient counterparts or copies for each of the Banks
and shall be in form and substance reasonably satisfactory to the
Banks.
SECTION 7. Representations, Warranties and Agreements.
In order to induce the Banks to enter into this Agreement and to
make the Loans, and issue (or participate in) the Letters of
Credit as provided herein, each of the Borrowers makes the
following representations, warranties and agreements, in each
case after giving effect to the Transaction consummated on the
Restatement Effective Date, all of which shall survive the
execution and delivery of this Agreement and the Notes and the
making of the Loans and issuance of the Letters of Credit, with
the occurrence of each Credit Event on or after the Restatement
Effective Date being deemed to constitute a representation and
warranty that the matters specified in this Section 7 are true
and correct in all material respects on and as of the Restatement
Effective Date and on the date of each such Credit Event (it
being understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be
required to be true and correct in all material respects only as
of such specified date).
7.01 Corporate Status. INTERCO and each of its
Restricted Subsidiaries (i) is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate power
and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and
is in good standing in each jurisdiction where the conduct of its
business requires such qualifications, except for failures to be
so qualified which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.02 Corporate Power and Authority. Each Credit Party
has the corporate power and authority to execute, deliver and
perform the terms and provisions of each of the Documents to
which it is party and has taken all necessary corporate action to
authorize the execution, delivery and performance by it of each
of such Documents. Each Credit Party has duly executed and
delivered each of the Documents to which it is party, and each of
such Documents constitutes the legal, valid and binding obli-
gation of such Credit Party enforceable in accordance with its
terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether
enforcement is sought in equity or at law).
7.03 No Violation. Neither the execution, delivery or
performance by any Credit Party of the Documents to which it is a
party, nor compliance by it with the terms and provisions
thereof, (i) will contravene any provision of any applicable law,
statute, rule or regulation or any applicable order, writ,
injunction or decree of any court or governmental instrumental-
ity, (ii) will conflict with or result in any breach of any of
the terms, covenants, conditions or provisions of, or constitute
a default under, or result in the creation or imposition of (or
the obligation to create or impose) any Lien (except pursuant to
the Security Documents) upon any of the material properties or
assets of INTERCO or any of its Restricted Subsidiaries pursuant
to the terms of any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other material agreement,
contract or instrument, to which INTERCO or any of its Restricted
Subsidiaries is a party or by which it or any of its property or
assets is bound or to which it may be subject or (iii) will
violate any provision of the Certificate of Incorporation or By-
Laws of INTERCO or any of its Restricted Subsidiaries.
7.04 Governmental Approvals. No order, consent,
approval, license, authorization or validation of, or filing,
recording or registration with (except (i) as have been obtained
or made prior to the Restatement Effective Date and (ii) other
than UCC-1 filings and recordings of Assignments of Security
Interests in U.S. Patents and Trademarks, in each case, performed
pursuant to Section 5.10, which filings and/or recordings, as the
case may be, if this representation is being made on a date which
is more than ten days after the Restatement Effective Date, have
been made), or exemption by, any governmental or public body or
authority, or any subdivision thereof, is required to authorize,
or is required in connection with, (i) the execution, delivery
and performance of any Document or (ii) the legality, validity,
binding effect or enforceability of any such Document except,
with respect to the Transaction Documents, where the failure to
so obtain would not have a Material Adverse Effect.
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc. (a) (i) The
consolidated and consolidating statements of financial condition
of INTERCO and its Subsidiaries at December 31, 1994 and the
related consolidated and consolidating statements of income and
cash flow and changes in shareholders' equity of INTERCO and its
Subsidiaries for the Fiscal Year ended on such date, and furn-
ished to the Banks prior to the Restatement Effective Date and
(ii) the consolidated and consolidating statements of financial
condition of INTERCO and its Subsidiaries as of the end of each
fiscal quarter of INTERCO ended after December 31, 1994, and the
related consolidated and consolidating statements of income and
cash flow of INTERCO and its Subsidiaries for such quarterly
periods, and furnished to the Banks prior to the Restatement
Effective Date, in each case, present fairly the financial condi-
tion of INTERCO and its Subsidiaries (or INTERCO and its
Restricted Subsidiaries, as the case may be) at the date of such
statements of financial condition and the results of the
operations of INTERCO and its Subsidiaries (or INTERCO and its
Restricted Subsidiaries as the case may be) for the respective
Fiscal Year or fiscal quarter, as the case may be (subject, in
the case of unaudited financial statements, to normal year-end
adjustments). All such financial statements have been prepared
in accordance with generally accepted accounting principles and
practices consistently applied, except, in the case of the
quarterly financial statements, for the omission of footnotes,
and certain reclassifications and ordinary end of period adjust-
ments and accruals (all of which are of a recurring nature and
none of which individually, or in the aggregate, would be
material).
(b) Each of (i) (x) the audited statements of income
and cash flow of Thomasville and its Subsidiaries for the years
ended December 31, 1992, December 31, 1993 and December 31, 1994,
and (y) the audited consolidated balance sheet of Thomasville and
its Subsidiaries as of December 31, 1993, and December 31, 1994,
together with the notes thereto and the reports thereon of KMPG
Peat Marwick, and (ii) the unaudited consolidated balance sheet
of Thomasville and its Subsidiaries as of October 31, 1995 and
the related statement of income and cash flow for the ten-month
period then ended (including in all cases the notes thereto, if
any), fairly presents the financial position of and the results
of operations for the entities reported on and is consistent with
the books and records of Thomasville and its Subsidiaries and has
been prepared in accordance with generally accepted accounting
principles, consistently applied, subject in the case of the
financial statements referred to in (ii) above to changes
resulting from normal year-end adjustments. The books and
records upon which the foregoing financial statements are based
are true and complete, to the best knowledge of the Borrowers.
(c) Since December 31, 1994, there has been no
material adverse change in the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the Borrowers
and their Restricted Subsidiaries taken as a whole, it being
understood that any determination of whether such material
adverse change has occurred shall take into account, inter alia,
(x) any available indemnities and (y) the timing and likelihood
of payment thereunder.
(d) (i) On and as of the Restatement Effective Date,
after giving effect to the Transaction and to all Indebtedness
(including the Loans) being incurred or assumed and Liens created
by the Credit Parties in connection therewith (assuming the full
utilization of all Commitments on the Restatement Effective
Date), (a) the sum of the assets, at a fair valuation, of each
Borrower, individually, each Borrower and its Subsidiaries,
(each of the foregoing, as to itself or as to itself and its
Subsidiaries, a "Solvent Entity") will exceed its or their debts;
(b) each Solvent Entity has not incurred and does not intend to
incur, and does not believe that it will incur, debts beyond its
ability to pay such debts as such debts mature; and (c) each
Solvent Entity will have sufficient capital with which to conduct
its businesses. For purposes of this Section 7.05(d), "debt"
means any liability on a claim, and "claim" means (i) right to
payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured or
(ii) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such
right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed, secured or
unsecured.
(e) Except as fully disclosed in the financial
statements delivered pursuant to Section 7.05(a) or (b) or in
Schedule IV, there were as of the Restatement Effective Date no
liabilities or obligations with respect to INTERCO or any of its
Subsidiaries (including without limitation Thomasville and its
Subsidiaries) of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) which,
either individually or in aggregate, is reasonably likely to have
a Material Adverse Effect. As of the Restatement Effective Date,
none of the Borrowers knows of any basis for the assertion
against it of any liability or obligation of any nature whatso-
ever that is not fully disclosed in the financial statements
delivered pursuant to Section 7.05(a) or (b) or as disclosed in
Schedule IV hereto which, either individually or in the aggre-
gate, could reasonably be expected to have a Material Adverse
Effect.
(f) On and as of the Restatement Effective Date, the
Projections previously delivered to the Administrative Agent and
the Banks have been prepared on a basis consistent with the
financial statements referred to in Section 7.05(a) (other than
as set forth or presented in such Projections), and there are no
statements or conclusions in any of the Projections which are
based upon or include information known to the Borrowers to be
misleading in any material respect or which fail to take into
account material information regarding the matters reported
therein. On the Restatement Effective Date, the Borrowers be-
lieved that the Projections were reasonable and attainable.
7.06 Litigation. There are no actions, suits or
proceedings pending or, to the best knowledge of the Borrowers,
threatened (i) on the Restatement Effective Date, in respect of
any material Transaction Document (other than any Credit
Document), (ii) with respect to any Credit Document or (iii) that
could reasonably be expected to have a Material Adverse Effect.
7.07 True and Complete Disclosure. Except as provided
in the immediately succeeding sentence with respect to
Thomasville and its Subsidiaries, all factual information (taken
as a whole) furnished by or on behalf of INTERCO or any of its
Subsidiaries in writing to the Administrative Agent or any Bank
(including, without limitation, all factual information contained
in the Documents) for purposes of or in connection with this
Agreement, the other Credit Documents or any transaction contem-
plated herein or therein is, and all other such factual informa-
tion (taken as a whole) hereafter furnished by or on behalf of
INTERCO or any of its Subsidiaries in writing to the
Administrative Agent or any Bank will be, true and accurate in
all material respects on the date as of which such information is
dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not
misleading in any material respect at such time in light of the
circumstances under which such information was provided. No
representation or warranty of the Borrowers in this Agreement or
in the other Credit Documents with respect to Thomasville and its
Subsidiaries, to the best knowledge of the Borrowers, contains as
of the Restatement Effective Date any untrue statements of a
material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not
misleading.
7.08 Use of Proceeds; Margin Regulations. (a) All
proceeds of the A Term Loans (other than the portion thereof
converted from Original Term Loans under Section 1.01(a) or used
to repay obligations to the Original Banks under the Original
Credit Agreement) shall be used by the Borrowers to (x)
consummate the Transaction and (y) pay fees and expenses related
thereto.
(b) All proceeds of the B Term Loans shall be used by
the Borrower to (x) consummate the Transaction and (y) pay fees
and expenses related thereto.
(c) All proceeds of the C Term Loans shall be used by
the Borrower to (x) consummate the Transaction and (y) pay fees
and expenses related thereto.
(d) All proceeds of the Revolving Loans and Swingline
Loans shall be used for the Borrowers' and their Subsidiaries'
ongoing general corporate purposes; provided that not more than
$75,000,000 in aggregate principal amount of Revolving Loans and
Swingline Loans shall be outstanding on the Restatement Effective
Date.
(e) No part of the proceeds of any Loan will be used
to purchase or carry any Margin Stock or to extend credit for the
purpose of purchasing or carrying any Margin Stock. Neither the
making of any Loan nor the use of the proceeds thereof nor the
occurrence of any other Credit Event will violate or be
inconsistent with the provisions of Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System.
7.09 Tax Returns and Payments. (a) Each of INTERCO
and its Restricted Subsidiaries (including, without limitation,
but subject to the last sentence of this Section 7.09(a),
Thomasville and its Subsidiaries) have timely filed or caused to
be timely filed, on the due dates thereof or within applicable
grace periods (inclusive of any permitted extensions), with the
appropriate taxing authority, all Federal, state and other
material returns, statements, forms and reports for taxes (the
"Returns") required to be filed by or with respect to the income,
properties or operations of INTERCO and its Restricted
Subsidiaries. The Returns accurately reflect in all material
respects all liability for taxes of INTERCO and its Restricted
Subsidiaries for the periods covered thereby other than Taxes for
which adequate reserves have been established in accordance with
generally accepted accounting principles. Each of INTERCO and
its Restricted Subsidiaries have paid all material taxes payable
by them other than taxes which are not delinquent, and other than
those contested in good faith and for which adequate reserves
have been established in accordance with generally accepted
accounting principles. Except as disclosed in the financial
statements referred to in Section 7.05(a) or (b) and except as
disclosed on Schedule V, there is, as of the Restatement Ef-
fective Date, no material action, suit, proceeding, investiga-
tion, audit, or claim now pending or, to the best knowledge of
the Borrowers, threatened by any authority regarding any taxes
relating to INTERCO or its Restricted Subsidiaries. As of the
Restatement Effective Date, except as set forth on Schedule V,
none of INTERCO or its Restricted Subsidiaries has entered into
an agreement or waiver or been requested to enter into an
agreement or waiver extending any statute of limitations relating
to the payment or collection of taxes of INTERCO or its
Restricted Subsidiaries, or is aware of any circumstances that
would cause the taxable years or other taxable periods of INTERCO
or its Restricted Subsidiaries not to be subject to the normally
applicable statute of limitations. As of the Restatement
Effective Date, none of INTERCO or its Restricted Subsidiaries
has provided, with respect to themselves or property held by
them, any consent under Section 341 of the Code. Except for
amounts specifically set forth in Schedule V, none of INTERCO or
its Restricted Subsidiaries has incurred, or will incur, any
material tax liability in connection with the Transaction and the
other transactions contemplated hereby. Additionally, all of the
foregoing representations are true and correct as to all
Unrestricted Subsidiaries of INTERCO (to the same extent they
were Restricted Subsidiaries) except to the extent any and all
failures to be true and correct could not reasonably be expected
to have a Material Adverse Effect. Notwithstanding anything to
the contrary contained above, to the extent the foregoing
representations contained in this Section 7.09 relate to
Thomasville and its Subsidiaries for periods prior to the
Restatement Effective Date, such representations shall be deemed
untrue only if the aggregate effect of all such failures and
noncompliances of the types described above with respect to
Thomasville and its Subsidiaries for periods prior to the
Restatement Effective Date would reasonably be expected to have a
Material Adverse Effect.
(b) INTERCO'S tax basis in the shares of capital stock
of (x) Converse spun-off in connection with the Converse
Disposition was an amount not less than $165,000,000 at the time
of the consummation thereof and (y) Florsheim spun-off in con-
nection with the Florsheim Disposition was an amount not less
than $50,000,000.
7.10 Compliance with ERISA. (a) Each Plan is in sub-
stantial compliance with ERISA and the Code; no Reportable Event
has occurred with respect to a Plan; to the best knowledge of the
Borrowers, no Multiemployer Plan is insolvent or in
reorganization; no Plan has an Unfunded Current Liability; no
Plan, and to the best knowledge of the Borrowers, no Spunoff
Plan, has an accumulated or waived funding deficiency, or has
applied for an extension of any amortization period within the
meaning of Section 412 of the Code; all contributions required to
be made by the Borrowers, any of their respective Restricted
Subsidiaries or any ERISA Affiliate with respect to a Plan, a
Spunoff Plan, a Multiemployer Plan, and/or a Foreign Pension Plan
have been timely made; none of the Borrowers or any of their
respective Restricted Subsidiaries nor any ERISA Affiliate has
incurred any liability to or on account of a Plan, a Spunoff
Plan, and/or a Multiemployer Plan pursuant to Section 409,
502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212
of ERISA or Section 401(a)(29), 4971, 4975 or 4980 of the Code or
reasonably expects to incur any liability (including any
indirect, contingent or secondary liability) under any of the
foregoing Sections with respect to any Plan, a Spunoff Plan,
and/or a Multiemployer Plan; no proceedings have been instituted
to terminate or appoint a trustee to administer any Plan and, to
the best knowledge of the Borrowers, any Spunoff Plan; no
condition exists which presents a risk to the Borrowers or any of
their respective Restricted Subsidiaries or any ERISA Affiliate
of incurring a liability to or on account of a Plan, or to the
best knowledge of the Borrowers a Spunoff Plan, and/or a
Multiemployer Plan pursuant to the foregoing provisions of ERISA
and the Code; using actuarial assumptions and computation methods
consistent with Part 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of the Borrowers, their respective
Restricted Subsidiaries and their ERISA Affiliates to all
Multiemployer Plans in the event of a complete withdrawal there-
from, as of the close of the most recent fiscal year of each such
Multiemployer Plan ended prior to the date of the most recent
Credit Event, would not exceed $50,000; no lien imposed under the
Code or ERISA on the assets of the Borrowers or any of their
respective Restricted Subsidiaries or any ERISA Affiliate exists
on account of any Plan, a Spunoff Plan, and/or a Multiemployer
Plan or is likely to arise on account of any Plan, or to the best
knowledge of the Borrowers, is likely to arise on account of any
Spunoff Plan and/or Multiemployer Plan; and the Borrowers and
their respective Restricted Subsidiaries do not maintain or con-
tribute to any employee welfare benefit plan (as defined in
Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by
Section 601 of ERISA) or any employee pension benefit plan (as
defined in Section 3(2) of ERISA) the obligations with respect to
which could reasonably be expected to have a Material Adverse
Effect. For purposes of this Section 7.10(a) "to the best
knowledge of the Borrowers" with respect to any Spunoff Plan
means (x) actual knowledge or (y) knowledge acquired through
written or oral notice provided directly to a Borrower by any
governmental agency, court, or Spunoff Plan administrator.
(b) Each Foreign Pension Plan has been maintained in
substantial compliance with its terms and with the requirements
of any and all applicable laws, statutes, rules, regulations and
orders and has been maintained, where required, in good standing
with applicable regulatory authorities. None of the Borrowers
nor any of their respective Restricted Subsidiaries has incurred
any obligation in connection with the termination of or
withdrawal from any Foreign Pension Plan. The present value of
the accrued benefit liabilities (whether or not vested) under
each Foreign Pension Plan, determined as of the end of each Bor-
rower's most recently ended fiscal year on the basis of actuar-
ial assumptions, each of which is reasonable, did not exceed the
current value of the assets of such Foreign Pension Plan
allocable to such benefit liabilities.
(c) Notwithstanding anything to the contrary in this
Section 7.10, the representations made in this Section 7.10 shall
only be untrue if the aggregate effect of all failures and
noncompliances of the types described above could reasonably be
expected to have a Material Adverse Effect.
7.11 The Security Documents. (a) The provisions of
the Security Agreement are effective to create in favor of the
Collateral Agent for the benefit of the Secured Creditors a
legal, valid and enforceable security interest in all right,
title and interest of the Credit Parties in the Security Agree-
ment Collateral described therein, and the Security Agreement,
upon the filing of Form UCC-1 financing statements or the appro-
priate equivalent (which filings, if this representation is being
made more than 10 days after the Restatement Effective Date, have
been made), create a fully perfected first lien on, and security
interest in, all right, title and interest in all of the Security
Agreement Collateral described therein, to the extent that a
security interest may be perfected therein by filing a financing
statement under the UCC, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of Security
Interest in U.S. Patents and Trademarks in the form attached to
the Security Agreement in the United States Patent and Trademark
Office together with filings on Form UCC-1 made pursuant to the
Security Agreement will be effective, under applicable law, to
perfect the security interest granted to the Collateral Agent in
the trademarks and patents covered by the Security Agreement.
Each of the Credit Parties party to the Security Agreement has
good and valid title to all Security Agreement Collateral owned
by such Credit Party described therein, free and clear of all
Liens except those described above in this clause (a).
(b) The security interests created in favor of the
Collateral Agent, as Pledgee, for the benefit of the Secured
Creditors under the Pledge Agreement constitute first priority
perfected security interests in the Pledged Securities described
in the Pledge Agreement, subject to no security interests of any
other Person. No filings or recordings are required in order to
perfect (or maintain the perfection or priority of) the security
interests created in the Pledged Securities and the proceeds
thereof under the Pledge Agreement.
(c) The Mortgages create, as security for the obli-
gations purported to be secured thereby, a valid and enforceable
perfected security interest in and mortgage lien on all of the
Mortgaged Properties in favor of the Collateral Agent (or such
other trustee as may be required or desired under local law) for
the benefit of the Secured Creditors, superior to and prior to
the rights of all third persons (except that the security inter-
est and mortgage lien created in the Mortgaged Properties may be
subject to the Permitted Encumbrances related thereto) and
subject to no other Liens (other than Permitted Liens). Schedule
III contains a true and complete list of each parcel of Real
Property owned or leased by INTERCO and its Restricted
Subsidiaries on the Effective Date, and the type of interest
therein held by INTERCO or such Restricted Subsidiary. INTERCO
and each of its Restricted Subsidiaries have good and
indefeasible title to all fee-owned Mortgaged Properties and
valid leasehold title to all Leaseholds material to its business,
in each case free and clear of all Liens except those described
in the first sentence of this subsection (c).
7.12 Representations and Warranties in Other
Documents. All representations and warranties set forth in the
Documents other than this Agreement were true and correct in all
material respects at the time as of which such representations
and warranties were made (or deemed made) and shall be true and
correct in all material respects as of the Restatement Effective
Date as if such representations and warranties were made on and
as of such date, unless stated to relate to a specific earlier
date, in which case such representations and warranties shall be
true and correct in all material respects as of such earlier
date. Notwithstanding anything to the contrary contained above,
to the extent that the representations and warranties set forth
in the Documents other than this Agreement were made by parties
other than INTERCO and its Subsidiaries, such representations and
warranties shall be deemed untrue only if the aggregate effect of
all inaccuracies in such representations and warranties would
reasonably be expected to have a Material Adverse Effect.
7.13 Properties. INTERCO and each of its Restricted
Subsidiaries have good and valid title to all material properties
owned by them, including all property reflected in the balance
sheets referred to in Sections 7.05(a) and (b) and in the pro
forma balance sheet referred to in Section 5.15 (except as sold
or otherwise disposed of since the date of such balance sheet in
the ordinary course of business or otherwise as permitted
hereunder), free and clear of all Liens, other than (i) as
referred to in the balance sheet or in the notes thereto or in
the pro forma balance sheet or (ii) Permitted Liens otherwise
permitted by Section 9.01.
7.14 Capitalization. (a) On the Restatement Ef-
fective Date and after giving effect to the Transaction, the
authorized capital stock of INTERCO consisted of 100,000,000
shares of INTERCO Common Stock, $1.00 stated value per share, of
which 50,119,816 shares were issued and outstanding as of
September 30, 1995, and at least 60% of such outstanding shares
are owned by the Apollo Group or a Controlled Account. As of the
Restatement Effective Date, INTERCO does not have outstanding any
securities convertible into or exchangeable for its capital stock
or outstanding any rights to subscribe for or to purchase, or any
options for the purchase of, or any agreement providing for the
issuance (contingent or otherwise) of, or any calls, commitments
or claims of any character relating to, its capital stock, in
each case other than the options outstanding pursuant to the
Employee Stock Option Plan and the INTERCO Warrants.
(b) On the Restatement Effective Date and after giving
effect to the Transaction, the authorized capital stock of
Broyhill shall consist of 5,296,178 shares of common stock, no
par value per share, 100 shares of which shall be issued and
outstanding and delivered for pledge pursuant to the Pledge
Agreement. All such outstanding shares of common stock have been
duly and validly issued, are fully paid and nonassessable. As of
the Restatement Effective Date, Broyhill does not have outstand-
ing any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock.
(c) On the Restatement Effective Date and after giving
effect to the Transaction, the authorized capital stock of Lane
shall consist of 1,000 shares of common stock, no par value per
share, all of which shall be issued and outstanding and delivered
for pledge pursuant to the Pledge Agreement. All such outstand-
ing shares of common stock have been duly and validly issued, are
fully paid and nonassessable. As of the Restatement Effective
Date, Lane does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for the
purchase of, or any agreements providing for the issuance
(contingent or otherwise) of, or any calls, commitments or claims
of any character relating to, its capital stock.
(d) On the Restatement Effective Date and after giving
effect to the Transaction, the authorized capital stock of
Thomasville shall consist of 50,000,000 shares of common stock,
$1.00 par value per share, 7,500,000 of which shall be issued and
outstanding and delivered for pledge pursuant to the Pledge
Agreement. All such outstanding shares of common stock have been
duly and validly issued, are fully paid and nonassessable. As of
the Restatement Effective Date, Thomasville does not have out-
standing any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or to
purchase, or any options for the purchase of, or any agreements
providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, its
capital stock.
7.15 Subsidiaries. (a) On the Restatement Effective
Date and after giving effect to the Transaction, INTERCO has no
Subsidiaries other than the other Borrowers, their respective
Subsidiaries, Interfashions Industries, S.A. and its
Subsidiaries, and the Receivables Subsidiary (which is owned by
Broyhill, Lane, Action and Thomasville).
(b) After giving effect to the Transaction, INTERCO
will have no Subsidiaries other than (i) those Subsidiaries
listed on Schedule VI and (ii) new Subsidiaries created in
compliance with this Agreement.
7.16 Compliance with Statutes, etc. INTERCO and each
of its Subsidiaries are in compliance with all applicable
statutes, regulations and orders of, and all applicable
restrictions imposed by, all governmental bodies, domestic or
foreign, in respect of the conduct of their business and the
ownership of their property (including applicable statutes,
regulations, orders and restrictions relating to environmental
standards and controls), except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
7.17 Investment Company Act. None of INTERCO nor any
of its Subsidiaries is an "investment company" or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
7.18 Public Utility Holding Company Act. None of
INTERCO nor any of its Subsidiaries is a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
7.19 Environmental Matters. (a) INTERCO and each of
its Subsidiaries have complied with all applicable Environmental
Laws and the requirements of any permits issued under such
Environmental Laws. There are no pending or, to the best
knowledge of the Borrowers after due inquiry, threatened Environ-
mental Claims against INTERCO, or any of its Subsidiaries or any
Real Property owned or operated by INTERCO or any of its
Subsidiaries. There are no facts, circumstances, conditions or
occurrences on any Real Property owned or operated by INTERCO or
any of its Subsidiaries or, to the best knowledge of INTERCO or
the Borrowers after due inquiry, on any property adjoining or in
the vicinity of any such Real Property that, to the best knowl-
edge of the Borrowers after due inquiry, could reasonably be
expected (i) to form the basis of an Environmental Claim against
INTERCO or any of its Subsidiaries or any such Real Property, or
(ii) to cause any such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability
of such Real Property by INTERCO or any of its Subsidiaries under
any applicable Environmental Law.
(b) Hazardous Materials have not at any time been
generated, used, treated or stored on, or transported to or from,
any Real Property owned or operated by INTERCO or any of its
Subsidiaries except in compliance with all applicable
Environmental Laws and so as not to give rise to an Environmental
Claim. Hazardous Materials have not at any time been Released on
or from any Real Property owned or operated by INTERCO or any of
its Subsidiaries except in compliance with all applicable
Environmental Laws and so as not to give rise to an Environmental
Claim.
(c) Notwithstanding anything to the contrary in this
Section 7.19, the representations made in this Section 7.19 shall
only be untrue if the aggregate effect of all failures and
noncompliances of the types described above could reasonably be
expected to have a Material Adverse Effect.
7.20 Labor Relations. None of INTERCO nor any of its
Subsidiaries is engaged in any unfair labor practice that could
reasonably be expected to have a material adverse effect on the
Borrowers taken as a whole or the Borrowers and their Restricted
Subsidiaries taken as a whole. There is (i) no unfair labor
practice complaint pending against INTERCO or any of its Subsidi-
aries or, to the best knowledge of the Borrowers, threatened
against any of them, before the National Labor Relations Board,
and no material grievance or material arbitration proceeding
arising out of or under any collective bargaining agreement is so
pending against INTERCO or any of its Subsidiaries or, to the
best knowledge of the Borrowers, threatened against any of them,
(ii) no strike, labor dispute, slowdown or stoppage pending
against INTERCO or any of its Subsidiaries or, to the best
knowledge of the Borrowers, threatened against INTERCO or any of
its Subsidiaries and (iii) to the best knowledge of the
Borrowers, no union representation proceeding pending with
respect to the employees of INTERCO or any of its Subsidiaries,
except (with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate) such as
could not reasonably be expected to have a Material Adverse
Effect.
7.21 Patents, Licenses, Franchises and Formulas.
INTERCO and its Subsidiaries own all material patents,
trademarks, permits, service marks, trade names, copyrights,
licenses, franchises and formulas, or rights with respect to the
foregoing, and have obtained assignments of all leases and other
rights of whatever nature, reasonably necessary for the present
conduct of their business, without any known conflict with the
rights of others which, or the failure to obtain which, as the
case may be, could reasonably be expected to result in a Material
Adverse Effect.
7.22 Indebtedness. Schedule VII sets forth a true and
complete list of all Indebtedness for borrowed money of INTERCO
and its Restricted Subsidiaries as of the Restatement Effective
Date and which is to remain outstanding after giving effect to
the Transaction (excluding the Loans and the Letters of Credit
and the Attributed Receivables Facility Indebtedness, the
"Existing Indebtedness"), in each case showing the aggregate
principal amount thereof and the name of the respective borrower
and any other entity which directly or indirectly guaranteed such
debt all of which Existing Indebtedness is or shall be evidenced
by the Permitted Debt Agreements.
7.23 Transaction. At the time of consummation
thereof, the Transaction shall have been consummated in all
respects in accordance with the terms of the Transaction
Documents and all applicable laws. At the time of consummation
of the Transaction, all consents and approvals of, and filings
and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required
in order to make or consummate the Transaction will have been
obtained, given, filed or taken and are or will be in full force
and effect (or effective judicial relief with respect thereto has
been obtained), except where the failure to so obtain, give, file
or take would not have a material adverse effect on the business,
operations, property, assets, liabilities, condition (financial
or otherwise) or prospects of the Borrowers taken as a whole or
of the Borrowers and their Restricted Subsidiaries taken as a
whole. All applicable waiting periods with respect thereto have
or, prior to the time when required, will have, expired without,
in all such cases, any action being taken by any competent
authority which restrains, prevents, or imposes material adverse
conditions upon the Transaction. Additionally, there does not
exist any judgment, order or injunction prohibiting or imposing
material adverse conditions upon the Transaction or the
occurrence of any Credit Event or the performance by the Credit
Parties of their obligations under the respective Documents. All
actions taken by the Credit Parties pursuant to or in furtherance
of the Transaction have been taken in material compliance with
the respective Documents and all applicable laws.
7.24 Special Purpose Corporation. The Receivables
Subsidiary was formed for the purpose of purchasing, and
receiving contributions of, receivables from each of the
Borrowers (other than INTERCO) and their respective Restricted
Subsidiaries, and selling such receivables to, or obtaining
secured loans from, the Receivables Purchasers, pursuant to the
Receivables Facility and except in connection with the foregoing
(and activities reasonably incidental thereto), the Receivables
Subsidiary engages in no business activities and has no
significant assets or liabilities and shall in no event purchase
receivables from any Unrestricted Subsidiary.
SECTION 8. Affirmative Covenants. Each of the
Borrowers hereby covenants and agrees that on and after the
Restatement Effective Date and until the Total Commitment and all
Letters of Credit and Acceptances have terminated and the Loans,
Notes and Unpaid Drawings, together with interest, Fees and all
other Obligations incurred hereunder and thereunder, are paid in
full:
8.01 Information Covenants. The Borrowers will
furnish to the Administrative Agent, and the Administrative Agent
will promptly forward to each Bank:
(a) Monthly Reports. Within 30 days after the end of
each calendar month of INTERCO (within 45 days after the end
of the last month of each Fiscal Year), the consolidated and
consolidating balance sheets of INTERCO and its
Subsidiaries, in each case, as at the end of such month, and
the related consolidated and consolidating statements of
income and the consolidated statement of cash flow for such
month and for the elapsed portion of the calendar year ended
with the last day of such month, in each case setting forth
comparative figures for the corresponding month in the prior
calendar year and the budgeted figures for such month as set
forth in the respective budget delivered pursuant to Section
8.01(e).
(b) Quarterly Financial Statements. As soon as
available and in any event within 45 days after the close of
each of the first three quarterly accounting periods in each
Fiscal Year, (i) the consolidated and consolidating balance
sheets of INTERCO and its Subsidiaries, in each case, as at
the end of such quarterly period and the related
consolidated and consolidating statements of income and the
consolidated statement of cash flow for such quarterly
period and for the elapsed portion of the Fiscal Year ended
with the last day of such quarterly period and (ii)
management's discussion and analysis of the important opera-
tional and financial developments during such quarterly
period.
(c) Annual Financial Statements. Within 95 days after
the close of each Fiscal Year, (i) the consolidated and
consolidating balance sheets of INTERCO and its
Subsidiaries, in each case, as at the end of such Fiscal
Year and the related consolidated and consolidating
statements of income and consolidated statements of
shareholders' equity and cash flow for such Fiscal Year
setting forth comparative figures for the preceding Fiscal
Year and (A) certified, in the case of such consolidated
financial statements and (B) confirmed by a letter, in the
case of the consolidating statements, delivered in
substantially the form of the auditor's letter delivered to
INTERCO on January 31, 1995, in each case by Peat Marwick or
such other independent certified public accountants of
recognized national standing reasonably acceptable to the
Administrative Agent, together with a report of such
accounting firm stating that in the course of its regular
audit of the financial statements of INTERCO and its
Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, such accounting firm
obtained no knowledge of any Default or Event of Default
which has occurred and is continuing or, if in the opinion
of such accounting firm such a Default or Event of Default
with respect to the covenants set forth in Sections 9.02
through 9.16, inclusive, has occurred and is continuing, a
statement as to the nature thereof and (ii) management's
discussion and analysis of the important operational and
financial developments during such Fiscal Year.
(d) Management Letters. Promptly after the receipt
thereof by INTERCO or any of its Restricted Subsidiaries, a
copy of any "management letter" received by such Person from
their certified public accountants and the management's
responses thereto.
(e) Budgets. No later than 30 days following the
commencement of the first day of each Fiscal Year, a budget
in form satisfactory to the Administrative Agent (including
budgeted statements of income and sources and uses of cash
and balance sheets) prepared by INTERCO for (x) each of the
twelve months of such Fiscal Year prepared in detail and (y)
each of the four Fiscal Years immediately following such
Fiscal Year prepared in summary form, in each case, of
INTERCO and its Restricted Subsidiaries, accompanied by the
statement of an Authorized Representative of INTERCO to the
effect that, to the best of his knowledge, the budget is a
reasonable estimate for the period covered thereby.
(f) Officer's Certificates. At the time of the
delivery of the financial statements provided for in Section
8.01(a), (b) and (c), a certificate of an Authorized
Representative of INTERCO to the effect that, to the best of
such Authorized Representative's knowledge, no Default or
Event of Default has occurred and is continuing or, if any
Default or Event of Default has occurred and is continuing,
specifying the nature and extent thereof, which certificate
shall, in the case of any such financial statements
delivered in respect of a period ending on the last day of a
fiscal quarter or year of INTERCO, (x) set forth the
calculations required to establish whether the Borrowers
were in compliance with the provisions of Section 4.02
(excluding Section 4.02(i)), 9.02, 9.03, 9.04, 9.05 and 9.07
through 9.10, inclusive, and 9.16 at the end of such fiscal
quarter or year, as the case may be, (y) if delivered with
the financial statements required by Section 8.01(c), set
forth the amount of Excess Cash Flow for the respective
Excess Cash Flow Payment Period and (z) set forth the
calculation of the Leverage Ratio and Senior Debt Leverage
Ratio and the amount of the Available $10 Million Dividend
Basket Amount, Available $10 Million Acquisition/Investment
Basket Amount, Available Retained Excess Cash Flow Amount,
Available Debt Proceeds Amount, Available Unrestricted
Proceeds Amount, Available Dividend Unrestricted Proceeds
Amount, Available Net Income Amount, Consolidated Cumulative
Net Income Amount, Consolidated Cumulative Excess Net Income
Amount, Consolidated Cumulative 25% Net Income Amount,
Available Permitted Acquisition Amount, Returned Investment
Amount and Available Returned Investment Amount at the end
of the period covered by such financial statements, and all
sources and uses of proceeds relating to the calculation
thereof changing during the period covered by such
statements.
(g) Notice of Default or Litigation. Promptly, and in
any event within three Business Days after an executive
officer of any Borrower obtains knowledge thereof, notice of
(i) the occurrence of any event which constitutes a Default
or Event of Default and (ii) any litigation or governmental
investigation or proceeding pending (x) against INTERCO or
any of its Subsidiaries which could reasonably be expected
to materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole or
the Borrowers and their Restricted Subsidiaries taken as a
whole, (y) with respect to any material Indebtedness of
INTERCO and its Restricted Subsidiaries taken as a whole or
(z) with respect to any Document.
(h) Other Reports and Filings. Promptly, copies of
all financial information, proxy materials and other
information and reports, if any, which INTERCO or any of its
Restricted Subsidiaries shall file with the Securities and
Exchange Commission or any successor thereto (the "SEC") or
deliver to holders of its Indebtedness pursuant to the terms
of the documentation governing such Indebtedness (or any
trustee, agent or other representative therefor).
(i) Environmental Matters. Promptly upon, and in any
event within ten Business Days after, an executive officer
of INTERCO or any of its Restricted Subsidiaries obtains
knowledge thereof, notice of one or more of the following
environmental matters, unless such environmental matters
could not, individually or when aggregated with all other
such environmental matters, be reasonably expected to
materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole or
of the Borrowers and their Restricted Subsidiaries taken as
a whole:
(i) any pending or threatened Environmental Claim
against INTERCO or any of its Subsidiaries or any Real
Property owned or operated by INTERCO or any of its
Subsidiaries;
(ii) any condition or occurrence on or arising from
any Real Property owned or operated by INTERCO or any
of its Subsidiaries that (a) results in noncompliance
by INTERCO or any of its Subsidiaries with any
applicable Environmental Law or (b) could reasonably be
expected to form the basis of an Environmental Claim
against INTERCO or any of its Subsidiaries or any such
Real Property;
(iii) any condition or occurrence on any Real
Property owned or operated by INTERCO or any of its
Subsidiaries that could reasonably be expected to cause
such Real Property to be subject to any restrictions on
the ownership, occupancy, use or transferability by
INTERCO or any of its Subsidiaries of such Real
Property under any Environmental Law; and
(iv) the taking of any removal or remedial action
in response to the actual or alleged presence of any
Hazardous Material on any Real Property owned or
operated by INTERCO or any of its Subsidiaries as
required by any Environmental Law or any governmental
or other administrative agency; provided that in any<PAGE>
event the Borrowers shall deliver to each Bank all
notices received by them or any of their respective
Subsidiaries from any government or governmental agency
under, or pursuant to, CERCLA.
All such notices shall describe in reasonable detail the
nature of the claim, investigation, condition, occurrence or
removal or remedial action, and the Borrowers' or such
Subsidiary's response thereto. In addition, the Borrowers
will provide the Banks with copies of all material communi-
cations with any government or governmental agency relating
to Environmental Laws, all communications with any Person
(other than its attorneys) relating to any Environmental
Claim of which notice is required to be given pursuant to
this Section 8.01(i), and such detailed reports of any such
Environmental Claim as may reasonably be requested by the
Banks.
(j) Annual Meetings with Banks. At the request of the
Administrative Agent, INTERCO shall within 120 days after
the close of each Fiscal Year hold a meeting at a time and
place selected by INTERCO and reasonably acceptable to the
Administrative Agent with all of the Banks at which meeting
shall be reviewed the financial results of the previous
Fiscal Year and the financial condition of INTERCO and the
budgets presented for the current Fiscal Year.
(k) Other Information. From time to time, such other
information or documents (financial or otherwise) with
respect to INTERCO or any of its Subsidiaries as any Bank
may reasonably request in writing.
8.02 Books, Records and Inspections. The Borrowers
will, and will cause each of their respective Restricted Subsidi-
aries to, keep proper books of record and account in which full,
true and correct entries in conformity with generally accepted
accounting principles and all requirements of law shall be made
of all dealings and transactions in relation to its business and
activities. The Borrowers will, and will cause each of their
respective Restricted Subsidiaries to, permit officers and
designated representatives of the Agents or the Required Banks to
visit and inspect, after reasonable notice during regular
business hours and under guidance of officers of the Borrowers or
such Restricted Subsidiary, any of the properties of the
Borrowers or such Restricted Subsidiary, and to examine the books
of account of the Borrowers or such Restricted Subsidiary and
discuss the affairs, finances and accounts of the Borrowers or
such Restricted Subsidiary with, and be advised as to the same
by, its and their officers and independent accountants, all at
such reasonable times and intervals and to such reasonable extent
as such Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a) Sched-
ule VIII sets forth a true and complete listing of all insurance
(including self-insurance programs) maintained by INTERCO and its
Restricted Subsidiaries as of the Restatement Effective Date.
The Borrowers will, and will cause each of their respective
Restricted Subsidiaries to, (i) keep all property necessary in
its business in good working order and condition (ordinary wear
and tear excepted), (ii) maintain insurance on all its property
in at least such amounts and against at least such risks as is
consistent and in accordance with industry practice and (iii)
furnish to the Administrative Agent, upon written request, full
information as to the insurance carried. In addition to the
requirements of the immediately preceding sentence, the Borrowers
will at all times cause insurance of the types described in
Schedule VIII to be maintained (with the same scope of coverage
as that described in Schedule VIII) at levels which are at least
as great as the respective amount described opposite the
respective type of insurance on Schedule VIII under the column
headed "Minimum Amount Required to be Maintained."
(b) Except with respect to self-insurance programs
listed on Schedule VIII, the Borrowers will, and will cause their
respective Restricted Subsidiaries to, at all times keep their
respective property insured in favor of the Collateral Agent, and
all policies (including Mortgage Policies) or certificates (or
certified copies thereof) with respect to such insurance (and any
other insurance maintained by the Borrowers or any of their
respective Restricted Subsidiaries) (i) shall be endorsed to the
Collateral Agent's satisfaction for the benefit of the Collateral
Agent (including, without limitation, by naming the Collateral
Agent as loss payee or as an additional insured (provided that
INTERCO and its Restricted Subsidiaries shall be permitted to
settle claims in an amount less than $10,000,000 per claim, so
long as the proceeds from such claims are applied in accordance
with Section 4.02(j))), (ii) shall state that such insurance
policies shall not be cancelled without 30 days' prior written
notice thereof by the respective insurer to the Collateral Agent,
(iii) shall provide that the respective insurers irrevocably
waive any and all rights of subrogation with respect to the
Collateral Agent and the Secured Creditors, (iv) shall contain
the standard non-contributory mortgagee clause endorsement in
favor of the Collateral Agent with respect to hazard insurance
coverage, (v) shall, except in the case of public liability
insurance and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or neglect of
the Borrowers or any of their respective Restricted Subsidiaries,
(B) the occupation or use of the properties for purposes more
hazardous than those permitted by the terms of the respective
policy if such coverage is obtainable at commercially reasonable
rates and is of the kind from time to time customarily insured
against by Persons owning or using similar property and in such
amounts as are customary, (C) any foreclosure or other proceeding
relating to the insured properties if such coverage is available
at commercially reasonable rates or (D) any change in the title
to or ownership or possession of the insured properties and (vi)
shall be deposited with the Collateral Agent if such coverage is
available at commercially reasonable rates.
(c) If the Borrowers or any of their respective
Restricted Subsidiaries shall fail to maintain all insurance in
accordance with this Section 8.03, or if the Borrowers or any of
their respective Restricted Subsidiaries shall fail to so endorse
and deposit all policies or certificates with respect thereto,
the Administrative Agent and/or the Collateral Agent shall have
the right (but shall be under no obligation) after giving notice
to INTERCO (but not requiring any consent from INTERCO) to
procure such insurance and the Borrowers agree to jointly and
severally reimburse the Administrative Agent or the Collateral
Agent, as the case may be, for all costs and expenses of pro-
curing such insurance.
8.04 Corporate Franchises. The Borrowers will, and
will cause each of their respective Restricted Subsidiaries
(other than Interfashions Industries, S.A. and its Subsidiaries)
to, do or cause to be done, all things necessary to preserve and
keep in full force and effect its existence and its material
rights, franchises, licenses and patents; provided, however, that
nothing in this Section 8.04 shall prevent (i) sales of assets,
mergers or other transactions by or among INTERCO or any of its
Restricted Subsidiaries in accordance with Section 9.02 or (ii)
(x) the withdrawal by INTERCO or any of the Restricted Sub-
sidiaries of its qualification as a foreign corporation or the
failure to qualify as a foreign corporation in any jurisdiction
or (y) the amendment of the Certificate of Incorporation or By-
Laws of INTERCO or any of its Subsidiaries which would not in any
way materially and adversely affect the Banks, and where such
withdrawal or failure or amendment, as the case may be, could not
reasonably be expected to have a Material Adverse Effect. In the
event INTERCO shall elect to change its corporate name, the
Borrowers will afford the Administrative Agent ten Business Days'
prior written notice of such change and the Borrowers will
execute in advance of such change and cause to be filed and/or
delivered to the Administrative Agent any financing statements or
other documents reasonably requested by the Administrative Agent
in order to continue perfected liens and security interests in
the Collateral, all in form and substance satisfactory to the
Administrative Agent.
8.05 Compliance with Statutes, etc. The Borrowers
will, and will cause each of their respective Subsidiaries to,
comply with all applicable statutes, regulations and orders of,
and all applicable restrictions imposed by, all governmental
bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property, except such noncom-
pliances as could not, individually or in the aggregate, rea-
sonably be expected to have a material adverse effect on the
business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers taken as a
whole or of the Borrowers and their Restricted Subsidiaries taken
as a whole.
8.06 Compliance with Environmental Laws. (a) The
Borrowers will comply, and will cause each of their respective
Subsidiaries to comply, in all material respects with all
Environmental Laws applicable to the ownership or use of its Real
Property now or hereafter owned or operated by INTERCO or any of
its Subsidiaries, will within a reasonable time period pay or
cause to be paid all costs and expenses incurred in connection
with such compliance, and will keep or cause to be kept all such
Real Property free and clear of any Liens on such Real Property
imposed pursuant to such Environmental Laws; provided that, none
of INTERCO nor any of its Subsidiaries shall be required to
remove any such Liens, so long as the aggregate amount of obliga-
tions purported to be secured by such Liens does not exceed
$1,000,000, and such Liens are being contested in good faith and
by proper proceedings if it has maintained adequate reserves with
respect thereto in accordance with generally accepted accounting
principles. None of INTERCO nor any of its Subsidiaries will
generate, use, treat, store, release or dispose of, or permit the
generation, use, treatment, storage, release or disposal of
Hazardous Materials on any Real Property now or hereafter owned
or operated by INTERCO or any of its Subsidiaries, or transport
or permit the transportation of Hazardous Materials to or from
any such Real Property except for Hazardous Materials used or
stored at any such Real Properties in material compliance with
all applicable Environmental Laws and reasonably required in
connection with the operation, use and maintenance of any such
Real Property.
(b) At the written request of the Administrative Agent
or the Required Banks, which request shall specify in reasonable
detail the basis therefor, at any time and from time to time, the
Borrowers will provide, at the Borrowers' joint and several cost
and expense, an environmental site assessment report concerning
any Real Property now or hereafter owned or operated by INTERCO
or any of its Subsidiaries, prepared by an environmental
consulting firm approved by the Administrative Agent, indicating
the presence or absence of Hazardous Materials and the potential
cost of any removal or remedial action in connection with any
Hazardous Materials on such Real Property; provided, that such
request may be made only if (i) there has occurred and is
continuing an Event of Default, (ii) the Administrative Agent
reasonably believes that INTERCO, any of its Subsidiaries or any
such Real Property is not in material compliance with
Environmental Law, or (iii) circumstances exist that reasonably
could be expected to form the basis of a material Environmental
Claim against INTERCO, any of its Subsidiaries or any such Real
Property. If the Borrowers fail to provide the same within 90
days after such request was made, the Administrative Agent may
order the same, and the Borrowers shall grant and hereby grant to
the Administrative Agent and the Banks and their agents access to
such Real Property and specifically grant the Administrative
Agent and the Banks an irrevocable non-exclusive license, subject
to the rights of tenants, to undertake such an assessment, all at
the Borrowers' joint and several expense.
8.07 ERISA. As soon as possible and, in any event,
within 20 days after the Borrowers or any of their respective
Restricted Subsidiaries or any ERISA Affiliate knows or has
reason to know of the occurrence of any of the following, the
Borrowers will deliver to the Administrative Agent, and the
Administrative Agent shall promptly forward to each Bank a
certificate of an Authorized Representative of the Borrowers
setting forth details as to such occurrence and the action, if
any, that the Borrowers, such Restricted Subsidiary or such ERISA
Affiliate is required or proposes to take, together with any
notices required or proposed to be given to or filed with or by
the Borrowers, such Restricted Subsidiary, the ERISA Affiliate,
the PBGC, or a Plan participant or the Plan administrator with
respect thereto: that a Reportable Event has occurred; that an
accumulated funding deficiency has been incurred or an applica-
tion is likely to be or has been made to the Secretary of the
Treasury for a waiver or modification of the minimum funding
standard (including any required installment payments) or an
extension of any amortization period under Section 412 of the
Code with respect to a Plan, Multiemployer Plan and/or a Spunoff
Plan; that a contribution required to be made to a Plan,
Multiemployer Plan and/or Foreign Pension Plan has not been
timely made; that a Plan, Multiemployer Plan and/or a Spunoff
Plan has been or is reasonably expected to be terminated,
reorganized, partitioned or declared insolvent under Title IV of
ERISA; that a Plan, Multiemployer Plan and/or a Spunoff Plan has
an Unfunded Current Liability giving rise to a lien under ERISA
or the Code; that proceedings are likely to be or have been
instituted or notice has been given to terminate or appoint a
trustee to administer a Plan, Multiemployer Plan and/or a Spunoff
Plan; that a proceeding has been instituted pursuant to Section
515 of ERISA to collect a delinquent contribution to a
Multiemployer Plan if material in amount; that the Borrowers, any
of their respective Restricted Subsidiaries or any ERISA
Affiliate will or is reasonably expected to incur any material
liability (including any indirect, contingent or secondary
liability) to or on account of the termination of or withdrawal
from a Plan, Multiemployer Plan and/or a Spunoff Plan under
Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
with respect to a Plan, Multiemployer Plan and/or a Spunoff Plan
under Section 401(a)(29), 4971, 4975 or 4980 of the Code or
Section 409 or 502(i) or 502(l) of ERISA; or except as disclosed
on Schedule XVII, that the Borrowers or any Restricted Subsidiary
is reasonably expected to incur any liability pursuant to any
employee welfare benefit plan (as defined in Section 3(1) of
ERISA) that provides benefits to retired employees or other
former employees (other than as required by Section 601 of ERISA)
or any employee pension benefit plan (as defined in Section 3(2)
of ERISA) which liability, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
Upon request, the Borrowers will deliver to each of the Banks a
complete copy of the annual report (Form 5500) of each Plan
(including, to the extent required to be filed with the Internal
Revenue Service in connection with such annual report, the
related financial and actuarial statements and opinions and other
supporting statements, certifications, schedules and information)
required to be filed with the Internal Revenue Service. In
addition to any certificates or notices delivered to the Banks
pursuant to the first sentence hereof, copies of such annual
reports and any material notices received by the Borrowers or any
of their respective Restricted Subsidiaries or any ERISA
Affiliate with respect to any Plan, Multiemployer Plan, Spunoff
Plan and/or Foreign Pension Plan shall be delivered to the Banks
no later than 20 days after the date such report has been
requested or such notice has been received by the Borrowers, the
Restricted Subsidiary or the ERISA Affiliate, as applicable. For
purposes of this Section 8.07 "knows or has reason to know" with
respect to any Spunoff Plan means knowledge acquired through
written or oral notice provided directly to a Borrower by any
governmental agency, court, or Spunoff Plan administrator.
8.08 End of Fiscal Years; Fiscal Quarters. INTERCO
shall cause (i) each of its Fiscal Years to end on December 31,
and each of its fiscal quarters to end on the last day of each
March, June, September and December and (ii) each of its
Restricted Subsidiaries' (x) fiscal years to end on the closest
Saturday to December 31 and (y) fiscal quarters to end on the
closest Saturday to the last day of each March, June, September
and December.
8.09 Performance of Obligations. Each of the
Borrowers will, and will cause each of its Subsidiaries to,
perform all of its obligations under the terms of each mortgage,
indenture, security agreement and other debt instrument by which
it is bound, except such non-performances as could not,
individually or in the aggregate, reasonably be expected to have
a material adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the Borrowers
and the Restricted Subsidiaries taken as a whole.
8.10 Payment of Taxes. Each of the Borrowers will pay
and discharge or cause to be paid and discharged, and will cause
each of their respective Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or levies
imposed upon it or upon its income or profits, or upon any
material properties belonging to it, in each case on a timely
basis, and all lawful claims which, if unpaid, might become a
lien or charge upon any properties of INTERCO or any of its
Restricted Subsidiaries; provided that none of INTERCO nor any of
its Subsidiaries shall be required to pay any such tax,
assessment, charge, levy or claim which is being contested in
good faith and by proper proceedings if it has maintained ade-
quate reserves with respect thereto in accordance with generally
accepted accounting principles.
8.11 Additional Security; Further Assurances; Required
Appraisals. (a) The Borrowers will, and will cause each of
their respective Restricted Subsidiaries to, grant to the Col-
lateral Agent security interests and mortgages (an "Additional
Mortgage") in such Real Property (other than Real Property
encumbered by (i) liens incurred by a Restricted Subsidiary at a
time when it was an Unrestricted Subsidiary, to the extent such
Liens are otherwise permitted by this Agreement and (ii) Liens
securing Indebtedness permitted pursuant to Section 9.04 (vii),
but only until such time as such Indebtedness is repaid) of the
Borrowers or any of their respective Restricted Subsidiaries as
are not covered by the original Mortgages, to the extent such
Real Property is acquired after the Effective Date and either (x)
the cost (including assumed Indebtedness) of such Real Property
is in excess of $2,500,000 or (y) the respective Additional Mort-
gage has been requested by the Required Banks (each such Real
Property, an "Additional Mortgaged Property"), provided that
subject to Section 9.02(xi), if the Real Property located at
North Scientific Street, High Point, North Carolina is not sold
by March 31, 1996, then the Borrowers will, and will cause their
respective Restricted Subsidiaries to, grant to the Collateral
Agent an Additional Mortgage in such Real Property. All such
Additional Mortgages shall be granted pursuant to documentation
substantially in the form of the Mortgages delivered to the
Administrative Agent on the Effective Date or in such other form
as is reasonably satisfactory to the Administrative Agent and
shall constitute valid and enforceable perfected Liens superior
to and prior to the rights of all third Persons and subject to no
other Liens except as are permitted by Section 9.01 at the time
of perfection thereof. The Additional Mortgages or instruments
related thereto shall have been duly recorded or filed in such
manner and in such places as are required by law to establish,
perfect, preserve and protect the Liens in favor of the
Collateral Agent required to be granted pursuant to the
Additional Mortgages and all taxes, fees and other charges pay-
able in connection therewith shall have been paid in full.
(b) The Borrowers will, and will cause each of their
respective Restricted Subsidiaries to, at the joint and several
expense of the Borrowers, make, execute, endorse, acknowledge,
file and/or deliver to the Collateral Agent from time to time
such vouchers, invoices, schedules, confirmatory assignments,
conveyances, financing statements, transfer endorsements, powers
of attorney, certificates, real property surveys, reports and
other assurances or instruments and take such further steps
relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require pursuant
to this Section 8.11. Furthermore, the Borrowers shall cause to
be delivered to the Collateral Agent such opinions of counsel,
title insurance and other related documents as may be requested
by the Collateral Agent to assure itself that this Section 8.11
has been complied with.
(c) Each Borrower agrees to cause each Restricted
Subsidiary established or created in accordance with Section 9.12
to execute and deliver a guaranty of all Obligations and all
obligations under Interest Rate Protection Agreements in substan-
tially the form of the Subsidiary Guaranty, or by becoming a
party to the Subsidiary Guaranty.
(d) Each Borrower agrees to pledge all of the capital
stock of each new Subsidiary (other than any Subsidiary of an
Unrestricted Subsidiary) created in accordance with Section 9.12
to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Pledge Agreement.
(e) Each Borrower will cause each Restricted
Subsidiary established or created in accordance with Section 9.12
to grant to the Collateral Agent a first priority Lien on all
property (tangible and intangible) of such Subsidiary upon terms
similar to those set forth in the Security Documents as
appropriate, and satisfactory in form and substance to the
Administrative Agent and Required Banks. Each Borrower shall
cause each of its respective Restricted Subsidiaries, at its own
expense, to execute, acknowledge and deliver, or cause the
execution, acknowledgement and delivery of, and thereafter
register, file or record in any appropriate governmental office,
any document or instrument reasonably deemed by the Collateral
Agent to be necessary or desirable for the creation and
perfection of the foregoing Liens. Each Borrower will cause each
of its respective Restricted Subsidiaries to take all actions
requested by the Administrative Agent (including, without
limitation, the filing of UCC-1's) in connection with the
granting of such security interests.
(f) The security interests required to be granted
pursuant to this Section 8.11 shall be granted pursuant to
security documentation (which shall be substantially similar to
the Security Documents already executed and delivered by INTERCO
and its Restricted Subsidiaries, as applicable) or otherwise
satisfactory in form and substance to the Administrative Agent
and shall constitute valid and enforceable perfected security
interests prior to the rights of all third Persons and subject to
no other Liens except such Liens as are permitted by Section
9.01. The Additional Security Documents and other instruments
related thereto shall be duly recorded or filed in such manner
and in such places and at such times as are required by law to
establish, perfect, preserve and protect the Liens, in favor of
the Collateral Agent for the benefit of the respective Secured
Creditors, required to be granted pursuant to the Additional
Security Documents and all taxes, fees and other charges payable
in connection therewith shall be paid, jointly and severally, in
full by the Borrowers. At the time of the execution and delivery
of the Additional Security Documents, the Borrowers shall cause
to be delivered to the Collateral Agent such opinions of counsel,
Mortgage Policies, title surveys, real estate appraisals and
other related documents as may be reasonably requested by the
Administrative Agent or the Required Banks to assure themselves
that this Section 8.11 has been complied with.
(g) In the event that the Administrative Agent or the
Required Banks at any time after the Effective Date determine in
its or their good faith discretion that real estate appraisals
satisfying the requirements of FIRREA (any such appraisal a
"Required Appraisal") are or were required to be obtained, or
should be obtained, in connection with any Mortgaged Property or
Mortgaged Properties, then, within 120 days after receiving
written notice thereof from the Administrative Agent or the
Required Banks, as the case may be, such Required Appraisal shall
be delivered, at the expense of the Borrowers, to the
Administrative Agent which Required Appraisal, and the respective
appraiser, shall be satisfactory to the Administrative Agent.
(h) Each of the Borrowers agrees that each action
required above by Section 8.11 (a) or (b) shall be completed as
soon as possible, but in no event later than 60 days after such
action is requested to be taken by the Administrative Agent or
the Required Banks. Each of the Borrowers further agrees that
each action required by Section 8.11(c), (d), (e) and (f) with
respect to the Additional Collateral shall be completed
contemporaneously with the creation of such new Subsidiary.
8.12 Interest Rate Protection. The Borrowers shall
maintain, for the remaining scheduled term thereof (which ends on
December 31, 1997), the Interest Rate Protection Agreement which
is in effect on the Restatement Effective Date, and which
established a fixed or maximum interest rate in respect of
$170,000,000 notional principal amount of Indebtedness. In
addition to the Interest Rate Protection Agreement maintained
pursuant to the immediately preceding sentence, not later than
March 31, 1996, INTERCO and/or the other Borrowers shall enter
into, and at all times thereafter for a period of at least three
years from the entering into thereof maintain, interest rate
protection pursuant to one or more Interest Rate Protection
Agreements which establish a fixed or maximum interest rate
(whether through swaps, caps, collars or otherwise) acceptable to
the Administrative Agent in respect of at least $180,000,000 (in
addition to the $170,000,000 referenced in the immediately
preceding sentence) notional principal amount of Indebtedness.
8.13 Ownership of Subsidiaries. INTERCO shall at all
times own 100% of the outstanding capital stock of the other
Borrowers. Except to the extent otherwise expressly consented in
writing by the Required Banks and except as set forth in Schedule
VI, the Borrowers shall directly or indirectly own 100% of the
capital stock of each of their Subsidiaries (other than as
permitted pursuant to the definition of Permitted Acquisition).
8.14 Permitted Acquisitions. Subject to the provi-
sions of this Section 8.14, Section 9.02(vii) and the require-
ments contained in the definition of Permitted Acquisition, the
Borrowers and their Restricted Subsidiaries may from time to time
after the Restatement Effective Date effect Permitted
Acquisitions, so long as (i) the Borrowers shall have given the
Administrative Agent and the Banks at least 10 Business Days'
prior written notice of any Permitted Acquisition, (ii) based on
calculations made by the Borrowers on a Pro Forma Basis after
giving effect to the respective Permitted Acquisition and any
Indebtedness (including without limitation Permitted Acquired
Debt) or Disqualified Preferred Stock incurred, issued or assumed
in connection with the respective Permitted Acquisition or to
finance same, (x) no Default or Event of Default will exist
under, or would have existed during the periods covered by, the
financial covenants contained in Sections 9.08 through 9.10,
inclusive, of this Agreement and (y) if any Indebtedness or
Disqualified Preferred Stock is being incurred, issued or assumed
in connection with the respective Permitted Acquisition or to
finance same (excluding, however, Permitted Acquired Debt in
connection with any Permitted Acquisition where the only
Indebtedness or Disqualified Preferred Stock being incurred,
issued or assumed in connection therewith or to finance same is
Permitted Acquired Debt), the Senior Debt Leverage Ratio shall
not exceed 3.5:1.0, (iii) based on good faith projections
prepared by the Borrowers for the period from the date of the
consummation of the Permitted Acquisition to the date which is
one year thereafter, the level of financial performance measured
by the covenants set forth in Sections 9.08 through 9.10
inclusive shall be better than or equal to such level as would be
required to provide that no Default or Event of Default would
exist under the financial covenants contained in Sections 9.08
through 9.10, inclusive, of this Agreement as compliance with
such covenants would be required through the date which is one
year from the date of the consummation of the respective
Permitted Acquisition, (iv) the Administrative Agent shall have
been satisfied in its reasonable discretion that the proposed
Permitted Acquisition could not reasonably be expected to result
in materially increased tax, ERISA or environmental liabilities
with respect to INTERCO or any of its Restricted Subsidiaries, it
being understood that any determination of whether the proposed
Permitted Acquisition could reasonably be expected to result in
such materially increased tax, ERISA or environmental liabilities
shall take into account, inter alia, (x) any available
indemnities and (y) the timing and likelihood of payment
thereunder and (v) the Borrowers shall have delivered to the
Administrative Agent an officer's certificate executed by an
Authorized Representative of the Borrowers, certifying (A) to the
best of his knowledge, compliance with the requirements of
preceding clauses (i), (ii) and (iii) and containing the calcula-
tions required by the preceding clauses (ii) and (iii) and (B)
compliance with the requirements of Section 9.02(vii).
8.15 Maintenance of Corporate Separateness. INTERCO
will, and will cause each of its Subsidiaries to, satisfy
customary corporate formalities, including the holding of regular
board of directors' and shareholders' meetings or action by
directors or shareholders without a meeting and the maintenance
of corporate offices and records. None of the Borrowers nor any
of their respective Restricted Subsidiaries shall make any pay-
ment to a creditor of any Unrestricted Subsidiaries in respect of
any liability of any Unrestricted Subsidiaries, and no bank
account of any Unrestricted Subsidiary shall be commingled with
any bank account of any of the Borrowers or any of their respec-
tive Restricted Subsidiaries. Any financial statements
distributed to any creditors of any Unrestricted Subsidiaries
shall clearly establish or indicate the corporate separateness of
such Unrestricted Subsidiary from the Borrowers and their respec-
tive Restricted Subsidiaries. Finally, neither INTERCO nor any
of its Subsidiaries shall take any action, or conduct its affairs
in a manner, which is likely to result in the corporate existence
of INTERCO or any of its Subsidiaries being ignored, or in the
assets and liabilities of the Borrowers or any of their
respective Restricted Subsidiaries being substantively consoli-
dated with those of any Unrestricted Subsidiaries in a bank-
ruptcy, reorganization or other insolvency proceeding.
8.16 Cash Management System. The Borrowers will, and
will cause each of their respective Restricted Subsidiaries to,
utilize and maintain the Cash Management System for all deposits
made by any of them (including the concentration of all such
deposits in the Concentration Account). The Cash Management
System shall be operated solely for the business of the Borrowers
and their respective Restricted Subsidiaries.
SECTION 9. Negative Covenants. The Borrowers covenant
and agree that on and after the Restatement Effective Date and
until the Total Commitments and all Letters of Credit and
Acceptances have terminated and the Loans, Notes and Unpaid Draw-
ings, together with interest, Fees and all other Obligations
incurred hereunder and thereunder, are paid in full:
9.01 Liens. The Borrowers will not, and will not
permit any of their respective Restricted Subsidiaries to,
create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets (real or personal, tangible or
intangible) of INTERCO or any of its Restricted Subsidiaries,
whether now owned or hereafter acquired, or sell any such prop-
erty or assets subject to an understanding or agreement, contin-
gent or otherwise, to repurchase such property or assets (includ-
ing sales of accounts receivable with recourse to INTERCO or any
of its Restricted Subsidiaries), or assign any right to receive
income or permit the filing of any financing statement under the
UCC or any other similar notice of Lien under any similar record-
ing or notice statute; provided that the provisions of this
Section 9.01 shall not prevent the creation, incurrence, filing,
assumption or existence of the following (Liens described below
are herein referred to as "Permitted Liens"):
(i) incipient Liens for taxes, assessments or govern-
mental charges or levies not yet due and payable or Liens
for taxes, assessments or governmental charges or levies
being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in
accordance with generally accepted accounting principles in
the United States (or the equivalent thereof in any country
in which a Foreign Sales Corporation or a Foreign Subsidiary
is doing business, as applicable);
(ii) Liens in respect of property or assets of the
Borrowers or any of their Restricted Subsidiaries imposed by
law, which were incurred in the ordinary course of business
and do not secure Indebtedness for borrowed money, such as
carriers', warehousemen's, materialmen's and mechanics'
liens and other similar Liens arising in the ordinary course
of business, and (x) which do not in the aggregate
materially detract from the value of the Borrowers' or such
Restricted Subsidiary's property or assets or materially
impair the use thereof in the operation of the business of
the Borrowers or such Restricted Subsidiary or (y) which are
being contested in good faith by appropriate proceedings,
which proceedings have the effect of preventing the forfei-
ture or sale of the property or assets subject to any such
Lien;
(iii) Liens in existence on the Restatement Effective
Date which are listed, and the property subject thereto
described, in Schedule IX, but only to the respective date,
if any, set forth in such Schedule IX for the removal and
termination of any such Liens, plus renewals and extensions
of such Liens to the extent set forth on Schedule IX,
provided that (x) the aggregate principal amount of the
Indebtedness, if any, secured by such Liens does not
increase from that amount outstanding at the time of any
such renewal or extension and (y) any such renewal or
extension does not encumber any additional assets or
properties of INTERCO or any of its Restricted Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Documents;
(vi) licenses, leases or subleases granted to other
Persons in the ordinary course of business not materially
interfering with the conduct of the business of INTERCO and
its Restricted Subsidiaries taken as a whole;
(vii) Liens upon assets subject to Capitalized Lease
Obligations of the Borrowers and their Restricted Sub-
sidiaries to the extent permitted by Section 9.04(vii),
provided that (x) such Liens only serve to secure the
payment of Indebtedness arising under such Capitalized Lease
Obligation and (y) the Lien encumbering the asset giving
rise to the Capitalized Lease Obligation does not encumber
any other asset of the Borrowers or any Restricted Subsidi-
ary of the Borrowers;
(viii) Liens placed upon assets used in the ordinary
course of business of the Borrowers or any of their
Restricted Subsidiaries at the time of acquisition or new
construction thereof by the Borrowers or any such Restricted
Subsidiary or within 180 days thereafter to secure Indebted-
ness incurred to pay all or a portion of the purchase price
and/or construction costs thereof, or Liens securing
Permitted Acquired Debt, provided that (x) the aggregate
outstanding principal amount of all Indebtedness secured by
Liens permitted by this clause (viii) shall not at any time
exceed the amount permitted by Section 9.04(vii) and (y) in
all events, the Lien encumbering the assets so acquired or
newly constructed does not encumber any other asset of the
Borrowers or such Restricted Subsidiary;
(ix) easements, rights-of-way, restrictions (including
zoning restrictions), encroachments, protrusions and other
similar charges or encumbrances, and minor title
deficiencies, in each case whether now or hereafter in
existence, not securing Indebtedness and not materially
interfering with the conduct of the business of the
Borrowers or any of their respective Restricted Sub-
sidiaries;
(x) Liens arising from precautionary UCC financing
statement filings regarding operating leases entered into by
the Borrowers or any of their Restricted Subsidiaries in the
ordinary course of business;
(xi) Liens arising out of the existence of judgments or
awards not constituting an Event of Default under Section
10.09, provided that no cash or property is deposited or
delivered to secure the respective judgment or award (or any
appeal bond in respect thereof, except as permitted by
following clause (xiv));
(xii) Liens, and the filing of financing statements in
connection therewith, created by, and as set forth in, the
Receivables Documents;
(xiii) statutory and contractual landlords' liens under
leases to which the Borrowers or any of their Restricted
Subsidiaries are a party;
(xiv) Liens (other than any Lien imposed by ERISA) (x)
incurred or deposits made in the ordinary course of business
of the Borrowers and their respective Restricted
Subsidiaries in connection with workers' compensation,
unemployment insurance and other types of social security,
(y) to secure the performance by the Borrowers and their
respective Restricted Subsidiaries of tenders, statutory
obligations (other than excise taxes), surety, stay, customs
and appeal bonds, statutory bonds, bids, leases, government
contracts, trade contracts, performance and return of money
bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money) or (z) to
secure the performance by the Borrowers and their respective
Restricted Subsidiaries of leases of Real Property, to the
extent incurred or made in the ordinary course of business
consistent with past practices, provided that the aggregate
amount of deposits at any time pursuant to sub-clause (y)
and sub-clause (z) shall not exceed $5,000,000 in the
aggregate;
(xv) any interest or title of a lessor, sublessor,
licensee or licensor under any lease or license agreement
permitted by this Agreement;
(xvi) Liens (x) in favor of customs and revenue authori-
ties arising as a matter of law to secure the payment of
customs duties in connection with the importation of goods
and deposits made to secure statutory obligations in the
form of excise taxes or (y) in respect of property or assets
of Thomasville or any of its Subsidiaries imposed by law or
governmental action which arise out of actual or potential
claims under any Environmental Law disclosed in the
environmental report furnished to the Administrative Agent
prior to the Restatement Effective Date, in each case so
long as the Liens described in this clause (y) are being
contested in good faith (or INTERCO or its respective
Subsidiaries are in good faith pursuing indemnities in
respect thereof pursuant to the Stock Purchase Agreement)
pursuant to appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the
property subject to any such Lien and so long as adequate
reserves (if necessary) have been established in accordance
with generally accepted accounting principles with respect
to the liability or liabilities secured by such Liens;
(xvii) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the sale
of goods entered into by the Borrowers or any of their
Restricted Subsidiaries in the ordinary course of business
in accordance with the past practices of the Borrowers and
their Restricted Subsidiaries prior to the Effective Date;
and
(xviii) Liens not otherwise permitted by the foregoing
clauses (i) through (xvii) to the extent attaching to
properties and assets with an aggregate fair value not in
excess of, and securing liabilities not in excess of,
$10,000,000 in the aggregate at any time outstanding.
9.02 Consolidation, Merger, Purchase or Sale of
Assets, etc. The Borrowers will not, and will not permit any of
their respective Restricted Subsidiaries to, wind up, liquidate
or dissolve its affairs (other than with respect to Interfashions
Industries, S.A. and its Subsidiaries) or enter into any trans-
action of merger or consolidation, or convey, sell, lease or
otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any part of its property or assets (other
than the liquidation of Cash Equivalents in the ordinary course
of business), or enter into any sale-leaseback transactions, or
purchase or otherwise acquire (in one or a series of related
transactions) any part of the property or assets (other than pur-
chases or other acquisitions of inventory, materials, equipment,
furniture, fixtures, and intangible assets in the ordinary course
of business) of any Person, except that:
(i) Capital Expenditures by the Borrowers and their
Restricted Subsidiaries shall be permitted to the extent not
in violation of Section 9.07;
(ii) each of the Borrowers and their Restricted
Subsidiaries may (x) in the ordinary course of business,
sell, lease or otherwise dispose of any assets which, in the
reasonable judgment of such Person, are obsolete, worn out
or otherwise no longer useful in the conduct of such
Person's business, (y) sell, lease or otherwise dispose of
any other assets, provided that each such sale, lease or
disposition shall be for fair market value (other than with
respect to sales, leases or dispositions in an aggregate
amount not to exceed $100,000 per calendar year) and at
least 75% of the consideration therefor shall be in the form
of cash, and provided further, that (A) except as provided
in following clause (B), the aggregate Net Sale Proceeds of
all assets subject to sales or other dispositions pursuant
to clauses (x) and (y) shall not exceed $15,000,000 in the
aggregate in any Fiscal Year and (B) in addition to sales
effected pursuant to preceding clause (A), additional assets
may be sold pursuant to this Section 9.02(ii) so long as at
least 90% of the aggregate consideration for any such asset
sale shall be in the form of cash and so long as the
aggregate Net Sale Proceeds of all assets sold pursuant to
this clause (B) after the Restatement Effective Date do not
exceed $75,000,000, and (z) enter into transactions
permitted under Section 9.01(vi);
(iii) Investments may be made to the extent permitted by
Section 9.05;
(iv) each of the Borrowers and their Restricted Subsidi-
aries may lease (as lessee) real or personal property (so
long as any such lease does not create a Capitalized Lease
Obligation except to the extent permitted by Section 9.04);
(v) each of the Borrowers and their Restricted
Subsidiaries may make sales or transfers of inventory (x) in
the ordinary course of business or (y) to any other Borrower
or any Domestic Wholly-Owned Subsidiary of INTERCO which is
a Subsidiary Guarantor;
(vi) sales and contributions of accounts receivable to
the Receivables Subsidiary and sales of accounts receivable
by the Receivables Subsidiary to the Receivables Purchasers,
and purchases and acquisitions of accounts receivable by the
Receivables Subsidiary, in each case pursuant to the
Receivables Facility shall be permitted;
(vii) the Borrowers and their respective Restricted
Subsidiaries shall be permitted to make Permitted
Acquisitions so long as (A) such Permitted Acquisitions are
effected in accordance with the requirements of Section
8.14, (B) after giving effect to any Permitted Acquisition,
the aggregate amount paid (including for the purpose of this
clause (vii) all cash consideration paid, the amount of all
Indebtedness and/or Disqualified Preferred Stock directly
issued as consideration, the face amount of all Permitted
Acquired Debt incurred or assumed and the fair market value
of any merger consideration, but excluding the fair market
value of all INTERCO Common Stock and/or Qualified Preferred
Stock issued as consideration therefor, in each case in con-
nection with such Permitted Acquisition) by the Borrowers
and their Restricted Subsidiaries in connection with such
Permitted Acquisition shall not exceed the Available
Permitted Acquisition Amount at such time (after giving
effect to all prior and contemporaneous adjustments thereto,
except as a result of such Permitted Acquisition); provided
that in no event shall such aggregate amount paid in
connection with Permitted Acquisitions effected after the
Restatement Effective Date (calculated in accordance with
the first parenthetical contained in preceding clause (B)),
when added to the amount of Investments made after the
Restatement Effective Date pursuant to Section 9.05(vii),
exceed $75,000,000 plus the Returned Investment Amount as
calculated on the date any determination is being made
pursuant to this proviso, and (C) with respect to each
Permitted Acquisition, no Default or Event of Default is in
existence at the time of the consummation of such Permitted
Acquisition or would exist after giving effect thereto;
(viii) INTERCO may sell or otherwise dispose of any shares
of capital stock of any Unrestricted Subsidiaries owned by
it;
(ix) so long as no Default or Event of Default then
exists or would result therefrom, the Borrowers or any
Domestic Wholly-Owned Subsidiary which is a Restricted
Subsidiary (other than the Receivables Subsidiary) of
INTERCO may be merged into or consolidated with any Borrower
(so long as such Borrower is the surviving corporation of
such merger) or any other Domestic Wholly-Owned Subsidiary
which is a Restricted Subsidiary (other than the Receivables
Subsidiary) of the Borrowers;
(x) the Borrowers and their respective Restricted
Subsidiaries (other than the Receivables Subsidiary) shall
be permitted to merge with another Person (so long as such
Borrower or Restricted Subsidiary is the surviving corpora-
tion), so long as such merger is used to effect a Permitted
Acquisition in compliance with Section 9.02(vii); and
(xi) the Borrowers may sell or otherwise dispose of
Excluded Assets.
To the extent the Required Banks waive the provisions of this
Section 9.02 with respect to the sale of any Collateral, or any
Collateral is sold as permitted by this Section 9.02, such
Collateral (unless sold to INTERCO or a Subsidiary of INTERCO)
shall be sold free and clear of the Liens created by the Security
Documents, and the Administrative Agent and Collateral Agent
shall be authorized to take any actions deemed appropriate in
order to effect the foregoing.
9.03 Dividends. INTERCO shall not, and shall not
permit any of its Restricted Subsidiaries to, authorize, declare
or pay any Dividends with respect to INTERCO or any of its
Restricted Subsidiaries, except that:
(i) any Restricted Subsidiary of any Borrower may pay
Dividends to such Borrower or any Wholly-Owned Subsidiary
which is a Restricted Subsidiary of the Borrowers;
(ii) so long as no Default or Event of Default exists
or would result therefrom, INTERCO shall be permitted to pay
Dividends (including, without limitation, Dividends on
Qualified Preferred Stock) in an amount not to exceed (A)
the Available $10 Million Dividend Basket Amount on such
date (after giving effect to all prior and contemporaneous
reductions thereto, except as a result of such Dividend),
plus (B) the Available Net Income Amount on such date (after
giving effect to all prior and contemporaneous adjustments
thereto, except as a result of such Dividend) plus (C) $0
or, if the Dividend Threshold Date has theretofore occurred,
the then Available Dividend Unrestricted Proceeds Amount
(after giving effect to all prior and contemporaneous
adjustments thereto, except as a result of such Dividend),
minus (D) all Guaranty Payments made by INTERCO pursuant to
Section 9.11(b)(ii)(y)(A) and (B); and
(iii) so long as no Default or Event of Default exists
or would result therefrom, INTERCO may pay regularly
accruing cash Dividends on Disqualified Preferred Stock in
accordance with the terms of the certificate of designation
therefor.
9.04 Indebtedness. INTERCO will not, and will not
permit any of its Restricted Subsidiaries to, contract, create,
incur, assume or suffer to exist any Indebtedness, except:
(i) Indebtedness incurred pursuant to this Agreement
and the other Credit Documents;
(ii) Permitted Subordinated Indebtedness not to exceed
(x) in aggregate principal amount $150,000,000, minus the
aggregate liquidation preference or amount of all
Disqualified Preferred Stock issued on or prior to the date
of the incurrence of such Permitted Subordinated
Indebtedness pursuant to Section 9.13(b)(i), provided that
to the extent Permitted Subordinated Indebtedness is
incurred under this clause (ii)(x) and (1) any portion of
such Permitted Subordinated Indebtedness is being issued as
consideration in connection with a Permitted Acquisition or
(2) 100% of the Net Cash Proceeds thereof are not
immediately used to repay Term Loans pursuant to Section
4.02(g), such incurrence shall only be permitted if the
Administrative Agent has received a certificate from, and
signed by an Authorized Representative of, INTERCO showing
that immediately after the incurrence of such Permitted
Subordinated Indebtedness, the Senior Debt Leverage Ratio,
calculated on a Pro Forma Basis after giving effect to the
incurrence of such Indebtedness, shall not exceed 3.5:1.0,
plus (y) an amount of Permitted Subordinated Indebtedness
incurred and simultaneously used to repay, refinance or
otherwise replace the Receivables Facility in accordance
with the terms hereof, in each case shall be permitted on
terms and conditions set forth in the definition of
Permitted Subordinated Indebtedness and on other terms and
conditions reasonably satisfactory to the Administrative
Agent and the Required Banks (provided that such other terms
and conditions shall be deemed satisfactory to the Required
Banks unless objected to by the Required Banks in writing on
or prior to the date which is twenty Business Days after the
documentation therefor is delivered to the Banks);
(iii) Permitted Unsecured Indebtedness not to exceed in
aggregate principal amount $25,000,000 minus the aggregate
liquidation preference or amount of all Disqualified
Preferred Stock issued on or prior to the date of the
incurrence of such Permitted Unsecured Indebtedness pursuant
to Section 9.13(b)(ii), shall be permitted on terms and
conditions set forth in the definition of Permitted
Unsecured Indebtedness and on other terms and conditions
reasonably satisfactory to the Administrative Agent;
provided that to the extent Permitted Unsecured Indebtedness
is incurred under this clause (iii) and (1) any portion of
such Permitted Unsecured Indebtedness is being issued as
consideration in connection with a Permitted Acquisition or
(2) 100% of the Net Cash Proceeds thereof are not
immediately used to repay Term Loans pursuant to Section
4.02(g), such incurrence shall only be permitted if the
Administrative Agent has received a certificate from, and
signed by an Authorized Representative of, INTERCO showing
that immediately after the incurrence of such Permitted
Unsecured Indebtedness, the Senior Debt Leverage Ratio, cal-
culated on a Pro Forma Basis after giving effect to the
incurrence of such Indebtedness, shall not exceed 3.5:1.0.
(iv) Existing Indebtedness shall be permitted to the
extent the same is listed on Schedule VII, but no refinanc-
ings or renewals thereof, except as expressly permitted on
such Schedule VII;
(v) accrued expenses and current trade accounts pay-
able incurred in the ordinary course of business;
(vi) Indebtedness under Interest Rate Protection
Agreements entered into in compliance with Section 8.12;
(vii) Indebtedness of the Borrowers and their Restricted
Subsidiaries evidenced by Capitalized Lease Obligations to
the extent permitted pursuant to Section 9.01(vii), and
Indebtedness secured by Liens permitted under Section
9.01(viii) and Permitted Acquired Debt; provided that in no
event shall the aggregate principal amount of Capitalized
Lease Obligations and Indebtedness permitted by this clause
(vii) exceed $20,000,000;
(viii) Indebtedness under Currency Hedging Agreements
entered into in compliance with Section 9.05(ix);
(ix) Contingent Obligations (a) of the Borrowers or any
Restricted Subsidiary as a guarantor of the lessee under any
lease pursuant to which the Borrowers or a Restricted
Subsidiary is the lessee so long as such lease is otherwise
permitted hereunder, (b) of INTERCO constituting guarantees
by INTERCO of trade payables owing in the ordinary course of
business by its Restricted Subsidiaries and (c) of INTERCO
and/or Thomasville consisting of guarantees (with the
maximum amount guaranteed at any time pursuant to this
clause (c) not to exceed $7,500,000 in the aggregate) of
actual or potential claims under Environmental Laws as
referenced in Section 9.01(xvi)(y);
(x) Contingent Obligations of INTERCO pursuant to (x)
the Surviving Guaranties; provided that the making of any
payments thereunder, and any renewals or extensions of such
Surviving Guaranties, shall be subject to restrictions set
forth in Section 9.11(b) and (y) the Tax Sharing Agreements;
(xi) Indebtedness (a) consisting of Attributed
Receivables Facility Indebtedness of the Receivables
Subsidiary so long as the Net Cash Proceeds of Attributed
Receivables Facility Indebtedness in excess of $240,000,000
shall be applied to repay Term Loans in accordance with
Section 4.02(g) and (b) consisting of the Contingent
Obligations of INTERCO in respect of certain of its
Restricted Subsidiaries (other than the Receivables
Subsidiary) with respect to certain limited obligations
under the Receivables Facility as set forth in the
Receivables Documents;
(xii) Indebtedness among the Borrowers and their
Restricted Subsidiaries to the extent permitted pursuant to
Section 9.05(v); and
(xiii) unless and until replaced by a Letter of Credit
issued hereunder, the Existing Fluvanna Letter of Credit may
remain outstanding.
In furtherance of the foregoing and in no way in
limitation thereof, INTERCO shall not permit any Unrestricted
Subsidiary to incur any Indebtedness having any element of
recourse to INTERCO or its Restricted Subsidiaries or to any of
their assets or property.
9.05 Investments; etc. The Borrowers will not, and
will not permit any of their respective Restricted Subsidiaries
to, directly or indirectly, lend money or credit or make advances
to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital
contribution to, any other Person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of
currency or other commodities at a future date in the nature of a
futures contract, or hold any cash or Cash Equivalents (any of
the foregoing, an "Investment"), except that the following shall
be permitted:
(i) the Borrowers and their Restricted Subsidiaries
may acquire and hold accounts receivables owing to any of
them, if created or acquired in the ordinary course of bus-
iness and payable or dischargeable in accordance with cus-
tomary terms;
(ii) the Borrowers and their Restricted Subsidiaries
may acquire and hold cash and Cash Equivalents (including
cash and Cash Equivalents held by INTERCO on behalf of its
Restricted Subsidiaries pursuant to the Cash Management
System); provided that during any time that Revolving Loans
of Non-Defaulting Banks or Swingline Loans are outstanding,
the aggregate amount of cash and Cash Equivalents permitted
to be held by the Borrowers and their Restricted
Subsidiaries (including cash and Cash Equivalents held by
INTERCO on behalf of its Restricted Subsidiaries pursuant to
the Cash Management System) shall not exceed $20,000,000 for
any period of five consecutive days;
(iii) INTERCO and its Restricted Subsidiaries may make
loans and advances in the ordinary course of business to
their respective employees so long as the aggregate
principal amount thereof at any time outstanding (determined
without regard to any write-downs or write-offs of such
loans and advances) shall not exceed $1,000,000;
(iv) the Borrowers may enter into Interest Rate Protec-
tion Agreements to the extent permitted in Section 9.04(vi);
(v) any Credit Party or the Receivables Subsidiary
may make intercompany loans and advances to any other Credit
Party;
(vi) the Borrowers may (x) establish Subsidiaries in
compliance with Section 9.12 and (y) make Investments
therein as otherwise provided in this Section 9.05;
(vii) so long as no Default or Event of Default exists,
or would result therefrom, the Borrowers and their
Restricted Subsidiaries may make Investments at any time in
an amount not to exceed the sum of (A) the Available $10
Million Acquisition/Investment Basket Amount at such time
(after giving effect to all prior and contemporaneous
reductions thereto, except as a result of such Investment),
plus (B) the then Available Unrestricted Proceeds Amount at
such time (after giving effect to all prior and
contemporaneous adjustments thereto, except as a result of
such Investment), plus (C) the Available Net Income Amount
(after giving effect to all prior and contemporaneous
adjustments thereto, except as a result of such Investment),
plus (D) the Available Returned Investment Amount (after
giving effect to all prior and contemporaneous adjustments
thereto, except as a result of such Investment); provided
that in no event shall the aggregate amount of Investments
made pursuant to this clause (vii) after the Restatement
Effective Date, when added to the aggregate amount paid in
connection with Permitted Acquisitions effected after the
Restatement Effective Date (calculated in accordance with
the first parenthetical contained in Section 9.02(vii)(B)),
exceed $75,000,000 plus the Returned Investment Amount as
calculated on the date any determination is being made
pursuant to this clause (vii);
(viii) the Borrowers and their Restricted Subsidiaries
may retain cash consideration plus purchase money notes
derived from asset sales permitted pursuant to Section
9.02(ii);
(ix) the Borrowers may enter into and perform their
obligations under Currency Hedging Agreements entered into
in the ordinary course of business and consistent with past
practices so long as (i) any such Currency Hedging Agreement
is related to income derived from foreign operations of the
Borrowers or any Restricted Subsidiary (or any Foreign Sales
Corporation which is a Restricted Subsidiary) or otherwise
related to purchases permitted hereunder from foreign
suppliers and (ii) such Currency Hedging Agreements do not
exceed a notional amount equal to $15,000,000 in the
aggregate at any one time;
(x) the Borrowers and their Restricted Subsidiaries
may acquire and own investments (including notes or other
debt obligations or securities) received in connection with
the bankruptcy or reorganization of their suppliers and
customers and in settlement of delinquent obligations of, or
disputes with, their customers or suppliers in the ordinary
course of business;
(xi) existing Investments by the Borrowers and their
Restricted Subsidiaries shall be permitted to the extent
listed on Schedule X;
(xii) the Restricted Subsidiaries of INTERCO may
contribute accounts receivable to the Receivables Subsidiary
in accordance with the provisions of the Receivables
Documents;
(xiii) INTERCO shall be permitted to make capital
contributions to Foreign Sales Corporations in an amount not
to exceed $100,000 in the aggregate; and
(xiv) Permitted Acquisitions shall be permitted in
compliance with Sections 8.14 and 9.02(vii).
9.06 Transactions with Affiliates and Unrestricted
Subsidiaries. The Borrowers will not, and will not permit any of
their respective Restricted Subsidiaries to, enter into any
transaction or series of related transactions with any Affiliate
of INTERCO or any of its Subsidiaries or any of its Unrestricted
Subsidiaries, other than in the ordinary course of business and
on terms and conditions substantially as favorable to the
Borrowers or such Restricted Subsidiary as would reasonably be
obtained by the Borrowers or such Restricted Subsidiary at that
time in a comparable arm's-length transaction with a Person other
than an Affiliate, except that:
(i) Dividends may be paid to the extent provided in
Section 9.03;
(ii) Investments may be made to the extent permitted by
Section 9.05;
(iii) the transactions entered into between the
Borrowers and their Subsidiaries shall be permitted to the
extent expressly permitted by Section 9.02;
(iv) customary fees may be paid to non-officer
directors of the Borrowers and their Restricted Subsi-
diaries;
(v) INTERCO and its Restricted Subsidiaries may enter
into employment arrangements with respect to the procurement
of services with their respective officers and employees in
the ordinary course of business;
(vi) the Borrowers and their respective Restricted
Subsidiaries may make (x) capital contributions to any of
their respective Restricted Subsidiaries which is a Credit
Party or (y) capital contributions of accounts receivable to
the Receivables Subsidiary in accordance with the
Receivables Documents;
(vii) so long as no Default or Event of Default exists,
or would result therefrom, INTERCO shall be permitted to pay
management fees to Apollo Advisors, L.P. pursuant to the
Apollo Management Agreement, provided, that, such fees shall
not exceed $650,000 in any Fiscal Year and no amendment
adverse to the interests of the Banks shall be made to the
Apollo Management Agreement without the consent of the
Administrative Agent;
(viii) existing transactions between INTERCO and its
Subsidiaries and their Affiliates shall be permitted to the
extent listed on Schedule XI;
(ix) INTERCO may sell or issue INTERCO Common Stock and
Qualified Preferred Stock to its Affiliates (other than its
Subsidiaries); and
(x) INTERCO may modify the Tax Sharing Agreement as
provided in Section 9.11(c).
Except as specifically provided above, no management or
similar fees shall be paid or payable by INTERCO or any of its
Restricted Subsidiaries to any Affiliate (other than INTERCO).
Notwithstanding anything contained in the foregoing to
the contrary, any transactions between and among INTERCO and/or
Restricted Subsidiaries on the one hand and any of their
respective Affiliates (excluding INTERCO and its Restricted
Subsidiaries) on the other hand, shall be arm's length
transactions and on terms and conditions at least as favorable to
INTERCO and/or such Restricted Subsidiaries as the terms and
conditions which would apply to a similar transaction on an arm's
length basis with a Person that is not an Affiliate; provided,
that, any transaction (other than as described in clauses (i),
(ii), (iii) and (vi) above) between and among the aforementioned
parties with a value in excess of $1,000,000 shall only be
permitted if a majority of the disinterested directors of INTERCO
approve the transaction.
9.07 Capital Expenditures. (a) The Borrowers will
not, and will not permit any of their respective Restricted
Subsidiaries to, make any Capital Expenditures, except that
during any Fiscal Year set forth below (taken as one accounting
period) the Borrowers and their Restricted Subsidiaries may make
Capital Expenditures so long as the aggregate amount of such
Capital Expenditures made pursuant to this clause (a) does not
exceed $50,000,000 in any Fiscal Year (beginning with the Fiscal
Year ended in 1996).
(b) Notwithstanding anything to the contrary contained
above, to the extent that $50,000,000 exceeds the aggregate
amount of Capital Expenditures made by the Borrowers, and their
Restricted Subsidiaries pursuant to Section 9.07(a) during any
Fiscal Year (beginning with the Fiscal Year ended in 1996), such
excess may be carried forward and used by the Borrowers and their
respective Restricted Subsidiaries to make additional Capital
Expenditures during subsequent Fiscal Years; provided that the
maximum amount carried forward pursuant to this clause (b) into
(x) Fiscal Year 1997 shall be $10 million and (y) any Fiscal Year
thereafter shall be $20 million, with any amounts otherwise
permitted to be carried forward to lapse and terminate at such
time, if any, as they are not permitted to be carried forward
into a subsequent Fiscal Year by virtue of this proviso.
(c) In addition to the Capital Expenditures permitted
pursuant to preceding clauses (a) and (b), the Borrowers and
their respective Restricted Subsidiaries shall be permitted to
make additional Capital Expenditures to the extent consisting of
the reinvestment of proceeds of Recovery Events not required to
be applied to prepay Loans pursuant to the provisions of Section
4.02(j).
9.08 Consolidated Net Interest Coverage Ratio. The
Borrowers will not permit the Consolidated Net Interest Coverage
Ratio for any period of four consecutive fiscal quarters (or, if
shorter, the period beginning on January 1, 1996 and ended on the
last day of a fiscal quarter ended after the Restatement
Effective Date), in each case taken as one accounting period,
ended on the last day of a fiscal quarter set forth below to be
less than the amount set forth opposite such period below:
Fiscal Quarter
Ended Closest to Ratio
---------------- -----
March 31, 1996 1.75:1.0
June 30, 1996 1.90:1.0
September 30, 1996 2.10:1.0
December 31, 1996 2.25:1.0
March 31, 1997 2.35:1.0
June 30, 1997 2.35:1.0
September 30, 1997 2.35:1.0
December 31, 1997 2.65:1.0
March 31, 1998 2.70:1.0
June 30, 1998 2.80:1.0
September 30, 1998 2.90:1.0
December 31, 1998 3.00:1.0
March 31, 1999 3.05:1.0
June 30, 1999 3.10:1.0
September 30, 1999 3.15:1.0
December 31, 1999 3.25:1.0
March 31, 2000 3.30:1.0
June 30, 2000 3.35:1.0
September 30, 2000 3.40:1.0
December 31, 2000 3.50:1.0
March 31, 2001 3.55:1.0
June 30, 2001 3.60:1.0
September 30, 2001 3.65:1.0
December 31, 2001 3.75:1.0
March 31, 2002 3.80:1.0
June 30, 2002 3.85:1.0
September 30, 2002 3.90:1.0
December 31, 2002
and the last day of
each fiscal quarter
thereafter 4.00:1.0.
9.09 Consolidated EBITDA; Cumulative Consolidated
EBITDA. (a) The Borrowers will not permit Consolidated EBITDA
for any period of four consecutive fiscal quarters (or, if
shorter, the period beginning on January 1, 1996 and ended on the
last day of a fiscal quarter ended after the Restatement
Effective Date), in each case taken as one accounting period,
ended on the last day of a fiscal quarter set forth below to be
less than the amount set forth opposite such period below:
Fiscal Quarter
Ended Closest to Amount
---------------- -------
March 31, 1996 $ 25,000,000
June 30, 1996 55,000,000
September 30, 1996 90,000,000
December 31, 1996 130,000,000
March 31, 1997 132,500,000
June 30, 1997 135,000,000
September 30, 1997 137,500,000
December 31, 1997 140,000,000
March 31, 1998 143,000,000
June 30, 1998 147,000,000
September 30, 1998 151,000,000
December 31, 1998 155,000,000
March 31, 1999 157,500,000
June 30, 1999 160,000,000
September 30, 1999 162,500,000
December 31, 1999 165,000,000
March 31, 2000 167,500,000
June 30, 2000 170,000,000
September 30, 2000 172,500,000
December 31, 2000 175,000,000
March 31, 2001 177,500,000
June 30, 2001 180,000,000
September 30, 2001 182,500,000
December 31, 2001 185,000,000
March 31, 2002 187,500,000
June 30, 2002 190,000,000
September 30, 2002 192,500,000
December 31, 2002 195,000,000
March 31, 2003 197,500,000
June 30, 2003 200,000,000
September 30, 2003 202,500,000
December 31, 2003 205,000,000
(b) In addition to the covenant contained in preceding
clause (a), the Borrowers will not permit Consolidated EBITDA for
any period beginning on January 1, 1996 and ended on the last day
of a Fiscal Year (beginning with Fiscal Year 1997) ended
thereafter, in each case taken as one accounting period (with
Consolidated EBITDA for any such period being herein called
"Cumulative Consolidated EBITDA") to be less than the amount set
forth opposite such Fiscal Year below:
Fiscal Year Ended Amount
----------------- ------
1997 $ 300,000,000
1998 475,000,000
1999 650,000,000
2000 875,000,000
2001 1,100,000,000
2002 1,325,000,000
2003 1,550,000,000
provided that, from and after the first date upon which the
Borrowers shall have used more than $50,000,000 of Net Cash
Proceeds from sales or issuances of equity of INTERCO (including
pursuant to any exercise of the INTERCO Warrants, any exercise of
any stock options and the issuance of any Preferred Stock) to
repay Term Loans after the Restatement Effective Date pursuant to
Sections 4.01, 4.02(e) and/or 4.02(f), and shall have furnished a
certificate to the Administrative Agent showing in reasonable
detail the amount of such applications pursuant to the respective
such Sections, then each of the amounts set forth in the table
appearing in this Section 9.09(b) shall be reduced (i) by
$15,000,000 if the principal amount of Term Loans so repaid with
such Net Cash Proceeds from equity issuances is greater than
$50,000,000 but less than or equal to $75,000,000 or (ii) by
$20,000,000 if the aggregate principal amount of Term Loans so
repaid with such Net Cash Proceeds from equity issuances is
greater than $75,000,000.
9.10 Maximum Leverage Ratio. The Borrowers will not
permit the Leverage Ratio at any time on or after December 31,
1996 to be greater than the ratio set forth opposite the fiscal
quarter most recently ended as set forth below:
Fiscal Quarter
Ended Closest to Ratio
---------------- -----
December 31, 1996 5.00:1.0
March 31, 1997 5.00:1.0
June 30, 1997 4.75:1.0
September 30, 1997 4.75:1.0
December 31, 1997 4.50:1.0
March 31, 1998 4.50:1.0
June 30, 1998 4.25:1.0
September 30, 1998 4.25:1.0
December 31, 1998 4.00:1.0
March 31, 1999 4.00:1.0
June 30, 1999 4.00:1.0
September 30, 1999 4.00:1.0
December 31, 1999 3.75:1.0
March 31, 2000 3.75:1.0
June 30, 2000 3.50:1.0
September 30, 2000 3.25:1.0
December 31, 2000 3.25:1.0
March 31, 2001 3.25:1.0
June 30, 2001 3.25:1.0
September 30, 2001 3.25:1.0
December 31, 2001
and the last day of
each fiscal quarter
thereafter 3.00:1.0.
9.11 Limitation on Modifications of and Payments on
Indebtedness and Qualified Preferred Stock; Modifications of
Certificate of Incorporation, By-Laws and Certain Other
Agreements; Surviving Guaranty Payments, etc. (a) The Borrowers
will not, and will not permit any of their respective Restricted
Subsidiaries to, (i) make (or give any notice in respect of) any
voluntary or optional payment or prepayment on or redemption,
repurchase or acquisition for value of any of the Existing
Indebtedness, or after the incurrence thereof, any Permitted
Unsecured Indebtedness, Permitted Subordinated Indebtedness or
Disqualified Preferred Stock (any such payment, prepayment,
redemption or acquisition, a "Restricted Junior Payment"), if at
such time (x) a Default or Event of Default then exists or arises
therefrom and (y) such Restricted Junior Payment shall exceed an
amount equal to the sum of (A) the then Available Unrestricted
Proceeds Amount (after giving effect to all prior or
contemporaneous adjustments thereto, except as a result of such
Restricted Junior Payment) and (B) the then Available Net Income
Amount (after giving effect to all prior and contemporaneous
adjustments thereto, except as a result of such Restricted Junior
Payment), (ii) amend or modify, or permit the amendment or
modification of, any provision of the Existing Indebtedness or
the Receivables Documents or, after the incurrence or issuance
thereof, any Permitted Unsecured Indebtedness, Permitted
Subordinated Indebtedness, Qualified Preferred Stock or Dis-
qualified Preferred Stock or of any agreement (including, without
limitation, any purchase agreement, indenture, loan agreement,
security agreement or certificate of designation) relating
thereto, other than any amendments or modifications to the
Existing Indebtedness, the Receivables Documents, any Permitted
Unsecured Indebtedness, any Permitted Subordinated Indebtedness,
any Qualified Preferred Stock and any Disqualified Preferred
Stock which (A) do not make any term or condition thereof more
restrictive than the previously existing terms and conditions
with respect thereto, (B) do not in any way materially adversely
affect the interests of the Banks and (C) do not increase the
interest or dividend rates applicable thereunder, reduce the
maturity date thereunder or change any pay-in-kind mechanics or
requirements or any subordination provision thereof or (iii)
amend or modify its Certificate of Incorporation (including,
without limitation, by the filing or modification of any certifi-
cate of designation, other than any certificate of designation
relating to Qualified Preferred Stock or Disqualified Preferred
Stock) or By-Laws, or any agreement entered into by it, with
respect to its capital stock (including any Shareholders'
Agreement), or enter into any new agreement with respect to its
capital stock if the foregoing would in any way materially and
adversely affect the Banks, provided that (x) INTERCO may amend
its Certificate of Incorporation to reflect a change in corporate
name if INTERCO shall have complied with the requirements of
Section 8.04 hereof and (y) INTERCO or any of the other Borrowers
may amend its respective Certificate of Incorporation to reflect
an increase in the number of authorized shares of capital stock.
(b) INTERCO will not (i) amend, extend, renew or
modify, or permit the amendment, extension, renewal or
modification of, any provision of the Surviving Guaranties (or
any lease obligation guarantied thereby) or any agreement
relating thereto, other than any renewal or extension of a lease
obligation guarantied by any Surviving Guaranty pursuant to the
renewal and/or extension provisions contained therein as in
effect on the Effective Date which (a) creates a continuing
guaranty obligation with respect to such existing lease (without
any amendments thereto which would increase the lessee's
obligations thereunder), (b) is exercised (x) not more than 30
days prior to the last day on which such extension or renewal may
be exercised in accordance with the terms of the lease relating
thereto and (y) at a time when no Default or Event of Default
then exists or arises therefrom and (c) creates future fixed
payment obligations with respect thereto which, when combined
with all future fixed payment obligations under renewals and/or
extensions made in compliance with this Section 9.11(b)(i), would
not exceed $10,000,000 or (ii) make any payment whatsoever,
whether voluntary, mandatory or otherwise, in respect of the
Surviving Guaranties (any such payment, a "Guaranty Payment") if
at such time (x) a Default or Event of Default then exists or
arises therefrom or (y) such payment shall exceed an amount equal
to the sum of (A) $5,000,000 less the amount of all Guaranty
Payments theretofore made after the Restatement Effective Date
pursuant to this clause (A), plus (B) at any time, the aggregate
amount of Dividends which could be made pursuant to (1) Section
9.03(ii)(A), (2) Section 9.03(ii)(B) and (3) Section 9.03(ii)(C),
in each case at such time (without including the amount of such
Guaranty Payment contemplated to be included in the calculation
pursuant to Section 9.03(ii)(D) at such time), plus (C) the
amount of any such Guaranty Payment made with the cash proceeds
of issuances of equity by INTERCO permitted to be so used for
such purposes pursuant to clause (iv) of the first parenthetical
of Section 4.02(e).
(c) The Borrowers will not, and will not permit any of
their respective Restricted Subsidiaries to, amend, modify or
change any provision of any Tax Sharing Agreement other than any
amendment, modification or change deemed immaterial by the
Administrative Agent or as otherwise consented to by the Required
Banks, except only that without such consent INTERCO may amend
the provisions of Section 3(a) of the Tax Sharing Agreement dated
as of November 17, 1994 among INTERCO, Converse and Converse's
domestic Subsidiaries that are signatories thereto with respect
to the allocation of the benefit described in such Section 3(a)
as INTERCO's Board of Directors may deem appropriate.
9.12 Limitation on Creation or Acquisition of Sub-
sidiaries and Restricted Subsidiaries. The Borrowers will not,
and will not permit any of their respective Restricted
Subsidiaries to, establish, create or acquire after the Effective
Date any Subsidiary, unless (x) if such Subsidiary is an
Unrestricted Subsidiary (other than a Foreign Sales Corporation),
(i) it is established, created or acquired by INTERCO or another
Unrestricted Subsidiary, (ii) if owned by INTERCO, 100% of the
capital stock of such new Unrestricted Subsidiary owned by
INTERCO shall be pledged pursuant to the Pledge Agreement and the
certificates representing such stock, together with stock powers
duly executed in blank, shall be delivered to the Collateral
Agent and (iii) such Unrestricted Subsidiary shall, at the
request of the Administrative Agent, become a party to a Tax
Sharing Agreement, (y) if such Subsidiary is a Restricted Subsi-
diary (other than a Foreign Sales Corporation), (i) at least 10
Business Days' prior written notice thereof is given to the
Administrative Agent and the Banks, (ii) 100% of the capital
stock of such new Subsidiary is pledged pursuant to the Pledge
Agreement and the certificates representing such stock, together
with stock powers duly executed in blank, are delivered to the
Collateral Agent and (iii) such new Restricted Subsidiary exe-
cutes a counterpart of the Subsidiary Guaranty, the Security
Agreement and the Pledge Agreement or (z) if such Subsidiary is a
Foreign Sales Corporation, any Investment therein is made in
accordance with Section 9.05(xiii). In addition, each new
Restricted Subsidiary shall execute and deliver, or cause to be
executed and delivered, all other relevant documentation of the
type described in Section 5 as such new Restricted Subsidiary
would have had to deliver if such new Restricted Subsidiary were
a Restricted Subsidiary and/or a Subsidiary Guarantor on the
Restatement Effective Date.
9.13 Limitation on Issuance of Capital Stock. (a)
INTERCO shall not issue (i) any Preferred Stock (other than
Qualified Preferred Stock and Disqualified Preferred Stock issued
pursuant to clause (b) below, the proceeds of which are applied
as required pursuant to Section 4.02(e)) or (ii) any redeemable
common stock unless, in either case, all terms thereof are
satisfactory to the Required Banks in their sole discretion.
(b) INTERCO may issue Disqualified Preferred Stock not
to exceed in aggregate liquidation preference or amount (i)
$150,000,000 minus the aggregate principal amount of all
Permitted Subordinated Indebtedness issued pursuant to Section
9.04(ii)(x), plus (ii) $25,000,000 minus the aggregate principal
amount of all Permitted Unsecured Indebtedness issued pursuant to
Section 9.04(iii), plus (iii) any amount of Disqualified
Preferred Stock the proceeds of which are used to repay,
refinance or otherwise replace the Receivables Facility in
accordance with the terms hereof, on terms and conditions set
forth in the definition of Disqualified Preferred Stock and on
other terms and conditions reasonably satisfactory to the
Administrative Agent; provided that to the extent Disqualified
Preferred Stock is issued pursuant to preceding clauses (i)
and/or (ii) and (1) any portion of such Disqualified Preferred
Stock is being issued as consideration in connection with a
Permitted Acquisition or (2) 100% of the Net Cash Proceeds
therefrom are not immediately used to repay Term Loans pursuant
to Section 4.02(e), such issuance shall only be permitted if the
Administrative Agent has received a certificate from, and signed
by an Authorized Representative of, INTERCO showing that
immediately after the issuance of such Disqualified Preferred
Stock, the Senior Debt Leverage Ratio, calculated on a Pro Forma
Basis after giving effect to such issuance, shall not exceed
3.5:1.0. Notwithstanding anything to the contrary contained
above, all Disqualified Preferred Stock issued pursuant to
Section 9.13(b) shall be issued only where 100% of the
consideration received for the issuance of such Disqualified
Preferred Stock is cash, except that Disqualified Preferred Stock
may be issued in accordance with Section 9.13(b)(i) and (ii)
directly as consideration in connection with Permitted
Acquisitions; provided that to the extent Disqualified Preferred
Stock is issued pursuant to Section 9.13(b)(i) directly as
consideration in connection with a Permitted Acquisition, the
aggregate liquidation preference or amount of all Disqualified
Preferred Stock issued after the Restatement Effective Date
pursuant to said Section 9.13(b)(i) as consideration in
connection with Permitted Acquisitions, when added to the sum of
(x) the aggregate principal amount of all Permitted Subordinated
Indebtedness so issued after the Restatement Effective Date as
consideration in connection with Permitted Acquisitions pursuant
to Section 9.04(ii), (y) the aggregate principal amount of all
Permitted Subordinated Indebtedness issued or incurred after the
Restatement Effective Date but not issued as consideration in
connection with Permitted Acquisitions to the extent the Net Cash
Proceeds therefrom have not been required to be used to repay
Term Loans as a result of clause (w)(ii) of the parenthetical of
Section 4.02(g), and (z) the aggregate liquidation preference or
amount of all Disqualified Preferred Stock issued after the
Restatement Effective Date pursuant to Section 9.13(b)(i) but not
issued in consideration with Permitted Acquisitions, to the
extent the Net Cash Proceeds therefrom have not been required to
be used to repay Term Loans as a result of clause (v)(y) of the
first parenthetical of Section 4.02(e), shall not exceed
$50,000,000.
(c) No Restricted Subsidiary of INTERCO shall issue,
or permit any of their Restricted Subsidiaries to issue, any
capital stock (including by way of sales of treasury stock) or
any options or warrants to purchase, or securities convertible
into, capital stock, except (i) for transfers and replacements of
then outstanding shares of capital stock, (ii) for stock splits,
stock dividends and additional issuances which do not decrease
the percentage ownership of INTERCO or any of its Restricted
Subsidiaries in any class of the capital stock of such Restricted
Subsidiaries, (iii) to qualify directors to the extent required
by applicable law, and (iv) Restricted Subsidiaries formed after
the Effective Date pursuant to Section 9.12 may issue capital
stock to the Borrowers or the respective Restricted Subsidiary of
the Borrowers which is to own such stock in accordance with the
requirements of Section 9.12. All capital stock issued in
accordance with this Section 9.13(c) shall, to the extent
required by the Pledge Agreement, be delivered to the Collateral
Agent for pledge pursuant to the Pledge Agreement.
9.14 Business. The Borrowers will not, and will not
permit any of their Restricted Subsidiaries to, engage (directly
or indirectly) in any business other than substantially the same
lines of business in which they are engaged on the Restatement
Effective Date and reasonable extensions thereof. No Restricted
Subsidiary of INTERCO will, or will permit any of their
Restricted Subsidiaries to, create or own any Unrestricted
Subsidiaries. The Foreign Sales Corporation will not engage in
any business other than the sale of goods and/or services outside
of the United States and any business reasonably incidental to
the foregoing.
9.15 Limitation on Certain Restrictions on Sub-
sidiaries. (a) The Borrowers will not, and will not permit any
of their respective Restricted Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or
become effective, except as set forth on Schedule XIII, any
encumbrance or restriction on the ability of any such Restricted
Subsidiary to (x) pay dividends or make any other distributions
on its capital stock or any other interest or participation in
its profits owned by INTERCO or any Restricted Subsidiary of
INTERCO, or pay any Indebtedness owed to INTERCO or a Restricted
Subsidiary of INTERCO, (y) make loans or advances to INTERCO or
any of INTERCO's Restricted Subsidiaries or (z) transfer any of
its properties or assets to INTERCO, except for such encumbrances
or restrictions existing under or by reason of (i) applicable
law, (ii) this Agreement and the other Credit Documents, (iii)
customary provisions restricting subletting or assignment of any
lease governing a leasehold interest of the Borrowers or a Re-
stricted Subsidiary of the Borrowers, (iv) customary provisions
restricting assignment of any licensing agreement entered into by
the Borrowers or any Restricted Subsidiary of the Borrowers in
the ordinary course of business and (v) restrictions on the
Receivables Subsidiary set forth in the Receivables Documents.
(b) INTERCO will not permit any of its Unrestricted
Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any restriction
whatsoever on the operations of INTERCO and/or its Restricted
Subsidiaries.
9.16 Limitation on Receivables and Receivables
Facility. (a) The Receivables Subsidiary shall engage in no
business activities other than the purchase, acquisition, sale
and pledge of receivables (or interests therein) pursuant to the
Receivables Facility and borrowings thereunder and any business
activities reasonably incidental thereto, all in accordance with
the Receivables Facility, and shall have no assets or liabili-
ties, other than receivables purchased from each of the Borrowers
and their Restricted Subsidiaries, cash collections therefrom,
any investments of such cash collections and other assets and
liabilities reasonably incidental to the foregoing activities,
and shall in no event purchase any receivables from an
Unrestricted Subsidiary.
(b) INTERCO and its Restricted Subsidiaries shall not
cause, permit, or suffer to exist (including as a result of
actions taken by the Receivables Purchasers) (i) unless the
Receivables Facility has been terminated, refinanced or replaced
as otherwise permitted under the provisions of this Agreement,
the Receivables Subsidiary to cease selling receivables pursuant
to the Receivables Facility for a period in excess of five
consecutive Business Days (excluding any Business Day on which
(x) none of Broyhill, Lane, Thomasville or Action generate any
receivables or (y) no Swingline Loans and no Revolving Loans of
Non-Defaulting Banks are outstanding), (ii) the Receivables
Facility to be terminated on any date prior to the date which is
five years after the Restatement Effective Date except, in the
event the Receivables Facility is repaid, refinanced or otherwise
replaced in accordance with the terms hereof by Permitted
Subordinated Indebtedness and/or Disqualified Preferred Stock
and/or a replacement facility, (iii) an Event of Termination (as
defined in either Receivables Purchase Agreement) to have
occurred and be continuing and which shall not have been cured or
waived for a period in excess of five consecutive Business Days
or (iv) the sum of the Yield Reserve, the Loss Reserve, the
Service Fee Reserve and the Dilution Reserve (each as defined in
the Receivables Documents) to exceed 30% at any time.
SECTION 10. Events of Default. Upon the occurrence of
any of the following specified events (each an "Event of
Default"):
10.01 Payments. The Borrowers shall (i) default in
the payment when due of any principal of any Loan or any Note or
(ii) default, and such default shall continue unremedied for
three or more Business Days, in the payment when due of any
Unpaid Drawings or interest on any Loan or Note, or any Fees or
any other amounts owing hereunder or thereunder; or
10.02 Representations, etc. Any representation,
warranty or statement made by any Credit Party herein or in any
other Credit Document or in any certificate (including, without
limitation, the certificates delivered pursuant to Section 5.21
of the Original Credit Agreement) delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on the
date as of which made or deemed made; or
10.03 Covenants. The Borrowers shall (i) default in
the due performance or observance by it of any term, covenant or
agreement contained in Section 8.01(g)(i), 8.08, 8.11, 8.15, 8.16
or Section 9 or (ii) default in the due performance or observance
by it of any other term, covenant or agreement contained in this
Agreement and such default shall continue unremedied for a period
of 30 days after written notice to the Borrowers by the
Administrative Agent or any Bank; or
10.04 Default Under Other Agreements. The Borrowers
or any of their respective Restricted Subsidiaries shall (i)
default in any payment of any Indebtedness (other than the
Obligations) beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created
or (ii) default in the observance or performance of any agreement
or condition relating to any Indebtedness (other than the
Obligations) or contained in any instrument or agreement evidenc-
ing, securing or relating thereto, or any other event shall occur
or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such
Indebtedness (or a trustee or agent on behalf of such holder or
holders) to cause (determined without regard to whether any
notice is required), any such Indebtedness to become due prior to
its stated maturity, or (iii) any Indebtedness (other than the
Obligations) of the Borrowers or any of their respective
Restricted Subsidiaries shall be declared to be due and payable,
or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof,
provided that (x) it shall not be a Default or Event of Default
under this Section 10.04 unless the aggregate principal amount of
all Indebtedness as described in preceding clauses (i) through
(iii), inclusive, is at least $5,000,000; or
10.05 Bankruptcy, etc. The Borrowers or any of their
respective Subsidiaries shall commence a voluntary case
concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"); or an involuntary case
is commenced against the Borrowers or any of their respective
Subsidiaries and the petition is not controverted within 30 days,
or is not dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is
appointed for, or takes charge of, all or substantially all of
the property of the Borrowers or any of their respective Subsidi-
aries, or the Borrowers or any of their respective Subsidiaries
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrowers or
any of their respective Subsidiaries, or there is commenced
against the Borrowers or any of their respective Subsidiaries any
such proceeding which remains undismissed for a period of 60
days, or the Borrowers or any of their respective Subsidiaries is
adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or
the Borrowers or any of their respective Subsidiaries suffers any
appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged or
unstayed for a period of 60 days; or the Borrowers or any of
their respective Subsidiaries makes a general assignment for the
benefit of creditors; or any corporate action is taken by the
Borrowers or any of their respective Subsidiaries for the purpose
of effecting any of the foregoing; or
10.06 ERISA. (a) Any Plan, Multiemployer Plan,
and/or Spunoff Plan shall fail to satisfy the minimum funding
standard required for any plan year or part thereof or a waiver
of such standard or extension of any amortization period is
sought or granted under Section 412 of the Code, any Plan,
Multiemployer Plan and/or Spunoff Plan shall have had or is
likely to have a trustee appointed to administer such Plan,
Multiemployer Plan and/or Spunoff Plan pursuant to Section 4042
of ERISA, any Plan, Multiemployer Plan and/or Spunoff Plan shall
have been or is reasonably expected to be terminated or to be the
subject of termination proceedings under Section 4042 of ERISA,
any Plan, Multiemployer Plan and/or Spunoff Plan shall have an
Unfunded Current Liability, a contribution required to be made to
a Plan, Multiemployer Plan, Spunoff Plan and/or Foreign Pension
Plan has not been timely made, the Borrowers or any their
respective Restricted Subsidiaries or any ERISA Affiliate has
incurred or is reasonably expected to incur a liability to or on
account of a Plan, Multiemployer Plan and/or Spunoff Plan under
Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or 4980
of the Code, the Borrowers or any of their respective Restricted
Subsidiaries has incurred or is reasonably expected to incur
liabilities pursuant to one or more employee welfare benefit
plans (as defined in Section 3(1) of ERISA) which provide
benefits to retired employees or other former employees (other
than as required by Section 601 of ERISA) or employee pension
benefit plans (as defined in Section 3(2) of ERISA) or Foreign
Pension Plans, (b) there shall result from any such event or
events the imposition of a lien, the granting of a security
interest, or a liability or a material risk of incurring a
liability; (c) and in each case in clauses (a) and (b) above,
such lien, security interest or liability, individually, and/or
in the aggregate, in the opinion of the Required Banks, will have
a Material Adverse Effect; or
10.07 Security Documents. At any time after the
execution and delivery thereof, any of the Security Documents
shall cease to be in full force and effect, or shall cease in any
material respect to give the Collateral Agent for the benefit of
the Secured Creditors the Liens, rights, powers and privileges
purported to be created thereby (including, without limitation, a
perfected security interest in, and Lien on, all of the Collat-
eral), in favor of the Collateral Agent, superior to and prior to
the rights of all third Persons (except as permitted by Section
9.01), and subject to no other Liens (except as permitted by
Section 9.01), or any Credit Party shall default in the due per-
formance or observance of any term, covenant or agreement on its
part to be performed or observed pursuant to any of the Security
Documents and such default shall continue beyond any grace period
specifically applicable thereto pursuant to the terms of such
Security Document; or
10.08 Subsidiary Guaranty. The Subsidiary Guaranty or
any provision thereof shall cease to be in full force or effect
as to any Subsidiary Guarantor, or any Subsidiary Guarantor or
Person acting by or on behalf of such Subsidiary Guarantor shall
deny or disaffirm such Subsidiary Guarantor's obligations under
the Subsidiary Guaranty, or any Subsidiary Guarantor shall
default in the due performance or observance of any term,
covenant or agreement on its part to be performed or observed
pursuant to the Subsidiary Guaranty; or
10.09 Judgments. One or more judgments or decrees
shall be entered against the Borrowers or any of their respective
Restricted Subsidiaries involving in the aggregate for the Bor-
rowers and their respective Restricted Subsidiaries a liability
(not paid or fully covered by a reputable and solvent insurance
company) and such judgments and decrees either shall be final and
non-appealable or shall not be vacated, discharged or stayed or
bonded pending appeal for any period of 60 consecutive days, and
the aggregate amount of all such judgments exceeds $5,000,000; or
10.10 Change of Control. A Change of Control shall
occur; or
10.11 Tax Sharing Agreement. One or more parties to a
Tax Sharing Agreement (other than Borrowers or any of their
respective Restricted Subsidiaries) shall have defaulted in its
or their payment obligations (other than reimbursement
obligations in respect of payments made under the Surviving
Guaranties) in an aggregate amount equal to or greater than
$2,500,000 thereunder and such default or defaults shall remain
unremedied for a period in excess of ten consecutive Business
Days; or
10.12 Receivables Repurchases. The Borrowers and/or
their respective Restricted Subsidiaries shall have repurchased
accounts receivables (pursuant to indemnity provisions or
otherwise) from the Receivables Subsidiary and/or the Receivables
Purchasers in an aggregate amount exceeding $20,000,000 in any
Fiscal Year;
then, and in any such event, and at any time thereafter, if any
Event of Default shall then be continuing, the Administrative
Agent, upon the written request of the Required Banks, shall by
written notice to the Borrowers, take any or all of the following
actions, without prejudice to the rights of any Agent, any Bank
or the holder of any Note to enforce its claims against any
Credit Party (provided that, if an Event of Default specified in
Section 10.05 shall occur with respect to the Borrowers, the
result of which would occur upon the giving of written notice by
the Administrative Agent to the Borrowers as specified in clauses
(i) and (ii) below shall occur automatically without the giving
of any such notice): (i) declare the Total Commitment termin-
ated, whereupon all Commitments of each Bank shall forthwith
terminate immediately and any Commitment Commission and other
Fees shall forthwith become due and payable without any other
notice of any kind; (ii) declare the principal of and any accrued
interest in respect of all Loans and the Notes and all
Obligations owing hereunder and thereunder to be, whereupon the
same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by each Credit Party; (iii) terminate any Letter of
Credit which may be terminated in accordance with its terms; (iv)
direct the Borrowers to pay (and the Borrowers agree that upon
receipt of such notice, or upon the occurrence of an Event of
Default specified in Section 10.05 with respect to the Borrowers,
they will pay) to the Collateral Agent at the Payment Office such
additional amount of cash, to be held as security by the Collat-
eral Agent, as is equal to the aggregate Stated Amount of all
Letters of Credit issued for the account of the Borrowers and all
Acceptances then outstanding; (v) enforce, as Collateral Agent,
all of the Liens and security interests created pursuant to the
Security Documents; and (vi) apply any cash collateral held for
the benefit of the Banks pursuant to Section 4.02 to repay
outstanding Obligations.
SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"A Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is
the A Term Loan Commitment of such Bank at such time and the
denominator of which is the Total A Term Loan Commitment at such
time.
"A Term Loan" shall have the meaning provided in
Section 1.01(a).
"A Term Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly
below the column entitled "A Term Loan Commitment", as same may
be (x) reduced from time to time pursuant to Sections 3.03, 4.02
and/or 10 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Sections 1.13 and/or
13.04(b).
"A Term Loan Maturity Date" shall mean December 29,
2001.
"A Term Loan Scheduled Repayment" shall have the
meaning provided in Section 4.02(b).
"A Term Note" shall have the meaning provided in Sec-
tion 1.05(a).
"Acceptance" shall have the meaning provided in Section
2.01(a).
"Acceptance Facing Fee" shall having the meaning
provided in Section 3.01(c)(y).
"Acceptance Fee" shall have the meaning provided in
Section 3.01(b).
"Acquisition" shall have the meaning provided in
Section 5.16.
"Acquisition Documents" shall have the meaning provided
in Section 5.16.
"Action" shall mean Action Industries, Inc., a Virginia
corporation.
"Additional Collateral" shall mean all property
(whether real or personal) in which security interests are
granted (or have been purported to be granted) (and continue to
be in effect at the time of determination) pursuant to Section
8.11.
"Additional Mortgage" shall have the meaning provided
in Section 8.11(a).
"Additional Mortgaged Property" shall have the meaning
provided in Section 8.11(a).
"Additional Security Documents" shall mean all
mortgages, pledge agreements, security agreements and other
security documents entered into pursuant to Section 8.11 with
respect to Additional Collateral.
"Adjusted Certificate of Deposit Rate" shall mean, on
any day, the sum (rounded to the nearest 1/100 of 1%) of (1) the
rate obtained by dividing (x) the most recent weekly average
dealer offering rate for negotiable certificates of deposit with
a three-month maturity in the secondary market as published in
the most recent Federal Reserve System publication entitled
"Select Interest Rates," published weekly on Form H.15 as of the
date hereof, or if such publication or a substitute containing
the foregoing rate information shall not be published by the
Federal Reserve System for any week, the weekly average offering
rate determined by the Administrative Agent on the basis of
quotations for such certificates received by it from three
certificate of deposit dealers in New York of recognized standing
or, if such quotations are unavailable, then on the basis of
other sources reasonably selected by the Administrative Agent, by
(y) a percentage equal to 100% minus the stated maximum rate of
all reserve requirements as specified in Regulation D applicable
on such day to a three-month certificate of deposit of a member
bank of the Federal Reserve System in excess of $100,000 (in-
cluding, without limitation, any marginal, emergency, sup-
plemental, special or other reserves), plus (2) the then daily
net annual assessment rate as estimated by the Administrative
Agent for determining the current annual assessment payable by
the Administrative Agent to the Federal Deposit Insurance
Corporation for insuring three-month certificates of deposit.
"Adjusted Consolidated Working Capital" at any time
shall mean Consolidated Current Assets (but excluding therefrom
all cash and Cash Equivalents) less Consolidated Current
Liabilities.
"Adjusted Percentage" shall mean (x) at a time when no
Bank Default exists, for each Bank, such Bank's Percentage and
(y) at a time when a Bank Default exists (i) for each Bank that
is a Defaulting Bank, zero and (ii) for each Bank that is a Non-
Defaulting Bank, the percentage determined by dividing such
Bank's Revolving Loan Commitment at such time by the Adjusted
Total Revolving Loan Commitment at such time, it being understood
that all references herein to Revolving Loan Commitments and the
Adjusted Total Revolving Loan Commitment at a time when the Total
Revolving Loan Commitment or Adjusted Total Revolving Loan
Commitment, as the case may be, has been terminated shall be
references to the Revolving Loan Commitments or Adjusted Total
Revolving Loan Commitment, as the case may be, in effect
immediately prior to such termination, provided that (A) no
Bank's Adjusted Percentage shall change upon the occurrence of a
Bank Default from that in effect immediately prior to such Bank
Default, to the extent such change after giving effect to such
Bank Default, and any repayment of Revolving Loans and Swingline
Loans at such time pursuant to Section 4.02(a) or otherwise,
would cause the sum of (i) the aggregate outstanding principal
amount of Revolving Loans of all Non-Defaulting Banks plus (ii)
the aggregate outstanding principal amount of Swingline Loans
plus (iii) the Letter of Credit Outstandings, to exceed the
Adjusted Total Revolving Loan Commitment; (B) any changes to the
Adjusted Percentage that would have become effective upon the
occurrence of a Bank Default but that did not become effective as
a result of the preceding clause (A) shall become effective on
the first date after the occurrence of the relevant Bank Default
on which the sum of (i) the aggregate outstanding principal
amount of the Revolving Loans of all Non-Defaulting Banks plus
(ii) the aggregate outstanding principal amount of Swingline
Loans plus (iii) the Letter of Credit Outstandings is equal to or
less than the Adjusted Total Revolving Loan Commitment; and (C)
if (i) a Non-Defaulting Bank's Adjusted Percentage is changed
pursuant to the preceding clause (B) and (ii) any repayment of
such Bank's Revolving Loans, or of Unpaid Drawings with respect
to Letters of Credit or of Swingline Loans, that were made during
the period commencing after the date of the relevant Bank Default
and ending on the date of such change to its Adjusted Percentage
must be returned to the Borrowers as a preferential or similar
payment in any bankruptcy or similar proceeding of the Borrowers,
then the change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to that
positive change, if any, as would have been made to its Adjusted
Percentage if (x) such repayments had not been made and (y) the
maximum change to its Adjusted Percentage would have resulted in
the sum of the outstanding principal of Revolving Loans made by
such Bank plus such Bank's new Adjusted Percentage of the
outstanding principal amount of Swingline Loans and of Letter of
Credit Outstandings equalling such Bank's Revolving Loan
Commitment at such time.
"Adjusted Total Revolving Loan Commitment" shall mean
at any time the Total Revolving Loan Commitment less the
aggregate Revolving Loan Commitments of all Defaulting Banks.
"Administrative Agent" shall mean Bankers Trust
Company, in its capacity as Administrative Agent for the Banks
hereunder, and shall include any successor to the Administrative
Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any
other Person (including, for purposes of Section 9.06 only, all
directors, officers and partners of such Person) directly or in-
directly controlling, controlled by, or under direct or indirect
common control with, such Person; provided, however, that for
purposes of Section 9.06, an Affiliate of INTERCO shall include
any Person that directly or indirectly owns more than 5% of any
class of the capital stock of INTERCO and any officer or director
of INTERCO or any such Person. A Person shall be deemed to
control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the
management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.
"Agents" shall mean any of the Administrative Agent,
the Collateral Agent, the Documentation Agent and the Syndication
Agent.
"Agreement" shall mean this Credit Agreement, as
modified, supplemented, amended, restated, extended, renewed or
replaced from time to time.
"Alternate Receivables Purchase Agreement" shall mean
that Receivables Purchase Agreement, dated as of November 15,
1994, among the Receivables Subsidiary, as Seller, and Credit
Lyonnais, as Purchaser and Agent, as amended and restated as of
December 29, 1995, as same may be further amended, modified or
supplemented from time to time in compliance with Section 9.11,
or as replaced in compliance with the definition of Receivables
Facility.
"Apollo Group" shall mean Apollo Advisors, L.P., Lion
Advisors, L.P., Apollo Investment Fund, L.P. and Apollo Advisors
II, L.P., all Delaware limited partnerships.
"Apollo Management Agreement" shall mean the consulting
agreement, dated September 23, 1992, between Apollo Advisors,
L.P. and INTERCO.
"Applicable Margin" shall mean a percentage per annum
equal to (x) in the case of A Term Loans and Revolving Loans
which are maintained as (i) Base Rate Loans, 1.125% and (ii)
Eurodollar Loans, 2.125%, in each case of this clause (x) reduced
(but not below zero) by the then applicable Reduction Percentage,
if any, (y) in the case of B Term Loans which are maintained as
(i) Base Rate Loans, 1.625% and (ii) Eurodollar Loans, 2.625%,
(z) in the case of C Term Loans which are maintained as (i) Base
Rate Loans, 2.125% and (ii) Eurodollar Loans, 3.125%; provided
that, in the case of clause (x) above, after giving effect to any
reductions to the Applicable Margin due to the Reduction
Percentage, if a public offering of INTERCO Common Stock is
consummated within nine months after the Restatement Effective
Date and so long as prepayments of Term Loans have been made with
Net Cash Proceeds from sales or issuances of equity of INTERCO
(including, pursuant to any exercise of the INTERCO Warrants, any
exercise of stock options and the issuance of any INTERCO Common
Stock or Qualified Preferred Stock of INTERCO, but excluding Net
Cash Proceeds from any issuance of Disqualified Preferred Stock)
within nine months after the Restatement Effective Date pursuant
to Sections 4.01(a), 4.02(e) and/or 4.02(f) (but in each case,
only to the extent made with Net Cash Proceeds of equity
issuances as described above) in an aggregate amount of at least
$71 million, and so long as no Default or Event of Default
exists, the highest Applicable Margin for A Term Loans and
Revolving Loans shall thereafter be (i) in the case of Base Rate
Loans, 1.00% and (ii) in the case of Eurodollar Loans, 2.00% (it
being understood that the Reduction Percentage shall be deducted,
when appropriate, from the respective amounts contained in clause
(x) above and not the amounts contained in clauses (i) and (ii)
of this proviso).
"Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement substantially in the form of
Exhibit K (appropriately completed).
"Atlantic" shall mean Atlantic Asset Securitization
Corp., a Delaware corporation.
"Atlantic Receivables Purchase Agreement" shall mean
the Receivables Purchase Agreement, dated as of November 15,
1994, among the Receivables Subsidiary, Atlantic, as Purchaser,
and Credit Lyonnais, as Agent, as amended and restated as of
December 29, 1995 as same may be further amended, modified or
supplemented from time to time in compliance with Section 9.11,
or as replaced in compliance with the definition of Receivables
Facility.
"Attributed Receivables Facility Indebtedness" at any
time shall mean the sum of (i) the aggregate Invested Amount of
Receivables Interests (as defined in the Receivables Documents)
under the Receivables Purchase Agreements (it being the intent of
the parties that the amount of Attributed Receivables Facility
Indebtedness at any time outstanding approximate as closely as
possible the principal amount of indebtedness which would be
outstanding at such time under the Receivables Facility if same
were structured as a secured lending agreement rather than a
purchase agreement) plus (ii) the outstanding principal amount of
Indebtedness under the Subordinated Loan Agreement.
"Authorized Representative" shall mean, with respect to
(i) delivering Notices of Borrowing, Notices of Conversion,
Letter of Credit Requests and similar notices, any person or
persons that has or have been authorized by the respective boards
of the Borrowers to deliver such notices pursuant to this Agree-
ment and that has or have appropriate signature cards on file
with the Administrative Agent, BTCo and each Issuing Bank; (ii)
delivering financial information and officer's certificates
pursuant to this Agreement, any financial officer of INTERCO and
(iii) any other matter in connection with this Agreement or any
other Credit Document, any officer (or a person or persons so
designated by any two officers) of INTERCO.
"Available Debt Proceeds Amount" shall mean, on any
date of determination, an amount equal to zero, plus (i) all Net
Cash Proceeds received by the Borrowers after the Restatement
Effective Date from the issuance of Permitted Subordinated
Indebtedness pursuant to Section 9.04(ii)(x) and/or Permitted
Unsecured Indebtedness pursuant to Section 9.04(iii) retained by
any of the Borrowers on or prior to such date and not required to
be used to repay Term Loans on or prior to such date pursuant to
Section 4.02(g), minus (ii) any amounts used to effect Permitted
Acquisitions pursuant to clause (C) of the definition of
Available Permitted Acquisition Amount on or prior to such date;
provided that, at the time of the consummation of any Permitted
Acquisition, the Available Debt Proceeds Amount shall be
increased by the face amount of Permitted Acquired Debt (not
being issued in return for Net Cash Proceeds) being incurred
pursuant thereto and by the aggregate principal amount of
Permitted Subordinated Indebtedness and/or Permitted Unsecured
Indebtedness being directly issued as consideration in respect of
such Permitted Acquisition (so long as no Net Cash Proceeds are
received in connection therewith) (with the resultant increase in
the Available Permitted Acquisition Amount, as provided in clause
(C) of the definition thereof, for purposes of the consummation
of the respective Permitted Acquisition), which increase in the
Available Debt Proceeds Amount (and resultant increase in the
Available Permitted Acquisition Amount) shall be reduced to zero
immediately upon the consummation of the respective Permitted
Acquisition.
"Available Dividend Unrestricted Proceeds Amount" shall
mean, on any date of determination, the amount which would be
calculated as the Available Unrestricted Proceeds Amount in
accordance with the definition thereof contained in this
Agreement if the phrase "after the Restatement Effective Date" in
each place it appears in such definition were deleted and the
phrase "on or after the Dividend Threshold Date" were inserted in
lieu thereof; provided that, notwithstanding anything to the
contrary contained above or in the definition of Available
Unrestricted Proceeds Amount, if the Dividend Threshold Date
occurs on or before the Leverage Reduction Threshold Date, the
Net Cash Proceeds received by INTERCO on or after the Dividend
Threshold Date from issuances of equity by INTERCO (including
pursuant to any exercise of the INTERCO Warrants, any exercise of
stock options and the issuance of any INTERCO Common Stock or
Qualified Preferred Stock) which caused the Dividend Threshold
Date to occur shall be included in the Available Dividend
Unrestricted Proceeds Amount to the extent otherwise provided in
clause (i) of the definition of Available Unrestricted Proceeds
Amount as modified pursuant to this definition, except that any
portion of such Net Cash Proceeds which was required to be
applied on a pro forma basis to the reduction of Indebtedness to
establish the occurrence of the Dividend Threshold Date as
provided in the definition thereof contained herein shall not be
included for purposes of determining the Available Dividend
Unrestricted Proceeds Amount.
"Available Net Income Amount" shall mean on any date of
determination an amount equal to zero, plus or minus (i) an
amount equal to the Consolidated Cumulative Net Income Amount on
such date, minus (ii) any Dividend payments made by INTERCO
pursuant to Section 9.03(ii)(B) on or prior to such date, minus
(iii) any Investments made by the Borrowers or their Restricted
Subsidiaries pursuant to Section 9.05(vii)(C), minus (iv) any
Restricted Junior Payments made by INTERCO or its Restricted
Subsidiaries pursuant to Section 9.11(a)(i)(y)(B), minus (v) any
amount paid in connection with a Permitted Acquisition pursuant
to clause (D) of the definition of Available Permitted
Acquisition Amount, minus (vi) any Guaranty Payment made by
INTERCO pursuant to Section 9.11(b)(ii)(y)(B)(2) on or prior to
such date; provided that in any event, the amount of the
Available Net Income Amount shall never exceed the then Available
Retained Excess Cash Flow Amount (after giving effect to all
prior and contemporaneous reductions thereto).
"Available Permitted Acquisition Amount" shall mean, at
the time of determination thereof, an amount equal to the sum of
(A) the Available $10 Million Acquisition/Investment Basket
Amount on such date (after giving effect to all prior and
contemporaneous reductions thereto), plus (B) the Available Unre-
stricted Proceeds Amount on such date (after giving effect to all
prior and contemporaneous reductions thereto), plus (C) the
Available Debt Proceeds Amount on such date (after giving effect
to all prior and contemporaneous reductions thereto), plus (D)
the Available Net Income Amount on such date (after giving effect
to all prior and contemporaneous reductions thereto).
"Available Retained Excess Cash Flow Amount" shall be
on any date of determination an amount equal to zero, (i) plus or
minus an amount equal to the amount of Excess Cash Flow permitted
to be retained by the Borrowers after the Restatement Effective
Date and on or prior to such date with respect to any prior
Excess Cash Flow Payment Period (which shall be determined on a
cumulative basis, but including at the time of any determination
of the Available Retained Excess Cash Flow Amount, only those
Excess Cash Flow Payment Periods for which the respective Excess
Cash Flow Payment Date has occurred and any required repayment
pursuant to Section 4.02(i) has been made; provided, that, if
Excess Cash Flow is negative for any Excess Cash Flow Payment
Period, 100% of such negative amount shall be included in
determining the Borrowers' cumulative retained share of all
Excess Cash Flow and not required to be utilized to repay Term
Loans pursuant to Section 4.02(i)), minus (ii) all deductions to
the Available Net Income Amount made pursuant to clauses (ii),
(iii), (iv), (v) and (vi) of, and the first proviso to, the
definition thereof.
"Available Returned Investment Amount" shall mean on
any date of determination an amount equal to (i) the Returned
Investment Amount as calculated on such date, minus (ii) any
amounts used to make Investments pursuant to Section 9.05(vii)(D)
after the Restatement Effective Date and on or prior to such
date.
"Available $10 Million Acquisition/Investment Basket
Amount" shall mean on any date of determination an amount equal
to (i) $10,000,000, minus (ii) any amounts used to make
Investments pursuant to Section 9.05(vii)(A) after the
Restatement Effective Date and on or prior to such date, minus
(iii) any amounts used to make Permitted Acquisitions pursuant to
clause (A) of the definition of Available Permitted Acquisition
Amount after the Restatement Effective Date and on or prior to
such date.
"Available $10 Million Dividend Basket Amount" shall
mean on any date of determination an amount equal to (i)
$10,000,000, minus (ii) any amounts used to pay Dividends
pursuant to Section 9.03(ii)(A) after the Restatement Effective
Date and on or prior to such date.
"Available Unrestricted Proceeds Amount" shall mean, on
any date of determination, an amount equal to zero, plus (i) all
Net Cash Proceeds received by INTERCO from issuances of equity by
INTERCO (including pursuant to any exercise of the INTERCO
Warrants, any exercise of stock options and the issuance of any
Qualified Preferred Stock or Disqualified Preferred Stock of
INTERCO) after the Restatement Effective Date and on or prior to
such date, and not (x) used to repay Term Loans pursuant to the
second proviso to clause (iv) of Section 4.01(a) (or otherwise
pursuant to Section 4.01 if such repayment is included in any
certification delivered pursuant to the proviso to Section
9.09(b)) or pursuant to Section 4.02(e) and/or Section 4.02(f),
or (y) excluded from the requirements of Section 4.02(e) by
virtue of clauses (iv) and/or (v)(x) of the first parenthetical
to Section 4.02(e)) minus (ii) any amounts used to effect
Permitted Acquisitions pursuant to clause (B) of the definition
of Available Permitted Acquisition Amount after the Restatement
Effective Date and on or prior to such date, minus (iii) any
Dividend payments made by INTERCO pursuant to Section 9.03(ii)(C)
after the Restatement Effective Date and on or prior to such
date, minus (iv) any Investments by the Borrowers or their
Restricted Subsidiaries pursuant to Section 9.05(vii)(B) after
the Restatement Effective Date and on or prior to such date,
minus (v) any Restricted Junior Payments made by INTERCO or its
Restricted Subsidiaries after the Restatement Effective Date and
on or prior to such date pursuant to Section 9.11(a)(i)(y)(A),
minus (vii) Guaranty Payments made by the Borrowers or their
Restricted Subsidiaries after the Restatement Effective Date and
on or prior to such date pursuant to Section
9.11(b)(ii)(y)(B)(3); provided that, at the time of the
consummation of any Permitted Acquisition, the Available
Unrestricted Proceeds Amount shall be increased by the aggregate
liquidation preference or amount of Disqualified Preferred Stock
being directly issued as consideration in connection with such
Permitted Acquisition (where no Net Cash Proceeds are received in
connection therewith) (with the resultant increase in the
Available Permitted Acquisition Amount, as provided in clause (B)
of the definition thereof, for purposes of a consummation of the
respective Permitted Acquisition), which increase in the
Available Unrestricted Proceeds Amount (and resultant increase in
the Available Permitted Acquisition Amount) shall be reduced to
zero immediately upon the consummation of the respective
Permitted Acquisition.
"B Term Loan" shall have the meaning provided in
Section 1.01(b).
"B Term Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly
below the column entitled "B Term Loan Commitment," as same may
be (x) reduced from time to time pursuant to Sections 3.03, 4.02
and/or 10 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Sections 1.13 and/or
13.04(b).
"B Term Loan Maturity Date" shall mean March 29, 2003.
"B Term Loan Scheduled Repayment" shall have the
meaning provided in Section 4.02(c).
"B Term Note" shall have the meaning provided in
Section 1.05(a).
"Bank" shall mean each financial institution listed on
Schedule I, as well as any Person which becomes a "Bank"
hereunder pursuant to 13.04(b).
"Bank Default" shall mean (i) the refusal (which has
not been retracted) of a Bank, in violation of this Agreement, to
make available its portion of any Borrowing (including any
Mandatory Borrowing) or to fund its portion of any unreimbursed
payment under Section 2.03(c) or (ii) a Bank having notified in
writing the Borrowers and/or the Administrative Agent that it
does not intend to comply with its obligations under Section
1.01(f) or Section 2 in the case of either clause (i) or (ii), as
a result of any takeover of such bank by any regulatory authority
or agency.
"Bankruptcy Code" shall have the meaning provided in
Section 10.05.
"Base Case Consolidated Cumulative Net Income Amount"
shall mean, at any date, the amount shown on Schedule XVI
corresponding to the fiscal quarter most recently ended or, if
the Leverage Reduction Threshold Date has theretofore occurred,
corresponding to the Leverage Reduction Fiscal Quarter.
"Base Rate" at any time shall mean the higher of (i)
1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate
and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline Loan and
(ii) each Loan designated or deemed designated as such by the
Borrowers at the time of the incurrence thereof or conversion
thereto.
"Borrowers" shall have the meaning provided in the
first paragraph of this Agreement.
"Borrowing" shall mean the borrowing of one Type of
Loan of a single Tranche from all the Banks having Commitments of
the respective Tranche (or from BTCo in the case of Swingline
Loans) on a given date (or resulting from a conversion or
conversions on such date) having in the case of Eurodollar Loans
the same Interest Period, provided that Base Rate Loans incurred
pursuant to Section 1.10(b) shall be considered part of the re-
lated Borrowing of Eurodollar Loans.
"Broyhill" shall have the meaning provided in the first
paragraph of this Agreement.
"BTCo" shall mean Bankers Trust Company in its
individual capacity.
"Business Day" shall mean (i) for all purposes other
than as covered by clause (ii) below, any day except Saturday,
Sunday and any day which shall be in New York City a legal
holiday or a day on which banking institutions are authorized or
required by law or other government action to close and (ii) with
respect to all notices and determinations in connection with, and
payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (i) above and which
is also a day for trading by and between banks in the New York
interbank Eurodollar market.
"C Term Loan" shall have the meaning provided in
Section 1.01(c).
"C Term Loan Commitment" shall mean, for each Bank, the
amount set forth opposite such Bank's name in Schedule I directly
below the column entitled "C Term Loan Commitment," as same may
be (x) reduced from time to time pursuant to Sections 3.03, 4.02
and/or 10 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Sections 1.13 and/or
13.04(b).
"C Term Loan Maturity Date" shall mean March 29, 2004.
"C Term Loan Scheduled Repayment" shall have the
meaning provided in Section 4.02(d).
"C Term Note" shall have the meaning provided in
Section 1.05(a).
"Capital Expenditures" shall mean, with respect to any
Person, all expenditures by such Person which should be
capitalized in accordance with generally accepted accounting
principles, including all such expenditures with respect to fixed
or capital assets (including, without limitation, expenditures
for maintenance and repairs which should be capitalized in
accordance with generally accepted accounting principles) and the
amount of Capitalized Lease Obligations incurred by such Person.
"Capitalized Lease Obligations" of any Person shall
mean all rental obligations which, under generally accepted
accounting principles, are or will be required to be capitalized
on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with such
principles.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by
the United States or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than
one year from the date of acquisition, (ii) time deposits and
certificates of deposit of any commercial bank having, or which
is the principal banking subsidiary of a bank holding company
organized under the laws of the United States, any State thereof,
the District of Columbia or any foreign jurisdiction having
capital, surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year from the
date of acquisition by such Person, (iii) repurchase obligations
with a term of not more than 90 days for underlying securities of
the types described in clause (i) above entered into with any
bank meeting the qualifications specified in clause (ii) above,
(iv) commercial paper issued by any Person incorporated in the
United States rated at least A-1 or the equivalent thereof by
Standard & Poor's Corporation or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case
maturing not more than one year after the date of acquisition by
such Person, (v) investments in money market funds substantially
all of whose assets are comprised of securities of the types
described in clauses (i) through (iv) above and (vi) demand
deposit accounts maintained in the ordinary course of business
not in excess of $100,000 in the aggregate.
"Cash Management System" shall mean the "Cash
Management System" as defined in the Original Credit Agreement.
"CERCLA" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as the same
may be amended from time to time, 42 U.S.C. Section 9601 et seq.
"Change of Control" shall mean (i) INTERCO shall at any
time cease to own 100% of the capital stock of any of Broyhill,
Lane or Thomasville, (ii) the board of directors of INTERCO shall
cease to consist of a majority of Continuing Directors and (iii)
any Person, entity or "group" (as such term is defined in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended)
(other than the Apollo Group or a Controlled Account) is or
becomes the beneficial owner of an amount of outstanding Voting
Stock of INTERCO in excess of 25%, and the Apollo Group and/or
one or more Controlled Accounts own less than such Person, entity
or group (as defined above), of the total amount of fully diluted
shares of outstanding Voting Stock of INTERCO.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and
the rulings issued thereunder. Section references to the Code
are to the Code, as in effect at the date of this Agreement, and
to any subsequent provision of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all property (whether real or
personal) with respect to which any security interests have been
granted (or purported to be granted) pursuant to any Security
Document, including, without limitation, all Pledge Agreement
Collateral (which shall include all capital stock of, and
promissory notes issued by, the Receivables Subsidiary, to the
extent held by any Credit Party), all Security Agreement Collat-
eral (which shall exclude all assets of the Receivables
Subsidiary), all Mortgaged Properties, all cash and Cash Equiva-
lents delivered as collateral pursuant to Section 4.02 or 10
hereof and all Additional Collateral, if any.
"Collateral Agent" shall mean the Administrative Agent
acting as collateral agent for the Secured Creditors pursuant to
the Security Documents.
"Collective Bargaining Agreements" shall have the
meaning provided in Section 5.05.
"Commitment" shall mean any of the commitments of any
Bank, i.e., whether the A Term Loan Commitment, B Term Loan
Commitment, C Term Loan Commitment or Revolving Loan Commitment.
"Commitment Commission" shall have the meaning provided
in Section 3.01(a).
"Concentration Account" shall have the meaning provided
in the Security Agreement.
"Consolidated Cumulative Excess Net Income Amount"
shall mean, on any date, an amount determined on a cumulative
basis equal to (i) the sum of 100% of Consolidated Net Income for
all Consolidated Cumulative Net Income Periods ended prior to
such date of determination or, if the Leverage Reduction
Threshold Date has theretofore occurred, for all Consolidated
Cumulative Excess Net Income Periods ending on or prior to the
last day of the Leverage Reduction Fiscal Quarter, minus (ii)
100% of the Base Case Consolidated Cumulative Net Income Amount
as same is listed on Schedule XVI for the last fiscal quarter
included in the determination pursuant to preceding clause (i).
"Consolidated Cumulative Net Income Amount" shall mean,
at any date (A) if the Leverage Reduction Threshold Date has not
theretofore occurred, the Consolidated Cumulative Excess Net
Income Amount as determined on such date or (B) if the Leverage
Reduction Threshold Date has theretofore occurred, the sum of (x)
the Consolidated Cumulative Excess Net Income Amount as
determined on the Leverage Reduction Threshold Date plus (y) the
Consolidated Cumulative 25% Net Income Amount as determined on
the date on which the Consolidated Cumulative Net Income Amount
is being determined.
"Consolidated Cumulative Net Income Period" shall mean
each period consisting of a fiscal quarter of INTERCO ending
after January 1, 1996 and for which the related financial
statements required to be delivered pursuant to Section 8.01(b)
or (c), as the case may be, have theretofore been delivered.
"Consolidated Cumulative 25% Net Income Amount" shall
mean, at any date an amount determined on a cumulative basis
equal to (i) the sum of 25% of Consolidated Net Income for all
Consolidated Cumulative Net Income Periods ending after the last
day of the Leverage Reduction Fiscal Quarter and prior to such
date of determination for which Consolidated Net Income was a
positive number, minus (ii) 100% of Consolidated Net Income for
all Consolidated Cumulative Net Income Periods ending after the
last day of the Leverage Reduction Fiscal Quarter and prior to
such date of determination for which Consolidated Net Income was
a negative number.
"Consolidated Current Assets" shall mean, at any time,
the current assets of INTERCO and its Restricted Subsidiaries
determined on a consolidated basis.
"Consolidated Current Liabilities" shall mean, at any
time, the current liabilities of INTERCO and its Restricted Sub-
sidiaries determined on a consolidated basis at such time, but
excluding (i) the current portion of any Indebtedness under this
Agreement, any Attributed Receivables Facility Indebtedness of
the Receivables Subsidiary and any other long-term Indebtedness
which would otherwise be included therein, (ii) accrued but
unpaid interest with respect to the Indebtedness described in
clause (i) and with respect to Capitalized Lease Obligations,
(iii) the current portion of Indebtedness constituting Capital-
ized Lease Obligations and (iv) any current portion of tax
liabilities of such Persons.
"Consolidated Debt" shall mean all Indebtedness of
INTERCO and its Restricted Subsidiaries (including, without
limitation, the amount of Attributed Receivables Facility
Indebtedness) determined on a combined basis with respect to
borrowed money or other obligations of such Persons which would
appear on the balance sheet of such Persons as indebtedness
(including unreimbursed drawings under Letters of Credit and
unreimbursed payments under Acceptances, but excluding
Consolidated Current Liabilities and deferred tax and pension
liabilities) provided that for any date of determination, the
amount of Revolving Loans and Swingline Loans included in the
foregoing calculation shall be the daily average utilization of
Revolving Loans and Swingline Loans for the period of (A) three
months, if such calculation is made within the first three months
following the Restatement Effective Date, (B) six months, if such
calculation is made within the first six months following the
Restatement Effective Date, (C) nine months, if such calculation
is made within the first nine months following the Restatement
Effective Date and (D) twelve months thereafter, in each case,
prior to such calculation, plus (i) all Contingent Obligations of
such Persons incurred after the Restatement Effective Date
(excluding obligations resulting from extensions or renewals of
the leases guaranteed by the Surviving Guarantees made in
compliance with this Agreement), plus (ii) all Contingent Obliga-
tions with respect to any Surviving Guaranty on and after the
date on which INTERCO made any payment in respect of such Surviv-
ing Guaranty, plus (iii) an amount equal to the greater of the
liquidation preference and the maximum fixed repurchase price
(excluding accrued Dividends) of any outstanding Disqualified
Preferred Stock, minus (iv) (x) if on the date of determination
of Consolidated Debt any amount of Revolving Loans or Swingline
Loans is then outstanding, the cash in excess of $10,000,000 as
shown on the consolidated balance sheet of INTERCO and its
Restricted Subsidiaries as of the date of determination, provided
that not more than $10,000,000 shall be deducted pursuant to this
subclause (x) on any date of determination of Consolidated Debt
or (y) if on the date of determination no Revolving Loans or
Swingline Loans are then outstanding, the amount of cash as shown
on the consolidated balance sheet of INTERCO and its Restricted
Subsidiaries as of the date of determination of Consolidated
Debt.
"Consolidated EBIT" shall mean, for any period, the
Consolidated Net Income of INTERCO and its Restricted Subsidi-
aries, determined on a consolidated basis, before Consolidated
Net Interest Expense (to the extent deducted in arriving at
Consolidated Net Income) and provision for taxes or gains or
losses from sales of assets other than inventory sold in the
ordinary course of business, in each case that were included in
arriving at Consolidated Net Income.
"Consolidated EBITDA" shall mean, for any period,
Consolidated EBIT, adjusted by adding thereto the amount of all
amortization of intangibles and depreciation, in each case that
were deducted in arriving at Consolidated EBIT for such period.
"Consolidated Net Income" shall mean, for any period,
the net after tax income of INTERCO and its Restricted
Subsidiaries determined on a consolidated basis, minus cash
Dividends paid in respect of Disqualified Preferred Stock,
without giving effect to any extraordinary gains or losses.
"Consolidated Net Interest Coverage Ratio" for any
period shall mean the ratio of Consolidated EBITDA to Consoli-
dated Net Interest Expense for such period.
"Consolidated Net Interest Expense" shall mean, for any
period, the total consolidated interest expense of INTERCO and
its Restricted Subsidiaries for such period (calculated without
regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capitalized Lease Obligations of
INTERCO and its Restricted Subsidiaries representing the interest
factor for such period, and capitalized interest expense, plus,
(i) all cash fees, service charges and other costs, as well as
all collections or other amounts retained by the Receivables
Purchasers which are in excess of amounts paid to INTERCO and its
Restricted Subsidiaries under the Receivables Facility by it for
the purchase of receivables pursuant to the Receivables Facility
and (ii) the product of (x) the amount of all cash Dividend
requirements (whether or not declared or paid) on Disqualified
Preferred Stock paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which
is one and the denominator of which is one minus the then current
effective consolidated Federal, state, local and foreign tax rate
(expressed as a decimal number between one and zero) of INTERCO
as reflected in the audited consolidated financial statements of
INTERCO for its most recently completed Fiscal Year, which
amounts described in the preceding clauses (i) and (ii) shall be
treated as interest expense of INTERCO and its Restricted
Subsidiaries for purposes of this definition regardless of the
treatment of such amounts under generally accepted accounting
principles, in each case net of the total consolidated cash
interest income of INTERCO and its Restricted Subsidiaries for
such period, but excluding the amortization of any deferred
financing costs and all amounts in respect of the Interest Rate
Protection Agreements, all determined on a consolidated basis.
"Consolidated Senior Debt" at any time shall mean
Consolidated Debt on such date, adjusted by excluding therefrom
the amount of Permitted Subordinated Indebtedness and
Disqualified Preferred Stock reflected in Consolidated Debt on
such date.
"Contingent Obligation" shall mean, as to any Person,
any obligation of such Person guaranteeing or intended to
guarantee any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obli-
gation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (x) for the purchase or
payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii)
to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of
the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless
the holder of such primary obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation
shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made (or, if less,
the maximum amount of such primary obligation for which such
Person may be liable pursuant to the terms of the instrument
evidencing such Contingent Obligation) 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.<PAGE>
"Continuing Bank" shall mean each Original Bank with a
Commitment under this Agreement (immediately upon giving effect
to the Restatement Effective Date).
"Continuing Directors" shall mean the Directors of
INTERCO on the Restatement Effective Date and each other Director
if such Director's nomination for election to the Board of
Directors of INTERCO is recommended by a majority of the then
Continuing Directors.
"Controlled Account" shall mean any account managed by
the Apollo Group for so long as the Apollo Group exercises sole
power of disposition and voting with respect thereto.
"Converse" shall mean Converse Inc., a Delaware
corporation.
"Converse Disposition" shall mean the "Converse
Disposition" as such term is defined in the Original Credit
Agreement.
"Credit Documents" shall mean this Agreement and, after
the execution and delivery thereof pursuant to the terms of this
Agreement, each Note, each Security Document and the Subsidiary
Guaranty and, after the execution and delivery thereof, each
additional guaranty or security document executed pursuant to
Section 8.11.
"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit.
"Credit Lyonnais" shall have the meaning provided in
the preamble hereto.
"Credit Party" shall mean the Borrowers and each
Subsidiary Guarantor.
"Cumulative Consolidated EBITDA" shall have the meaning
provided in Section 9.09(b).
"Currency Hedging Agreements" shall mean any foreign
exchange contracts, currency swap agreements or other similar
agreements or arrangements designed to protect against the
fluctuations in currency values.
"Default" shall mean any event, act or condition which
with notice or lapse of time, or both, would constitute an Event
of Default.
"Defaulting Bank" shall mean any Bank with respect to
which a Bank Default is in effect.
"Disqualified Preferred Stock" means any Preferred
Stock of INTERCO which would be Qualified Preferred Stock except
that regular accruing dividends thereon are required to be paid
in cash, and so long as, (i) based on calculations made by
INTERCO on a Pro Forma Basis after giving effect to the issuance
of such Disqualified Preferred Stock, no Default or Event of
Default will exist under, or would have existed under the periods
covered by, the financial covenants contained in Sections 9.08
through 9.10, inclusive, of this Agreement, (ii) based on good
faith projections prepared by INTERCO for the period from the
date of the issuance of such Disqualified Preferred Stock to the
date which is one year thereafter, the level of financial per-
formance measured by the covenants set forth in Sections 9.08
through 9.10 inclusive shall be better than or equal to such
level as would be required to provide that no Default or Event of
Default would exist under the financial covenants contained in
Sections 9.08 through 9.10, inclusive, of this Agreement as com-
pliance with such covenants would be required through the date
which is one year from the date of the issuance of such
Disqualified Preferred Stock, (iii) INTERCO shall furnish to the
Administrative Agent for distribution to each of the Banks an
officer's certificate by the chief financial officer or treasurer
of INTERCO certifying to the best of his knowledge as to compli-
ance with the requirements of the preceding clauses (i) and (ii)
and containing the pro forma calculations and projections
required by the preceding clauses (i) and (ii), and (iv) such
Disqualified Preferred Stock shall not contain any provision in
the documents governing or evidencing the same which, in the opi-
nion of the Administrative Agent, are more restrictive than the
provisions in the Credit Documents.
"Dividend" with respect to any Person shall mean that
such Person has declared or paid a dividend or returned any
equity capital to its stockholders or authorized or made any
other distribution, payment or delivery of property (other than
common stock of such Person or Qualified Preferred Stock of
INTERCO paid as a pay-in-kind Dividend on any Qualified Preferred
Stock of INTERCO) or cash to its stockholders as such, or
redeemed, retired, purchased or otherwise acquired, directly or
indirectly, for a consideration any shares of any class of its
capital stock outstanding on or after the Effective Date (or any
options or warrants issued by such Person with respect to its
capital stock), or set aside any funds for any of the foregoing
purposes, or shall have permitted any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of
any class of the capital stock of such Person outstanding on or
after the Effective Date (or any options or warrants issued by
such Person with respect to its capital stock). Without limiting
the foregoing, "Dividends" with respect to any Person shall also
include all payments made or required to be made during any
period by such Person with respect to any stock appreciation
rights, plans, equity incentive or achievement plans or any
similar plans or setting aside of any funds for the foregoing
purposes, except to the extent such payments have reduced
Consolidated EBITDA during the respective period.
"Dividend Threshold Date" shall mean the Leverage
Reduction Threshold Date; provided that if INTERCO establishes to
the reasonable satisfaction of the Administrative Agent, by
delivering a certificate of an Authorized Officer showing in
reasonable detail the necessary calculations to substantiate
same, that an issuance of equity by INTERCO (including pursuant
to any exercise of the INTERCO Warrants, any exercise of stock
options and the issuance of any INTERCO Common Stock or Qualified
Preferred Stock) and the concurrent application of the proceeds
thereof to any outstanding Indebtedness would cause a reduction
to Consolidated Debt in such amount so that the Leverage Ratio as
determined on the last day of the fiscal quarter last ended on or
prior to the date of the respective equity issuance, after giving
effect to the pro forma application of the proceeds of such
equity issuance to the repayment of Indebtedness, would have been
less than or equal to 3.5:1.0 if such application to outstanding
Indebtedness had been made as of the last day of such fiscal
quarter, then the Dividend Threshold Date shall instead occur on
the date of such equity issuance and concurrent application of
the proceeds to repay such Indebtedness.
"Documentation Agent" shall mean Credit Lyonnais, in
its capacity as Documentation Agent for the Banks hereunder.
"Documents" shall mean the Credit Documents, the
Receivables Documents and the Acquisition Documents.
"Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States.
"Domestic Subsidiary" with respect to any Person shall
mean a Subsidiary thereof other than a Foreign Subsidiary
thereof.
"Domestic Wholly-Owned Subsidiary" of any Person shall
mean each Wholly-Owned Subsidiary of such Person which is also a
Domestic Subsidiary.
"Drawing" shall have the meaning provided in Section
2.05(b).
"Effective Date" shall mean the Effective Date of, and
is defined in, the Original Credit Agreement.
"Eligible Transferee" shall mean and include a com-
mercial bank, mutual fund, financial institution or other
"accredited investor" (as defined in Regulation D of the
Securities Act).
"Employee Stock Option Plan" shall mean the INTERCO
Incorporated 1992 Stock Option Plan.
"Environmental Claims" means any and all adminis-
trative, regulatory or judicial actions, suits, demands, demand
letters, directives, claims, liens, notices of noncompliance or
violation, investigations or proceedings relating in any way to
any Environmental Law or any permit issued, or any approval
given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law, and (b) any and all Claims
by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief
in connection with alleged injury or threat of injury to health,
safety or the environment due to the presence of Hazardous
Materials.
"Environmental Law" means any applicable Federal,
state, foreign or local statute, law, rule, regulation,
ordinance, code, binding and enforceable guideline, binding and
enforceable written policy and rule of common law now or
hereafter in effect and in each case as amended, and any judicial
or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, to the
extent binding on the Borrowers or any of their respective
Subsidiaries, relating to the environment, employee health and
safety or Hazardous Materials, including, without limitation,
CERCLA; RCRA; the Federal Water Pollution Control Act, 33 U.S.C.
Section 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq.; the Clean Air Act, 42 U.S.C. Section 7401
et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 3803 et
seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701
et seq.; the Emergency Planning and the Community Right-to-Know
Act of 1986, 42 U.S.C. Section 11001 et seq., the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 et seq. and
the Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq. (to the extent it regulates occupational exposure to
Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from
time to time.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder. Section
references to ERISA are to ERISA, as in effect at the date of
this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in
Section 3(9) of ERISA) which together with the Borrowers or any
Subsidiary of the Borrowers would be deemed to be a "single
employer" (i) within the meaning of Section 414(b), (c), (m) or
(o) of the Code or (ii) as a result of the Borrowers or any
Subsidiary of the Borrowers being or having been a general
partner of such person.
"Eurodollar Loan" shall mean each Loan (excluding
Swingline Loans) designated as such by the Borrowers at the time
of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation
to first-class banks in the New York interbank Eurodollar market
by BTCo for Dollar deposits of amounts in immediately available
funds comparable to the outstanding principal amount of the
Eurodollar Loan of BTCo with maturities comparable to the
Interest Period applicable to such Eurodollar Loan commencing two
Business Days thereafter as of 10:00 A.M. (New York time) on the
date which is two Business Days prior to the commencement of such
Interest Period, divided (and rounded off to the nearest 1/16 of
1%) by (b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including, without
limitation, any marginal, emergency, supplemental, special or
other reserves required by applicable law) applicable to any
member bank of the Federal Reserve System in respect of
Eurocurrency funding or liabilities as defined in Regulation D
(or any successor category of liabilities under Regulation D).
"Event of Default" shall have the meaning provided in
Section 10.
"Excess Cash Flow" shall mean, for any period, the
remainder of (a) the sum of (i) Consolidated Net Income for such
period plus, without duplication, the sum of the amount of all
net non-cash charges (including, without limitation,
depreciation, amortization, deferred tax expense and non-cash
interest expense, but excluding any net non-cash charges
reflected in Adjusted Consolidated Working Capital) and net non-
cash losses which were included in arriving at Consolidated Net
Income for such period less the sum of the amount of all net non-
cash income or gains (exclusive of items reflected in Adjusted
Consolidated Working Capital) included in arriving at
Consolidated Net Income for such period, (ii) the decrease, if
any, in Adjusted Consolidated Working Capital from the first day
to the last day of such period and (iii) any net increases (or
minus any net decreases) in items classified as "Other Liabili-
ties" (excluding long term Indebtedness) during such period as
shown on the consolidated balance sheet of INTERCO and its
Restricted Subsidiaries covering such period, minus (b) the sum
of (i) the amount of Capital Expenditures made by the Borrowers
and its Restricted Subsidiaries on a consolidated basis during
such period pursuant to and in accordance with Section 9.07(a)
and (b) except to the extent financed with the proceeds of
Indebtedness or pursuant to Capitalized Lease Obligations, (ii)
the aggregate amount of permanent principal payments of Indebt-
edness for borrowed money of the Borrowers and their Restricted
Subsidiaries and the permanent repayment of the principal com-
ponent of Capitalized Lease Obligations of the Borrowers and its
Subsidiaries (excluding (1) payments with proceeds of asset
sales, (2) payments pursuant to the Refinancing or with the
proceeds of other Indebtedness or equity and (3) payments of
Loans or other Obligations, provided that repayments of Loans
shall be deducted in determining Excess Cash Flow if such repay-
ments were (x) required as a result of a Scheduled Repayment of A
Term Loans, B Term Loans or C Term Loans under Section 4.02(b),
(c) or (d), respectively or (y) made as a voluntary prepayment
pursuant to Section 4.01 with internally generated funds (but in
the case of a voluntary prepayment of Revolving Loans, only to
the extent accompanied by a voluntary reduction to the Total
Revolving Loan Commitment)) during such period, (iii) the
increase, if any, in Adjusted Consolidated Working Capital from
the first day to the last day of such period and (iv) any net
increases (or minus any net decreases) in items classified as
"Other Assets" (excluding (i) any goodwill created in connection
with a Permitted Acquisition and (ii) debt issuance costs created
in connection with any incurrence of Indebtedness permitted
hereunder to the extent paid with the proceeds thereof) during
such period as shown on the consolidated balance sheet of INTERCO
and its Restricted Subsidiaries covering such period.
"Excess Cash Flow Payment Date" shall mean (i) with
respect to any Excess Cash Flow Payment Period less than a full
Fiscal Year selected by INTERCO pursuant to the proviso to the
definition thereof, the date occurring 45 days (or such shorter
number of days as may be elected by INTERCO) after the last day
of such Excess Cash Flow Payment Period, and otherwise (ii) the
date occurring 95 days (or such shorter period as may be elected
by INTERCO) after the last day of each Fiscal Year (beginning
with the Fiscal Year ended closest to December 31, 1996).
"Excess Cash Flow Payment Period" shall mean (i) with
respect to the repayment required on the first Excess Cash Flow
Payment Date, the period beginning on January 1, 1996 and ending
on December 31, 1996 and (ii) on each Excess Cash Flow Payment
Date thereafter, the immediately preceding Fiscal Year; provided
that INTERCO may, at its option, elect from time to time to have
Excess Cash Flow Payment Periods which end on the last day of any
fiscal quarter of INTERCO, in which event such period shall
consist of a period beginning on the later of (x) the Restatement
Effective Date and (y) the end of any prior Excess Cash Flow
Payment Period, and ending on such last day of such fiscal
quarter.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
"Excluded Assets" shall mean each of the assets listed
on Schedule XIV.
"Existing Fluvanna Letter of Credit" shall mean the
letter of credit issued by Union Bank of Switzerland in support
of the Existing IRBs.
"Existing Indebtedness" shall have the meaning provided
in Section 7.22.
"Existing IRBs" shall mean $8,000,000 Industrial
Development Authority of Fluvanna County, Virginia Floating Rate
Demand Industrial Development Revenue Bonds (Thomasville
Furniture Industries, Inc. Project) Series 1986.
"Existing Letters of Credit" shall mean the letters of
credit listed on Schedule XII and previously issued under the
Original Credit Agreement.
"Existing Mortgage Policies" shall mean each mortgage
insurance policy issued with respect to an Existing Mortgage
under the Original Credit Agreement.
"Existing Mortgages" shall mean all Mortgages granted
by the Borrowers pursuant to the Original Credit Agreement and
which have not been released by the lenders thereunder prior to
the Restatement Effective Date.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such period
to the weighted average of the rates on overnight Federal Funds
transactions with members of the Federal Reserve System arranged
by Federal Funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by the
Administrative Agent from three Federal Funds brokers of
recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or
referred to in Section 3.01.
"FIRREA" shall mean Financial Institution Reform,
Recovery and Enforcement Act of 1989.
"Fiscal Year" shall mean each fiscal year of INTERCO
ending on December 31 of each calendar year.
"Florsheim" shall mean The Florsheim Shoe Company, a
Delaware corporation.
"Florsheim Disposition" shall mean the "Florsheim
Disposition" as such term is defined in the Original Credit
Agreement.
"Foreign Pension Plan" means any plan, fund (including,
without limitation, any superannuation fund) or other similar
program established or maintained outside the United States of
America by any Borrower or any one or more of their respective
Subsidiaries primarily for the benefit of employees of such
Borrower or such Subsidiary residing outside the United States of
America, which plan, fund or other similar program provides, or
results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon
termination of employment, and which plan is not subject to ERISA
or the Code.
"Foreign Sales Corporation" shall mean a Wholly-Owned
Foreign Subsidiary of INTERCO and/or its Restricted Subsidiaries
created for the purpose of effecting sales of goods and/or
services in foreign countries.
"Foreign Subsidiary" with respect to any Person shall
mean each Subsidiary thereof that is incorporated under the laws
of any jurisdiction other than the United States of America, any
State thereof, the United States Virgin Islands or Puerto Rico.
"Guaranty Payments" shall have the meaning provided in
Section 9.11(b)(ii).
"Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any form
that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain
dielectric fluid containing any level of polychlorinated
biphenyls, and radon gas; (b) any chemicals, materials or
substances defined as or included in the definition of "hazardous
substances," "hazardous waste," "hazardous materials," "extremely
hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants,"
or words of similar import, under any applicable Environmental
Law; and (c) any other chemical, material or substance, exposure
to which is prohibited, limited or regulated by any governmental
authority under Environmental Laws.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest,
fees and charges) of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) the maximum
amount available to be drawn under all letters of credit issued
for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by such
Person, whether or not such Indebtedness has been assumed by such
Person (to the extent of the value of the respective property),
(iv) the aggregate amount required to be capitalized under leases
under which such Person is the lessee, (v) all obligations of
such person to pay a specified purchase price for goods or
services, whether or not delivered or accepted, i.e., take-or-pay
and similar obligations, (vi) all Contingent Obligations of such
Person and (vii) all obligations under any Interest Rate
Protection Agreement or under any similar type of agreement. In
addition to the foregoing, all Attributed Receivables Facility
Indebtedness shall constitute Indebtedness.
"INTERCO" shall have the meaning provided in the first
paragraph of this Agreement.
"INTERCO Common Stock" shall mean the common stock of
INTERCO.
"INTERCO Warrants" shall mean warrants to purchase
shares of INTERCO Common Stock pursuant to the Warrant Agreement,
dated August 3, 1992, between INTERCO and Society National Bank,
as Warrant Agent.
"Interest Determination Date" shall mean, with respect
to any Eurodollar Loan, the second Business Day prior to the
commencement of any Interest Period relating to such Eurodollar
Loan.
"Interest Period" shall have the meaning provided in
Section 1.09.
"Interest Rate Protection Agreement" shall mean any
interest rate swap agreement, interest rate cap agreement,
interest collar agreement, interest rate hedging agreement,
interest rate floor agreement or other similar agreement or
arrangement.
"Investments" shall have the meaning provided in
Section 9.05.
"Issuing Bank" shall mean BTCo and any Bank which at
the request of the Borrowers and with the consent of the
Administrative Agent (which shall not be unreasonably withheld or
delayed) agrees, in such Bank's sole discretion, to become an
Issuing Bank for the purpose of issuing Letters of Credit
pursuant to Section 2. On the Restatement Effective Date the
sole Issuing Banks are (x) BTCo and (y) if the New Fluvanna
Letter of Credit has been issued, NationsBank with respect
thereto.
"Lane" shall have the meaning provided in the first
paragraph of this Agreement.
"L/C Supportable Obligations" shall mean obligations of
INTERCO or its Restricted Subsidiaries incurred in the ordinary
course of business with respect to insurance obligations and
workers' compensation, surety bonds and other similar statutory
obligations, and all obligations customarily supported by Standby
Letters of Credit and satisfactory to the Administrative Agent.
"Leaseholds" of any Person means all the right, title
and interest of such Person as lessee or licensee in, to and
under leases or licenses of land, improvements and/or fixtures.
"Letter of Credit" shall have the meaning provided in
Section 2.01(a) and shall include Trade Letters of Credit and
Standby Letters of Credit.
"Letter of Credit Facing Fee" shall have the meaning
provided in Section 3.01(c)(x).
"Letter of Credit Fee" shall have the meaning provided
in Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at any
time, the sum of (i) the aggregate Stated Amount of all out-
standing Letters of Credit which have not terminated and
Acceptances which have not matured or been prepaid and (ii) the
amount of all Unpaid Drawings.
"Letter of Credit Request" shall mean any request for
the issuance of a Letter of Credit made by the Borrowers pursuant
to Section 2.03(a), including Trade Letter of Credit Requests and
Standby Letter of Credit Requests.
"Letter of Credit Service Agreement" shall have the
meaning provided in Section 2.03(a).
"Leverage Ratio" shall mean on any date the ratio of
(i) Consolidated Debt on such date to (ii) Consolidated EBITDA
for the period of four consecutive fiscal quarters most recently
ended on or prior to such date (or, if shorter, the period
beginning on January 1, 1996 and ended on the last day of a
fiscal quarter ended after the Restatement Effective Date,
provided that for purposes of calculating the Leverage Ratio for
(i) the period ending on March 31, 1996, Consolidated EBITDA
shall be multiplied by 4, (ii) for the period ending on June 30,
1996, Consolidated EBITDA shall be multiplied by 2 and (iii) for
the period ending September 30, 1996, consolidated EBITDA shall
be multiplied by 4/3), in each case taken as one accounting
period.
"Leverage Reduction Fiscal Quarter" shall have the
meaning assigned that term in the definition of "Leverage
Reduction Threshold Date".
"Leverage Reduction Threshold Date" shall mean the
first date following the end of a fiscal quarter ended after
January 1, 1996 upon which (x) no Default or Event of Default is
in existence and (y) the financial statements required by Section
8.01(b) or (c), as the case may be, with respect to such fiscal
quarter (or Fiscal Year in the case of the last fiscal quarter in
any Fiscal Year) have been delivered, together with the officer's
certificate required by Section 8.01(f), establishing that the
Leverage Ratio as determined on the last day of such fiscal
quarter (the "Leverage Reduction Fiscal Quarter") is less than or
equal to 3.5:1.0.
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement of any
kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or
any other similar recording or notice statute, and any lease
having substantially the same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving Loan
and each Swingline Loan.
"Majority B and C Banks" shall mean those Non-
Defaulting Banks which would constitute the Required Banks under,
and as defined in, this Agreement if all outstanding Obligations,
other than the B Term Loans and C Term Loans, were repaid in full
and the Total Revolving Loan Commitment were terminated.
"Majority Banks" of any Tranche shall mean those Non-
Defaulting Banks which would constitute the Required Banks under,
and as defined in, this Agreement if all outstanding Obligations
of the other Tranches under this Agreement were repaid in full
and all Commitments with respect thereto were terminated.
"Mandatory Borrowing" shall have the meaning provided
in Section 1.01(f).
"Margin Stock" shall have the meaning provided in
Regulation U.
"Material Adverse Effect" shall mean a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or prospects of
the Borrowers taken as a whole or the Borrowers and their
Restricted Subsidiaries taken as a whole, it being understood
that any determination of whether a Material Adverse Effect has
occurred shall take into account, inter alia, (x) any available
indemnities and (y) the timing and likelihood of payments
thereunder.
"Maximum Swingline Amount" shall mean $15,000,000.
"Mortgage" shall mean and include each Existing
Mortgage, as amended pursuant to the respective Mortgage
Amendment, each New Mortgage and, after the execution and
delivery thereof, each Additional Mortgage, in each case as same
may be amended, modified or supplemented from time to time.
"Mortgage Amendments" shall have the meaning provided
in Section 5.11.
"Mortgage Policies" shall have the meaning provided in
Section 5.11.
"Mortgaged Property" shall have the meaning provided in
Section 5.11 and, after the execution and delivery of any
Additional Mortgage, shall include the respective Additional
Mortgaged Property.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA, which is maintained or
contributed to by (or to which there is an obligation to
contribute of) the Borrowers or a Subsidiary of the Borrowers or
an ERISA Affiliate and, except for a Spunoff Plan, each such plan
for the five year period immediately following the latest date on
which the Borrowers, any Subsidiaries of the Borrowers or any
ERISA Affiliates maintained, contributed to or had an obligation
to contribute to such plan.
"NationsBank" shall have the meaning provided in the
preamble hereto.
"Net Cash Proceeds" shall mean for any event requiring
a repayment pursuant to Section 4.02, the gross cash proceeds
(including any cash received by way of deferred payment pursuant
to a promissory note, receivable or otherwise, but only as and
when received) received from such event, net of reasonable
transaction costs (including, as applicable, any underwriting,
brokerage or other customary commissions and reasonable legal,
advisory and other fees and expenses associated therewith)
received from any such event.
"Net Sale Proceeds" shall mean for any sale of assets,
the gross cash proceeds (including any cash received by way of
deferred payment pursuant to a promissory note, receivable or
otherwise, but only as and when received) received from any sale
of assets, net of reasonable transaction costs (including,
without limitation, any underwriting, brokerage or other
customary selling commissions and reasonable legal, advisory and
other fees and expenses, including title and recording expenses,
associated therewith) and payments of unassumed liabilities
relating to the assets sold at the time of, or within 30 days
after, the date of such sale, the amount of such gross cash pro-
ceeds required to be used to repay any Indebtedness (other than
Indebtedness of the Banks pursuant to this Agreement) which is
secured by the respective assets which were sold, and the
estimated marginal increase in income taxes which will be payable
by INTERCO's consolidated group with respect to the fiscal year
in which the sale occurs as a result of such sale; but excluding
any portion of any such gross cash proceeds which INTERCO deter-
mines in good faith should be reserved for post-closing adjust-
ments (to the extent INTERCO delivers to the Banks a certificate
signed by its chief financial officer, controller or chief
accounting officer as to such determination), it being understood
and agreed that on the day that all such post-closing adjustments
have been determined, (which shall not be later than six months
following the date of the respective asset sale), the amount (if
any) by which the reserved amount in respect of such sale or
disposition exceeds the actual post-closing adjustments payable
by INTERCO or any of its Restricted Subsidiaries shall constitute
Net Sale Proceeds on such date received by INTERCO and/or any of
its Restricted Subsidiaries from such sale, lease, transfer or
other disposition.
"New Banks" shall mean each of the Persons listed on
Schedule I which is not a Continuing Bank.
"New Fluvanna Letter of Credit" shall mean a letter of
credit issued by NationsBank pursuant to this Agreement on or
after the Restatement Effective Date in support of (x) the
Existing IRBs or (y) the Existing Fluvanna Letter of Credit.
"New Mortgage Policies" shall mean the mortgage title
insurance policies issued in respect of each New Mortgaged
Property.
"New Mortgaged Property" shall have the meaning
provided in Section 5.11(iii).
"New Mortgages" shall mean those Mortgages that have
been granted with respect to the New Mortgaged Properties.
"Non-Continuing Bank" shall have the meaning provided
in Section 13.18.
"Non-Defaulting Bank" shall mean and include each Bank
other than a Defaulting Bank.
"Note" shall mean each Term Note, each Revolving Note
and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided
in Section 1.03.
"Notice of Conversion" shall have the meaning provided
in Section 1.06.
"Notice Office" shall mean the office of the
Administrative Agent located at 130 Liberty Street, New York, New
York 10006, Attention: Mary Kay Coyle or such other office as
the Administrative Agent may hereafter designate in writing as
such to the other parties hereto.
"Obligations" shall mean all amounts owing to the
Administrative Agent, the Collateral Agent, any Issuing Bank or
any Bank pursuant to the terms of this Agreement or any other
Credit Document.
"Original Banks" shall mean each Person which was a
Bank under, and as defined in, the Original Credit Agreement.
"Original Credit Agreement" shall have the meaning
provided in the recitals to this Agreement.
"Original Receivables Facility" shall mean the
Receivables Facility as defined in the Original Credit Agreement.
"Original Revolving Loans" shall mean the "Revolving
Loans" under, and as defined in, the Original Credit Agreement.
"Original Swingline Loans" shall mean the "Swingline
Loans" under, and as defined in, the Original Credit Agreement.
"Original Term Loans" shall mean the "Term Loans"
under, and as defined in, the Original Credit Agreement.
"Participant" shall have the meaning provided in
Section 2.04(a).
"Pay-In-Kind Preferred Stock" means any Preferred Stock
where all dividends with respect thereto may, at the option of
the issuer thereof, be paid through the issuance of additional
shares of preferred stock of the same series.
"Payment Office" shall mean the office of the
Administrative Agent located at One Bankers Trust Plaza, New
York, New York 10006, or such other office as the Administrative
Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA, or any
successor thereto.
"Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which is
the Revolving Loan Commitment of such Bank at such time and the
denominator of which is the Total Revolving Loan Commitment at
such time, provided that if the Percentage of any Bank is to be
determined after the Total Revolving Loan Commitment has been
terminated, then the Percentages of the Banks shall be determined
immediately prior (and without giving effect) to such
termination.
"Permitted Acquired Debt" shall mean Indebtedness
(other than Permitted Subordinated Indebtedness and Permitted
Unsecured Indebtedness incurred pursuant to Sections 9.04(ii) and
(iii)) assumed or acquired in connection with a Permitted
Acquisition as permitted under this Agreement.
"Permitted Acquisition" shall mean the acquisition by
the Borrowers or any of their Restricted Subsidiaries of assets
constituting part of or an entire business or division of any
Person not already a Subsidiary of the Borrowers or of 100% of
the capital stock of any such Person which Person shall, as a
result of such acquisition, become a Restricted Subsidiary,
provided that (A) the consideration paid by the Borrowers and/or
their Restricted Subsidiaries consists solely of cash or common
stock or Qualified Preferred Stock or Disqualified Preferred
Stock permitted pursuant to Section 9.13(b) of INTERCO, the
issuance of Indebtedness otherwise permitted in Section 9.04 and
the assumption/acquisition of any Permitted Acquired Debt
(calculated at face value) relating to such business, division or
Person, (B) the assets acquired, or the business of the Person
whose stock is acquired, shall be in the same line of business in
which the Borrowers and their Restricted Subsidiaries are already
engaged, and (C) in the case of the acquisition of 100% of the
capital stock of any Person, such Person shall own no capital
stock of any other Person unless either (x) such Person owns 100%
of the capital stock of such other Person or (y) (1) such Person
and/or its Wholly-Owned Subsidiaries own 80% of the consolidated
assets or capital stock of such Person and its Subsidiaries and
(2) any non-Wholly Owned Subsidiary of such Person was non-Wholly
Owned prior to the date of such Permitted Acquisition of such
Person (it being understood and agreed that investments by
Subsidiaries shall be permitted in accordance with the provisions
of Section 9.05). Notwithstanding anything to the contrary con-
tained in the immediately preceding sentence, any acquisition
shall be a Permitted Acquisition only if all requirements of
Sections 8.14 and 9.02(vii) applicable to Permitted Acquisitions
are met with respect thereto.
"Permitted Debt Agreements" shall have the meaning
provided in Section 5.05.
"Permitted Encumbrance" shall mean, with respect to any
Mortgaged Property, such exceptions to title as are set forth in
the title insurance policy or title commitment delivered with
respect thereto, all of which exceptions must be acceptable to
the Administrative Agent in its reasonable discretion.
"Permitted Liens" shall have the meaning provided in
Section 9.01.
"Permitted Subordinated Indebtedness" shall mean any
Indebtedness (including, without limitation, any Permitted
Subordinated Indebtedness incurred in connection with the
creation of a replacement Receivables Facility) which is
subordinated on terms reasonably satisfactory to the
Administrative Agent and the Required Banks to all Obligations
hereunder and any other obligations secured pursuant to the
Security Documents and incurred by the Borrowers, so long as (i)
based on calculations made by the Borrowers on a Pro Forma Basis
after giving effect to the incurrence of such Indebtedness, no
Default or Event of Default will exist under, or would have
existed under the periods covered by, the financial covenants
contained in Sections 9.08 through 9.10, inclusive, of this
Agreement, (ii) based on good faith projections prepared by the
Borrowers for the period from the date of the incurrence of such
Indebtedness to the date which is one year thereafter, the level
of financial performance measured by the covenants set forth in
Sections 9.08 through 9.10 inclusive shall be better than or
equal to such level as would be required to provide that no
Default or Event of Default would exist under the financial
covenants contained in Sections 9.08 through 9.10, inclusive, of
this Agreement as compliance with such covenants would be
required through the date which is one year from the date of the
incurrence of such Indebtedness, (iii) INTERCO shall furnish to
the Administrative Agent for distribution to each of the Banks an
officer's certificate by the chief financial officer or treasurer
of INTERCO certifying to the best of his knowledge as to
compliance with the requirements of the preceding clauses (i) and
(ii) and containing the pro forma calculations and projections
required by the preceding clauses (i) and (ii), (iv) such
Indebtedness shall require no amortization, sinking fund payment
or any other scheduled maturity of the principal amount thereof
on any date which is earlier than the date occurring one year
after the C Term Loan Maturity Date and (v) all other provisions
of such Indebtedness (including, without limitation, covenants,
defaults and remedies) in the documents governing or evidencing
the same are reasonably satisfactory to the Administrative Agent
and the Required Banks. To the extent the preceding sentence
requires terms of Permitted Subordinated Indebtedness to be
satisfactory to the Required Banks, such terms shall be deemed
satisfactory to the Required Banks unless objected to by the
Required Banks in writing on or prior to the date which is 20
Business Days after the documentation therefor is delivered to
the Banks. Notwithstanding anything to the contrary contained
above in the definition of "Permitted Subordinated Indebtedness",
all Permitted Subordinated Indebtedness shall be required to
constitute Indebtedness for borrowed money (where 100% of the
consideration received for the issuance of such Indebtedness is
cash), except that Permitted Subordinated Indebtedness may be
issued directly as consideration in connection with a Permitted
Acquisition so long as (i) the proviso to Section 9.04(ii)(x) has
been complied with and (ii) the aggregate principal amount of all
Permitted Subordinated Indebtedness issued after the Restatement
Effective Date as consideration in connection with Permitted
Acquisitions, when added to the sum of (x) the aggregate
liquidation preference or amount of all Disqualified Preferred
Stock so issued after the Restatement Effective Date as
consideration in connection with Permitted Acquisitions pursuant
to Section 9.13(b)(i), (y) the aggregate principal amount of all
Permitted Subordinated Indebtedness issued or incurred after the
Restatement Effective Date but not issued as consideration in
connection with Permitted Acquisitions to the extent the Net Cash
Proceeds therefrom have not been required to be used to repay
Term Loans as a result of clause (w)(ii) of the first
parenthetical of Section 4.02(g), and (z) the aggregate
liquidation preference or amount of all Disqualified Preferred
Stock issued after the Restatement Effective Date pursuant to
Section 9.13(b)(i) but not issued as consideration in connection
with Permitted Acquisitions, to the extent the Net Cash Proceeds
therefrom have not been required to be used to repay Term Loans
as a result of clause (v)(y) of the first parenthetical of
Section 4.02(e), does not exceed $50,000,000.
"Permitted Unsecured Indebtedness" shall mean any
general unsecured Indebtedness incurred by the Borrowers, so long
as (i) based on calculations made by the Borrowers on a Pro Forma
Basis after giving effect to the incurrence of such Indebtedness,
no Default or Event of Default will exist under, or would have
existed under the periods covered by, the financial covenants
contained in Sections 9.08 through 9.10, inclusive, of this
Agreement, (ii) based on good faith projections prepared by the
Borrowers for the period from the date of the incurrence of such
Indebtedness to the date which is one year thereafter, the level
of financial performance measured by the covenants set forth in
Sections 9.08 through 9.10 inclusive shall be better than or
equal to such level as would be required to provide that no
Default or Event of Default would exist under the financial
covenants contained in Sections 9.08 through 9.10, inclusive, of
this Agreement as compliance with such covenants would be
required through the date which is one year from the date of the
incurrence of such Indebtedness, (iii) INTERCO shall furnish to
the Administrative Agent for distribution to each of the Banks an
officer's certificate by the chief financial officer or treasurer
of INTERCO certifying to the best of his knowledge as to
compliance with the requirements of the preceding clauses (i) and
(ii) and containing the pro forma calculations required by the
preceding clauses (i) and (ii), (iv) the average life of such
Indebtedness at the time of the incurrence thereof shall be at
least one year beyond the average life of the Term Loans then
outstanding and the Total Revolving Commitments (assuming maximum
utilization thereof) and (v) such Indebtedness shall not contain
any provision (including, without limitation, covenants, defaults
and remedies) in the documents governing or evidencing the same
which, in the opinion of the Administrative Agent, are more
restrictive than the provisions in the Credit Documents.
Notwithstanding anything to the contrary contained above in the
definition of "Permitted Unsecured Indebtedness", all Permitted
Unsecured Indebtedness shall be required to constitute
indebtedness for borrowed money where 100% of the consideration
received for the issuance for such Indebtedness is cash, except
that Permitted Unsecured Indebtedness may be issued directly as
consideration in connection with Permitted Acquisitions so long
as the proviso to Section 9.04(iii) has been complied with.
"Person" shall mean any individual, partnership, joint
venture, firm, corporation, association, trust or other
enterprise or any government or political subdivision or any
agency, department or instrumentality thereof.
"Plan" shall mean any single-employer plan, as defined
in Section 4001 of ERISA, which is maintained or contributed to
by (or to which there is an obligation to contribute of), the
Borrowers or a Subsidiary of the Borrowers or an ERISA Affiliate,
and except for a Spunoff Plan, each such plan for the five year
period immediately following the latest date on which the
Borrowers, a Subsidiary of the Borrowers or an ERISA Affiliate
maintained, contributed or had an obligation to contribute to
such plan.
"Pledge Agreement" shall have the meaning provided in
Section 5.09.
"Pledge Agreement Collateral" shall mean all
"Collateral" as defined in the Pledge Agreement.
"Pledged Securities" shall mean "Pledged Securities" as
defined in the Pledge Agreement.
"Preferred Stock," as applied to the capital stock of
any Person, means capital stock of such Person (other than common
stock of such Person) of any class or classes (however designed)
that ranks prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares
of capital stock of any other class of such Person, and shall
include any Qualified Preferred Stock and Disqualified Preferred
Stock.
"Prime Lending Rate" shall mean the rate which BTCo
announces from time to time as its prime lending rate, the Prime
Lending Rate to change when and as such prime lending rate
changes. The Prime Lending Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to
any customer. BTCo may make commercial loans or other loans at
rates of interest at, above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, as to any Person, for any
of the following events which occur subsequent to the
commencement of a period for which the financial effect of such
event is being calculated, and giving effect to the event for
which such calculation is being made, such calculation as will
give pro forma effect to such event as if same had occurred at
the beginning of such period of calculation, and
(i) for purposes of the foregoing calculation, the
transaction giving rise to the need to calculate the pro
forma effect to any of the following events shall be assumed
to have occurred on the first day of the four fiscal quarter
period last ended before the occurrence of the respective
event for which such pro forma effect is being determined
(the "Reference Period"), and
(ii) in making any determination with respect to the
incurrence or assumption of any Indebtedness or issuance of
any Disqualified Preferred Stock during the Reference Period
or subsequent to the Reference Period and on or prior to the
date of the transaction referenced in clause (i) above (the
"Transaction Date"), (w) all Indebtedness or Disqualified
Preferred Stock (including the Indebtedness or Disqualified
Preferred Stock incurred or assumed and for which the
financial effect is being calculated) incurred or
permanently repaid during the Reference Period shall be
deemed to have been incurred or repaid at the beginning of
such period, (x) Consolidated Net Interest Expense of such
Person attributable to interest or dividends on any
Indebtedness or Disqualified Preferred Stock, as the case
may be, bearing floating interest rates should be computed
on a pro forma basis as if the rate in effect on the
Transaction Date had been the applicable rate for the entire
period, (y) Consolidated Net Interest Expense of such Person
attributable to interest on any Indebtedness under any
revolving credit facility which was in effect during the
respective Reference Period shall be computed on a pro forma
basis based upon the average daily balance of such
Indebtedness outstanding during the applicable period (or,
if shorter, the portion of the period during which the
revolving credit facility was in effect) and (z)
Consolidated Net Interest Expense will be increased or
reduced by the net cost (including amortization of discount)
or benefit (after giving effect to amortization of discount)
associated with the Interest Rate Protection Agreements,
which will remain in effect for the twelve-month period
after the Transaction Date and which shall have the effect
of fixing the interest rate on the date of computation, and
(iii) in making any determination of Consolidated
EBITDA, pro forma effect shall be given to any Permitted
Acquisition or Significant Divestiture which occurred during
the Reference Period or subsequent to the Reference Period
and prior to the Transaction Date, Consolidated EBITDA shall
be determined as if such Permitted Acquisition or
Significant Divestiture occurred on the first day of the
Reference Period, taking into account cost savings and
expenses which would otherwise be accounted for as an
adjustment pursuant to Article 11 of Regulation S-X under
the Securities Act, as if such cost savings or expenses were
realized on the first day of the Reference Period.
"Projections" shall have the meaning provided in
Section 5.15(b).
"Purchase and Contribution Agreement" shall mean the
Purchase and Contribution Agreement, dated as of November 15,
1994 as amended and restated as of December 29, 1995, among
Broyhill, Lane, Action and Thomasville and the Receivables
Subsidiary, as same may be further amended, modified or
supplemented from time to time in compliance with Section 9.11,
or as replaced in compliance with the definition of Receivables
Facility.
"Qualified Preferred Stock" means any Pay-In-Kind
Preferred Stock of INTERCO, or any other Preferred Stock of
INTERCO, the express terms of which shall provide that Dividends
thereon shall not be required to be paid in cash at any time that
such cash payment would be prohibited by the terms of this
Agreement (and any refinancings, replacements or extensions
hereof) and in either case which, by its terms (or by the terms
of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event (including an
event which would constitute a Change of Control), cannot mature
(excluding any maturity as the result of an optional redemption
by the issuer thereof) and is not mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, and is not
redeemable, or required to be repurchased, at the sole option of
the holder thereof (including, without limitation, upon the
occurrence of an event which would constitute a Change of
Control), in whole or in part, on or prior to the first
anniversary of the C Term Loan Maturity Date.
"Quarterly Payment Date" shall mean the last Business
Day of each June, September, December and March, occurring after
the Restatement Effective Date.
"RCRA" shall mean the Resource Conservation and
Recovery Act, as the same may be amended from time to time, 42
U.S.C. Section 6901 et seq.
"Real Property" of any Person shall mean all the right,
title and interest of such Person in and to land, improvements
and fixtures, including Leaseholds.
"Receivables Documents" shall mean the Receivables
Purchase Agreements, the Purchase and Contribution Agreement and
any related documentation entered into by the Borrowers and their
Restricted Subsidiaries, the Receivables Subsidiary and/or the
Receivables Purchasers in connection with the Receivables
Facility.
"Receivables Facility" shall mean the arrangement
pursuant to which (x) each of Broyhill, Lane, Action and
Thomasville and its respective Subsidiaries will from time to
time sell accounts receivable to the Receivables Subsidiary and
(y) the Receivables Subsidiary shall sell interests in the
receivables to the Receivables Purchasers, or obtain subordinated
loans secured by the receivables from the Receivables Purchasers,
as more fully set forth in the Receivables Documents; provided,
that the Receivables Facility may be replaced after the date
hereof so long as the Administrative Agent is reasonably
satisfied that the terms and conditions of any replacement
facility are as favorable or more favorable to INTERCO and its
Restricted Subsidiaries and to the Banks (and in any event
contains no greater degree of recourse to INTERCO and its
Restricted Subsidiaries (other than the Receivables Subsidiary))
than the terms and conditions of the current Receivables Facility
(in which event such replacement facility shall be deemed to be
the Receivables Facility hereunder).
"Receivables Purchase Agreements" shall mean and
include the Atlantic Receivables Purchase Agreement, the
Alternate Receivables Purchase Agreement and the Subordinated
Loan Agreement.
"Receivables Purchaser" shall mean and include (i) with
respect to the Alternate Receivables Purchase Agreement, Credit
Lyonnais and (ii) with respect to the Atlantic Receivables
Purchase Agreement, Atlantic and Credit Lyonnais and (iii) with
respect to the Subordinated Loan Agreement, Credit Lyonnais and
their respective successors and assigns (in the event that the
Receivables Facility is replaced, any replacement receivables
purchasers shall be deemed to be the Receivables Purchasers
hereunder).
"Receivables Subsidiary" shall mean INTERCO Receivables
Corp., the special purpose subsidiary formed by Broyhill, Lane
and Action and owned by Broyhill, Lane, Action and Thomasville to
purchase and receive contributions of receivables from each of
Broyhill, Lane, Action and Thomasville and their respective other
Restricted Subsidiaries pursuant to the Receivables Facility.
"Recovery Event" shall mean the receipt by INTERCO or
any of its Restricted Subsidiaries of any cash insurance proceeds
or condemnation award payable (i) by reason of theft, loss,
physical destruction or damage or any other similar event with
respect to any property or assets of the Borrowers or any of its
Subsidiaries and (ii) under any policy of insurance required to
be maintained under Section 8.03.
"Reduction Percentage" shall mean (i) initially zero
and (ii) from and after each day of delivery of any certificate
delivered in accordance with the following sentence indicating an
entitlement to a Reduction Percentage other than zero (each, a
"Start Date") to and including the applicable End Date described
below, the percentage set forth below opposite the Leverage Ratio
indicated to have been achieved in any certificate delivered in
accordance with the following sentence:
Leverage Interest
Ratio Reduction Discount
-------- ------------------
Equal to or .375%
greater than
3.25:1 but less
than 3.50:1
Equal to or .500%
greater than
3.00:1 but less
than 3.25:1
Equal to or .625%
greater than
2.75:1 but less
than 3.00:1
Equal to or .750%
greater than
2.50:1 but less
than 2.75:1
Equal to or .875%
greater than
2.25:1 but less
than 2.50:1
Equal to or 1.00%
greater than 2.00:1
but less than 2.25:1
Less than 2.0:1 1.125%
The Leverage Ratio shall be determined based on the delivery of a
certificate of the Borrowers by an Authorized Representative of
the Borrowers to the Administrative Agent (with a copy to be sent
by the Borrowers to each Bank), within 30 days of the last day of
any fiscal quarter of INTERCO (beginning after the first such
fiscal quarter ended in 1996), which certificate shall set forth
the calculation of the Leverage Ratio for the fiscal quarter
ended immediately prior to the relevant Start Date and the
Reduction Percentage which shall be thereafter applicable (until
same is changed or ceases to apply in accordance with the
following sentences). The Reduction Percentage so determined
shall apply, except as set forth in the succeeding sentence, from
the Start Date to the earlier of (x) the date on which the next
certificate is delivered to the Administrative Agent and (y) the
date which is 30 days following the last day of the fiscal
quarter in which the previous Start Date occurred (the "End
Date"), at which time, if no certificate has been delivered to
the Administrative Agent indicating an entitlement to a Reduction
Percentage other than zero (and thus commencing a new Start
Date), the Reduction Percentage shall be reduced to zero. Not-
withstanding anything to the contrary contained above in this
definition, the Reduction Percentage shall be reduced to zero at
all times during which there shall exist a Default or an Event of
Default.
"Refinancing" shall mean all repayments and
refinancings of Indebtedness in connection with the Transaction.
"Register" shall have the meaning provided in Section
13.17.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof establishing
reserve requirements.
"Regulation G" shall mean Regulation G of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in
effect and any successor to all or a portion thereof.
"Release" means any spilling, leaking, pumping, pour-
ing, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, disposing or migration into the environment.
"Replaced Bank" shall have the meaning provided in
Section 1.13.
"Replacement Bank" shall have the meaning provided in
Section 1.13.
"Reportable Event" shall mean an event described in
Section 4043(c) of ERISA with respect to a Plan other than those
events as to which the 30-day notice period is waived under
subsection .13, .14, .16, .18, .19 or .20 of PBGC Regulation
Section 2615.
"Required Appraisal" shall have the meaning provided in
Section 8.11(g).
"Required Banks" shall mean Non-Defaulting Banks, the
sum of whose outstanding Term Loans (or, if prior to the
Restatement Effective Date, Term Loan Commitments) and Revolving
Loan Commitments (or after the termination thereof, outstanding
Revolving Loans and Adjusted Percentage of Swingline Loans and
Letter of Credit Outstandings) represent greater than 50% of the
sum of all outstanding Term Loans (or, if prior to the
Restatement Effective Date, Term Loan Commitments) of Non-
Defaulting Banks and the Adjusted Total Revolving Loan Commitment
(or after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks and the
aggregate Adjusted Percentages of all Non-Defaulting Banks of the
total outstanding Swingline Loans and Letter of Credit
Outstandings at such time).<PAGE>
"Required Supermajority Banks" at any time shall mean
those Banks which would constitute the Required Banks under, and
as defined in, this Agreement if the term "50%" contained therein
were changed to "66-2/3%."
"Restatement Effective Date" shall have the meaning
provided in Section 13.10.
"Restricted Junior Payment" shall have the meaning
provided in Section 9.11(a)(i).
"Restricted Subsidiaries" shall mean, (x) all of the
Subsidiaries of the Borrowers and their respective Subsidiaries
in existence on the Restatement Effective Date and (y) any
Subsidiary (other than an Unrestricted Subsidiary) that is
created, established or acquired after the Restatement Effective
Date.
"Returned Investment Amount" shall mean, with respect
to all Investments made pursuant to Section 9.05(vii) after the
Restatement Effective Date in Persons which are Unrestricted
Subsidiaries or are not Restricted Subsidiaries, the aggregate
amount of cash received by INTERCO and its Restricted
Subsidiaries which are Wholly-Owned Subsidiaries of INTERCO
representing a return of capital of such Investment, in each case
to the extent the amount of capital so returned is not, and will
not be, included in Consolidated Net Income.
"Returns" shall have the meaning provided in Section
7.09.
"Revolving Loan" shall have the meaning provided in
Section 1.01(d).
"Revolving Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule I
hereto directly below the column entitled "Revolving Loan
Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.02, 3.03, 4.02 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from such Bank
pursuant to Section 1.13 or 13.04(b).
"Revolving Loan Maturity Date" shall mean December 29,
2001.
"Revolving Note" shall have the meaning provided in
Section 1.05(a).
"Scheduled Repayment Date" shall mean each date upon
which any Scheduled Repayment is due and payable.
"Scheduled Repayments" shall mean the A Term Loan
Scheduled Repayments, the B Term Loan Scheduled Repayments and
the C Term Loan Scheduled Repayments.
"SEC" shall have the meaning provided in Section
8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the
meaning provided in Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning assigned
that term in the Security Documents.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Security Agreement" shall have the meaning provided in
Section 5.10.
"Security Agreement Collateral" shall mean all
"Collateral" as defined in the Security Agreement (which shall
exclude all assets of the Receivables Subsidiary).
"Security Document" shall mean the Pledge Agreement,
the Security Agreement, each Mortgage and, after the execution
and delivery thereof, each Additional Mortgage and each
Additional Security Document.
"Senior Debt Leverage Ratio" shall mean on any date a
ratio calculated as provided in the definition of Leverage Ratio
contained herein; provided that the term "Consolidated Senior
Debt" shall be deemed inserted in lieu of the term "Consolidated
Debt" in clause (i) of the definition of Leverage Ratio.
"Shareholders' Agreements" shall have the meaning
provided in Section 5.05.
"Significant Divestiture" shall mean any sale or other
disposition of assets by INTERCO and/or its Restricted
Subsidiaries, the fair market value of which exceeds $500,000 for
any transaction (or series of related transactions).
"Solvent Entity" shall have the meaning provided in
Section 7.05(d).
"Spunoff Plan" shall mean any employee benefit plan as
defined in Section 3(3) of ERISA which INTERCO ceased to maintain
or contribute to pursuant to the Distribution and Services
Agreement dated as of November 17, 1994.
"Standby Letter of Credit" shall mean any Standby
Letter of Credit or similar instrument issued or deemed issued
for the account of any Borrower pursuant to Section 2.01 for the
purpose of supporting L/C Supportable Obligations.
"Standby Letter of Credit Request" shall have the
meaning provided in Section 2.03(a).<PAGE>
"Start Date" shall have the meaning provided in the
definition of `Reduction Percentage.'
"Stated Amount" of (x) each Letter of Credit shall, at
any time, mean the maximum amount available to be drawn there-
under (in each case determined without regard to whether any con-
ditions to drawing could then be met) and (y) each Acceptance
shall mean the amount of each such Acceptance.
"Stock Purchase Agreement" shall mean the Stock
Purchase Agreement, dated as of November 18, 1995, by and among
Armstrong World Industries, Inc., Armstrong Enterprises, Inc. and
INTERCO.
"Subordinated Loan Agreement" shall mean the
Subordinated Loan Agreement in the form annexed to the Atlantic
Receivables Purchase Agreement on the Restatement Effective Date.
"Subsidiary" shall mean, as to any Person, (i) any
corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a
majority of the directors of such corporation (irrespective of
whether or not at the time stock of any class or classes of such
corporation shall have or might have voting power by reason of
the happening of any contingency) is at the time owned by such
Person and/or one or more Subsidiaries of such Person and (ii)
any partnership, association, joint venture or other entity in
which such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time. As used in this
Agreement, the term "Subsidiary" shall include or apply to any
Restricted Subsidiary and any Unrestricted Subsidiary.
"Subsidiary Guarantor" shall mean Broyhill Transport,
Inc., a North Carolina corporation, Lane Advertising, Inc., a
Virginia corporation, Action Industries, Inc., a Virginia
corporation, Action Transport, Inc., a Delaware corporation,
Thomasville Enterprises, Inc., a Vermont corporation, Fayette
Enterprises, Inc., a Mississippi corporation, Gordon's, Inc., a
Delaware corporation, Thomasville Chair Company, a North Carolina
corporation, Thomasville Home Furnishings, Inc., a Delaware
corporation, and Thomasville Upholstery, Inc., a Delaware
corporation and any Restricted Subsidiary of any Borrower which
executes a guarantee after the Restatement Effective Date
pursuant to Section 8.11, but shall in any event exclude the
Receivables Subsidiary, Thomasville Furniture Latin America, S.A.
and Interfashions Industries, S.A. and its Subsidiaries.
"Subsidiary Guaranty" shall have the meaning provided
in Section 5.08.
"Supermajority Banks" of any Tranche shall mean those
Non-Defaulting Banks which would constitute the Required Banks
under, and as defined in, this Agreement if (x) all outstanding
Obligations of the other Tranches under this Agreement were<PAGE>
repaid in full and all Commitments with respect thereto were
terminated and (y) the term "50%" contained therein were changed
to "66-2/3%."
"Surviving Guaranties" shall mean the guarantee
obligations of INTERCO with respect to the leases described in
Schedule XV hereto.
"Swingline Expiry Date" shall mean the date which is
two Business Days prior to the Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in
Section 1.01(e).
"Swingline Note" shall have the meaning provided in
Section 1.05(a).
"Syndication Agent" shall mean NationsBank, in its
capacity as Syndication Agent for the Banks hereunder.
"Tax Sharing Agreement" shall mean any tax sharing,
disaffiliation or tax allocation agreement entered into among the
Borrowers, Converse and Florsheim.
"Taxes" shall have the meaning provided in Section
4.04(a).
"Term Loan Commitments" shall mean the A Term Loan
Commitments, B Term Loan Commitments and C Term Loan Commitments.
"Term Loans" shall mean each of the A Term Loans, B
Term Loans and C Term Loans.
"Term Notes" shall mean the A Term Notes, B Term Notes
and C Term Notes.
"Thomasville" shall have the meaning provided in the
first paragraph of this Agreement.
"Total A Term Loan Commitment" shall mean, at any time,
the sum of the A Term Loan Commitments of each of the Banks.
"Total B Term Loan Commitment" shall mean, at any time,
the sum of the B Term Loan Commitments of each of the Banks.
"Total C Term Loan Commitment" shall mean, at any time,
the sum of the C Term Loan Commitments of each of the Banks.
"Total Commitment" shall mean, at any time, the sum of
the Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at any
time, the sum of the Revolving Loan Commitments of each of the
Banks.
"Total Term Loan Commitment" shall mean, at any time,
the sum of the A Term Loan Commitments, the B Term Loan
Commitments and the C Term Loan Commitments of each of the Banks.
"Total Unutilized Revolving Loan Commitment" shall
mean, at any time, an amount equal to the remainder of (x) the
then Total Revolving Loan Commitment, less (y) the sum of the
aggregate principal amount of Revolving Loans and Swingline Loans
outstanding plus the then aggregate amount of Letter of Credit
Outstandings.
"Trade Letter of Credit" shall mean any Letter of
Credit or similar instrument issued for the account of any
Borrower pursuant to Section 2.01 for the purpose of providing
the primary payment mechanism in connection with the purchase of
any materials, goods or services by the Borrowers or their
Restricted Subsidiaries in the ordinary course of business of the
Borrowers or their Restricted Subsidiaries.
"Trade Letter of Credit Request" shall have the meaning
provided in Section 2.03(a).
"Tranche" shall mean the respective facility and
commitment utilized in making Loans, with there being five
separate Tranches, i.e., A Term Loans, B Term Loans, C Term
Loans, Revolving Loans and Swingline Loans.
"Transaction" shall mean (i) the consummation of the
Acquisition, (ii) the amendment and restatement of the Original
Credit Agreement in the form of this Agreement as provided
herein, (iii) the incurrence of the Loans hereunder on the
Restatement Effective Date and (iv) the consummation of the
Refinancing.
"Transaction Documents" shall mean all Documents (other
than the Credit Documents) and agreements and instruments entered
into in connection with the Transaction.
"Type" shall mean the type of Loan determined with
regard to the interest option applicable thereto, i.e., whether a
Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from
time to time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means the
amount, if any, by which the actuarial present value of the
accumulated benefits under the Plan as of the close of its most
recent plan year each exceeds the fair market value of the assets
allocable thereto, each determined in accordance with Statement
of Financial Accounting Standards No. 87, based upon the
actuarial assumptions used by the Plan's actuary in the most
recent annual valuation of the Plan.
"United States" and "U.S." shall each mean the United
States of America.
"Unpaid Drawing" shall have the meaning provided for in
Section 2.05(a).
"Unrestricted Subsidiary" shall mean any Wholly-Owned
Subsidiary of INTERCO that is acquired or created after the
Restatement Effective Date and designated by INTERCO as an
Unrestricted Subsidiary hereunder by written notice to the
Administrative Agent; provided that INTERCO shall only be
permitted to so designate a new Unrestricted Subsidiary after the
Restatement Effective Date and so long as (i) no Default or Event
of Default exists or would result therefrom and (ii) 100% of the
capital stock of such newly-designated Unrestricted Subsidiary is
owned by INTERCO or another Unrestricted Subsidiary and all of
the provisions of Section 9.12 shall have been complied with in
respect of such newly-designated Unrestricted Subsidiary and such
Unrestricted Subsidiary is capitalized (to the extent capitalized
by INTERCO or any of its Restricted Subsidiaries) through
Investments as permitted by, and in compliance with, Section
9.05(vii), with any assets owned by such Unrestricted Subsidiary
at the time of the initial designation thereof to be treated as
Investments made pursuant to Section 9.05(vii), provided that at
the time of the initial Investments by INTERCO in such Subsidiary
(x) INTERCO shall designate such entity as an Unrestricted
Subsidiary in a written notice to the Administrative Agent and
(y) such entity and the Borrowers shall have entered into tax
sharing and management services agreements on a basis reasonably
satisfactory to the Administrative Agent. Additionally, INTERCO
may not designate any Credit Party, the Receivables Subsidiary or
any Subsidiary created or acquired pursuant to a Permitted
Acquisition as an Unrestricted Subsidiary.
"Unutilized Revolving Loan Commitment" with respect to
any Bank, at any time, shall mean such Bank's Revolving Loan
Commitment at such time less the sum of (i) the aggregate
outstanding principal amount of Revolving Loans made by such Bank
and (ii) such Bank's Adjusted Percentage of the Letter of Credit
Outstandings at such time.
"Voting Stock" shall mean, as to any Person, any class
or classes of capital stock of such Person pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the Board of
Directors of such Person.
"Wholly-Owned Subsidiary" shall mean, as to any Person,
(i) any corporation 100% of whose capital stock (other than
director's qualifying shares) is at the time owned by such Person
and/or one or more Wholly-Owned Subsidiaries of such Person and
(ii) any partnership, association, joint venture or other entity
in which such Person and/or one or more Wholly-Owned Subsidiaries
of such Person has a 100% equity interest at such time.
SECTION 12. The Agents.
12.01 Appointment. The Banks hereby designate BTCo as
Administrative Agent (for purposes of this Section 12, the term
"Administrative Agent" shall include BTCo in its capacity as
Collateral Agent pursuant to the Security Documents), Credit
Lyonnais as Documentation Agent and NationsBank as Syndication
Agent, in each case to act as specified herein and in the other
Credit Documents. Each Bank hereby irrevocably authorizes, and
each holder of any Note by the acceptance of such Note shall be
deemed irrevocably to authorize, the Administrative Agent, the
Documentation Agent and the Syndication Agent to take such action
on its behalf under the provisions of this Agreement, the other
Credit Documents and any other instruments and agreements
referred to herein or therein and to exercise such powers and to
perform such duties hereunder and thereunder as are specifically
delegated to or required of the Administrative Agent, the
Documentation Agent or the Syndication Agent by the terms hereof
and thereof and such other powers as are reasonably incidental
thereto. Each of the Administrative Agent, the Documentation
Agent and the Syndication Agent may perform any of its duties
hereunder by or through its respective officers, directors,
agents, employees or affiliates.
12.02 Nature of Duties. The Administrative Agent
shall not have any duties or responsibilities except those
expressly set forth in this Agreement and the Security Documents.
The Documentation Agent and the Syndication Agent, as such, shall
not have any duties or responsibilities under this Agreement or
any Security Document or any other document or matter related
thereto. None of the Administrative Agent, the Documentation
Agent or the Syndication Agent nor any of its respective
officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or
under any other Credit Document or in connection herewith or
therewith, unless caused by its or their gross negligence or
willful misconduct. The duties of the Administrative Agent, the
Documentation Agent and the Syndication Agent shall be mechanical
and administrative in nature; the Administrative Agent, the
Documentation Agent and the Syndication Agent shall not have by
reason of this Agreement or any other Credit Document a fiduciary
relationship in respect of any Bank or the holder of any Note;
and nothing in this Agreement or any other Credit Document,
expressed or implied, is intended to or shall be so construed as
to impose upon the Administrative Agent, the Documentation Agent
and the Syndication Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set
forth herein or therein.
12.03 Lack of Reliance on the Administrative Agent,
the Documentation Agent and the Syndication Agent. Independently
and without reliance upon the Administrative Agent, the
Documentation Agent and the Syndication Agent, each Bank and the
holder of each Note, to the extent it deems appropriate, has made<PAGE>
and shall continue to make (i) its own independent investigation
of the financial condition and affairs of INTERCO and its
Subsidiaries in connection with the making and the continuance of
the Loans and the taking or not taking of any action in con-
nection herewith and (ii) its own appraisal of the credit-
worthiness of INTERCO and its Subsidiaries and, except as ex-
pressly provided in this Agreement, the Administrative Agent, the
Documentation Agent and the Syndication Agent shall not have any
duty or responsibility, either initially or on a continuing
basis, to provide any Bank or the holder of any Note with any
credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time
or times thereafter. None of the Administrative Agent, the
Documentation Agent or the Syndication Agent or any of their
respective affiliates nor any of their respective officers,
directors, agents, or employees shall be responsible to any Bank
or the holder of any Note for any recitals, statements, informa-
tion, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or
for the execution, effectiveness, genuineness, validity, enforce-
ability, perfection, collectibility, priority or sufficiency of
this Agreement or any other Credit Document or the financial
condition of INTERCO and its Subsidiaries or be required to make
any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement or
any other Credit Document, or the financial condition of INTERCO
and its Subsidiaries or the existence or possible existence of
any Default or Event of Default.
12.04 Certain Rights of the Administrative Agent, the
Documentation Agent and the Syndication Agent. If the
Administrative Agent, the Documentation Agent or the Syndication
Agent shall request instructions from the Required Banks with
respect to any act or action (including failure to act) in
connection with this Agreement or any other Credit Document, such
Administrative Agent, Documentation Agent or Syndication Agent
shall be entitled to refrain from such act or taking such action
unless and until the Administrative Agent shall have received
instructions from the Required Banks; and such Administrative
Agent, Documentation Agent or Syndication Agent shall not incur
liability to any Person by reason of so refraining. Without
limiting the foregoing, no Bank or holder of any Note shall have
any right of action whatsoever against the Administrative Agent,
the Documentation Agent or the Syndication Agent as a result of
the Administrative Agent acting or refraining from acting
hereunder or under any other Credit Document in accordance with
the instructions of the Required Banks.
12.05 Reliance. The Administrative Agent, the
Documentation Agent and the Syndication Agent shall be entitled
to rely, and shall be fully protected in relying, upon any note,
writing, resolution, notice, statement, certificate, telex,
teletype or telecopier message, cablegram, radiogram, order or
other document or telephone message signed, sent or made by any
Person that such Administrative Agent, Documentation Agent or
Syndication Agent believed to be the proper Person, and, with
respect to all legal matters pertaining to this Agreement and any
other Credit Document and its duties hereunder and thereunder,
upon advice of counsel selected by such Administrative Agent,
Documentation Agent or Syndication Agent (which may be counsel
for the Credit Parties).
12.06 Indemnification. To the extent each of the
Administrative Agent, the Documentation Agent or the Syndication
Agent is not reimbursed and indemnified by the Borrowers, the
Banks will reimburse and indemnify such Administrative Agent,
Documentation Agent or Syndication Agent, in proportion to their
respective "percentages" as used in determining the Required
Banks (determined as if there were no Defaulting Banks), for and
against any and all liabilities, obligations, losses, damages,
penalties, claims, actions, judgments, costs, expenses or dis-
bursements of whatsoever kind or nature which may be imposed on,
asserted against or incurred by such Administrative Agent,
Documentation Agent or Syndication Agent in performing its
respective duties hereunder or under any other Credit Document,
in any way relating to or arising out of this Agreement or any
other Credit Document; provided that no Bank shall be liable for
any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Administrative Agent's,
Documentation Agent's or Syndication Agent's gross negligence or
willful misconduct.
12.07 The Administrative Agent, the Documentation
Agent and the Syndication Agent in its Individual Capacity. With
respect to its obligation to make Loans and participate in
Letters of Credit under this Agreement, each of the
Administrative Agent, the Documentation Agent and the Syndication
Agent shall have the rights and powers specified herein for a
"Bank" and may exercise the same rights and powers as though it
were not performing the duties specified herein; and the term
"Banks," "Required Banks," "holders of Notes" or any similar
terms shall, unless the context clearly otherwise indicates, in-
clude the Administrative Agent, the Documentation Agent and the
Syndication Agent in their individual capacity. Each of the
Administrative Agent, the Documentation Agent and the Syndication
Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with any
Credit Party or any Affiliate of any Credit Party as if they were
not performing the duties specified herein, and may accept fees
and other consideration from the Borrowers or any other Credit
Party for services in connection with this Agreement and
otherwise without having to account for the same to the Banks.
12.08 Holders. The Administrative Agent may deem and
treat the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall have
been filed with the Administrative Agent. Any request, authority
or consent of any Person who, at the time of making such request
or giving such authority or consent, is the holder of any Note
shall be conclusive and binding on any subsequent holder,
transferee, assignee or indorsee, as the case may be, of such
Note or of any Note or Notes issued in exchange therefor.
12.09 Resignation by the Agents. (a) The
Administrative Agent may resign from the performance of all its
functions and duties hereunder and/or under the other Credit
Documents at any time by giving 15 Business Days' prior written
notice to the Borrowers and the Banks. Such resignation shall
take effect upon the appointment of a successor Administrative
Agent pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the Required
Banks shall appoint a successor Administrative Agent hereunder or
thereunder who shall be a commercial bank or trust company rea-
sonably acceptable to the Borrowers.
(c) If a successor Administrative Agent shall not have
been so appointed within such 15 Business Day period, the
Administrative Agent, with the consent of the Borrowers, shall
then appoint a commercial bank or trust company with capital and
surplus of not less than $500 million as successor Administrative
Agent who shall serve as Administrative Agent hereunder or there-
under until such time, if any, as the Required Banks appoint a
successor Administrative Agent as provided above.
(d) If no successor Administrative Agent has been
appointed pursuant to clause (b) or (c) above by the 20th
Business Day after the date such notice of resignation was given
by the Administrative Agent, the Administrative Agent's
resignation shall become effective and the Banks shall thereafter
perform all the duties of the Administrative Agent hereunder
and/or under any other Credit Document until such time, if any,
as the Required Banks appoint a successor Administrative Agent as
provided above.
(e) The Documentation Agent, as such, may resign at
any time by giving 5 Business Days' prior written notice to the
Banks. Such resignation shall take effect at the end of such
five Business Day period.
(f) The Syndication Agent, as such, may resign at any
time by giving 5 Business Days' prior written notice to the
Banks. Such resignation shall take effect at the end of such
five Business Day period.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrowers jointly
and severally shall: (i) whether or not the transactions herein
contemplated are consummated, pay all reasonable out-of-pocket
costs and expenses of the Administrative Agent (including,
without limitation, the reasonable fees and disbursements of
White & Case and local counsel) in connection with the
preparation, execution and delivery of this Agreement and the
other Credit Documents and the documents and instruments referred
to herein and therein and any amendment, waiver or consent relat-
ing hereto or thereto, of the Agents in connection with their
respective syndication efforts with respect to this Agreement and
of the Administrative Agent and, following and during the
continuation of an Event of Default, each of the Banks in
connection with the enforcement of this Agreement and the other
Credit Documents and the documents and instruments referred to
herein and therein (including, without limitation, the reasonable
fees and disbursements of counsel for the Administrative Agent
and, following and during the continuation of an Event of
Default, for each of the Banks); (ii) pay and hold each of the
Banks harmless from and against any and all present and future
stamp, excise and other similar taxes with respect to the
foregoing matters and hold each of the Banks harmless from and
against any and all liabilities with respect to or resulting from
any delay or omission (other than to the extent attributable to
such Bank) to pay such taxes; and (iii) indemnify the Agents and
each Bank (including in its capacity as an Issuing Bank), and
each of their respective officers, directors, employees,
representatives, affiliates and agents from and hold each of them
harmless against any and all liabilities, obligations (including
removal or remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and disbursements
(including reasonable attorneys' and consultants' fees and
disbursements) incurred by, imposed on or assessed against any of
them as a result of, or arising out of, or in any way related to,
or by reason of, (a) any investigation, litigation or other pro-
ceeding (whether or not any Agent or any Bank is a party thereto)
related to the entering into and/or performance of this Agreement
or any other Credit Document or the use of any Letter of Credit
or the proceeds of any Loans hereunder or the consummation of any
transactions contemplated herein (including, without limitation,
the Transaction) or in any other Credit Document or the exercise
of any of their rights or remedies provided herein or in the
other Credit Documents, or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or
on the surface or subsurface of any Real Property owned or at any
time operated by INTERCO or any of its Subsidiaries, the genera-
tion, storage, transportation, handling or disposal of Hazardous
Materials at any location, whether or not owned or operated by
INTERCO or any of its Subsidiaries, the non-compliance of any
Real Property with foreign, federal, state and local laws,
regulations, and ordinances (including applicable permits
thereunder) applicable to any Real Property, or any Environmental
Claim asserted against INTERCO, any of its Subsidiaries, or any
Real Property owned or at any time operated by INTERCO or any of
its Subsidiaries, including, in each case, without limitation,
the reasonable fees and disbursements of counsel and other
consultants incurred in connection with any such investigation,
litigation or other proceeding (but excluding any losses,
liabilities, claims, damages or expenses to the extent incurred
by reason of the gross negligence or willful misconduct of the
Person to be indemnified). To the extent that the undertaking to
indemnify, pay or hold harmless any Agent or any Bank set forth
in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrowers shall make
the maximum contribution to the payment and satisfaction of each
of the indemnified liabilities which is permissible under
applicable law.
13.02 Right of Setoff. In addition to any rights now
or hereafter granted under applicable law or otherwise, and not
by way of limitation of any such rights, upon the occurrence of
an Event of Default, each Bank is hereby authorized at any time
or from time to time, without presentment, demand, protest or
other notice of any kind to the Borrowers or to any other Person,
any such notice being hereby expressly waived, to set off and to
appropriate and apply any and all deposits (general or special)
and any other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of such
Bank wherever located) to or for the credit or the account of any
Credit Party against and on account of the Obligations and
liabilities of all Credit Parties to such Bank under this
Agreement or under any of the other Credit Documents, including,
without limitation, all interests in Obligations purchased by
such Bank pursuant to Section 13.06(b), and all other claims of
any nature or description arising out of or connected with this
Agreement or any other Credit Document, irrespective of whether
or not such Bank shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them,
shall be contingent or unmatured.
13.03 Notices. Except as otherwise expressly provided
herein, all notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex,
telecopier or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered: if to the Borrowers,
at the Borrowers' address specified opposite its signature below;
if to any other Credit Party, at such Credit Party's address set
forth in any Credit Document; if to any Bank, at its address
specified opposite its name on Schedule II below; and if to the
Administrative Agent, at its Notice Office; or, as to any Credit
Party or the Administrative Agent, at such other address as shall
be designated by such party in a written notice to the other
parties hereto and, as to each Bank, at such other address as
shall be designated by such Bank in a written notice to the
Borrowers and the Administrative Agent. All such notices and
communications shall, when mailed, telegraphed, telexed, tele-
copied, or cabled or sent by overnight courier, be effective when
deposited in the mails, delivered to the telegraph company, cable
company or overnight courier, as the case may be, or sent by
telex or telecopier, except that notices and communications to
the Administrative Agent and the Borrowers shall not be effective
until received by the Administrative Agent or the Borrowers, as
the case may be.
13.04 Benefit of Agreement. (a) This Agreement shall
be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto;
provided, however, no Borrower may assign or transfer any of its
rights, obligations or interest hereunder or under any other
Credit Document without the prior written consent of all of the
Banks and, provided further, that although any Bank may transfer,
assign or grant participations in its rights hereunder, such Bank
shall remain a "Bank" for all purposes hereunder (and may not
transfer or assign all or any portion of its Commitments
hereunder except as provided in Section 13.04(b)) and the
transferee, assignee or participant, as the case may be, shall
not constitute a "Bank" hereunder and, provided further, that no
Bank shall transfer or grant any participation under which the
participant shall have rights to approve any amendment to or
waiver of this Agreement or any other Credit Document except to
the extent such amendment or waiver would (i) extend the final
scheduled maturity of any Loan or Note or extend the expiry date
of any Letter of Credit in which such participant is partici-
pating beyond the Final Maturity Date, or reduce the rate or
extend the time of payment of interest or Fees thereon (except in
connection with a waiver of applicability of any post-default in-
crease in interest rates) or reduce the principal amount thereof,
or increase the amount of the participant's participation over
the amount thereof then in effect (it being understood that
waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in any
Commitments shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan
shall be permitted without the consent of any participant if the
participant's participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the
Borrowers of any of their rights and obligations under this
Agreement or (iii) release all or substantially all of the
Collateral under all of the Security Documents (except as
expressly provided in the Credit Documents) supporting the Loans
and/or Letters of Credit hereunder in which such participant is
participating. In the case of any such participation, the
participant shall not have any rights under this Agreement or any
of the other Credit Documents (the participant's rights against
such Bank in respect of such participation to be those set forth
in the agreement executed by such Bank in favor of the
participant relating thereto) and all amounts payable by the
Borrowers hereunder shall be determined as if such Bank had not
sold such participation.
(b) Notwithstanding the foregoing, any Bank (or any
Bank together with one or more other Banks) may (x) assign all or
a portion of its Revolving Loan Commitment (and related out-
standing Obligations hereunder) and/or its outstanding Term Loans
(or, if prior to the Restatement Effective Date, Term Loan
Commitments) to its parent company and/or any affiliate of such
Bank which is at least 50% owned by such Bank or its parent
company or to one or more Banks or (y) after providing at least
two Business Days prior notice to (but without requiring the
consent of) INTERCO, assign all, or if less than all, a portion
equal to at least $10,000,000 in the aggregate for the assigning
Bank or assigning Banks, of such Revolving Loan Commitments and
outstanding principal amount of Term Loans (or, if prior to the
Restatement Effective Date, Term Loan Commitments) hereunder to
one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that, (i) at such
time Schedule I shall be deemed modified to reflect the
Commitments (and/or outstanding Term Loans, as the case may be)
of such new Bank and of the existing Banks, (ii) upon surrender
of the old Notes, new Notes will be issued, at the Borrowers'
expense, to such new Bank and to the assigning Bank, such new
Notes to be in conformity with the requirements of Section 1.05
(with appropriate modifications) to the extent needed to reflect
the revised Commitments (and/or outstanding Term Loans, as the
case may be), (iii) the consent of the Administrative Agent and
any Issuing Bank shall be required in connection with any such
assignment of a Bank's Revolving Loan Commitment (which consent
shall not be unreasonably withheld or delayed) and (iv) the
Administrative Agent shall receive at the time of each such
assignment (other than in connection with an assignment by a Bank
to an affiliate of such Bank), from the assigning or assignee
Bank, the payment of a non-refundable fee of $1,500 or in the
case of an assignment to an assignee which is not a Bank, the
payment of a non-refundable assignment fee of $3,500 and, pro-
vided further, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the
Register pursuant to Section 13.17 hereof. To the extent of any
assignment pursuant to this Section 13.04(b), the assigning Bank
shall be relieved of its obligations hereunder with respect to
its assigned Commitments. At the time of each assignment pursu-
ant to this Section 13.04(b) to a Person which is not already a
Bank hereunder and which is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for Federal
income tax purposes, the respective assignee Bank shall provide
to the Borrowers and the Administrative Agent the appropriate
Internal Revenue Service Forms (and, if applicable a Section
4.04(b)(ii) Certificate) described in Section 4.04(b). To the
extent that an assignment of all or any portion of a Bank's
Commitments and related outstanding Obligations pursuant to
Section 1.13 or this Section 13.04(b) would, at the time of such
assignment, result in increased costs under Section 1.10 or 1.11
greater than those being charged by the respective assigning Bank
prior to such assignment, then the Borrowers shall not be
obligated to pay such greater increased costs (although the
Borrowers shall be obligated to pay any other increased costs of
the type described above resulting from changes after the date of
the respective assignment).
(c) Nothing in this Agreement shall prevent or
prohibit any Bank from pledging its Loans and Notes hereunder to
a Federal Reserve Bank in support of borrowings made by such Bank
from such Federal Reserve Bank.
13.05 No Waiver; Remedies Cumulative. No failure or
delay on the part of the Administrative Agent or any Bank or any
holder of any Note in exercising any right, power or privilege
hereunder or under any other Credit Document and no course of
dealing between the Borrowers or any other Credit Party and the
Administrative Agent or any Bank or the holder of any Note shall
operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights, powers and remedies herein
or in any other Credit Document expressly provided are cumulative
and not exclusive of any rights, powers or remedies which the
Administrative Agent or any Bank or the holder of any Note would
otherwise have. No notice to or demand on any Credit Party in
any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute
a waiver of the rights of the Administrative Agent or any Bank or
the holder of any Note to any other or further action in any
circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as otherwise
provided in this Agreement, the Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of
the Borrowers in respect of any Obligations hereunder, it shall
distribute such payment to the Banks (other than any Bank that
has consented in writing to waive its pro rata share of any such
payment) pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.
(b) Each of the Banks agrees that, if it should
receive any amount hereunder (whether by voluntary payment, by
realization upon security, by the exercise of the right of setoff
or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal
of, or interest on, the Loans, Unpaid Drawings, Commitment Com-
mission or other Fees, of a sum which with respect to the related
sum or sums received by other Banks is in a greater proportion
than the total of such Obligation then owed and due to such Bank
bears to the total of such Obligation then owed and due to all of
the Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash without
recourse or warranty from the other Banks an interest in the
Obligations of the respective Credit Party to such Banks in such
amount as shall result in a proportional participation by all the
Banks in such amount; provided that if all or any portion of such
excess amount is thereafter recovered from such Bank, such
purchase shall be rescinded and the purchase price restored to
the extent of such recovery, but without interest.
(c) Notwithstanding anything to the contrary contained
herein, the provisions of the preceding Sections 13.06(a) and (b)
shall be subject to the express provisions of this Agreement
which require, or permit, differing payments to be made to Non-
Defaulting Banks as opposed to Defaulting Banks.
13.07 Calculations; Computations. (a) The financial
statements to be furnished to the Banks pursuant hereto shall be
made and prepared in accordance with generally accepted
accounting principles in the United States (or the equivalent
thereof in any country in which a Foreign Sales Corporation is
doing business, as applicable) consistently applied throughout
the periods involved, provided that, (i) except as otherwise
specifically provided herein, all computations of Excess Cash
Flow, Available $10 Million Dividend Basket Amount, Available $10
Million Acquisition/Investment Basket Amount, Available Retained
Excess Cash Flow Amount, Available Debt Proceeds Amount,
Available Unrestricted Proceeds Amount, Available Dividend
Unrestricted Proceeds Amount, Available Net Income Amount,
Consolidated Cumulative Net Income Amount, Consolidated
Cumulative Excess Net Income Amount, Consolidated Cumulative 25%
Net Income Amount, Returned Investment Amount and Available
Returned Investment Amount and all computations determining com-
pliance with Sections 9.02 through 9.10, inclusive, shall utilize
accounting principles and policies in conformity with those used
to prepare the historical financial statements delivered to the
Banks pursuant to Sections 7.05(a), (ii) for all purposes of this
Agreement, all Attributed Receivables Facility Indebtedness of
the Receivables Subsidiary shall be included in the consolidated
financial statements of INTERCO and its Restricted Subsidiaries,
and shall be considered Indebtedness of a Restricted Subsidiary
of INTERCO hereunder, regardless of any differing treatment
pursuant to generally acceptable accounting principles and (iii)
for purposes of calculating financial terms, all covenants and
related definitions, all such calculations based on the
operations of INTERCO and its Restricted Subsidiaries on a
consolidated basis shall be made without giving effect to the
operations of any Unrestricted Subsidiaries.
(b) All computations of interest, Commitment Com-
mission and other Fees hereunder shall be made on the basis of a
year of 360 days for the actual number of days (including the
first day but excluding the last day) occurring in the period for
which such interest, Commitment Commission or other Fees are
payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER
CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND THEREUNDER SHALL, EXCEPT AS OTHERWISE PROVIDED IN
CERTAIN OF THE MORTGAGES, BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL ACTION
OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR
OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWERS HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF
THE AFORESAID COURTS. EACH OF THE BORROWERS HEREBY IRREVOCABLY
DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, WITH
OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK
10019 AS ITS DESIGNEE, APPOINTEE AND AGENT TO RECEIVE AND ACCEPT
FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS WHICH
MAY BE SERVED IN ANY SUCH ACTION OR PROCEEDING. IF FOR ANY
REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE TO BE
AVAILABLE TO ACT AS SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A
NEW DESIGNEE, APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS
AND FOR THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE
ADMINISTRATIVE AGENT UNDER THIS AGREEMENT. EACH OF THE BORROWERS
FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ANY CREDIT PARTY AT ITS ADDRESS SET FORTH
OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO BECOME EFFECTIVE 30
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT
OF THE ADMINISTRATIVE AGENT UNDER THIS AGREEMENT, ANY BANK OR THE
HOLDER OF ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED
AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF THE BORROWERS HEREBY IRREVOCABLY WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT
OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE
AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto on
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the
Borrowers and the Administrative Agent.
13.10 Effectiveness. (a) This Agreement shall become
effective on the date (the "Restatement Effective Date") on which
(i) each Borrower, each of the Banks (including each Continuing
Bank and each New Bank), the Required Banks (determined
immediately before the occurrence of the Restatement Effective
Date) and each Agent shall have signed a counterpart hereof
(whether the same or different counterparts) and shall have
delivered (including by way of facsimile device) the same to the
Administrative Agent at its Notice Office and (ii) the conditions
contained in Sections 5, 6 and 13.10(b) are met to the
satisfaction of the Administrative Agent and the Required Banks
(determined immediately after the occurrence of the Restatement
Effective Date). Unless the Administrative Agent has received
actual notice from any Bank that the conditions contained in
Sections 5 and 6 have not been met to its satisfaction, upon the
satisfaction of the condition described in clause (i) of the
immediately preceding sentence and upon the Administrative
Agent's good faith determination that the conditions described in
clause (ii) of the immediately preceding sentence have been met,
then the Restatement Effective Date shall have been deemed to
have occurred, regardless of any subsequent determination that
one or more of the conditions thereto had not been met (although
the occurrence of the Restatement Effective Date shall not
release the Borrowers from any liability for failure to satisfy
one or more of the applicable conditions contained in Section 5
or 6). The Administrative Agent will give the Borrowers and each
Bank prompt written notice of the occurrence of the Restatement
Effective Date.
(b) On the Restatement Effective Date, each New Bank
and Continuing Bank shall have delivered to the Administrative
Agent for the account of the Borrowers an amount equal to (i) in
the case of each New Bank, the Term Loans and Revolving Loans to
be made by such New Bank on the Restatement Effective Date and
(ii) in the case of each Continuing Bank, the amount by which the
principal amount of Loans to be made and/or converted by such
Continuing Bank on the Restatement Effective Date exceed the
amount of the Original Loans of such Continuing Bank outstanding
on the Restatement Effective Date. Notwithstanding anything to
the contrary contained in this Section 13.10(b), in satisfying
the foregoing condition, unless the Administrative Agent shall
have been notified by any Bank prior to the occurrence of the
Restatement Effective Date that such Bank does not intend to make
available to the Administrative Agent such Bank's Term Loans and
Revolving Loans required to be made by it on such date, then the
Administrative Agent may, in reliance on such assumption, make
available to the Borrower the corresponding amounts in accordance
with the provisions of Section 1.04 of this Agreement, and the
making available by the Administrative Agent of such amounts
shall satisfy the condition contained in this Section 13.10(b).
13.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are inserted
for convenience only and shall not in any way affect the meaning
or construction of any provision of this Agreement.
13.12 Amendment or Waiver; etc. (a) Neither this
Agreement nor any other Credit Document nor any terms hereof or
thereof may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the Re-
quired Banks, provided that no such change, waiver, discharge or
termination shall, without the consent of each Bank (other than a
Defaulting Bank) (with Obligations being directly affected
thereby in the case of following clause (i)), (i) extend the
final scheduled maturity of any Loan or Note, or extend the
stated maturity of any Letter of Credit beyond the Revolving Loan
Maturity Date, or reduce the rate or extend the time of payment
of interest or Fees thereon, or reduce the principal amount
thereof (except to the extent repaid in cash), (ii) release all
or substantially all of the Collateral under all the Security
Documents (except as expressly provided in the Credit Documents),
(iii) amend, modify or waive any provision of this Section 13.12,
(iv) reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent of the
Required Banks, additional extensions of credit pursuant to this
Agreement may be included in the determination of the Required
Banks on substantially the same basis as the extensions of Term
Loans and Revolving Loan Commitments are included on the
Restatement Effective Date) or (v) consent to the assignment or
transfer by the Borrowers of any of their rights and obligations
under this Agreement; provided further, that no such change,
waiver, discharge or termination shall (r) increase the
Commitments of any Bank over the amount thereof then in effect
without the consent of such Bank (it being understood that
waivers or modifications of conditions precedent, covenants,
Defaults or Events of Default or of a mandatory reduction in any
Commitments shall not constitute an increase of the Commitment of
any Bank, and that an increase in the available portion of any
Commitment of any Bank shall not constitute an increase in the
Commitment of such Bank), (s) without the consent of the
respective Issuing Bank or Issuing Banks, amend, modify or waive
any provision of Section 2 with respect to Letters of Credit
issued by it or alter its rights or obligations with respect to
Letters of Credit or Acceptances, (t) without the consent of
BTCo, amend, modify or waive any provision of Sections 1.01(e)
and (f) or alter its rights and obligations with respect to
Swingline Loans, (u) without the consent of each Agent affected
thereby, amend, modify or waive any provision of Section 12 as
same applies to such Agent or any other provision as same relates
to the rights or obligations of such Agent, (v) without the
consent of the Collateral Agent, amend, modify or waive any
provision relating to the rights or obligations of the Collateral
Agent, (w) without the consent of the Majority Banks of each
Tranche which is being allocated a lesser prepayment, repayment
or commitment reduction as a result of the actions described
below (or without the consent of the Majority Banks of each
Tranche in the case of an amendment to the definition of Majority
Banks), amend the definition of Majority Banks or alter the re-
quired application of any prepayments or repayments (or commit-
ment reductions), as between the various Tranches, pursuant to
Section 4.01 or 4.02 (excluding Sections 4.02(b), (c) and (d))
(although the Required Banks may, with the consent of the
Majority B and C Banks as provided in the following clause (x),
waive, in whole or in part, any such prepayment, repayment or
commitment reduction, so long as the application, as amongst the
various Tranches, of any such prepayment, repayment or commitment
reduction which is still required to be made is not altered), (x)
without the consent of the Majority B and C Banks, amend, modify
or waive any provision of Section 4.02 (excluding Sections
4.02(a), (b), (c) and (d)) or the definition of Majority B and C
Banks, or waive any repayment or prepayment required pursuant to
Section 4.02 (excluding pursuant to Sections 4.02(a), (b), (c)
and (d)), (y) without the consent of the Supermajority Banks of
the respective Tranche (1) amend, modify or waive any Scheduled
Repayment with respect to such Tranche or (2) reduce the
percentage specified in the definition of Supermajority Banks
with respect to such Tranche, and (z) without the consent of the
Required Supermajority Banks, (1) release any significant portion
of the Collateral under the Security Documents (except as
expressly provided in the Credit Documents) or release any
significant Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty (other than in connection with a transaction
permitted pursuant to Section 9.02); provided that no Collateral
shall constitute a significant portion of the Collateral and no
Subsidiary Guarantor shall constitute a significant Subsidiary
Guarantor if the fair market value of the Collateral to be
released plus the fair market value of the assets owned or held
by such Subsidiary Guarantor is $20 million or less in the
aggregate (based on a certificate of the chief financial officer
of INTERCO taking into account all prior releases) or (2) reduce
the percentage specified in the definition of Required
Supermajority Banks.
(b) If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions of this
Agreement as contemplated by clauses (i) through (v), inclusive,
of the first proviso to Section 13.12(a), the consent of the
Required Banks is obtained but the consent of one or more of such
other Banks whose consent is required is not obtained, then the
Borrowers shall have the right, so long as all non-consenting
Banks whose individual consent is required are treated as
described in either clauses (A) or (B) below, to either (A)
replace each such non-consenting Bank or Banks (or, at the option
of the Borrowers if the respective Bank's consent is required
with respect to less than all Tranches of Loans (or related
Commitments), to replace only the respective Tranche or Tranches
of Commitments and/or Loans of the respective non-consenting
Bank which gave rise to the need to obtain such Bank's individual
consent) with one or more Replacement Banks pursuant to Section
1.13 so long as at the time of such replacement, each such
Replacement Bank consents to the proposed change, waiver,
discharge or termination or (B) terminate such non-consenting
Bank's Revolving Loan Commitment (if such Bank's consent is
required as a result of its Revolving Loan Commitment) and/or
repay outstanding Term Loans of such Bank which gave rise to the
need to obtain such Bank's consent, in accordance with Sections
3.02(b) and/or 4.01(b), provided that, unless the Commitments are
terminated, and Loans repaid, pursuant to the preceding clause
(B) are immediately replaced in full at such time through the
addition of new Banks or the increase of the Commitments and/or
outstanding Loans of existing Banks (who in each case must
specifically consent thereto), then in the case of any action
pursuant to preceding clause (B) the Required Banks (determined
before giving effect to the proposed action) shall specifically
consent thereto, provided further, that in any event the Bor-
rowers shall not have the right to replace a Bank, terminate its
Revolving Loan Commitment or repay its Loans solely as a result
of the exercise of such Bank's rights (and the withholding of any
required consent by such Bank) pursuant to the second proviso to
Section 13.12(a).
13.13 Survival. All indemnities set forth herein
including, without limitation, in Sections 1.10, 1.11, 2.06,
4.04, 13.01 and 13.06 shall, subject to Section 13.15 (to the
extent applicable), survive the execution, delivery and
termination of this Agreement and the Notes and the making and
repayment of the Loans.
13.14 Domicile of Loans. Each Bank may transfer and
carry its Loans at, to or for the account of any office,
Subsidiary or Affiliate of such Bank. Notwithstanding anything
to the contrary contained herein, to the extent that a transfer
of Loans pursuant to this Section 13.14 would, at the time of
such transfer, result in increased costs under Section 1.10,
1.11, 2.06 or 4.04 from those being charged by the respective
Bank prior to such transfer, then the Borrowers shall not be
obligated to pay such increased costs (although the Borrowers
shall be obligated to pay any other increased costs of the type
described above resulting from changes after the date of the
respective transfer).
13.15 Limitation on Additional Amounts, etc. Not-
withstanding anything to the contrary contained in Sections 1.10,
1.11, 2.06 or 4.04 of this Agreement, unless a Bank gives notice
to the Borrowers that it is obligated to pay an amount under any
such Section within one year after the later of (x) the date the
Bank incurs the respective increased costs, Taxes, loss, expense
or liability, reduction in amounts received or receivable or
reduction in return on capital or (y) the date such Bank has
actual knowledge of its incurrence of the respective increased
costs, Taxes, loss, expense or liability, reductions in amounts
received or receivable or reduction in return on capital, then
such Bank shall only be entitled to be compensated for such
amount jointly and severally by the Borrowers pursuant to said
Section 1.10, 1.11, 2.06 or 4.04, as the case may be, to the
extent the costs, Taxes, loss, expense or liability, reduction in
amounts received or receivable or reduction in return on capital
are incurred or suffered on or after the date which occurs one
year prior to such Bank giving notice to the Borrowers that it is
obligated to pay the respective amounts pursuant to said Section
1.10, 1.11, 2.06 or 4.04, as the case may be. This Section 13.15
shall have no applicability to any Section of this Agreement
other than said Sections 1.10, 1.11, 2.06 and 4.04.
13.16 Confidentiality. (a) Subject to the provisions
of clause (b) of this Section 13.16, each Bank agrees that it
will use its best efforts not to disclose without the prior
consent of the Borrowers (other than to its employees, auditors,
advisors or counsel or to another Bank if the Bank or such Bank's
holding or parent company in its sole discretion determines that
any such party should have access to such information, provided
such Persons shall be subject to the provisions of this Section
13.16 to the same extent as such Bank) any information with
respect to INTERCO or any of its Subsidiaries which is now or in
the future furnished pursuant to this Agreement or any other
Credit Document and which is designated by INTERCO to the Banks
in writing as confidential, provided that any Bank may disclose
any such information (a) as has become generally available to the
public, (b) as may be required or appropriate in any report,
statement or testimony submitted to any municipal, state or
Federal regulatory body having or claiming to have jurisdiction
over such Bank or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether
in the United States or elsewhere) or their successors, (c) as
may be required or appropriate in respect to any summons or
subpoena or in connection with any litigation, (d) in order to
comply with any law, order, regulation or ruling applicable to
such Bank, (e) to any Agent or the Collateral Agent and (f) to
any prospective or actual transferee or participant in connection
with any contemplated transfer or participation of any of the
Notes or Commitments or any interest therein by such Bank,
provided, that such prospective transferee agrees to maintain the
confidentiality contained in this Section.
(b) Each of the Borrowers hereby acknowledges and
agrees that each Bank may share with any of its affiliates any
information related to INTERCO or any of its Subsidiaries (in-
cluding, without limitation, any nonpublic customer information
regarding the creditworthiness of INTERCO and its Subsidiaries),
provided such Persons shall be subject to the provisions of this
Section 13.16 to the same extent as such Bank.
13.17 Register. The Borrowers hereby designate the
Administrative Agent to serve as the Borrowers' agent, solely for
purposes of this Section 13.17, to maintain a register (the
"Register") on which it will record the Commitments from time to
time of each of the Banks, the Loans made by each of the Banks
and each repayment in respect of the principal amount of the
Loans of each Bank. Failure to make any such recordation, or any
error in such recordation shall not affect the Borrowers'
obligations in respect of such Loans. With respect to any Bank,
the transfer of the Commitments of such Bank and the rights to
the principal of, and interest on, any Loan made pursuant to such
Commitments shall not be effective until such transfer is
recorded on the Register maintained by the Administrative Agent
with respect to ownership of such Commitments and Loans and prior
to such recordation all amounts owing to the transferor with
respect to such Commitments and Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or
part of any Commitments and Loans shall be recorded by the
Administrative Agent on the Register only upon the acceptance by
the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 13.04(b).
Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and regis-
tration of assignment or transfer of all or part of a Loan, or as
soon thereafter as practicable, the assigning or transferor Bank
shall surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Bank and/or the new Bank.
The Borrowers jointly and severally agree to indemnify the
Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed
on, asserted against or incurred by the Administrative Agent in
performing its duties under this Section 13.17, provided that the
Borrowers shall have no obligation to indemnify the
Administrative Agent for any loss, claim, damage, liability or
expense which resulted primarily from the gross negligence or
wilful misconduct of the Administrative Agent.
13.18 Addition of New Banks; Conversion of Original
Loans of Continuing Banks; Termination of Commitments of Non-
Continuing Banks.
(a) On and as of the occurrence of the Restatement
Effective Date in accordance with Section 13.10, each New Bank
shall become a "Bank" under, and for all purposes of, this
Agreement and the other Credit Documents.
(b) The parties hereto acknowledge that each Original
Bank has been offered the opportunity to participate in this
Agreement, after the occurrence of the Restatement Effective
Date, as a Continuing Bank hereunder, but that no Original Bank
is obligated to be a Continuing Bank. By their execution and
delivery hereof, the Borrower and the Required Banks (determined
immediately before the occurrence of the Restatement Effective
Date) consent to the voluntary repayment by the Borrower of all
outstanding Original Loans and other Obligations owing to each
Original Bank which has not elected to become a Continuing Bank
(each such Bank, a "Non-Continuing Bank") and to the voluntary
termination by the Borrower of the Revolving Loan Commitment
(under, and as defined in, the Original Credit Agreement) of each
Non-Continuing Bank, in each case to be effective on, and contem-
poraneously with the occurrence of, the Restatement Effective
Date, in each case in accordance with the provisions of Section
13.18(c).
(c) Notwithstanding anything to the contrary contained
in the Original Credit Agreement or any Credit Document, the
Borrower and each of the Banks hereby agrees that on the
Restatement Effective Date, (i) each Bank with a Commitment as
set forth on Schedule I (after giving effect to the Restatement
Effective Date) shall make or maintain (including by way of
conversion) that principal amount of Term Loans and/or Revolving
Loans to the Borrower as is required by Section 1.01, provided
that if the Original Loans of any Continuing Bank outstanding on
the Restatement Effective Date (immediately before giving effect
thereto) exceed the aggregate principal amount of Loans required
to be made available by such Bank on such date (after giving
effect to the Restatement Effective Date), then Original Loans of
such Continuing Bank in an amount equal to such excess shall be
repaid on the Restatement Effective Date to such Continuing Bank
and (ii) in the case of each Non-Continuing Bank, all of such
Non-Continuing Bank's Original Loans outstanding on the
Restatement Effective Date shall be repaid in full on such date,
together with interest thereon and all accrued Fees (and any
other amounts) owing to such Non-Continuing Bank, and the Term
Loan Commitment and/or Revolving Loan Commitment (under, and as
defined in, the Original Credit Agreement) of such Non-Continuing
Bank, if any, shall be terminated, effective upon the occurrence
of the Restatement Effective Date. Notwithstanding anything to
the contrary contained in the Original Credit Agreement, this
Agreement or any other Credit Document, the parties hereto hereby
consent to the repayments and reductions required above, and
agree that in the event that any Original Bank shall fail to exe-
cute a counterpart of this Agreement prior to the occurrence of
the Restatement Effective Date, such Original Bank shall be
deemed to be a Non-Continuing Bank and, concurrently with the
occurrence of the Restatement Effective Date, the Revolving Loan
Commitment (under, and as defined in, the Original Credit
Agreement) of such Original Bank, if any, shall be terminated,
all Original Loans of such Original Bank outstanding on the
Restatement Effective Date shall be repaid in full, together with
interest thereon and all accrued Fees (and any other amounts)
owing to such Original Bank, and concurrently with the occurrence
of the Restatement Effective Date, such Original Bank shall no
longer constitute a "Bank" under this Agreement and the other
Credit Documents, provided that all indemnities of the Credit
Parties under the Original Credit Agreement and the other Credit
Documents (as in effect prior to the Restatement Effective Date)
for the benefit of such Original Bank shall survive in accordance
with the terms thereof.
13.19 Post Closing Actions. Notwithstanding anything
to the contrary contained in this Agreement or the other Credit
Documents, the parties hereto acknowledge and agree that:
(a) Revised Mortgage Policies. The Borrowers will
take any further action, including, without limitation
amending any UCC-1 Financing Statements or the relevant
Mortgage or deleting the title commitment exceptions to the
Davidson County, N.C. title commitment consisting of liens
or any adverse encumbrances as same may be revised or
amended, to assure that the mortgage policy with respect to
the Real Property located in Davidson County, N.C. is issued
within sixty (60) Business Days after the Restatement
Effective Date, in form and substance satisfactory to the
Administrative Agent.
(b) Stock Certificate. Thomasville will deliver, or
cause to be delivered, within sixty (60) Business Days after
the Restatement Effective Date to the Collateral Agent a
stock certificate evidencing the ownership by Thomasville of
the three shares of capital stock of Lee Publications, Inc.
(currently titled in the name of Caldwell Furniture Company,
provided the current certificate for such shares which is
pledged to the Collateral Agent shall be exchanged for such
new stock certificate), together with executed and undated
stock powers, in each case as required by the Pledge
Agreement.
All conditions precedent and representations contained
in this Agreement and the other Credit Documents shall be deemed
modified to the extent necessary to effect the foregoing (and to
permit the taking of the actions described above within the time
periods required above, rather than as elsewhere provided in the
Credit Documents); provided, that (x) to the extent any
representation and warranty would not be true because the
foregoing actions were not taken on the Restatement Effective
Date, the respective representation and warranty shall be
required to be true and correct in all material respects at the
time the respective action is taken (or was required to be taken)
in accordance with the foregoing provisions of Section 13.19 and
(y) all representations and warranties relating to the Security
Documents shall be required to be true immediately after the
actions required to be taken by Section 13.19 have been taken (or
were required to be taken). The acceptance of the benefits of
each Credit Event shall constitute a representation, warranty and
covenant by the Borrowers to each of the Banks that the actions
required pursuant to this Section 13.19 will be taken within the
relevant time periods referred to in this Section 13.19 and that,
at such time, all representations and warranties contained in
this Agreement and the other Credit Documents shall then be true
and correct without any modification pursuant to this Section
13.19.<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Agreement as of the date first above written.
Address:
--------
101 South Hanley Road INTERCO INCORPORATED
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By David P. Howard
---------------------------
Title: Vice-President
c/o INTERCO INCORPORATED BROYHILL FURNITURE
101 South Hanley Road INDUSTRIES, INC.
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By David P. Howard
---------------------------
Title: Vice-President
c/o INTERCO INCORPORATED THE LANE COMPANY,
101 South Hanley Road INCORPORATED
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By David P. Howard
---------------------------
Title: Vice-President
c/o INTERCO INCORPORATED THOMASVILLE FURNITURE
101 South Hanley Road INDUSTRIES, INC.
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By David P. Howard
---------------------------
Title: Vice-President
One Bankers Trust Plaza BANKERS TRUST COMPANY,
130 Liberty Street Individually and as Administrative
New York, NY 10006 Agent
Tel: (212) 250-1724
Fax: (212) 250-7218
Attention: Dana F. Klein By Gina S. Thompson
---------------------------
Title: Vice President
NATIONSBANK, N.A.,
Individually and as Syndication
Agent
By Christopher B. Torie
----------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
as Documentation Agent
By Raymond Whiteman
---------------------------
Title: Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH, Individually
By Robert H. Dial
---------------------------
Title: Authorized Signature
CREDIT LYONNAIS CHICAGO BRANCH,
Individually
By Mary Ann Klemm
---------------------------
Title: Vice President
Group Head
ARAB BANKING CORPORATION
By Sheldon Tilney
-----------------------------
Title: Deputy General Manager
BANK OF AMERICA ILLINOIS
By Jonathan Kitej
---------------------------
Title: Managing Director
BANK OF MONTREAL
By Michael D. Pincus
---------------------------
Title: Managing Director
BANK OF SCOTLAND
By W.P. Hendry
----------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By John C. Lambert
---------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By F.C.H. Ashby
---------------------------
Title: Senior Manager Loan
Operations
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By Matthew Springman
---------------------------
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE
By David Bouhl F.V.P.
---------------------------
Title: Head of Corporate
Banking, Chicago
CIBC, INC
By John J. Mack
---------------------------
Title: Director
CONTINENTAL CASUALTY COMPANY
By Richard W. Dubberke
---------------------------
Title: Vice President
THE DAI-ICHI KANGYO BANK, LTD.,
CHICAGO BRANCH
By Takao Teramura
-------------------------------
Title: Assistant Vice President
DRESDNER BANK AG
Chicago Branch and Grand Cayman
Branch
By Elizabeth B. Holden
------------------------------
Title: Senior Vice President
and Manager
By Elizabeth B. Holden
---------------------------
Title: Vice President
FIRST AMERICAN NATIONAL BANK
By Kelli H. Ernst
---------------------------
Title: Corporate Bank Officer
THE FUJI BANK LIMITED
By Peter L. Chinnici
---------------------------
Title: Joint General Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By Hiroki Yamada
---------------------------
Title: General Manager
THE LONG TERM CREDIT BANK OF
JAPAN, LTD
By Richard Stahl
---------------------------
Title: Senior Vice President
and Joint General
Manager
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By John B. Joyce
---------------------------
Title: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By Stephen M. Reese
---------------------------
Title: Vice President
MIDLAND BANK PLC, NEW YORK
BRANCH
By Martin Brown
---------------------------
Title: Director
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By Masaaki Yamagishi
---------------------------
Title: Chief Manager
NATIONAL CITY BANK
By Ted M. Parker
---------------------------
Title: Vice President
THE NIPPON CREDIT BANK, LTD
By Nancy Acevedo
----------------------------
Title: Assistant Vice President
PILGRIM PRIME RATE TRUST
By Howard Tiffen
---------------------------
Title: Senior Vice President
THE SANWA BANK, LIMITED
By T. Omura
---------------------------
Title: Assistant General Manager
THE SUMITOMO BANK, LIMITED,
CHICAGO BRANCH
By Hiroyuki Iwami
---------------------------
Title: Joint General Manager
UNITED STATES NATIONAL BANK OF
OREGON
By Dale Parshall
---------------------------
Title: Assistant Vice President
VAN KAMPEN AMERICAN CAPITAL
PRIME RATE INCOME TRUST
By Jeffrey W. Maillet
---------------------------
Title: Sr. Vice Pres. -
Portfolio Manager
THE YASUDA TRUST AND BANKING
CO., LTD., CHICAGO BRANCH
By Joeseph C. Meek
---------------------------
Title: First Vice President
& Manager<PAGE>
STOCK PURCHASE AGREEMENT
by and among
ARMSTRONG WORLD INDUSTRIES, INC.
ARMSTRONG ENTERPRISES, INC.
and
INTERCO INCORPORATED
November 18, 1995<PAGE>
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE OF SHARES . . . . . . . . . . . . . . . 1
1.1 Sale of Shares. . . . . . . . . . . . . . . . . . . . 1
1.2 Payment of Purchase Price. . . . . . . . . . . . . . . 2
2. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 The Closing; Post-Closing Purchase Price Adjustment . 2
2.2 Stock Certificates. . . . . . . . . . . . . . . . . . 2
2.3 Post-Closing Purchase Price Adjustment . . . . . . . . . 3
3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . 5
3.1 Organization and Corporate Power. . . . . . . . . . . 5
3.2 Authorization. . . . . . . . . . . . . . . . . . . . . 6
3.3 Financial Statements. . . . . . . . . . . . . . . . . 6
3.4 Absence of Undisclosed Liabilities. . . . . . . . . . 7
3.5 Absence of Certain Developments. . . . . . . . . . . . 7
3.6 Real Property. . . . . . . . . . . . . . . . . . . . . 9
3.7 Tangible Personal Property. . . . . . . . . . . . . . 10
3.8 Inventories and Supplies. . . . . . . . . . . . . . . 11
3.9 Intellectual Property Rights. . . . . . . . . . . . . 11
3.10 Accounts and Notes Receivable. . . . . . . . . . . . 12
3.11 Outstanding Capital Stock. . . . . . . . . . . . . . 12
3.12 Options or Other Rights. . . . . . . . . . . . . . . 13
3.13 Title to Shares. . . . . . . . . . . . . . . . . . . 13
3.14 Subsidiaries. . . . . . . . . . . . . . . . . . . . . 13
3.15 Compliance with Laws. . . . . . . . . . . . . . . . . 14
3.16 No Breach. . . . . . . . . . . . . . . . . . . . . . 14
3.17 Litigation. . . . . . . . . . . . . . . . . . . . . . 15
3.18 Material and Affiliated Contracts. . . . . . . . . . 16
3.19 Licenses and Permits. . . . . . . . . . . . . . . . . 17
3.20 Labor Matters. . . . . . . . . . . . . . . . . . . . 18
3.21 Charters and Bylaws. . . . . . . . . . . . . . . . . 18
3.22 Tax Matters. . . . . . . . . . . . . . . . . . . . . 19
3.23 Workers' Compensation . . . . . . . . . . . . . . . . 23
3.24 Insurance. . . . . . . . . . . . . . . . . . . . . . 23
3.25 Employee Benefit Plans. . . . . . . . . . . . . . . . 24
3.26 Necessary Property. . . . . . . . . . . . . . . . . . 31
3.27 Environmental Matters. . . . . . . . . . . . . . . . 32
3.28 Full Disclosure. . . . . . . . . . . . . . . . . . . 36
3.29 Limitation. . . . . . . . . . . . . . . . . . . . . . 37
4. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . 37
4.1 Organization and Corporate Power. . . . . . . . . . . 37
4.2 Authorization. . . . . . . . . . . . . . . . . . . . . 37
4.3 No Breach. . . . . . . . . . . . . . . . . . . . . . . 38
4.4 No Investigation. . . . . . . . . . . . . . . . . . . 38
4.5 Buyer's Financing. . . . . . . . . . . . . . . . . . . 39
4.6 Securities Act of 1933. . . . . . . . . . . . . . . . 39
5. COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . 39
5.1 Preservation of Business. . . . . . . . . . . . . . . 39
5.2 Negative Covenants of Seller. . . . . . . . . . . . . 40
5.3 Seller Tax Matters. . . . . . . . . . . . . . . . . . 41
5.4 Buyer Tax Matters. . . . . . . . . . . . . . . . . . . 42
5.5 Other Tax Matters. . . . . . . . . . . . . . . . . . . 43
5.6 Intercompany Accounts. . . . . . . . . . . . . . . . . 46
5.7 Notice of Developments. . . . . . . . . . . . . . . . 46
5.8 Reasonable Efforts and Certain Filings. . . . . . . . 47
5.9 Employees and Employee Benefits. . . . . . . . . . . . 47
5.10 Exclusivity. . . . . . . . . . . . . . . . . . . . . 54
5.11 Non-Hire. . . . . . . . . . . . . . . . . . . . . . . 55
5.12 Noncompetition. . . . . . . . . . . . . . . . . . . . 55
5.13 Pre- and Post-Closing Cooperation. . . . . . . . . . 56
5.14 Insurance. . . . . . . . . . . . . . . . . . . . . . 57
5.15 Confidentiality. . . . . . . . . . . . . . . . . . . 59
5.16 Industrial Revenue Bonds. . . . . . . . . . . . . . . 60
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER . . . . 61
6.1 Representations and Covenants. . . . . . . . . . . . . 61
6.2 Closing Certificate. . . . . . . . . . . . . . . . . . 62
6.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . 62
6.4 Injunction. . . . . . . . . . . . . . . . . . . . . . 62
6.5 Governmental Authority. . . . . . . . . . . . . . . . 62
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER . . . . . 62
7.1 Representations and Covenants. . . . . . . . . . . . . 63
7.2 Closing Certificate. . . . . . . . . . . . . . . . . . 63
7.3 Legal Opinion. . . . . . . . . . . . . . . . . . . . . 63
7.4 Injunction. . . . . . . . . . . . . . . . . . . . . . 63
7.5 Governmental Authority. . . . . . . . . . . . . . . . 64
7.6 No Loss. . . . . . . . . . . . . . . . . . . . . . . . 64
7.7 Financing. . . . . . . . . . . . . . . . . . . . . . . 64
7.8 Resignations. . . . . . . . . . . . . . . . . . . . . 64
7.9 Trademark License. . . . . . . . . . . . . . . . . . . 64
7.10 Consents. . . . . . . . . . . . . . . . . . . . . . . 65
7.11 Environmental Reports. . . . . . . . . . . . . . . . 65
8. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 65
8.1 Indemnity of Seller. . . . . . . . . . . . . . . . . . 65
8.2 Indemnity of Buyer. . . . . . . . . . . . . . . . . . 66
8.3 Mitigation. . . . . . . . . . . . . . . . . . . . . . 67
8.4 Matters Involving Third Parties. . . . . . . . . . . . 68
8.5 Tax Indemnification. . . . . . . . . . . . . . . . . . 69
8.6 Indemnification Payment. . . . . . . . . . . . . . . . 69
8.7 Environmental Indemnification. . . . . . . . . . . . . 70
8.8 Procedures Relating to Environmental Indemnity by Seller 73
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 76
9.1 Fees and Expenses. . . . . . . . . . . . . . . . . . . 76
9.2 Brokers. . . . . . . . . . . . . . . . . . . . . . . . 77
9.3 Access to the Company's Properties. . . . . . . . . . 77
9.4 Books and Records. . . . . . . . . . . . . . . . . . . 78
9.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . 79
9.6 Successors and Assigns. . . . . . . . . . . . . . . . 80
9.7 Entire Agreement and Modification. . . . . . . . . . . 80
9.8 Termination By Buyer. . . . . . . . . . . . . . . . . 81
9.9 Termination By Seller. . . . . . . . . . . . . . . . . 81
9.10 Other Termination. . . . . . . . . . . . . . . . . . 82
9.11 Effect of Termination. . . . . . . . . . . . . . . . 82
9.12 Survival of Representations, Covenants and Warranties. 83
9.13 Section and Other Headings. . . . . . . . . . . . . . 83
9.14 Governing Law. . . . . . . . . . . . . . . . . . . . 84
9.15 Counterparts. . . . . . . . . . . . . . . . . . . . . 84
9.16 Further Assurances. . . . . . . . . . . . . . . . . . 84
9.17 Severability. . . . . . . . . . . . . . . . . . . . . 84
9.18 Confidentiality. . . . . . . . . . . . . . . . . . . 84
9.19 No Third Party Beneficiaries. . . . . . . . . . . . . 85
9.20 Jurisdiction. . . . . . . . . . . . . . . . . . . . . 85
9.21 Specific Performance. . . . . . . . . . . . . . . . . 85
9.22 Intercompany Relationships. . . . . . . . . . . . . . 86
9.23 Parent Guarantee. . . . . . . . . . . . . . . . . . . 86
9.24 Definition of Knowledge. . . . . . . . . . . . . . . 86<PAGE>
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement"), dated November 18, 1995, among
ARMSTRONG WORLD INDUSTRIES, INC., a Pennsylvania corporation
("Parent"), ARMSTRONG ENTERPRISES, INC., a Vermont corporation
("Seller"), and INTERCO INCORPORATED, a Delaware corporation
("Buyer").
WITNESSETH:
WHEREAS, Seller, a wholly-owned subsidiary of Parent, owns
beneficially and of record all of the issued and outstanding shares
(the "Shares") of Common Stock, par value $1.00 per share, of
Thomasville Furniture Industries, Inc., a Pennsylvania corporation
(the "Company"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, the Shares upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained in this Agreement, Seller
and Buyer, intending to be legally bound, agree as follows:
1.PURCHASE AND SALE OF SHARES
1.1 Sale of Shares.
At the Closing (as defined in Section 2.1), Seller shall
sell, assign, transfer and deliver to Buyer, and Buyer shall purchase
and accept from Seller, the Shares for the aggregate purchase price of
$331,200,000 (the "Purchase Price"), payable as provided in Section
1.2. The Purchase Price is subject to adjustment as provided in
Section 2.3.
1.2 Payment of Purchase Price.
The Purchase Price shall be paid by Buyer to Seller on the
Closing Date by wire transfer of same day immediately available funds.
2. CLOSING
2.1 The Closing; Post-Closing Purchase Price Adjustment.
The closing ("Closing") of the sale and purchase of the
Shares contemplated hereby shall take place at the offices of the
legal counsel for Buyer s lead lender described in the Financing
Letters (as defined in Section 4.5) in New York, New York, at 10:00
a.m. local time on December 29, 1995 or, if later, the date that is
five business days following notice from Buyer to Seller of the
anticipated satisfaction of the condition set forth in Section 7.7, or
on such other date and such other place as the parties may agree, but
in any event not later than January 31, 1996 ( Termination Date );
provided, however, in the event that any of the conditions set forth
in Sections 6.4, 6.5, 7.4 and 7.5 shall not have been met or waived in
writing by the Termination Date, such date shall be extended to the
first to occur of (i) the satisfaction or written waiver of all such
conditions or (ii) March 15, 1996. The day of Closing is referred to
hereinafter as the "Closing Date."
2.2 Stock Certificates.
At the Closing, Seller shall deliver to Buyer stock
certificates representing all of the Shares, duly endorsed in blank or
accompanied by stock powers executed in blank, in proper form for
transfer, together with any required transfer stamps.
2.3 Post-Closing Purchase Price Adjustment.
(a) Within 60 days after the Closing Date, Buyer will
prepare and deliver to Seller a consolidated balance sheet (the
"Closing Date Balance Sheet") for the Company and the Subsidiaries as
of the close of business on the Closing Date (determined on a pro
forma basis as though the parties had not consummated the transactions
contemplated by this Agreement). The Closing Date Balance Sheet will
be audited by KPMG Peat Marwick ("Peat"), whose opinion will be
appended thereto. The Closing Date Balance Sheet will be prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with the preparation of the Latest Balance Sheet (as
defined in Section 3.3. below); provided, however, that (i)
inventories will be calculated at cost (first-in, first-out) or
market, whichever is lower, (ii) intercompany receivables,
intercompany payables and notes payable to affiliates will be
excluded, (iii) any asset or liability of the Company and the
Subsidiaries retained by Seller pursuant to this Agreement will be
excluded and (iv) any other adjustments shall be made which were made
in the calculation of Target Net Worth attached hereto as Schedule 2.3
(iv) (Subsections (i), (ii), (iii) and (iv) hereof collectively
referred to as the Balance Sheet Adjustments ). Representatives from
both Seller and Buyer shall be entitled to participate in the taking
of any physical inventories conducted with respect to the Company and
the Subsidiaries on or after the date of this Agreement. The fees and
expenses of Peat will be paid by Buyer.
(b) On or prior to the date 20 business days after
delivery to Seller of the Closing Date Balance Sheet (the Adjustment
Date ), Seller and Buyer shall mutually agree upon the "Adjusted
Closing Net Worth". The "Adjusted Closing Net Worth" shall mean the
Shareholder's Equity of the Company and the Subsidiaries reflected on
the Closing Date Balance Sheet. In the event that Seller and Buyer
are unable to agree on the Adjusted Closing Net Worth within such 20
day period, Seller and Buyer shall submit the dispute to Arthur
Andersen & Co. (the "Arbiter"), for resolution. Promptly, but no
later than 20 days after its acceptance of its appointment as Arbiter,
the Arbiter shall determine, based solely on presentations by Seller
and Buyer, and not by independent review, only those issues in dispute
and shall render a report as to the dispute and the resulting
computation of the Adjusted Closing Net Worth which shall be
conclusive and binding upon the parties. The fees, costs and expenses
of the Arbiter shall be borne by each party in proportion that the
aggregate dollar amount of such disputed items so submitted that are
unsuccessfully disputed by such party bears to the aggregate dollar
amount of the items submitted by the Arbiter.
(c) To the extent the Adjusted Closing Net Worth is
less than the "Target Net Worth" in an amount that is greater than
$2,000,000, Seller shall pay the amount of such difference in excess
of $2,000,000 to Buyer (plus interest from the Adjustment Date through
the date of payment at the prime lending rate of Bankers Trust Company
from time to time prevailing ), as an adjustment to the Purchase
Price, by wire transfer of immediately available funds within two
business days of the final determination of Adjusted Closing Net
Worth. The "Target Net Worth" shall mean $250,895,000, which is the
Shareholder's Equity reflected on the Latest Balance Sheet, adjusted
to give effect to the Balance Sheet Adjustments. In the event the
Adjusted Closing Net Worth is equal to or greater than $248,895,000,
no adjustment to the Purchase Price will be made.
(d) Seller will make its books, records and personnel
available to Buyer and its accountants and other representatives, and
Buyer will cause the Company and the Subsidiaries to make their
respective books, records and personnel and Peat's work papers and
back-up materials used in preparing and auditing the Closing Date
Balance Sheet available to Seller and its accountants and other
representatives, at reasonable times and upon reasonable notice at any
time during (A) the preparation by Buyer of the Closing Date Balance
Sheet, (B) the review by Seller of the Closing Date Balance Sheet and
(C) the resolution by the parties and, if necessary, the Arbiter of
any disputes involving the Closing Date Balance Sheet.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements
contained in this Article 3 are correct as of the date of this
Agreement, and will be correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 3).
3.1 Organization and Corporate Power.
Seller is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Vermont. Except as set
forth in Schedule 3.1, each of the Company and the Subsidiaries (as
defined in Section 3.14) (i) is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction
of incorporation and (ii) is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions in
which the character of the properties owned or leased by it or the
nature of the business conducted therein requires it to be so
qualified except where the failure to qualify would have a material
adverse effect on the Company and the Subsidiaries, taken as a whole.
Schedule 3.1 sets forth each state in which the Company or the
Subsidiaries are qualified to do business as a foreign corporation.
Seller has full corporate power and authority to execute, deliver and
perform this Agreement and to consummate the transactions contemplated
hereby. Each of the Company and the Subsidiaries has full power and
authority to carry on its business as conducted at the present time
and to own and use the properties owned and used by it.
3.2 Authorization.
This Agreement has been duly authorized, executed and
delivered by Seller and constitutes a valid and legally binding
agreement of Seller, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
3.3 Financial Statements.
Delivered contemporaneously herewith to Buyer are the
following financial statements:
(a) the (i) audited statements of income and cash
flows for the years ended December 31, 1992, December 31, 1993 and
December 31, 1994 and (ii) the audited consolidated balance sheet of
the Company and the Subsidiaries as of December 31, 1993, and December
31, 1994, together with the notes thereto and the reports thereon of
KMPG Peat Marwick; and
(b) the unaudited consolidated balance sheet of the
Company and the Subsidiaries as of October 31, 1995 (the "Latest
Balance Sheet") and the related statement of income and cash flows for
the ten-month period then ended.
Except as set forth on Schedule 3.3, each of the foregoing
financial statements (including in all cases the notes thereto, if
any) fairly presents the financial position of and the results of
operations for the entities reported on and is consistent with the
books and records of the Company and the Subsidiaries and has been
prepared in accordance with generally accepted accounting principles,
consistently applied, subject in the case of the financial statements
referred in (b) above to changes resulting from normal year-end
adjustments. The books and records upon which the foregoing financial
statements are based are true and complete.
3.4 Absence of Undisclosed Liabilities.
Except as set forth on Schedule 3.4, neither the Company nor
any of the Subsidiaries has any material obligation or liability
(whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due) other than (a) liabilities set forth on
the Latest Balance Sheet (including the notes thereto), (b)
liabilities and obligations which have arisen after the date of the
Latest Balance Sheet in the ordinary course of business , (c)
obligations not arising from a default under contracts or commitments
described on any Schedules hereto or not required to be described
thereon because of the nature and amount of such contracts or
commitments, and (d) other liabilities and obligations expressly
disclosed in the other Schedules to this Agreement.
3.5 Absence of Certain Developments.
There has not been any material adverse change in the
financial position or results of operation of the Company and the
Subsidiaries since the date of the Latest Balance Sheet; except,
however, for changes (i) in the furniture industry in general, (ii) in
the economy in general, or (iii) as a result of the seasonality of the
business of the Company and the Subsidiaries, or any of them. In
addition, except as expressly contemplated by this Agreement or as set
forth on Schedule 3.5, since the date of the Latest Balance Sheet,
there has not occurred any of the following events without the prior
written consent of Buyer:
(a) the issuance of any notes, bonds or other debt
securities or any equity securities;
(b) the borrowing of any amount of money or the
incurring of or becoming subject to any liabilities, except (i)
current liabilities incurred in the ordinary course of business, and
(ii) liabilities under contracts entered into in the ordinary course
of business;
(c) the discharge or satisfaction of any lien or
encumbrance or the payment of any obligation or liability, other than
current liabilities paid in the ordinary course of business;
(d) the mortgage or pledge of any properties or assets
or the subjection of any property or asset to any lien, security
interest, charge or other encumbrance, except liens for current
property taxes not yet due and payable;
(e) the cancellation of any debts or claims except in
the ordinary course of business;
(f) the sale, assignment or transfer of (i) any
tangible assets, other than the sale of inventory in the ordinary
course of business, or (ii) any trademarks, service marks, trade
names, copyrights, trade secrets or other intangible assets;
(g) any capital expenditures or commitments therefor
that aggregate in excess of $2.5 million per calendar quarter;
(h) any loan or bonus payment to an officer, director,
shareholder or affiliate of the Company or any of the Subsidiaries;
(i) the adoption or entering into, or the amendment,
modification or termination of, any collective bargaining agreement,
Employee Benefit Plan, or Employee Benefit Arrangement (as such terms
are defined in Section 3.25 hereof), or the granting of any increase
in compensation or the making of any other material change in
employment terms for any of its directors, officers or employees
outside of the ordinary course of business;
(j) any loans or advances to, or guarantees for the
benefit of, any persons in excess of $150,000 in the aggregate, other
than endorsements of negotiable instruments made for collection;
(k) any material charitable contributions or pledges;
(l) any theft, damage, destruction or casualty loss
exceeding in the aggregate $500,000, whether or not covered by
insurance;
(m) any conduct of the business of the Company and the
Subsidiaries outside the ordinary course of business;
(n) any new elections or change in any current
election with respect to Taxes (as defined in Section 3.22 hereof)
affecting the Company or the Subsidiaries; and
(o) any commitment on the part of the Company and the
Subsidiaries to any of the foregoing.
3.6 Real Property.
Schedule 3.6 sets forth a complete list and summary
description of all real property, leases, subleases and other rights
or interests of record in real property and improvements thereon,
wherever located, owned, leased, occupied or used by the Company or
any of the Subsidiaries (the "Real Property Interests"), together with
a description of the instruments or other documents by which the same
were acquired and the recording data applicable thereto. Within ten
(10) days of the execution of this Agreement by the parties hereto,
Seller will deliver to Buyer true and correct copies of all deeds,
leases, subleases, surveys, documents of title, title opinions and
title insurance policies relating to the Real Property Interests which
are in the possession of Seller. Except as set forth on Schedule 3.6
and except for: (a) liens for current ad valorem taxes not yet
delinquent, (b) covenants, conditions and restrictions of record which
are not violated by existing uses or improvements and which do not
materially interfere with the use of the Real Property Interests and
do not adversely affect the merchantability of the title to the Real
Property Interests and (c) statutory liens with respect to current
obligations not yet delinquent (other than for current ad valorem
taxes not yet delinquent) and other title defects which do not
materially interfere with the existing use of the Real Property
Interests and do not materially adversely affect the merchantability
of the title thereto, the Company and the Subsidiaries have good and
marketable title to the Real Property Interests, free and clear of any
mortgage, security interest, lien, lease, encumbrance, option or
agreement and there are no pending or, the knowledge of Seller,
threatened condemnation or eminent domain proceedings, lawsuits or
administrative actions, special assessments or changes in assessed
valuation (other than routine changes to assessed valuations and tax
rates) relating to the property affecting materially and adversely the
current use or occupancy . Except as set forth in Schedule 3.6, each
of the Real Property Interests listed and described in Schedule 3.6 is
in full force and effect, and there is no material default by the
Company or any of the Subsidiaries or, to the knowledge of Seller, by
any other party under any such Real Property Interests.
3.7 Tangible Personal Property.
The Company and the Subsidiaries have good and marketable
title to all of the equipment, machinery, motor vehicles, furniture
and fixtures, inventory and supplies and other tangible personal
property owned or leased by the Company and the Subsidiaries, free and
clear of any mortgage, liability, security interest, pledge, lien or
encumbrance of any kind or nature whatsoever except as set forth in
Schedule 3.7 and except for liens for current ad valorem taxes not yet
delinquent. All such tangible personal property used at present in
the operations of the Company and the Subsidiaries is in good
operating condition and repair (subject to normal wear and tear).
3.8 Inventories and Supplies.
All of the inventories and supplies of each of the Company
and the Subsidiaries are reflected on the Latest Balance Sheet, at
standard cost, or latest purchase price when inventoried, whichever is
lower, and all such inventories and supplies, together with
inventories and supplies acquired since the date of the Latest Balance
Sheet, are of sufficient quality and quantity for the normal operation
of the business of the Company and the Subsidiaries, and are free and
clear of any claim, security interest, pledge or lien or encumbrance
of any kind or nature whatsoever.
3.9 Intellectual Property Rights.
Schedule 3.9 sets forth a true and correct list of all of
the patents (including all reissues, divisions, continuations,
continuations -in-part and extensions thereof), applications for
patents, patent disclosures docketed, inventions, improvements,
trademarks (including service marks), trademark applications, trade
names, copyrights and copyright registrations owned by the Company or
any of the Subsidiaries, and all licenses, franchises, permits,
authorizations, agreements and arrangements that concern the same or
that concern any intellectual property owned by others and used by the
Company or any of the Subsidiaries. True and correct and complete
copies of all such intellectual property, licenses, franchises,
permits, authorizations, agreements and arrangements will be delivered
by Seller to Buyer within ten (10) days of the execution of this
Agreement by the parties hereto. The use of such intellectual
property rights by the Company and the Subsidiaries does not conflict
with the rights of others, nor, to the knowledge of Seller, is any
third party infringing upon the intellectual property rights of the
Company or any Subsidiary. Each of the Company and the Subsidiaries
owns or is the licensee of all rights to all patents, patent
applications, inventions, improvements, trademarks, trademark
applications, trade names, copyrights or other intellectual property
necessary to conduct its present business operations.
3.10 Accounts and Notes Receivable.
The accounts and notes receivable reflected on the Latest
Balance Sheet are owned by the Company and the Subsidiaries free and
clear of any security interest, pledge or lien or encumbrance of any
kind or nature whatsoever except as set forth on Schedule 3.10 and,
subject to the amounts reflected in the Latest Balance Sheet for bad
debts or doubtful accounts, are collectible in the normal course of
business. The accounts and notes receivable of the Company and the
Subsidiaries created from and after the date of the Latest Balance
Sheet to the Closing Date will be free and clear of any pledge,
security interest or lien or encumbrance of any kind or nature
whatsoever except as set forth on Schedule 3.10 and, subject to the
amounts which are reflected in the books and records of the Company
and the Subsidiaries for bad debts or doubtful accounts and which are
consistent with the past practices of the Company and the Subsidiaries
with respect to the bad debts or doubtful accounts, will be
collectible in the normal course of business.
3.11 Outstanding Capital Stock.
For each of the Company and the Subsidiaries, the title, par
value, number of authorized shares, number of issued and outstanding
shares of each class of capital stock and the persons owning
beneficially and of record the outstanding shares of each such class
of capital stock are set forth on Schedule 3.11. No other class of
capital stock of the Company or any Subsidiary is authorized or
outstanding. All of the issued and outstanding shares of each of the
Company and the Subsidiaries, including the Shares, are duly
authorized and are validly issued, fully paid and nonassessable and
none of such shares have been issued in violation of any preemptive
rights of shareholders, the provisions of the applicable Articles or
Certificate of Incorporation or any applicable law. The Shares
constitute all of the issued and outstanding shares of capital stock
of the Company.
3.12 Options or Other Rights.
There is no outstanding right, subscription, warrant, call,
unsatisfied preemptive rights, option or other agreement of any kind
to purchase or otherwise to receive from the Company, any Subsidiary
or Seller any shares of the capital stock or any other security of the
Company or any Subsidiary, and there is no outstanding security of any
kind convertible into such capital stock.
3.13 Title to Shares.
Seller owns and holds beneficially and of record, free and
clear of any lien or other encumbrance, or owns of record and has full
power and authority to transfer and dispose of free and clear of any
claim, suit, proceeding, call, voting trust, proxy, restriction,
security interest, lien or other beneficial interest or encumbrance of
any kind or nature whatsoever (other than created by Buyer), all of
the Shares and, upon delivery of and payment for such Shares as herein
provided, Buyer will acquire good and valid title thereto, free and
clear of any claim, suit, proceeding, call, voting trust, proxy,
restriction, security interest, lien or other beneficial interest or
encumbrance of any kind or nature whatsoever.
3.14 Subsidiaries.
The sole first tier subsidiary corporation of the Company is
Thomasville Enterprises, Inc., a Vermont corporation (the "First Tier
Subsidiary"). The sole subsidiary corporations of the First Tier
Subsidiary are as set forth on Schedule 3.14 (collectively, the
"Second Tier Subsidiaries"). The First Tier Subsidiary and the Second
Tier Subsidiaries are referred to hereinafter collectively as the
"Subsidiaries" and individually as a "Subsidiary". Except as set
forth on Schedule 3.14, neither the Company nor any of the
Subsidiaries owns, directly or indirectly, any shares of capital stock
or any other security or interest in any other corporation,
partnership, entity or person. The Company has good and valid title
to all of the issued and outstanding shares of stock of the First Tier
Subsidiary, free and clear of any claim, suit, proceeding, call,
voting trust, proxy, restriction, security interest, lien or other
encumbrance of any kind or nature whatsoever, and the First Tier
Subsidiary has good and valid title to all of the issued and
outstanding shares of the stock of each of the Second Tier
Subsidiaries, free and clear of any claim, suit, proceeding, call,
voting trust, proxy, restriction, security interest, lien or other
encumbrance of any kind or nature whatsoever.
3.15 Compliance with Laws.
The Company and the Subsidiaries have complied in all
respects with all laws, statutes, rules, regulations and orders of,
and have secured all necessary permits and authorizations and licenses
issued by, federal, state, local and foreign agencies and authorities,
applicable to their business, properties and operations. This Section
3.15 does not relate to matters with respect to labor matters, tax
matters, employee benefit plans or environmental matters, which are
the subjects of Sections 3.20, 3.22, 3.25 and 3.27, respectively.
3.16 No Breach.
Except as disclosed on Schedule 3.16, the execution and
delivery of this Agreement by Seller, consummation of the transactions
herein contemplated and compliance with the terms of this Agreement do
not conflict with or violate any provision of the charter documents or
bylaws of Seller, the Company or any Subsidiary; nor do such actions
(a) conflict with, (b) result in a breach of the terms or conditions
of, (c) constitute a default under, (d) result in the creation of any
lien, security interest or encumbrance upon any of the capital stock
or assets of the Company or any Subsidiary, (e) give any third party
the right to accelerate any obligations under, or (f) require any
filing or the consent or approval under any material agreement,
contract, lease, license, permit, instrument or other arrangement to
which the Company or any Subsidiary is party or by which any of them
are bound or any of their assets are subject, or any law, statute,
rule or regulation to which Seller, the Company or any Subsidiary is
subject, or any order, judgment or decree to which Seller, the Company
or any Subsidiary is subject, or require Seller to make any filing
with or obtain the approval or consent of any foreign, federal, state,
county, local or other governmental or regulatory body, except for the
filing with the Federal Trade Commission and Antitrust Division of the
Department of Justice of Notification and Report Forms pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act") and the rules promulgated thereunder, and the expiration of
the waiting period and any extension thereof required to expire under
such Act and rules; provided, however, Seller makes no representations
with respect to the application to this Agreement and the transactions
contemplated hereby of antitrust laws or other laws or regulation
dealing with competition or restraint of trade.
3.17 Litigation.
Except as disclosed in Schedule 3.17, there are no legal or
governmental proceedings, actions, suits or arbitrations pending or,
to the best of Seller's knowledge, threatened with respect to which
the Company or any Subsidiary is a party or to which any property of
the Company or any Subsidiary is subject. Neither the Company nor any
of the Subsidiaries is in violation of any order, decree or judgment
of any court or arbitration tribunal or governmental board,
commission, instrumentality or agency.
3.18 Material and Affiliated Contracts.
Schedule 3.18 sets forth all oral and written contracts,
commitments, or other agreements to which the Company or any
Subsidiary is a party or to which the Company's or any Subsidiary's
assets or properties is bound or subject (a) having an annual cost to
the Company or any Subsidiary of $50,000 or more, (b) under which the
Company or any Subsidiary is entitled to receive $50,000 or more
annually, (c) covering indebtedness of the Company or any Subsidiary
in the principal amount of $50,000 or more, (d) covering the
employment of any employee of the Company or any Subsidiary where the
annual salary required is $50,000 or more or involving any obligation
to pay severance to any employee (regardless of amount), (e) covering
any other matter material to the business of the Company and any
Subsidiary, (f) which obligates Seller, the Company or any Subsidiary
to act as a guarantor irrespective of the amount involved, (g)
involving any franchise, dealer, showroom, distributor or
manufacturer's or sales representative contract which is not
terminable by the Company and its Subsidiaries on six months (or less)
notice without penalty, (h) restricting competition on the part of any
of the Company or any Subsidiary, (i) which is terminable by the other
party thereto upon a merger or change of control of the Company and
its Subsidiaries or (j) involving any purchase order which has an
annual cost to the Company and the Subsidiaries in excess of $250,000
and which has a term of 6 months or more. Buyer acknowledges and
agrees that, except for purchase orders required to be disclosed in
(j) above, no purchase order shall be required to be disclosed on
Schedule 3.18. There are no contracts, agreements, purchase orders,
commitments, leases, agreements, including loan arrangements, between
the Company or any Subsidiary and any of their officers, directors or
shareholders, or any related or affiliated person, corporation or
other entity, except as set forth on Schedule 3.18 (a true and correct
and complete copy of each such written document and a true and correct
and complete written description of each such oral relationship having
heretofore been delivered by Seller to Buyer), and none shall be
entered into by the Company or any Subsidiary from the date hereof
through the Closing Date without the prior written consent of Buyer.
Each such contract, commitment or other agreement is legal, valid,
binding, enforceable obligation of the Company and/or the Subsidiary
or Subsidiaries which is a party thereto. Neither the Company nor any
of the Subsidiaries nor, to the knowledge of Seller, any other party
thereto, is in material breach or material default of any such
contract, commitment or other agreement nor has any event occurred
which with notice or lapse of time would constitute such a breach or
default or permit termination, modification or acceleration by any
third party thereunder.
3.19 Licenses and Permits.
The Company and the Subsidiaries have all licenses, permits
and other authorizations from federal, state, local and other
governmental or administrative authorities necessary for the conduct
of their respective businesses and all present business activities of
the Company and the Subsidiaries. Except as set forth in Schedule
3.19, (a) each of said permits, licenses and other authorizations is
in full force and effect, (b) the Company and the Subsidiaries are in
compliance with the terms, provisions and conditions thereof, and (c)
there are no outstanding violations, notices of noncompliance,
judgments, consent decrees, agreed orders or judicial or
administrative action(s) or proceeding(s) affecting any of said
permits, licenses and other authorizations. This Section 3.16 does
not relate to matters with respect to environmental matters, which are
the subject of Section 3.27.
3.20 Labor Matters.
No union is certified as collective bargaining agent to
represent any employee of the Company or any Subsidiary. Except as
set forth in Schedule 3.20, the Company and the Subsidiaries are in
compliance with all applicable laws pertaining to employment and
employment practices, terms and conditions of employment, and wages
and hours. Except as set forth on Schedule 3.20, neither the Company
nor any Subsidiary (a) is a party to, involved in or threatened by any
labor dispute, work stoppage, unfair labor practice charge, labor
arbitration proceeding or grievance proceeding, (b) is currently
negotiating any collective bargaining agreement or (c) is aware of any
threatened work stoppage, strike or filing by any employee or employee
group seeking recognition as a collective bargaining representative or
unit. This Section 3.20 does not relate to matters with respect to
employee benefit plans, which are the subject of Section 3.25.
3.21 Charters and Bylaws.
True and complete copies of the charter documents and bylaws
of the Company and the Subsidiaries (and all amendments thereto at any
time prior to the date of this Agreement), and the minute books
thereof have been provided to Buyer. The minute books of the Company
and the Subsidiaries contain true and complete originals or copies of
all minutes of meetings of and actions by the stockholders, Boards of
Directors and all committees of the Boards of Directors of the Company
and the Subsidiaries. The aforesaid charter documents and bylaws are
true, correct and complete as of the date hereof, and there will be no
amendments or additions thereto prior to the Closing without the prior
written consent of Buyer.
3.22 Tax Matters.
(a) Except as set forth on Schedule 3.22(d), the
Company and the Subsidiaries have properly prepared and filed, or have
caused to be properly prepared and filed, in a timely manner, all
Returns required to be filed by them on or prior to the date hereof,
and have paid (or withheld and paid over) or will pay all of such
Taxes shown as due and payable on such Returns. All such Returns that
have been filed are true, complete and correct in all respects.
The Company and the Subsidiaries have properly accrued and
reflected on the Latest Balance Sheet, and have thereafter to the date
hereof properly accrued all liabilities for taxes and assessments, and
will timely and properly file all such federal, state, local and
foreign Returns which it is required to file for any taxable period
ending on or before the Closing Date, either on its own behalf or on
behalf of its employees or other persons or entities, all such Returns
to be true and correct and complete in all respects, and will pay or
cause to be paid when due all Taxes which have become due and payable
pursuant to such Returns for all taxable periods ending on or before
the Closing Date.
(b) Member of Affiliated Group. Since 1988, the
Company and the Subsidiaries have been members of an affiliated group
of corporations within the meaning of section 1504 of the Code, with
respect to which Parent is and at all times has been the common
parent, and have joined in or will join in the filing of Parent's
consolidated federal income tax returns for all its taxable periods
ending on or prior to the Closing Date. Since 1988, neither the
Company nor any of the Subsidiaries have been a member or any other
affiliated group of corporations within the meaning of section 1504 of
the Code.
(c) Statutes of Limitations. No waiver or extension
of any statute of limitations is in effect with respect to Taxes or
Returns of the Company, the Subsidiaries, Parent, Seller or any Tax
Affiliate.
(d) Tax Audits. The United States Internal Revenue
Service has examined the consolidated federal Income Tax Returns of
Parent which include the Company and Subsidiaries for all years up to
and including the year ended December 31, 1992. The separate state,
local and foreign Income Tax Returns of the Company and the
Subsidiaries for taxable periods ending on or after December 31, 1991
have been audited as set forth in Schedule 3.22(d). The combined
state and local income Returns in which the income of the Company and
the Subsidiaries are included for taxable periods ending on or after
December 31, 1991 have been audited as set forth in Schedule 3.22(d).
Except as set forth in Schedule 3.22(d), no audit is in
process, or pending with respect to the Company, the Subsidiaries',
Parents', Seller's or any Tax Affiliate's Returns, nor is any audit in
process, or pending in which issues have been raised specifically in
connection with present or former assets of the Company and the
Subsidiaries. To the knowledge of Seller, no audit is threatened with
respect to the Company s, any Subsidiary s, Parent s, Seller s or any
Tax Affiliate s Returns nor is any audit threatened in which issues
have been raised specifically in connection with present or former
assets of the Company and the Subsidiaries. All such issues raised in
connection with any past audits have been fully resolved or finally
settled and any deficiency in Taxes associated with such issues has
been satisfied.
(e) Returns Furnished. Seller has furnished to Buyer
or its counsel true and complete copies of (i) relevant portions of
tax audit reports, statements of deficiencies, closing or other
agreements received by the Company, the Subsidiaries, Parent or Seller
on behalf of the Company or the Subsidiaries relating to the assets or
business of the Company or the Subsidiaries from the Internal Revenue
Service, or from any other taxing authority (sometimes collectively
referred to as a "Taxing Authority") and (ii) all pro forma separate
federal, state and local income Returns of Company and Subsidiaries
and the relevant portions of all pro forma separate federal, state,
local and foreign Income Tax Returns of any Tax Affiliate relating to
the assets of Company and Subsidiaries for the Company and the
Subsidiaries taxable periods ending on or after December 31, 1991.
(f) Affiliated Group Allocation Agreement. The
Company and the Subsidiaries are parties to an unwritten affiliated
group consolidated return tax allocation agreement with Parent and its
Tax Affiliates.
(g) Foreign Taxes. None of the Company, the
Subsidiaries, Parent or Seller is liable for taxes to any foreign
taxing authority. Except as provided in Schedule 3.22(g), Company and
Subsidiaries do not have and have not had a permanent establishment in
any foreign country, as defined in any applicable tax treaty or
convention between the United States and such foreign country, any
branch operation in a foreign county or any other taxable presence in
a foreign jurisdiction. The Company, each Subsidiary, Parent and
Seller have evidence of payment of all Taxes of a foreign country, if
any, paid or accrued from the date of formation of each of them,
respectively.
(h) Accounting Methods. None of the Company, or the
Subsidiaries nor any Tax Affiliate is required to include in income
any adjustment under Section 481(a) of the Code by reason of a change in
accounting method initiated by the Company, the Subsidiaries or any
Tax Affiliate and the Internal Revenue Service has not proposed any
such adjustment or change in accounting method.
(i) Definitions. For purposes of this Agreement the
following definitions shall apply:
(1) "Code" shall mean the Internal Revenue Code
of 1986, as amended, and/or, where appropriate, its predecessor,
the Internal Revenue Code of 1954, as amended, or any successor
thereto.
(2) "Income Tax" shall mean (i) federal, state,
local or foreign income or franchise taxes or other taxes
measured by income and all other taxes reported on Returns which
include federal, state or local income or franchise taxes or
other taxes measured by income, together with any interest,
penalties or additions to tax imposed with respect thereto and
(ii) any obligations under any agreements or arrangements with
respect to any Income Taxes described in clause (i) above.
(3) "Returns" shall mean all returns including
without limitation all returns, declarations, forms, reports,
estimates, information statements, schedules, any amendments
thereto and returns relating to or required by law to be filed by
the Company or the Subsidiaries in connection with any Taxes and,
in the case of consolidated or combined tax returns, by Parent on
behalf of the Company or any Subsidiary, and all information
returns (e.g., Form W-2, Form 1099) and reports relating to Taxes
of the Company or any Subsidiary. Any one of the foregoing
Returns shall be referred to sometimes as a "Return."
(4) "Tax Affiliate" shall mean, with respect to a
company, any member of an affiliated group as defined in section
1504 of the Code or member or a combined or unitary group of
which such company is or was a member (other than such company).
(5) "Taxes" shall mean (i) all taxes (whether
federal, possession, state, local or foreign or any governmental
unit, agency or political subdivision of the foregoing) based
upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales,
use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, real estate gains, real
estate transfer or property taxes, customs duties, levies or
other charges, and any other governmental charges of the same or
similar nature or in lieu thereof, together with any interest or
penalties or additions to tax imposed with respect thereto and
(ii) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (i) above. Any Taxes,
penalties or interest payable as a result of an audit of any
Return or any other adjustment with respect thereto shall be
deemed to have accrued in the period to which such Taxes,
penalties or interest are attributable.
3.23 Workers' Compensation
The Company and the Subsidiaries have been self-insured or
have carried workers' compensation and employer liability insurance
coverage as required by applicable workers' compensation laws or
regulations covering all employees employed by the Company and the
Subsidiaries.
3.24 Insurance.
Schedule 3.24 sets forth: (i) each insurance policy under
which the Company and the Subsidiaries or their assets or properties
is a direct or indirect beneficiary; (ii) the name of the insurer with
which such policy is or was carried; (iii) the liabilities covered
thereunder; (iv) the amount of coverage thereunder; (v) the period of
coverage thereunder; (vi) a designation of which policies provide
coverage on a "claims made" basis and which provide coverage on an
"occurrence basis"; and (vii) a designation of whether such policy is
carried by the Company and the Subsidiary, or by any other person.
Schedule 3.24 also contains a description of any program of self-
insurance maintained by Seller or by the Company or the Subsidiaries
to cover claims against or losses incurred by the Company or the
Subsidiaries arising on or prior to the Closing Date. All insurance
policies and programs of self insurance listed on Schedule 3.24 will
be maintained or will be replaced with substantially equivalent
policies or programs and such coverage will not be canceled or
terminated prior to the Closing. Seller shall have no obligation to
continue any such insurance after the Closing.
3.25 Employee Benefit Plans.
(a) Whenever any of the terms set forth below is used
in this Agreement, it shall have the following meaning: (i) "COBRA"
means any liability or obligation to provide continued health care
coverage under ERISA Section 601 or in Code Section 4980B; (ii)
"Employee Benefit Arrangement" means any employment, severance, or
similar contract, arrangement, or policy (exclusive of any such
contract, arrangement or policy which is terminable within 30 days
without liability), or any plan or arrangement providing for severance
benefits, insurance coverage (including pursuant to any self-insured
plan or arrangement), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe benefits
(other than retirement benefits, deferred compensation, profit sharing
and compensation benefits), sick leave, maternity, paternity, family
leave or other leave, bonuses, stock options, stock appreciation
rights, or other forms of incentive compensation or post-retirement
insurance or welfare benefits, any employment consulting, engagement
or retainer agreement, in each such case other than any Non-U.S.
Employee Benefit Arrangement; (iii) "Employee Benefit Plan" has the
meaning set forth in ERISA Section 3(3); (iv) "ERISA" means the
Employee Retirement Income Security Act of 1974, as amended; (v)
"ERISA Affiliate" means any entity which would be treated as a single
employer together with the Company and any Subsidiary under Code
Section 414; (vi) "Multi-Employer Plan" has the meaning set forth in
ERISA Section 3(37) or ERISA Section 4001(a)(3); (vii) "Non-U.S.
Employee Benefit Arrangement" means any employment, severance, or
similar contract arrangement, or policy, whether or not considered
legally binding, or any plan or arrangement providing for severance
benefits, insurance coverage (including pursuant to any self-insured
plan or arrangement), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, fringe
benefits, sick leave, maternity, paternity, family leave or other
leave, retirement benefits, deferred compensation profit-sharing,
bonuses, stock options, stock appreciation rights, or other forms of
incentive compensation or post-retirement insurance, compensation, or
benefits, any employment, consulting, engagement or retainer agreement
for the benefit of non-U.S. employees, non-U.S. former employees or
non-U.S. consultants; (viii) "PBGC" means the Pension Benefit Guaranty
Corporation, or any successor agency ; (ix) "Prohibited Transaction"
has the meaning set forth in ERISA Section 406 in Code Section 4975;
and (x) "Reportable Event" has the meaning set forth in ERISA Section
4043.
(b) Schedule 3.25(b) lists each Employee Benefit Plan
covered by or subject to ERISA that any of Parent, Seller, the
Company, and/or any Subsidiary maintains or administers, or to which
any of them contributes, in each such case covering any employee or
former employee of the Company and/or any Subsidiary. There are no
retirement benefit, deferred compensation, profit sharing or
compensation benefit plans that any of Parent, Seller, the Company
and/or the Subsidiaries maintains or administers, or to which any of
them contributes, in each case covering any employee of the Company or
former employee and/or any Subsidiary, which is not an Employee
Benefit Plan. There are no negotiations, demands or proposals which
are pending or threatened which concern matters now covered, or that
would be covered, by any Employee Benefit Plan.
(c) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in operation
with the applicable requirements of any and all statutes, orders or
governmental rules or regulations currently in effect, including but
not limited to ERISA, the Code, and other applicable laws. Parent,
Seller, Company and each of the Subsidiaries has performed all
obligations required to be performed by them under, and are not in
default under or in violation of, the terms or any of the Employee
Benefit Plans.
(d) All required notices, reports and descriptions
(including Form 5500 Annual Reports, Summary Annual Reports, Forms
PBGC-1, and Summary Plan Descriptions) have been filed or distributed
where required with respect to each such Employee Benefit Plan. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
Sec. 4980B as well as the applicable provisions of the Social Security
Act and the Public Health Service Act have been met with respect to
each such Employee Benefit Plan that is a group health plan (within
the meaning ERISA Sec. 601 and Code Sec. 4980B).
(e) All contributions (including all employer
contributions and employee salary reduction contributions), premiums
and administrative charges which are due and payable with respect to
any Employee Benefit Plan for all periods ending prior to the Closing
Date have been or will be made prior to the Closing Date by Parent,
Seller, the Company, and/or the Subsidiaries in accordance with
applicable law and the terms of each such Employee Benefit Plan.
(f) Each such Employee Benefit Plan which is an
employee pension benefit plan and which is intended to meet the
requirements of a qualified plan under Code Sec. 401(a) has either (i)
received a favorable determination letter from the Internal Revenue
Service covering such Employee Benefit Plan as amended for the Tax
Reform Act of 1986, the Unemployment Compensation Act of 1992, and the
Omnibus Budget Reconciliation Act of 1993 (and the related trust has
been determined to be exempt from taxation under Section 501(a) of
the Code), or (ii) timely applied to the Internal Revenue Service for
a favorable determination letter covering such Employee Benefit Plan.
No amendment made (or the failure of such amendment to be made) to any
such Employee Benefit Plan subsequent to the date of such
determination letter has adversely affected the qualified status of
any such plan, and Seller knows of no fact or set of circumstances
that would adversely affect such qualification prior to the Closing.
(g) Seller has delivered to Buyer correct and complete
copies of the current plan document and summary plan description, the
most recent favorable determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report filed with
the Internal Revenue Service, the three most recent actuarial reports,
and all related trust agreements, insurance contracts, and other
funding agreements which implement or evidence each such Employee
Benefit Plan, in each case as applicable to such Employee Benefit
Plan. In addition, to the extent applicable with respect to each
Employee Benefit Plan, Seller has delivered to Buyer (i) correct and
complete copies of any Form 5310 and related filings with the PBGC;
(ii) ruling letters and any outstanding requests for ruling letters
with respect to the tax exempt status of any VEBA which is
implementing any Employee Benefit Plan; and (iii) general notification
to employees of their rights under Code Section 4980B and form of
letters distributed upon the occurrence of a qualifying event
described in Code Section 4980B, in the case of an Employee Benefit
plan that is a "group health plan" as defined in Code Section 162(i).
(h) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan (and there is no fact or
circumstance which may lead to the occurrence of any such Prohibited
Transaction) and no plan fiduciary nor any officer, director, or
employee of Parent, Seller, the Company or any of the Subsidiaries has
any liability for breach of fiduciary duty or any other failure to act
or comply in connection with the administration or investment of the
assets of or otherwise involving any such Employee Benefit Plan. No
action, suit, arbitration, proceeding, hearing, claim, or
investigation with respect to the administration of or otherwise
involving the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or, to the knowledge of any
facts which would or could give rise to any action, suit, grievance,
arbitration or other manner of litigation, or claim.
(i) Schedule 3.25(i) lists any Employee Benefit
Arrangement providing medical, health, or life insurance or other
welfare-type benefits for currently (or future) retired or terminated
employees, their spouses, or their dependents (other than in
accordance with Code Sec. 4980B) which any of Parent, Seller, the
Company and the Subsidiaries maintains or administers, or to which any
of them contributes, in each case covering any employee or former
employee of any of the Company and the Subsidiaries.
(j) With respect to each Employee Benefit Plan which
is an employee pension benefit plan subject to Title IV of ERISA that
any of the Parent, Seller, the Company, the Subsidiaries, and their
ERISA Affiliates maintains or administers or ever has maintained or
administered, or to which any of them contributes, ever has
contributed, or ever has been required to contribute, in each such
case since January 1, 1990:
(i) No such employee pension benefit plan has been completely or
partially terminated or been the subject of a Reportable
Event as to which notices would be required to be filed with
the PBGC, and no proceeding by the PBGC to terminate any
such employee pension benefit plan has been instituted or
threatened.
(ii) None of the Company, the Subsidiaries, and their respective
ERISA Affiliates has any liability to the PBGC (other than
for PBGC premium payments) or otherwise under ERISA or under
the Code (including any withdrawal liability or any
accumulated funding deficiency, whether or not waived,
within the meaning of ERISA Section 302 or Code Section 412,
or any termination liability under ERISA Section 4062 or 4063).
(k) Neither Parent, Seller, the Company, nor any of the
Subsidiaries contributes, ever has contributed, ever has been required
to contribute, or has ever been a participant in a Multiemployer Plan
in each such case during the period since January 1, 1985 and covering
any employee or former employee of any of the Company and the
Subsidiaries.
(l) Schedule 3.25(l) lists each Employee Benefit
Arrangement other than those described in Schedule 3.25(b) that has
been entered into, maintained, or administered, as the case may be, by
any of Parent, Seller, the Company, and the Subsidiaries and that
currently covers any employee or former employee of any of the Company
and the Subsidiaries. Each such Employee Benefit Arrangement and the
administration thereof complies with its terms and with the
requirements of applicable statutes, orders, rules, and regulations.
(m) Since January 1, 1990, neither Seller, the Company
nor the Subsidiaries has terminated or taken action to terminate any
Employee Benefit Plan covering any employee or former employee of the
Company and the Subsidiaries.
(n) The statements of assets and liabilities of the
Employee Benefit Plans covering any employee or former employee of any
of the Company and the Subsidiaries as of the end of the most recent
three fiscal years for which information is available, and the
statements of changes in fund balances, financial position and net
assets available for benefits under such Employee Benefit Plans for
such fiscal years, copies of which have been certified by Seller and
furnished to Buyer, fairly present the financial conditions of such
Employee Benefit Plans as of such date and the results of operations
thereof for the year ended on such date, all in accordance with GAAP
applied on a consistent basis. The actuarial assumptions used for
funding purposes have not been changed since the last written report
of actuaries on such Employee Benefit Plans, which written reports
have been furnished to Buyer.
(o) With respect to any Employee Benefit Plan covering
any employee or former employee of any of the Company and the
Subsidiaries which is a welfare plan as defined in Section 3(1) of
ERISA; (i) each such welfare plan which is intended to meet the
requirements for tax-favored treatment under Subchapter B of Chapter 1
of the Code meets such requirements; and (ii) there is no disqualified
benefit (as such term is defined in Code Section 4976(b)) which would
subject the Company or Buyer to a tax under Code Section 4976(a).
(p) Each Employee Benefit Plan covering any employee
or former employee of any of the Company and the Subsidiaries and each
Employee Benefit Arrangement covering any employee or former employee
of any of the Company and the Subsidiaries may be amended or
terminated by Parent, Seller, the Company or the Subsidiaries or Buyer
on or at any time after the Closing Date.
(q) The Company and the Subsidiaries have no liability
under ERISA or the Code as a result of their being members of a group
described in Code Sections 414(b), (c), (m) or (o).
(r) Neither Parent, Seller, the Company nor any
Subsidiary contributes, ever has contributed, ever has been required
to contribute, has ever been a participant in, or has any obligations
or liabilities under any Non-U.S. Employee Benefit Arrangement
covering any employee or former employee of the Company or any
Subsidiary.
(s) All expenses and liabilities relating to the
Employee Benefit Plans have been, and will on the Closing Date be
fully and properly accrued on the books and records of the Company and
the Subsidiaries and the financial statements of the Company and the
Subsidiaries reflect all of such liabilities in a manner satisfying
the requirements of GAAP applied on a consistent basis.
3.26 Necessary Property.
The Company and the Subsidiaries own, lease, or have the
valid and enforceable right to use all rights, properties and assets,
tangible or intangible, which are presently used in the conduct of
their respective businesses as presently conducted and as presently
proposed to be conducted until the Closing Date and, to the knowledge
of Seller, immediately following the Closing Date the Company and the
Subsidiaries will have the same rights with respect to such rights,
properties and assets.
3.27 Environmental Matters.
Except as disclosed in Schedule 3.27:
(a) the Company and the Subsidiaries have obtained and
hold all Environmental Permits, each of which is listed on Schedule
3.27;
(b) the Company and the Subsidiaries are in
substantial compliance with all terms, conditions and provisions of
all (i) Environmental Permits and (ii) applicable Environmental Laws;
(c) there are no pending, or to the knowledge of the
Company or the Subsidiaries: (i) threatened Environmental Claims
against the Company or the Subsidiaries; and (ii) neither the Company
nor the Subsidiaries are aware of any facts or circumstances which are
likely to form the basis for any Environmental Claim against the
Company or the Subsidiaries;
(d) no Releases of Hazardous Materials (except in
material compliance with applicable Environmental Laws) have occurred
at, from, in, to, on, or under any Site during the time when the
Company or the Subsidiaries owned, leased or operated thereon and, no
such releases of Hazardous Materials occurred prior to the time that
the Company or the Subsidiary owned, leased or operated thereon, that
could give rise to an Environmental Claim against the Company or the
Subsidiaries;
(e) neither the Company nor the Subsidiaries
(including any predecessor thereof) nor any entity previously owned by
the Company or the Subsidiaries, during the time when the Company or
the Subsidiaries owned such entity and to the knowledge of the Company
and the Subsidiaries prior to the time the Company owned such entity,
has transported or arranged for the treatment, storage, handling,
disposal, or transportation ofany Hazardous Material to any off-Site
location which is an Environmental Clean-up Site.
(f) No Site is on the National Priority List or any
state equivalent list, or to the knowledge of Seller, a proposed
Environmental Clean-up Site;
(g) There are no liens arising under or pursuant to
any Environmental Law on any property currently owned, leased or
operated by the Company or any Subsidiary and, to the knowledge of
Seller, there are no facts, circumstances, or conditions that could
reasonably be expected to restrict, encumber, or result in the
imposition of special conditions under any Environmental Law with
respect to the ownership, occupancy, development, use, or
transferability of any such property;
(h) there are no underground storage tanks,
polychlorinated biphenyl-containing equipment or friable or damaged
asbestos-containing material at any property now owned, leased or
operated by the Company or the Subsidiaries not in substantial
compliance with applicable Environmental Law; and
(i) to the knowledge of Seller, the currently
anticipated aggregate expenditures, solely of equipment, of the
Company and the Subsidiaries are not in excess of $1,000,000 to comply
with applicable Maximum Achievable Control Technology ( MACT )
standards, National Emissions Standards for Hazardous Air Pollutants
( NESHAPs ), or Reasonably Available Control Technology (RACT) under
the existing Federal Clean Air Act and existing state laws regulating
air emissions.
Within 72 hours following the execution of this Agreement by
the parties hereto, Seller will deliver or make available to Buyer all
environmental investigations, studies, audits, tests, reviews or other
analyses with respect to any Site (including any properties owned,
leased or operated by any predecessors of the Company or the
Subsidiaries or any entities previously owned by the Company or
Subsidiaries) ( Environmental Reports ) conducted by, on behalf of,
and which are in possession of the Company, the Subsidiaries, Seller
or Parent.
For purposes of this Agreement, the following definitions
shall apply:
"Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish,
wildlife, biota and all other natural resources.
"Environmental Claim" means any and all administrative or
judicial actions, suits, orders, claims, liens, notices, notices of
violations, investigations, complaints, requests for information,
proceedings, or other written communication, whether criminal or
civil, pursuant to or relating to any applicable Environmental Law by
any person (including but not limited to any Governmental or
Regulatory Authority, private person and citizen's group) based upon,
alleging, asserting, or claiming any actual (i) violation of or
liability under any Environmental Law, (ii) violation of any
Environmental Permit, or (iii) liability for investigatory costs,
cleanup costs, removal costs, remedial costs, response costs, natural
resource damages, property damage, personal injury, fines, or
penalties arising out of, based on, resulting from, or related to the
presence, Release, or threatened Release into the Environment, of any
Hazardous Materials at any location, including but not limited to any
off-Site location to which Hazardous Materials or materials containing
Hazardous Materials were sent for handling, storage, treatment, or
disposal.
"Environmental Clean-up Site" means any location which is
listed or proposed for listing on the National Priorities List, or on
any similar state list of sites requiring investigation or cleanup, or
which is currently the subject of any pending or threatened action,
suit, proceeding, or investigation related to or arising from any
alleged violation of any Environmental Law or Release or threatened or
suspected Release or a Hazardous Material.
"Environmental Law" means any and all current, federal,
state, local, provincial, and foreign, civil and criminal laws,
statutes, ordinances, orders, codes, rules, regulations, Environmental
Permits, judgments, decrees, injunctions, or agreements with any
Governmental or Regulatory Authority, relating to the protection of
health and the Environment, and/or governing the handling, use,
generation, treatment, storage, transportation, disposal, manufacture,
distribution, formulation, packaging, labeling, or Release of
Hazardous Materials, now existing, including but not limited to; the
Clean Air Act, 42 U.S.C. Sections 7401 et seq.; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Hazardous
Material Transportation Act, 49 U.S.C. Sections 1801 et seq.; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section
136 et seq.; the Resource Conservation and Recovery Act of 1976
("RCRA"), 42 U.S.C. Section 6901 et seq.; the Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq.; the Oil Pollution Act of 1990, 33
U.S.C. Section 2701 et seq.; and the state analogies thereto, and any
common law doctrine, including but not limited to, negligence,
nuisance, trespass, personal injury, or property damage related to or
arising out of the presence, Release, or exposure to a Hazardous
Material and, with respect to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. Section
9601 et seq. ( CERCLA ) any reauthorization, reenactment or replacement
thereof to the extent the same is no more stringent than the
provisions of CERCLA last in effect.
"Environmental Permit" means any federal, state, local,
provincial, or foreign permits, licenses, approvals, consents or
authorizations required by any Governmental or Regulatory Authority
under or in connection with any Environmental Law and includes any and
all orders, consent orders or binding agreements issued or entered
into by a Governmental or Regulatory Authority under any applicable
Environmental Law.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any
domestic or foreign state, country, city or other political
subdivision.
"Hazardous Material" means petroleum, petroleum hydrocarbons
or petroleum products, petroleum by-products, and any other chemicals,
materials, substances or wastes in any amount or concentration which
are now defined as or included in the definition of "hazardous
substances", "hazardous materials", "hazardous wastes", "extremely
hazardous wastes", "restricted hazardous wastes", "toxic substances",
"toxic pollutants", "pollutants", "regulated substances", "solid
wastes", or "contaminants" or words of similar import under any
Environmental Law.
"Release" means any current or prior spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing of a Hazardous Material into
the Environment.
"Site" means any of the real properties currently or
previously owned, leased or operated by the Company (including any
predecessors thereof) or the Subsidiaries (including any predecessors
thereof), including all soil, subsoil, surface waters and groundwater
thereat for purposes of this Section 3.27 of the Agreement.
3.28 Full Disclosure.
No representation or warranty of Seller in this Agreement
contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary in order to make
the statements contained herein or therein not misleading.
3.29 Limitation.
NO REPRESENTATION OR WARRANTY WHATSOEVER, OTHER THAN THE
EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE 3, IS
MADE BY SELLER. SELLER EXPRESSLY HEREBY DISCLAIMS ANY OTHER SUCH
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that the statements
contained in this Article 4 are correct as of the date of this
Agreement, and will be correct as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of
this Agreement throughout this Article 4).
4.1 Organization and Corporate Power.
Buyer (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and (b)
is duly qualified to do business as a foreign corporation and is in
good standing in all jurisdictions where the failure so to qualify
would have a material adverse effect on Buyer. Buyer has full
corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Authorization.
This Agreement has been duly authorized, executed and
delivered by Buyer and constitutes a valid and legally binding
agreement of Buyer, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other
laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
4.3 No Breach.
The execution and delivery of this Agreement by Buyer,
consummation of the transactions herein contemplated and compliance
with the terms of this Agreement will not conflict with or violate any
provision of the Articles of Incorporation or Certificate of
Incorporation, as the case may be, or any bylaw of Buyer; nor to the
best knowledge of Buyer, do such actions constitute a default of or
require the consent or approval under any agreement or instrument to
which Buyer is a party or by which Buyer's assets are bound, or
require Buyer to obtain the approval or consent of any foreign,
federal, state, county, local or other governmental or regulatory
body, except for the filing with the Federal Trade Commission and
Antitrust Division of the Department of Justice of Notification and
Report Forms pursuant to the HSR Act and the rules promulgated
thereunder, and the expiration of the waiting period and any extension
thereof required to expire under such Act and rules; nor will such
actions materially violate any applicable law, rule, regulation,
judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, presently applicable to
Buyer; provided, however, Buyer makes no representations with respect
to the application to this Agreement and the transactions contemplated
hereby of antitrust laws or other laws or regulation dealing with
competition or restraint of trade.
4.4 No Investigation.
There exists no investigation by any governmental or
regulatory authority, request for information or action by any third
party or legal proceeding, known to Buyer which seeks to prohibit or
restrain the consummation or performance of this Agreement or the
transactions contemplated hereby.
4.5 Buyer's Financing.
Buyer has provided to Seller copies of bank commitments and
other financing letters attached hereto as Schedule 4.5 (the
Financing Letters ) relating to the financing described in Section
7.7 below which have been executed by Buyer and delivered by Buyer to
the lenders named therein. The Financing Letters have not been
revoked or modified. Buyer does not presently anticipate that it will
not satisfy the conditions to the financing set forth in the Financing
Letters (other than any conditions that relate directly to the Company
and the Subsidiaries).
4.6 Securities Act of 1933.
Buyer is acquiring the Shares solely for its own account and
for the purpose of investment only and not with a view to any
distribution thereof. Buyer acknowledges that the Shares are not
registered under the Securities Act of 1933, as amended, and that such
Shares may not be transferred or sold except pursuant to the
registration provisions of such Act or pursuant to an applicable
exemption therefrom and pursuant to applicable state securities laws
and regulations.
5. COVENANTS AND AGREEMENTS
5.1 Preservation of Business.
From the date hereof through the Closing Date, Seller shall
cause the Company and the Subsidiaries to conduct their respective
businesses in the ordinary course of business consistent with past
business practices, and shall use its commercially reasonable efforts
to cause the Company and the Subsidiaries to preserve their business
organizations intact, keep available the services of their present
employees, consultants and agents, maintain their present suppliers
and customers and preserve their goodwill.
5.2 Negative Covenants of Seller.
Seller covenants and agrees that from and after the date
hereof, neither the Company nor any Subsidiary will, except with the
prior written consent of Buyer:
(a) Propose or effect a split or reclassification of
its outstanding capital stock or a recapitalization;
(b) Mortgage, pledge or otherwise encumber any assets,
or dispose of, or make any agreement with respect to the disposition
of, any assets except for the sale of the same in the ordinary course
of business;
(c) Make any capital commitment or expenditure of more
than $500,000 for any single commitment or $2,500,000 in the
aggregate, or incur or become liable for any other obligation or
liability except current liabilities in the ordinary course of
business;
(d) Adjust in any way, either directly or indirectly,
the compensation or benefits paid or payable to any shareholder,
officer, director, consultant, agent or employee of the Company or any
Subsidiary except for such adjustments as may be made in the ordinary
course of business and except as required under existing agreements
described in one or more of the Schedules hereto or enter into any
employment or severance agreement with any of the foregoing;
(e) Take any action, or enter into contract commitment
or other agreement, which if taken or in effect on the date hereof,
would be required to be disclosed on any Schedule hereto.
5.3 Seller Tax Matters.
(a) Federal Taxes for Periods Through the Closing
Date. Subject to Section 5.3(c) below, Seller will include the income
of the Company and the Subsidiaries (including any deferred income
triggered into income by Treas. Reg. Sections 1.1502-13 and Treas.
Reg. Sections 1.1502-14 and any excess loss accounts taken into income
under Treas. Reg. Sections 1.1502-19) on its consolidated federal
Income Tax Returns for all periods through the Closing Date and pay
any federal Income Taxes attributable to such income. Buyer will
cause the Company and the Subsidiaries to furnish information to
Seller for inclusion in Parent's consolidated federal Income Tax
Return for the period which includes the Closing Date in accordance
with Parent's past custom and practice. Seller will allow Buyer an
opportunity to review and comment upon such Income Tax Returns
(including any amended Returns) to the extent that they relate to the
Company or the Subsidiaries for taxable periods ending after the
Closing Date. Subject to Section 5.3(c) below, the income of the
Company and the Subsidiaries will be apportioned between the period up
to and including the Closing Date and the period after the Closing
Date by closing the books of the Company and the Subsidiaries as of
the end of the Closing Date.
(b) State, Local and Foreign Income Taxes. Seller
shall be liable for all state, local and foreign Income Taxes of the
Company and the Subsidiaries for all periods through the Closing Date.
Seller shall file returns for tax periods which end on or before the
Closing Date. Seller shall file such returns on a basis consistent
with past practice except for differences in filing that are required
by the effect of the Section 338(h)(10) elections on such returns.
Buyer shall file returns for tax periods which end after the Closing
Date. If any such return filed by Buyer includes any period which
begins on or before the Closing Date, Seller shall be liable for taxes
attributable to income in such return arising on or before the Closing
Date. The income of the Company and the Subsidiaries will be
apportioned between the period up to and including the Closing Date
and the period after the Closing Date based upon closing the books of
the Company and the Subsidiaries as contemplated in Section 5.3(a)
hereof. To the extent that the liability for such Income Tax is
reflected on a Return filed by Buyer, Seller shall pay to Buyer its
share of the tax shown on such Return as provided in Section 5.4
hereof.
5.4 Buyer Tax Matters.
(a) Except as otherwise provided in Sections 5.3(a)
and 5.3(b), Buyer shall be responsible for filing all Returns required
to be filed by or on behalf of Company and Subsidiaries, after the
Closing Date.
(b) With respect to any Income Tax Return required to
be filed by Buyer for a taxable period of Company and Subsidiaries
which includes (but does not close on) the Closing Date, Buyer shall
provide Seller and its authorized representatives with copies of such
completed Income Tax Return and a statement certifying the amount of
Tax shown on such Income Tax Return that is allocable to Seller
pursuant to Section 5.3(b) hereof (the "Statement") at least 30
calendar days prior to the due date for the filing of such Income Tax
Return, and Seller and its authorized representatives shall have the
right to review and approve such Income Tax Return and Statement prior
to the filing of such Income Tax Return. Seller and Buyer agree to
consult and resolve in good faith any issues arising as a result of
the review and approval of such Income Tax Return and Statement by
Seller or its authorized representatives and to mutually consent to
the filing of such Income Tax Return. No later than 5 business days
before the due date for payment of Taxes with respect to such Income
Tax Return, Seller shall pay to Buyer an amount equal to the Taxes
shown on the Statement as being allocable to Seller pursuant to
Section 5.3(b) hereof.
5.5 Other Tax Matters.
(a) 338(h)(10). After the Closing, Buyer, Seller and
Parent will make an election under Section 338(h)(10) of the Code, and
any corresponding elections under state, local, or foreign tax law
(collectively a "Section 338(h)(10) Election"), with respect to the
purchase and sale of the capital stock of the Company and the
Subsidiaries indicated on Schedule 5.5(a) hereto. Seller will pay any
Tax attributable to making the Section 338(h)(10) Election, regardless
of the taxable period in which such Tax is payable.
(b) Allocation of Purchase Price. The parties agree
that the Purchase Price, the liabilities of the Company and the
Subsidiaries, and any adjustments thereto will be allocated among the
assets of the Company and the Subsidiaries in accordance with the
provisions of a Schedule of Tax Allocations (which will be prepared in
accordance with the provisions of Tres. Reg. Sections 1.338(h)(10)-
1(f)). Schedule 5.5(b) hereto sets forth Buyer and Seller s
preliminary estimate of such tax allocations as of the date hereof.
The Schedule of Tax Allocations as of the Closing Date shall be agreed
to by Seller and Buyer as soon as practicable after the Closing Date.
If Buyer and Seller are unable to agree on such Schedule, the Schedule
of Tax Allocations shall be determined on the basis of an appraisal
prepared by KPMG Peat Marwick. In the event of an adjustment to the
Purchase Price in accordance with this Agreement by reason of an
indemnity payment or pursuant to Section 2.3 hereof, such adjustment
shall be made to the Purchase Price of the assets of the Company or
the assets of the particular Subsidiary to which the indemnity payment
of Section 2.3 adjustment relates or from which it arose. If such
indemnity payment or Section 2.3 adjustment cannot be allocated to the
Company or a particular Subsidiary, such adjustment shall be allocated
to the assets of the Company. The parties will file all Returns
(including amended Returns and claims for refund) and information
reports in a manner consistent with such allocation.
(c) Information. Upon Buyer's reasonable request,
from time to time, Seller shall deliver or make available to Buyer all
information (including, without limitation, all work papers,
schedules, memoranda and other information prepared by Parent, Seller
or its affiliates, subsidiaries and agents, relating to the assets of
the Company and the Subsidiaries) reasonably available to Seller or
Parent and necessary to the preparation of Company and Subsidiaries'
Returns for periods ending after the Closing Date. Seller shall also
provide to Buyer, upon Buyer's written request and after they become
available to Seller or Parent, copies of the Company and the
Subsidiaries' separate pro forma federal income and state Income Tax
Returns for all tax years of Company and Subsidiaries ending on or
after December 31, 1988, together with any data or schedules
reasonably necessary to support the computations and information shown
on such returns. In the event of an audit of Buyer, the Company or
the Subsidiaries by a taxing authority with respect to any Return for
any taxable period or periods ending subsequent to the Closing Date,
Seller shall provide Buyer with such information which Seller or
Parent possesses as Buyer may reasonably request, in writing, with
respect to the Company and the Subsidiaries and shall otherwise
provide such assistance as Buyer may reasonably request in connection
with such audit. Seller and Parent shall maintain and preserve their
respective tax records with respect to the Company or the Subsidiaries
for at least seven years from the Closing Date. Upon Seller's
reasonable request, Buyer shall deliver or make available to Seller
all information reasonably available to Buyer and necessary to the
preparation of Seller's Returns for periods ending on or before
Closing Date. In the event of an audit of Seller, the Company or any
of the Subsidiaries by a taxing authority with respect to any Return
of the Company or a Subsidiary for any taxable period or periods
ending prior to the Closing Date, Buyer shall cause the Company and
the Subsidiaries to provide Seller with such information which the
Company or the Subsidiaries possess as Seller may reasonably request,
in writing, with respect to the Company and Subsidiaries and shall
otherwise provide such assistance as Seller may reasonably request in
connection with such audit. Buyer shall cause Company and
Subsidiaries to maintain and preserve their tax records with respect
to the Company or the Subsidiaries for at least seven years from the
Closing Date.
(d) Tax Audit. Buyer will allow Seller and its
counsel to participate at Seller s expense in any outside tax audit of
the Company s or the Subsidiaries state and local Tax Returns to the
extent that such audits relate to a tax or tax period for which the
Seller has any liability hereunder. Seller shall not settle, resolve,
compromise or otherwise resolve any state or local tax audit of the
Company or any Subsidiary on or before the Closing Date without the
prior written consent of Buyer, which consent will not be unreasonably
withheld.
(e) Participation. Seller will allow Buyer and its
counsel to participate at Buyer's own expense in any outside tax
audits of Parent's consolidated federal Income Tax Returns to the
extent that such audits relate to a tax or tax period for which the
Company and the Subsidiaries have liability hereunder.
(f) Termination of Existing Tax Sharing Agreements.
All tax-sharing agreements or similar agreements, whether written or
not, with respect to or involving the Company or the Subsidiaries
shall be terminated prior to the Closing Date.
(g) Tax Elections. No new elections with respect to
Taxes or any changes in current elections with respect to Taxes
affecting the Company or the Subsidiaries shall be made by Seller or
Parent after the date of this Agreement without the prior written
consent of Buyer.
(h) Transfer Taxes. Seller shall pay all transfer
taxes imposed in respect of the transactions contemplated by this
Agreement.
5.6 Intercompany Accounts.
On the Closing Date, all intercompany account balances
between the Company and the Subsidiaries, on the one hand, and Seller,
Parent and their respective subsidiaries and affiliates, on the other
hand, will be canceled and marked to zero without any payment by the
Company and the Subsidiaries or Seller, as the case may be.
5.7 Notice of Developments.
Each of Buyer and Seller shall give prompt notice (written
upon reasonable request) to the other of (i) to the extent known by
Buyer or Seller, as the case may be, the existence of any state of
facts, the occurrence or failure to occur of any event, the existence,
occurrence or failure of which to occur would be likely to cause (1)
any representation or warranty contained in this Agreement to be
untrue or inaccurate at any time from the date hereof to the Closing
Date, (2) any condition set forth in Article 6 or Article 7 to not be
satisfied (ii) any failure of the notifying party or its officers,
directors, employees, or agents to comply with or satisfy any
covenant, condition, or agreement to be complied with or satisfied by
it under this Agreement, and (iii) in the case of Seller, any known
material claims, actions, proceedings, or investigations commenced or
threatened, involving or affecting any of the properties or assets of
the Company and the Subsidiaries; provided, however, that no such
notification or failure to notify shall affect the representations,
warranties, covenants or indemnification obligations of the parties or
the conditions to the obligations to the parties hereunder.
5.8 Reasonable Efforts and Certain Filings.
Subject to the terms and conditions of this Agreement, Buyer
and Seller each will use its commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable to consummate the transactions
contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in Articles 6 and 7 below
including those relating to Buyer s financing). Buyer and Seller
shall cooperate with one another and use their respective best efforts
in preparing and filing the necessary notification and report forms
under the HSR Act by November 22, 1995. Without limiting the
generality of the foregoing, Seller will take, or cause to be taken,
all actions and do, or cause to be done, all things necessary and
desirable to obtain all material consents required for the
consummation of the transactions contemplated by this Agreement,
including without limitation consents required under the High Point
Showroom Lease, the Appomatox Town Center Lease and the Industrial
Revenue Bonds issued by the Industrial Development Authority of
Fluvanna County, Virginia (collectively the "IRB").
5.9 Employees and Employee Benefits.
(a) Continuation of Benefits. With respect to any
individuals who after the Closing Date continue to be employees of the
Company and the Subsidiaries and who were covered by an employee
welfare benefit plan and/or qualified defined contribution pension
plan maintained by Seller, Buyer will, effective as of the Closing
Date (i) establish a similar plan providing comparable benefits as
well as comparable pre-existing condition, waiting period, co-
insurance, and deductible provisions (collectively "eligibility
provisions"), or (ii) provide benefits comparable to the benefits
afforded similarly situated employees of Buyer. For purposes of
satisfying any eligibility provisions under such plans, Buyer will
credit such employees with all past service with Seller, the Company
and the Subsidiaries. Buyer shall waive any pre-existing condition
limitation under any such group health plan and the amount of any
expenses incurred before the Closing Date by employees of the Company
or any Subsidiaries before the Closing Date shall be taken into
account for purposes of satisfying the applicable deductible,
coinsurance and maximum out-of-pocket and lifetime maximum provisions
of such group health plan.
(b) Certain Statutory Requirements. As of the Closing
Date Buyer will assume and be solely responsible for any liability or
obligation that any of Seller and its affiliates may have for
providing continued health care coverage under COBRA with respect to
all individuals who are COBRA beneficiaries of the Company or any
Subsidiary as of the Closing Date under any health plan that covers
employees of the Company and the Subsidiaries, to the extent that the
Company and the Subsidiaries, in accordance with past custom and
practice, were responsible for such liability or obligation prior to
the Closing Date.
(c) Employee Pension Benefit Plans. As soon as
practicable after the Closing Date, and after giving and receiving
appropriate governmental notifications and approvals, the Parties
shall take the following actions with regard to those Employee Benefit
Plans listed on Schedule 3.25(b) (or shall cause the following actions
to be taken by the trustees, custodians, and, where appropriate,
actuaries and other professionals retained by such plans) in which any
participant was an employee of, was terminated with a deferred vested
benefit from, or was a retiree from any of the Company and the
Subsidiaries (or their respective predecessors) prior to the Closing
Date (such participants, together with their beneficiaries, are
referred to collectively herein as "Company Participants"):
(i) With respect to those Employee Benefit Plans
(indicated by an "A" in parentheses alongside its
listing in Schedule 3.25(b)) which are non-
qualified defined benefit plans, non-qualified
defined contribution plans, qualified defined
benefit plans, deferred compensation plans or
employee stock option plans, Parent, Seller, the
Company, and the Subsidiaries shall amend the
Employee Benefit Plans to provide, effective as of
the Closing Date, that each employee of the
Company and the Subsidiaries who is a participant
in any such Employee Benefit Plan shall have a
fully vested and nonforteitable right to any
benefit or account accrued in his or her name, in
each case as of the Closing Date. Effective as of
the Closing Date, the Company and the Subsidiaries
shall cease sponsorship of and participation in
such Employee Benefit Plans and such Employee
Benefit Plans shall be sponsored solely by Seller.
Parent, Seller and the Company and the
Subsidiaries shall take all actions necessary to
terminate the sponsorship and participation of the
Company and the Subsidiaries in such Employee
Benefit Plans and to ensure that Seller sponsors
such plans as of the Closing Date, and Seller
shall be solely responsible for all liabilities
and obligations with respect to such plans
following the Closing. With respect to those
Employee Benefit Plans which are qualified or non-
qualified defined benefit plans, Seller shall take
all actions necessary to amend such plans to
provide that for purposes of determining
participants eligibility for early retirement
benefits, service will include service with Buyer
and retirement from employment with Buyer shall be
treated as retirement from active employment with
Seller.
(ii) With respect to each Employee Benefit Plan
(indicated by a "B" in parentheses alongside its
listing on Schedule 3.25(b)) which is a tax-
qualified defined contribution pension plan (other
than an employee stock ownership plan) and which
covers Company Participants as well as other
participants ("Non-Company Participants"), Seller
shall direct to Buyer's successor plan and trustee
a transfer, in cash, securities (other than
securities of Seller or any affiliate), other
property, or any combination thereof as agreed
upon by the Parties pursuant to good faith
bargaining (or in particular investments (other
than securities of Seller or any affiliate) if
such plan permitted participant directed
investments and both such plan and Buyer s
successor plan and trustee will permit such
transfer of particular investments) of that
portion of such plan's assets (including all
outstanding Company Participant loans, if any, and
including allocable earnings and losses of such
plan or, in the case of participant-directed
investments, including earnings and losses of the
individual Company Participant accounts), valued
as of the date of such transfer, allocable to
those Company Participants with a benefit or
account (whether or not vested) under such plan
(other than benefits or accounts which have been
distributed in the normal course as of the date of
such transfer). Thereafter Buyer shall assume (or
the applicable Company or Subsidiary shall retain)
all liabilities and responsibilities relating to
such Company Participant benefits and accounts and
the assets so transferred. With respect to all
such directions for transfer, Buyer shall provide
to Seller an opinion of counsel, in the form
attached hereto as Exhibit A, to the effect that
each and every successor plan and trust to which
transfer is requested is (A) tax-qualified under
applicable provisions of Code Secs. 401(a) and
501(a) and (B) complies in all applicable respects
with Code Sec. 414(l). With respect to all
benefits accrued as of the date of the transfer of
assets, Buyer shall preserve under all such
successor plans all optional forms of benefits
which are protected under Code Sec. 411(d)(6).
From and after each such transfer of assets with
respect to each such Employee Benefit Plan, Seller
shall cease to have any liability or
responsibility for all liabilities and
responsibilities that Buyer has assumed (or that
the Company and the Subsidiaries has retained)
with respect to such plans, their assets, and the
Company Participants.
(iii) Seller will make available any and all
necessary records for the purpose of
computing or establishing all employee
benefits, and such other employee benefits
information or records as to provide for a
smooth and orderly transition, including but
not limited to statements of accrued benefits
as of the Closing Date under the defined
benefit pension plans and statements of
account balances as of the Closing Date under
the defined contribution plans.
(d) Other Employee Plans. Except as otherwise
provided in subsections (e) and (f) below, Buyer shall be responsible
for any liabilities or obligations with respect to events which
occurred and claims incurred prior to the Closing (including
liabilities and obligations for incurred but not reported claims
outstanding as of the Closing Date, for disabilities or periods of
sickness commencing prior to the Closing Date, and for workers
compensation claims arising prior to the Closing Date) with respect to
Employee Benefit Arrangements covering individuals who were employees
(including any employees on leave) of, or terminated or retired from,
the Company and the Subsidiaries prior to the Closing Date.
(e) Post Employment Obligations. With respect to
employees of any of the Company and the Subsidiaries who terminated
employment with the Company and the Subsidiaries prior to the Closing
Date, Buyer shall (except as provided in Sections 5.9(c)(i) and
5.9(f)) be solely responsible for any and all liabilities and
obligations reflected as FAS 106 and 112 liabilities on the Closing
Date Balance Sheet and Seller shall (except as provided in Section
5.9(c)(ii)) be solely responsible for any and all other post
employment liabilities and obligations arising under the Employee
Benefit Plans and the Employee Benefit Arrangements.
(f) Thomasville Group Insurance Plan. Seller shall be
solely responsible for any liabilities or obligations with respect to
events which occurred and claims incurred prior to the Closing Date
(including liabilities and obligations for incurred but not reported
claims outstanding as of the Closing Date, and for disabilities or
periods of sickness commencing prior to the Closing Date) by
individuals who were employees (including any employees on leave) of,
or terminated or retired from, the Company and the Subsidiaries and
their dependents with respect to the Group Insurance Plan for
Employees of Thomasville Furniture Industries, Inc. in accordance with
the terms thereof, which plan encompasses the Group Life Insurance
Program for Hourly Employees of Thomasville Furniture Industries,
Inc., the Group Life Insurance Program for Salaried Employees and
Marketing Representatives of Thomasville Furniture Industries, Inc.,
the Group Long Term Disability Insurance for Salaried and Commissioned
Employees of Thomasville Furniture Industries, Inc., the Group Dental
Assistance Plan for Employees of Thomasville Furniture Industries,
Inc., and the Group Medical Care Benefits for Employees of Thomasville
Furniture Industries, Inc.
(g) Liabilities Triggered in Connection with the
Transaction. To the extent that either the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby (i) results in any payment (including, without limitation,
severance, unemployment compensation, deferred compensation, golden
parachute or otherwise) becoming due to any officer, director,
employee or other person from the Company or any of the Subsidiaries
under any Employee Benefit Plan, Employee Benefit Arrangement or
otherwise, (ii) increases any benefits otherwise payable under any
Employment Benefit Plan or Employee Benefit Arrangement, or (iii)
results in the acceleration of the time of payment or vesting of any
such benefits, Seller shall be solely responsible and liable for such
payment, increased benefits or acceleration of benefits.
(h) No Third Party Beneficiaries. Nothing contained
in this Section 5.9 or elsewhere in this Agreement shall grant or
create in any person not a party hereto any right to be offered, or to
continue, employment or to receive any benefit as an employee or
former employee. Without limiting the generality of the foregoing,
after the Closing neither Buyer, the Company nor any of the
Subsidiaries shall have any obligation arising out of this Agreement
to continue the employment of or provide any benefit to any person who
was or is employed by the Company or the Subsidiaries, and neither
Buyer, the Company nor the Subsidiaries assumes any liability or
obligation under any Employee Benefit Plan established or maintained
by Seller except as set forth in this Agreement.
5.10 Exclusivity.
Seller and Parent will not, and shall use their respective
best efforts to cause their investment bankers, attorneys, accountants
and other agents retained by Seller or Parent not to, solicit,
initiate, or encourage, directly or indirectly, the submission of any
proposal or offer from any third party or engage in negotiations or
discussions with, or furnish any information or data to, any third
party, relating to the acquisition of any capital stock or all or
substantially all of the assets of any of the Company and the
Subsidiaries (including any such acquisition structured as a merger,
consolidation, or share exchange), or respond to or discuss such a
proposal or offer if made.
5.11 Non-Hire.
With respect to any person who is an executive, management
or supervisory employee of the Company and the Subsidiaries on the
date hereof, for a period of 18 months following the Closing, neither
Parent (or any division or subsidiary of Parent) nor Seller will,
without the prior written consent of Buyer, hire such person or
solicit, encourage, entice or induce such person to terminate his or
her employment by the Company and the Subsidiaries.
5.12 Noncompetition.
As an inducement for Buyer to enter into this Agreement,
Seller and Parent agree that for a period of three years following the
Closing Date (the "Non-Competition Period"), neither of them (nor any
division or subsidiary of Parent) shall directly or indirectly own,
manage, operate, assist, join, control or participate in the
ownership, management, operation or control of, or be connected as a
partner, consultant or otherwise with, any third party that directly
or indirectly competes with, or is about to compete with, the business
of the Company and the Subsidiaries as it shall exist on the Closing
Date. In recognition that the business of the Company and the
Subsidiaries is currently conducted throughout the world, the
restrictions set forth in the foregoing sentence shall have no
geographic limits. In the event the restrictions set forth in this
subsection (5.12) shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its extending over too
great a period of time or over too great a geographical area or by
reason of its being too extensive in any other respect, it shall be
interpreted to extend only over the maximum period of time for which
it may be enforceable and/or over the maximum geographical area as to
which it may be enforceable and/or to the maximum extent in all other
respects as to which it may be enforceable, all as determined by such
court in such action. Nothing contained in this subsection (5.12)
shall restrict Seller, Parent or Parent s pension plan from owning 5%
or less of the corporate securities of any third party which
securities are listed on any national securities exchange or
authorized for quotation on the Automated Quotation System of the
National Association of Securities Dealers, Inc., if none of them has
any other connection or relationship, direct or indirect, with such
third party, nor prevent Parent or any division or subsidiary of
Parent from conducting their business as currently being conducted.
5.13 Pre- and Post-Closing Cooperation.
Prior to, at and, at Buyer s sole out-of-pocket cost and
expense, for a reasonable period subsequent to the Closing, Seller and
Parent shall cooperate with Buyer in connection with (i) the
initiation by Buyer of administrative, legal and management functions
previously provided by Seller, Parent or their affiliates with respect
to the businesses of the Company and the Subsidiaries, (ii) the
efforts by Buyer to complete its financing with respect to this
transaction (including the provision of information and access to
Parent s accountants and auditors and the reasonable assistance of
management of the Company and the Subsidiaries), (iii) the making of
future filings with the Securities and Exchange Commission, including
the assistance and cooperation of Parent and its auditors in the
preparation of financial statements for such filings and the provision
of any necessary consents in connection therewith and (iv) Buyer's
handling following the Closing of any liabilities and obligations of
the Company and the Subsidiaries with respect to which Seller has no
responsibility pursuant to Section 8.1 or otherwise. Such cooperation
shall include, but not be limited to, the provision by Seller and
Parent of any documents (or copies thereof) reasonably requested by
Buyer.
5.14 Insurance.
(a) Seller, at its sole cost and expense, shall obtain
and maintain following the Closing for a period of 4 years general
liability insurance providing coverage on substantially the same terms
as the general liability policy maintained by the Parent on behalf of
the Company and Subsidiaries prior to Closing (the GLI Policy )
naming Seller as an insured and naming the Company and the
Subsidiaries as additional insureds and loss payees (as their
interests may appear) in respect of any insured events under the GLI
Policy arising out of occurrences occurring prior to the Closing Date
( GLI Claims ). With respect to GLI Claims which are not covered by
the GLI Policy, Seller will remain liable for, and will indemnify and
hold Buyer, the Company and the Subsidiaries harmless from and
against, all such Claims incurred on or prior to the Closing Date.
Notwithstanding any other provision of this Agreement to the contrary,
Buyer acknowledges and agrees that except as explicitly provided in
the immediately preceding sentences of this Section 5.14, with respect
to any and all occurrences arising after the Closing Date and any and
all other claims made after the Closing Date, Buyer shall have sole
liability therefor (without regard to when the occurrence or
occurrences giving rise to such claims arose). In this regard,
without limiting the provisions of the immediately preceding sentence,
Buyer shall have sole liability for worker s compensation claims which
are made on or after the Closing Date.
(b) Notwithstanding the foregoing, from and after the
Closing, Seller shall make claims and receive recoveries for the
benefit of the Company and the Subsidiaries under any occurrence
basis insurance policies maintained (including, automobile insurance)
at any time prior to the Closing by Seller (collectively, the Pre-
Closing Insurance Policies ), in respect of any insured events of the
Company and the Subsidiaries that relate to or arise out of
occurrences prior to the Closing Date (an Insurance Claim );
provided, however, that any recoveries received by Seller in respect
of such insured events shall be promptly paid by Seller to or as
directed by Buyer, and Seller will have no right or interest therein.
The Company and the Subsidiaries will have the sole and exclusive
right, in their own names, to make directly any Insurance Claims with
respect to insured events under any Pre-Closing Insurance Policies
maintained at any time prior to, on or after Closing by the Company
and the Subsidiaries and to receive directly any recoveries
thereunder, and other than with respect to matters for which Seller
has retained responsibility pursuant to this Agreement, Seller and its
affiliates will have no right or interest therein.
(c) In order to implement Section 5.14(a), Seller
shall (i) cooperate fully and cause its affiliates to cooperate fully
with Buyer and the Company and the Subsidiaries in submitting good
faith Insurance Claims and GLI Claims on behalf of the Company and the
Subsidiaries under the Pre-Closing Insurance Policies or the GLI
Policy, as the case may be, and (ii) pay promptly over to or as
directed by Buyer any and all amounts received by Seller or its
affiliates under the Pre-Closing Insurance Policies and the GLI Policy
with respect to Insurance Claims and GLI Claims, as the case may be.
(d) Effective as of the Closing Date, except as
expressly provided herein, Seller will cause the Company and the
Subsidiaries to be removed from any insurance policies or self
insurance programs maintained prior to the Closing by, and Buyer and
the Company and the Subsidiaries will be solely liable for asserted
claims as provided herein.
5.15 Confidentiality.
Parent and Seller acknowledge that the Confidential
Information (as defined below) of the Company and the Subsidiaries is
valuable and proprietary to the business of the Company and the
Subsidiaries and agree not to (and to cause their affiliates not to),
directly or indirectly, use, publish, disseminate, describe or
otherwise disclose any Confidential Information of the Company and the
Subsidiaries without the prior written consent of Buyer. For purposes
of this Agreement, "Confidential Information" shall mean with respect
to the Company and the Subsidiaries all confidential information of
the Company and the Subsidiaries existing on or prior to the Closing
Date that is not otherwise publicly disclosed or generally available,
including information delivered in confidence by others to the Company
and the Subsidiaries. Without limiting the generality of the
foregoing, Confidential Information shall include: (i) customer
lists, lists of potential customers and details of agreements with
customers; (ii) acquisition, expansion, marketing, financial and other
business information and plans; (iii) research and development
performed exclusively by or for the benefit of the Company and/or the
Subsidiaries; (iv) computer programs and computer software; (v)
sources of supply; (vi) identity of specialized consultants and
contractors; (vii) purchasing, operating and other cost data; (viii)
special customer needs, cost and pricing data; and (ix) employee
information. Confidential Information also includes information
recorded in manuals, memoranda, projections, minutes, plans, drawings,
designs, formula books, specifications, computer programs and records,
whether or not legended or otherwise identified as Confidential
Information, as well as information that is the subject of meetings
and discussions and not so recorded. Seller shall also fully exercise
all of its rights, contractual or otherwise, to retrieve from third
parties all Confidential Information (which for this purpose shall be
deemed to include all information subject to applicable
confidentiality agreements) of the Company and the Subsidiaries which
has been delivered to such third parties, whether in connection with
the contemplated sale by Seller of the Company and the Subsidiaries or
otherwise.
5.16 Industrial Revenue Bonds.
Buyer shall use its best efforts (and Seller shall
cooperate with Buyer) from and after the date hereof to cause Sovran
Bank, N.A., as Trustee under that certain Indenture of Trust dated as
of November 1, 1986, pursuant to which the IRB was issued (the
Trustee ), to permit the substitution by Buyer of (i) a letter of
credit to be issued by a lender which is chosen by Buyer and which is
satisfactory to the Trustee (the Substitute LOC ), for (ii) that
certain Irrevocable Letter of Credit issued by Union Bank of
Switzerland, New York Branch (the Bank ) in favor of the Trustee (the
Union LOC ) relative to the IRB. In the event the Substitute LOC has
not been issued on the Closing Date, Buyer, from and after the Closing
Date, shall (i) indemnify and hold Parent harmless from and against
any and all liabilities, obligations, losses, claims, and expenses
(including attorney s fees and costs of suit) incurred by Parent and
arising under or in connection with that certain Guarantee dated
November 1, 1986, made by Parent in favor of the Bank and (ii) as
security for the foregoing indemnity of Buyer, cause to be issued and
maintained in effect until the first to occur of the expiration of the
term of the Union LOC or the issuance of the Substitute LOC an
irrevocable letter of credit in favor of Parent (the Indemnity LOC )
by Bankers Trust Company, Nations Bank or such other lender which is
chosen by Buyer and which is satisfactory to Parent in the exercise of
its sole discretion and the Indemnity LOC shall be in an amount and
for a term equal to the Union LOC and contain such other terms as are
satisfactory to Parent. Notwithstanding the provisions of the first
sentence of this Section 5.16, in the event the substitution of the
Substitute LOC for the Union LOC would, by itself, adversely impair
the tax exemption of interest on the IRB or cause the IRB to not
remain outstanding after the Closing Date in accordance with the terms
of the IRB, Buyer s sole obligation under this Section 5.16 shall be
to provide to Parent the indemnity and Indemnity LOC contemplated by
the second sentence of this Section. In the event Buyer is unable to
cause the substitution of the Substitute LOC for the Union LOC and the
term of the Union LOC expires prior to end of the term of the IRB,
Parent shall use its reasonable commercial efforts to renew the Union
LOC or assist Buyer in obtaining a Substitute LOC so that the IRB
remains outstanding until the expiration of its term.
6. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the
fulfillment of the following conditions, any of which may be waived by
Seller:
6.1 Representations and Covenants.
All representations and warranties of Buyer contained herein
shall be true and correct in all material respects on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date. Buyer shall have performed and complied in all
material respects with all covenants and agreements contained herein
and required to be performed or complied with by it on or prior to the
Closing Date.
6.2 Closing Certificate.
Buyer shall have delivered to Seller a certificate signed by
its President or any Vice President, dated as of the Closing Date, to
the effect set forth in Section 6.1.
6.3 Legal Opinion.
Seller shall have received an opinion of Bryan Cave LLP,
counsel for the Buyer, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit B.
6.4 Injunction.
There shall not be any pending action, suit, or other
judicial proceeding brought by the United States Federal Trade
Commission or by the Antitrust Division of the United States
Department of Justice against any of the parties hereto with respect
to any of the transactions contemplated by this Agreement, and no
order or decree prohibiting or restraining the consummation of this
Agreement shall have been issued by any court or governmental or
regulatory body.
6.5 Governmental Authority.
The parties shall have filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice
notification and report forms with respect to the transactions
contemplated hereby pursuant to the HSR Act and the rules promulgated
thereunder, and the waiting period required to expire under such Act
and rules, including any extension thereof, shall have expired prior
to the Closing Date.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to enter into and complete the
Closing is subject to the fulfillment of the following conditions, any
of which may be waived by Buyer:
7.1 Representations and Covenants.
All representations and warranties of Seller contained
herein shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though made on and
as of the Closing Date. Seller shall have performed and complied in
all material respects with all covenants and agreements contained
herein and required to be performed or complied with by it on or prior
to the Closing Date.
7.2 Closing Certificate.
Seller shall have delivered to Buyer a certificate signed by
its President or any Vice President, dated as of the Closing Date, to
the effect set forth in Section 7.1.
7.3 Legal Opinion.
Buyer shall have received an opinion of Buchanan Ingersoll
Professional Corporation, counsel for Seller, dated as of the Closing
Date, substantially in the form attached hereto as Exhibit C.
7.4 Injunction.
There shall not be any pending or threatened action, suit,
or other judicial proceeding brought by the United States Federal
Trade Commission or by the Antitrust Division of the United States
Department of Justice against any of the parties hereto with respect
to any of the transactions contemplated by this Agreement, and no
order or decree prohibiting or restraining the consummation of this
Agreement or imposing any conditions to the consummation of this
Agreement which are burdensome in any material respect to Buyer shall
have been issued by any court or governmental or regulatory body.
7.5 Governmental Authority.
The parties shall have filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice
notification and report forms with respect to the transactions
contemplated hereby pursuant to the HSR Act and the rules promulgated
thereunder, and the waiting period required to expire under such Act
and rules, including any extension thereof, shall have expired prior
to the Closing Date.
7.6 No Loss.
Since the date of the Latest Balance Sheet, the Company and
the Subsidiaries shall not have suffered any loss on account of fire,
flood, accident, strike or other calamity which has had or may have a
material adverse effect on the financial condition or assets of the
Company and the Subsidiaries, taken as a whole, whether or not such
loss shall have been covered by insurance.
7.7 Financing.
Buyer shall have closed on financing for the purchase of all
of the Shares and consummation of the related transactions
contemplated in the Financing Letters.
7.8 Resignations.
Buyer shall have received resignations from each member of
the Board of Directors of each of the Company and the Subsidiaries,
who is not otherwise an employee of the Company or the Subsidiaries.
7.9 Trademark License.
Parent shall have executed and delivered to Buyer a
Trademark License Agreement, in a form mutually agreeable to Parent
and Buyer , pursuant to which Parent shall grant to the Company and
the Subsidiaries a royalty free license to use the Armstrong name
solely in connection with the business operations of the Company and
the Subsidiaries for a period not to exceed eighteen (18) months
following the Closing Date.
7.10 Consents.
Buyer shall have received the consents and approvals set
forth on Schedule 7.10.
7.11 Environmental Reports.
Buyer shall have received the final Phase One Study
described in Section 9.3, from an environmental consultant selected by
Buyer and agreed to in writing by Seller, such agreement not to be
unreasonably withheld, with respect to the properties currently owned
or operated by the Company and the Subsidiaries which does not reveal
environmental remediation costs and compliance costs (exclusive of
Known Environmental Losses, as hereinafter defined) which are
reasonably likely to exceed $20,000,000. This condition shall be
deemed satisfied on December 29, 1995 (effective as of the Closing
Date), unless on or before such date Buyer notifies Seller in writing
that this condition is not satisfied.
8. INDEMNIFICATION
8.1 Indemnity of Seller.
Seller shall indemnify Buyer, its affiliates, the Company
and the Subsidiaries and their respective directors, officers,
shareholders, employees, agents, representatives, successors and
assigns (collectively, the Buyer Indemnitees ) against any and all
claims, losses, liabilities, damages, expenses, including reasonable
attorney's fees and costs of suit ( Losses ), resulting from or
related to: (i) any breach of Seller's covenants, warranties and
representations contained in this Agreement and (ii) any item
disclosed on Schedule 3.27 (exclusive of Known Environmental Losses,
as hereinafter defined) ( Other Environmental Losses ); provided,
however, that with respect to breaches of the representations and
warranties of Seller set forth in Article 3 (other than with respect
to breaches of representations and warranties set forth in Sections
3.2, 3.11, 3.12, 3.13, 3.14 and 3.22) and including Other
Environmental Losses, (i) the Buyer Indemnitees will not be entitled
to indemnification until the aggregate of all such claims exceeds the
sum of $2,500,000, and then only to the extent of any amount in excess
of $2,500,000 and (ii) Seller's aggregate liability to indemnify the
Buyer Indemnitees shall not exceed $30,000,000 (the Seller s
Indemnity Cap ). Buyer and Seller acknowledge and agree that,
notwithstanding the foregoing provision of this Section 8.1, in the
event the Phase One Study described in Section 9.3 discloses
environmental remediation costs (exclusive of Known Environmental
Losses, as hereinafter defined) and compliance costs which are in
excess of $5,000,000, then the Seller s Indemnity Cap shall be
increased by an amount equal to the amount of such environmental
remediation costs and compliance costs in excess of $5,000,000 but in
no event shall such increase exceed $15,000,000 ( Excess Environmental
Indemnity ).
8.2 Indemnity of Buyer.
Buyer shall indemnify Seller and its affiliates, directors,
officers, shareholders, employees, agents, representatives, successors
and assigns (collectively, the Seller Indemnitees ) against any and
all claims, and losses, liabilities, damages, expenses, including
reasonable attorney's fees and costs of suit, to Seller (i) resulting
from or related to any breach of Buyer's covenants, warranties and
representations contained in this Agreement and (ii) resulting from,
relating to or in connection with the operations of the Company and
the Subsidiaries subsequent to the Closing Date, including without
limitation, the sale of products by the Company and the Subsidiaries
under the Armstrong brand name subsequent to the Closing Date (other
than with respect to infringement actions by third parties relative to
the use of the Armstrong brand name).
8.3 Mitigation.
Every person seeking indemnification hereunder shall correct
or mitigate, to the extent commercially reasonable, any loss suffered
by such person for which indemnification is claimed hereunder, and the
indemnifying party shall be liable only for the amount thereof which
is net of any insurance proceeds and other amounts paid by, or offset
against any amount owed to, any person not a party to this Agreement
(including any costs or expenses incurred to so correct or mitigate);
provided, however, with respect to matters, including without
limitation, known Environmental Losses, Other Environmental Losses,
and Environmental Warranty Losses, for which Seller is required to
indemnify Buyer pursuant to this Agreement, Seller shall indemnify and
hold harmless Buyer with respect to such matters upon receipt of
notice of such claim notwithstanding the existence of a pending claim
for recovery of insurance proceeds (including any proceeds from any
applicable state underground storage tank fund). In the event Buyer
recovers insurance proceeds with respect to matters that Seller
provided indemnity pursuant to this Agreement, Buyer shall reimburse
Seller for its expenditures in an amount equal to the funds recovered
by Buyer from such insurer. If a person which has a right of
indemnification under this Article 8 reasonably can, by expenditure of
money, mitigate or otherwise reduce or eliminate any loss for which
indemnification would otherwise be claimed, such person shall take
such action and shall be entitled to reimbursement for such
expenditures and all related expenses. The parties acknowledge and
agree that, except as provided in Sections 8.5, 8.7, 9.2, 9.11 and
9.21, the indemnification provided under this Article 8 shall be the
sole and exclusive remedy of the parties with respect to the breach of
any covenant, representation or warranty contained herein.
Notwithstanding the foregoing, nothing in this Agreement shall relieve
Seller or Buyer from any liability arising from an intentional breach
of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
8.4 Matters Involving Third Parties.
(a) If any third party (including any governmental
agency or authority) shall notify any Buyer Indemnitee or Seller
Indemnitee, as the case may be (the Indemnified Party ) with respect
to any matter (a Third Party Claim ) which may give rise to a claim
for indemnification against either Buyer or Seller, as the case may be
(the Indemnifying Party ) under this Article 8, then the Indemnified
Party shall promtly notify the Indemnifying Party thereof in writing.
(b) The Indemnifying Party shall, within 30 days after
receipt of the notice described in Section 8.4(a), assume and
thereafter conduct the defense of the Third Party Claim with counsel
of its choice reasonably satisfactory to the Indemnified Party at the
sole expense of the Indemnifying Party; provided, however, that the
Indemnified Party may participate in such settlement or defense
through counsel chosen by such Indemnified Party, provided that the
fees and expenses of such counsel shall be borne by such Indemnified
Party; and provided, further, that the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnified Party (not to be withheld unreasonably) unless the
judgment or proposed settlement involves only the payment of money
damages by the Indemnifying Party and does not impose an injunction or
any other equitable relief upon the Indemnified Party.
(c) Unless and until the Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 8.4(b)
above, however, the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem appropriate, but
shall not thereby waive any right to indemnify therefor pursuant to
this Agreement; provided, however, that the Indemnified Party will not
consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably).
(d) The specific provisions of Sections 5.5(c),
5.5(d), 8.5 and 8.7 will govern in the event of any conflict with the
general provisions of this Section 8.4.
8.5 Tax Indemnification.
In addition to any other indemnification granted herein and
notwithstanding the survivability or limits, if any, of any
representation contained herein or the absence of any representation
herein, Seller agrees to indemnify, defend and hold harmless the Buyer
Indemnitees from and against all loss, liability including the Company
and the Subsidiaries liability for its own Taxes or its liability, if
any (for example, by reason of transferee liability or application of
Treas. Reg. Section 1.1502-6) for Taxes of others, including, but not
limited to, Seller or any Tax Affiliate or any majority-controlled
foreign affiliate, damage or reasonable expense (including but not
limited to reasonable attorneys fees and expenses) (collectively,
Costs ) payable with respect to Taxes claimed or assessed against the
Company and the Subsidiaries (i) for any taxable period ending on or
before the Closing Date or (ii) for any taxable period resulting from
a breach of any of the representations or warranties contained in
Section 3.22 hereof
8.6 Indemnification Payment.
With respect to any indemnity payment under this Article 8,
the parties agree to treat, to the extent permitted by law, all such
payments as an adjustment to the consideration paid for the sale and
transfer of the stock of the Company and the Subsidiaries, to be
allocated to the Company or the Subsidiary in respect of which the
adjustment arose, and if the source of any such adjustment cannot
reasonably be determined, such adjustment shall be allocated to the
Company.
8.7 Environmental Indemnification.
(a) Identified Properties. Seller agrees to indemnify,
defend and hold harmless the Buyer Indemnitees from and against all
existing and future claims, losses, liabilities, damages and expenses,
including, without limitation, claims, losses, liabilities, damages
and expenses for personal injury, property damage, reasonable costs of
investigation, attorneys fees and costs of suit and reasonable
consultant fees, resulting from or related to (i) the direct or
indirect disposal by the Company or any of its Subsidiaries of wastes
or other materials in the Buckingham County, Virginia landfill site
( Buckingham ) and (ii) the former Pleasant Garden, North Carolina
facility of the Company heretofore sold to Hooker Furniture
Corporation pursuant to an agreement dated February 17, 1993
(including but not limited to releases of volatile organic compounds)
( Pleasant Garden ) (hereinafter Buckingham and Pleasant Garden
referred to together as the Identified Properties ) ( Known
Environmental Losses ); provided however (i) with respect to the first
$4,000,000 of Known Environmental Losses relating to the Identified
Properties, Seller and Buyer shall each pay fifty percent (50%) of
such $4,000,000 of such Known Environmental Losses and (ii)
thereafter, the Buyer Indemnities will be entitled to indemnification
for additional Known Environmental Losses with respect to the
Identified Properties up to an aggregate amount, including such
$4,000,000, not to exceed $30,000,000. Thereafter, Seller shall have
no further obligation to Buyer or any other person relating to the
Identified Properties. This Section 8.7(a) sets forth Buyer
Indemnitees sole and exclusive rights of indemnification for Known
Environmental Losses.
(b) Period of Indemnity. Seller s Indemnification
obligations in Section 8.7 (a) herein shall apply only to Known
Environmental Losses actually incurred by the Buyer Indemnities before
the tenth anniversary of the Closing Date. Thereafter Seller shall
have no further obligation to indemnify Buyer or any other person for
Known Environmental Losses.
(c) Lowest Cost Response. Notwithstanding anything in
this Agreement to the contrary, Seller s indemnity obligation for
breach of any warranty in Section 3.27(a)-(h) ( Environmental Warranty
Losses ), Other Environmental Losses and Known Environmental Losses
(collectively Environmental Losses ) for which Seller has an
indemnity obligation pursuant to this Agreement shall be satisfied by
implementation or indemnification for implementation of the Lowest
Cost Response. The Lowest Cost Response shall mean any compliance
activity or any investigation, cleanup, remediation, removal action or
other response activity that (1) satisfies applicable Environmental
Laws that are in existence at the time of the contemplated activity,
(2) is acceptable to Governmental Authorities having jurisdiction over
the site, (3) is consistent with the operations being conducted at the
site, and (4) can be achieved for the lowest financial cost as
compared with other potential response activities.
(d) Limitation. Notwithstanding anything in this
Agreement to the contrary, Seller s indemnity obligation for
Environmental Losses shall be limited solely to Environmental Losses
arising out of or resulting from (1) investigative or remedial action
required by Environmental Law or Governmental Authorities, (2) third-
party claims, or (3) the discovery of the presence or Release of a
Hazardous Material as a result of: (i) a facility expansion or
renovation (ii) in the ordinary course of operations, including
pursuant to a corporate environmental compliance program (except for
findings resulting from soil or ground water sampling pursuant to such
programs), (iii) an investigation done in connection with a bona fide
offer received after the Closing Date to purchase or lease any of the
real property currently owned or leased by the Company or the
Subsidiaries and in particular to the Armstrong Furniture Division of
the Company ( AFD ), a bona fide offer to purchase or a board approved
organized sale, disposition or bidding process to sell all or
substantially all of the assets of AFD (which for purposes hereof the
real property shall only include the real property listed on Schedule
8.7(d)(3)(iii) hereto) (the Assets ) or the stock of a subsidiary of
the Company owning directly or indirectly no real property other than
the Assets, or (iv) an investigation or remedial action which in the
reasonable business judgment of Buyer is required to protect human
health or safety. For purposes of Article 8, no indemnification is
provided by Seller for asbestos removal costs solely associated with
renovation of any property currently owned, leased, or operated by the
Company or any Subsidiary.
(e) Confidentiality. Buyer shall use its best efforts
to maintain in strict confidence, the existence and terms of Seller s
indemnity obligation with respect to the Identified Properties set
forth in Section 8.7(a) provided, however, Buyer may disclose the
terms and existence of such indemnity obligation (1) to any financial
institution that is considering or actually provides financing to
Buyer, and (2) to the extent required by law. In the event Buyer
discloses the existence or terms of Seller s indemnity obligation
pursuant to Section 8.7(a) to a financial institution, Buyer shall
take reasonable and appropriate measures to ensure that such financial
institution is familiar with the confidentiality requirement set forth
herein and agrees to comply with its terms.
8.8 Procedures Relating to Environmental Indemnity by Seller.
(a) Subject to the provisions of Section 8.7 (a) and
(b), the continued defense, settlement or compromise of the claims
giving rise to Known Environmental Losses shall continue with existing
counsel or other counsel selected by Seller and reasonably acceptable
to Buyer under the direction of Seller; provided, however, Buyer
Indemnitees shall have the right to retain, at their own expense
counsel and consultants of their own choosing to work with Seller s
current defense counsel and consultants.
(b) As a condition of the indemnity for Environmental
Warranty Losses and Other Environmental Losses Buyer shall, promptly
after becoming aware of facts that will likely result in such
Environmental Warranty Losses or Other Environmental Losses being
incurred for which Buyer Indemnitees are entitled to indemnity
hereunder ( Environmental Losses Claim ), submit to Seller a written
notice thereof within four years of the Closing Date, which notice
shall describe in reasonable detail the date when and circumstance by
which Buyer became aware of the Environmental Losses Claim; the nature
of the Environmental Losses Claim, and the basis for the alleged
liability. Seller shall have no obligation to Buyer for any
Environmental Warranty Losses or Other Environmental Losses for which
a notice as described above is not received before the fourth
anniversary of the Closing Date.
(c) With regard to any Environmental Losses Claim,
Seller may, at its option, defend such Environmental Losses Claim with
counsel or consultants selected by Seller reasonably acceptable to the
Buyer Indemnitees. If Seller does not elect to defend any such
Environmental Losses Claim, the Buyer Indemnitees shall defend such
Claim with counsel or consultants selected by the Buyer Indemnitees
reasonably acceptable to Seller. Seller shall provide Buyer with
copies of all correspondence, reports and other documentation,
including but not limited to settlement communications or documents
(excluding matters subject to confidentiality) (draft or final)
relating to any Other Environmental Losses or Environmental Warranty
Claims, excepting such documents as are routinely filed. If Seller
elects to defend such Environmental Losses Claim, Seller shall retain
control of the defense, compromise or settlement (including without
limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the
making of any admissions against interest; the making of any decision
whether work should be performed voluntarily by the Buyer Indemnitees
or their contractors, consultants or engineers or, alternatively, by
an authorized governmental entity; and the making of any decision
whether to enter into any consent decree, consent order or consent
agreement and the terms of such decree, order or agreement) thereof;
provided, however, that if Buyer reasonably determines that the
defense, compromise or settlement of an Environmental Losses Claim may
reasonably be expected to materially and adversely affect the business
or operations of the Buyer Indemnitees, the Buyer Indemnitees shall
have the right to approve, such approval not to be unreasonably
withheld, the defense, compromise or settlement of such Environmental
Losses Claim. If the Buyer Indemnitees are conducting the defense,
compromise or settlement of such Environmental Losses Claim, the Buyer
Indemnitees shall have control over the defense, compromise or
settlement; provided, however, that Seller shall have the right to
approve the defense, compromise or settlement (including without
limitation the nature and scope of any work to be performed; the
contractors, consultants or engineers to be performing any work; the
making of any admissions against interest; the making of any decision
whether work should be performed voluntarily by the Buyer Indemnitees
or their contractors, consultants or engineers or, alternatively, by
an authorized governmental entity; and the making of any decision
whether to enter into any consent decree, consent order or consent
agreement and the terms of such decree, order or agreement) if the
Environmental Losses Claim may reasonably be expected to exceed
$250,000 in Environmental Warranty Losses or Other Environmental
Losses in any one or more years. The party conducting the defense,
compromise or settlement of an Environmental Losses Claim shall inform
the other party in a timely manner of any material information
concerning the Environmental Losses Claim or the defense, compromise
or settlement thereof and provide copies of correspondence, reports
and other documentation (draft or final) relating thereto.. If at any
time Seller is not satisfied with the defense being provided by the
Buyer Indemnitees with regard to any Environmental Losses Claim that
may reasonably be expected to exceed $250,000 in Environmental Losses
Losses in any one or more years, Seller shall have the right, at its
option, to assume control of the defense, compromise or settlement of
such Environmental Losses Claim, including without limitation the
appointment of new counsel or consultants if Seller so elects;
provided, however, if Buyer reasonably determines that the defense,
compromise or settlement (including without limitation the nature and
scope of any work to be performed; the contractors, consultants or
engineers to be performing any work; the making of any admissions
against interest; the making of any decision whether work should be
performed voluntarily by the Buyer Indemnitees or their contractors,
consultants or engineers or, alternatively, by an authorized
governmental entity; and the making of any decision whether to enter
into any consent decree, consent order or consent agreement and the
terms of such decree, order or agreement) of such Environmental Losses
Claim may reasonably be expected to materially and adversely affect
the business or operations of the Buyer Indemnitees or result in not
insignificant Environmental Warranty Losses or Other Environmental
Losses to the Buyer Indemnitees, the Buyer Indemnitees shall have the
right to approve the defense, compromise or settlement of such
Environmental Losses Claim, such approval not to be unreasonably
withheld. Regardless of the party conducting the defense of any
Environmental Losses Claim, the parties agree to cooperate in the
defense, compromise or settlement of such claim. Where Seller decides
that the taking of any action to test, investigate, remove, remediate
or restore any environmental conditions with regard to a property
owned or operated by the Buyer Indemnitees is necessary to protect
Seller s interests under this Agreement, Seller shall provide advance
written notification to the Buyer Indemnitees of the nature of and
reasons for such action. The Buyer Indemnitees shall allow Seller to
perform all or part of any such action at Seller s option, using
Seller s own counsel, consultants, contractors and/or engineers
reasonably acceptable to the Buyer Indemnitees. Seller and the Buyer
Indemnitees will cooperate in attempting to minimize any disruption of
operations of the Buyer Indemnitees caused by such actions. In
connection with the obligations of Seller pursuant to this subsection
8.8(c) the Buyer Indemnitees shall cause the Company and its
Subsidiaries to deliver to Seller copies of all documents reasonably
necessary to Seller pertaining to environmental or other state or
federal regulatory matters with respect to which Seller may be
required to indemnify the Buyer Indemnitees hereunder.
9. MISCELLANEOUS
9.1 Fees and Expenses.
Each party to this Agreement shall pay its own expenses
(including, without limitation, the fees and expenses of their
respective agents, representatives, counsel and accountants)
incidental to the preparation, negotiation, and consummation of this
Agreement and the transactions contemplated hereby. All filing fees
required to be paid under the HSR Act and the rules promulgated
thereunder shall be paid by Buyer.
9.2 Brokers.
Buyer has not employed a finder or broker or other person
entitled to a brokerage commission or fee in respect of this Agreement
and the transaction contemplated hereby. Seller has engaged Goldman,
Sachs & Co. to act as its financial advisor in connection with the
transactions contemplated hereby and shall be solely responsible for
the payment of such firm's fees for such services.
9.3 Access to the Company's Properties.
Seller will, and will cause the Company to accord Buyer and
its authorized representatives reasonable access to all of the books,
records, personnel and properties of or pertaining to the Company and
the Subsidiaries commencing not later than the date of this Agreement.
Such access shall include, but not be limited to, the right to
conduct, at Buyer s sole expense, an environmental investigation
(which shall not include performance of soil, groundwater, surface
water and air sampling and analysis without the prior written consent
of Seller), at any of the properties currently owned or operated by
the Company and the Subsidiaries; provided however, that Buyer
acknowledges that such environmental investigation and report issued
thereon (the Phase One Study ) contains confidential information of
the Seller with respect to the Company and the Subsidiaries, and Buyer
agrees to not directly or indirectly use, publish, disseminate,
describe or otherwise disclose the Phase One Study to any person other
than its attorneys, accountants, financial institutions or other
advisors directly involved in the transaction contemplated by this
Agreement without the prior written consent of Seller. Buyer agrees
to cause any person to whom it discloses such Phase One Study to be
bound by the confidentiality provisions contained herein. Prior to
finalizing any Phase One Study, including any estimation of
environmental remediation or compliance costs, Buyer shall provide
Seller with an oral and an executive summary of the proposed Phase One
Study on or before December 8, 1995 and shall provide a copy of such
Phase One Study to Seller for meaningful review and comment by no
later than December 27, 1995. Buyer shall have the right to make
copies of any such records, files, tax returns and other materials as
it may deem advisable. Seller will cause the respective personnel of
Seller and the Company to assist Buyer in making such investigation,
and will make its counsel, accountants and other representatives
available for such purposes. All stock record books and all minute
books of the Company and the Subsidiaries will be delivered to Buyer
at the Closing. All other books and records of the Company and the
Subsidiaries in the possession of Seller will be delivered to Buyer at
the Closing.
9.4 Books and Records.
Seller (as it reasonably requires) and any taxing authority
in the United States shall have access for a period of six (6) years
after the Closing Date, during normal business hours, to personnel of
the Company and the Subsidiaries and to all books, records, files,
documents and other data relating to the business of the Company and
the Subsidiaries conducted prior to the Closing Date in connection
with any proceedings with any governmental authority.
9.5 Notices.
All notices or other communications given under this
Agreement shall be in writing and transmitted by registered or
certified mail, postage prepaid, or by telegram. Any such notice or
communication given hereunder shall be sent as follows:
If to Seller:
Armstrong Enterprises, Inc.
c/o Armstrong World Industries, Inc.
313 West Liberty Street, Lancaster, PA 17603
Attention: Larry A. Pulkrabek, Senior Vice
President
and General Counsel
Fax: 717-396-2983
Copy to:
Vincent C. Deluzio, Esq.
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
Fax: 412-562-1041
If to Buyer:
INTERCO INCORPORATED
101 South Hanley Road
St. Louis, MO 63105
Attn: Chairman of the Board
Telecopy No.: 314-863-7047
Copy to:
INTERCO INCORPORATED
101 South Hanley Road
St. Louis, MO 63105
Attn: General Counsel
Telecopy No.: 314-863-7047
Any party may send notice or other communication hereunder
using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail, or electronic
mail), but no such notice or other communication shall be deemed to
have been duly given unless and until it actually is received. Any
party may change the address to which notices and other communications
hereunder are to be delivered by giving the other party notice in the
manner herein set forth.
9.6 Successors and Assigns.
This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns. This Agreement or any part thereof, may not be assigned
without the prior written consent of the other party, which consent
may be withheld in the sole discretion of the other party; provided,
however, that Buyer may (i) assign any or all of its rights and
interests hereunder (but not delegate any or all of its duties
hereunder) to one or more of its affiliates and (ii) designate one or
more of its affiliates to perform its obligations hereunder (in any or
all of which cases in subparagraphs (i) and (ii) Buyer nonetheless
shall remain responsible for the performance of all of its obligations
hereunder). References to Buyer and Seller shall include their
respective successors and permitted assigns.
9.7 Entire Agreement and Modification.
This Agreement supersedes all prior agreements and
understandings between the parties or any of their respective
affiliates (written or oral) relating to the subject matter (except
for that certain Confidentiality Agreement between the parties dated
June 30, 1995), and is intended to be the entire and complete
statement of the terms of the agreement between the parties, and may
be amended or modified only by a written instrument executed by the
parties. The waiver by one party of any breach of this Agreement by
the other party shall not be considered to be a waiver of any
succeeding breach (whether of a similar or a dissimilar nature) of any
such provision or other provision or a waiver of any such provision
itself. The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
Notwithstanding anything to the contrary contained herein, any matter
set forth or referred to or disclosed on any Schedule hereto shall be
deemed also to be set forth, referred to and disclosed on all
schedules, and deemed to be the disclosure under all Sections and
provisions of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been
made or relied upon by either party hereto.
9.8 Termination By Buyer.
Buyer may, without liability, terminate this Agreement by
written notice to Seller as follows:
(a) If Seller fails to comply with Section 2.2 or to
satisfy at or prior to Closing in all material respects any of the
conditions to Closing specified in Article 7 which are required to be
performed or satisfied by Seller at or prior to Closing, and if any
such failure either is not waived in writing by Buyer or cured by
Seller within twenty days after written notice thereof by Buyer; or
(b) If the Phase One Study prepared pursuant to
Section 9.3 discloses environmental remediation costs and compliance
costs which are in excess of $20,000,000, Buyer may, without
liability, terminate this Agreement by written notice to Seller on or
before December 29, 1995.
9.9 Termination By Seller.
Seller may, without liability, terminate this Agreement by
written notice to Buyer as follows:
(a) If Buyer fails to comply with Section 1.2 or to
satisfy at or prior to Closing in all material respects any of the
conditions to Closing specified in Article 6 which are required to be
performed or satisfied by Buyer at or prior to Closing, and if any
such failure either is not waived in writing by Seller or cured by
Buyer within twenty days after written notice thereof by Seller;
(b) If Buyer fails to obtain financing as required by
Section 7.7 on or before January 16, 1996 and Buyer does not waive the
condition set forth in Section 7.7 thereon or before such date; or
(c) If the Phase One Study prepared pursuant to
Section 9.3 discloses environmental remediation costs and compliance
costs which are in excess of $20,000,000, and Buyer provides the
notice set forth in Section 7.11, Seller may, without liability,
terminate this Agreement by written notice to Buyer on or before
January 3, 1996.
9.10 Other Termination.
If no Closing occurs by March 15, 1996, and the failure to
close is not the result of Seller's or Buyer's failure to satisfy in
all material respects any of the conditions to Closing specified in
Articles 6 and 7 at or prior to Closing, each of Buyer and Seller
shall have the right to terminate this Agreement upon written notice
to the other.
9.11 Effect of Termination.
If this Agreement is terminated pursuant to Sections 9.8,
9.9 or 9.10 above, all rights and obligations of the parties hereunder
shall terminate without any liability of any party to the other party
under or with respect to this Agreement; provided, however, that
nothing in this Section 9.11 or elsewhere in this Agreement shall
impair or restrict the rights of any party to any and all remedies at
law or in equity in the event of a breach of or default under this
Agreement by the other party. If this Agreement is terminated as
provided herein all filings, applications and other submissions made
pursuant to this Agreement shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
9.12 Survival of Representations, Covenants and Warranties.
The representations and warranties made by Seller and Buyer
herein shall survive the Closing for a period of two years; provided,
however, that the representations and warranties made by Seller in
Section 3.27(a)-(h) above shall survive the Closing and continue in
full force and effect for a period of four years; those contained in
Sections 3.2, 3.11, 3.12, 3.13 and 3.14 above shall survive the
Closing and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations); and those
contained in Section 3.27 (i) shall not survive the Closing. The
covenants and agreements set forth in the Agreement shall survive
Closing, each in accordance with its terms.
In the case of any representation or warranty of Seller in
Section 3.22 and any other representation or warranty relating to or
affecting the Company or the Subsidiaries liability for Taxes (the
Surviving Representations ) whether the Company s or the
Subsidiaries Taxes or their liability, if any (for example, by reason
of transferee liability or application of Treas. Reg. Section
1.1502-6) for the Taxes of others including, but not limited to Seller
or any former or present affiliate or subsidiary thereof, the same
shall survive until the later of the final resolution of any judicial
or administrative proceeding involving any such Tax or expiration of
any statute of limitations (including any suspensions, tollings or
extensions thereof).
9.13 Section and Other Headings.
The Section and other headings contained in this Agreement
are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
9.14 Governing Law.
This Agreement shall be interpreted and governed by the laws
of the Commonwealth of Pennsylvania without giving effect to any
choice or conflict of law provision.
9.15 Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, and such counterparts
shall together constitute one and the same instrument.
9.16 Further Assurances.
Each of the parties shall execute such documents and other
papers and take such further actions as may be reasonably required to
carry out the provisions hereof and the transactions contemplated
hereby. Each party shall use its reasonable efforts to fulfill or
obtain the fulfillment of the conditions to the Closing.
9.17 Severability.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition and unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
9.18 Confidentiality.
Seller and Buyer agree to keep the terms of this Agreement
and any amendments to it or transactions arising from it confidential
except as required by law or as otherwise agreed by the parties. The
parties hereto agree that before issuing any press release or making
any public statement with respect to this Agreement or the
transactions contemplated hereby, the content of any such disclosure
shall be communicated between the parties and agreed to prior to the
release thereof, except as required by applicable law or government
regulation.
9.19 No Third Party Beneficiaries.
Neither this Agreement nor any provision hereof is intended
to confer upon any person (other than the parties hereto and their
respective successors and permitted assigns ) any rights or remedies
hereunder.
9.20 Jurisdiction.
Each party agrees to bring all judicial proceedings against
the other arising out of or relating to this Agreement or any of the
Delaware or the appropriate state court located in New Castle County,
Delaware. In addition, each party accepts, generally and
unconditionally, the exclusive jurisdiction of such courts and waives,
to the fullest extent permitted by law, any objection (including any
objection that jurisdiction, situs, or venue is inconvenient or
improper) which it may now have or may hereafter have to the laying of
venue or the convenience of the forum of any action with respect to
bringing, prosecution or defense of any such judicial proceeding in
any such court.
9.21 Specific Performance.
Buyer and Seller acknowledge and agree that failure by the
other to perform its obligations under this Agreement would cause such
party or parties to be materially and irreparably injured and to
suffer material loss; and that such injury and loss cannot be fully or
adequately compensated by the payment of money or by an award of
damages and each shall be entitled to the specific performance of this
Agreement, in addition to all other remedies that each might have, and
that each of them will not object to and will not hinder or delay the
entry of a decree of specific performance against it in any action or
suit brought under or in respect of this Agreement.
9.22 Intercompany Relationships.
All leases, licenses, contracts, and other agreements
between any of the Company and the Subsidiaries on one hand and any of
Seller or any of its affiliates on the other hand shall be deemed
terminated as of the Closing and will have no further force or effect.
9.23 Parent Guarantee.
Parent hereby unconditionally and irrevocably guarantees the
full and prompt performance by Seller of all of its obligations under
this Agreement.
9.24 Definition of Knowledge.
As used herein, the phrase knowledge of Seller shall have
the meaning, and be limited to the persons, as set forth on Schedule
9.24.<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
PARENT:
ATTEST: ARMSTRONG WORLD INDUSTRIES, INC.
L.A. Pulkrabek By: George A. Lorch
--------------------- ----------------------------
Title:
SELLER:
ATTEST: ARMSTRONG ENTERPRISES, INC.
D. D. Wilson By: L.A. Pulkrabek
---------------------- -----------------------------
Title:
BUYER
ATTEST: INTERCO INCORPORATED
D. A. Patterson By: R. B. Loynd
---------------------- -------------------------------
Title: Chairman of the Board<PAGE>
SCHEDULES
2.3 (iv) Targeted Net Worth
3.1 Exceptions To Qualification Of TFI
3.3 Additional Footnotes/Exceptions To Financial Statements
3.4 Undisclosed Material Obligations And Liabilities
3.5 Events And Developments Since Latest Balance Sheet Date
3.6(A) Real Property Interest Held By Company
3.6(B) Liens And Other Encumbrances On Real Property
3.7 Liens And Encumbrances On Personal Property
3.9 Intellectual Property Rights
3.10 Pledges, Liens Or Encumbrances on Accounts Receivable
Accounts And Notes Receivable Not Collectible In
The Ordinary Course of Business
3.11 Capital Stock Of Company And Its Subsidiaries
3.14 List Of Second Tier Subsidiaries
Corporations Whose Securities Are Owned By The Company
3.16 Agreements For Which The Proposed Transaction Requires
Consent Or
Waiver Of Breach
3.17 Litigation
3.18 Material Contracts And Contracts With Affiliates
3.19 Outstanding Violations And Notices of Noncompliance
With icenses,
Permits And Governmental Authorizations
3.22(d) Possible Unfiled Returns And Tax Payments Owed
Tax Audits In Process Or Pending
3.22(g) Permanent Establishments In Foreign Countries
3.24 Insurance Policies Currently Covering The Company And
Its Subsidiaries
3.25(b) Employee Benefit Plans
3.25(i) Employee Benefit Plans
3.27 Environmental Matters
4.5 Financing Commitment Letters
5.5(a) List of Company And Subsidiaries For Which Election
Will Be Made
5.5(b) Preliminary Estimate Of Tax Allocation
7.10 Agreements For Which The Proposed Transaction Requires
Consent
8.7(d)(3)(iii) The Real Property Of The Armstrong Furniture Division
9.24 Definition Of "Knowledge"
The Company agrees to furnish supplementally a copy of any of the
above schedules to the Commission upon request.<PAGE>
RECEIVABLES PURCHASE AGREEMENT
Dated as of November 15, 1994,
as amended and restated as of December 29, 1995
INTERCO RECEIVABLES CORP., a Delaware corporation (the
"Seller"), ATLANTIC ASSET SECURITIZATION CORP., a Delaware
corporation (the "Issuer"), and CREDIT LYONNAIS NEW YORK BRANCH,
a branch of Credit Lyonnais, a French banking corporation, duly
licensed under the laws of the State of New York ("CL-NY"), as
agent (the "Agent") for the Investors (as defined in Exhibit I
hereto), agree as follows:
PRELIMINARY STATEMENTS. Certain terms that are
capitalized and used throughout this Agreement are defined in
Exhibit I to this Agreement. References in the Exhibits to "the
Agreement" refer to this Agreement, as further amended, modified
or supplemented from time to time.
The Seller has acquired Receivables from the
Originators pursuant to the Originator Purchase Agreement, either
by purchase or by contribution to the capital of the Seller, as
determined from time to time by the Seller and each Originator.
The Seller, the Issuer and the Agent entered into a Receivables
Purchase Agreement, dated as of November 15, 1994, as amended as
of March 1, 1995 (the Original Agreement ), pursuant to which
the Seller sold undivided fractional ownership interests
(referred to herein as Receivable Interests ) in the Receivables
to the Issuer and the Issuer purchased such Receivable Interests
from the Seller. The parties desire to further amend the
Receivables Purchase Agreement to reflect certain changes
resulting from the addition to the Originator Purchase Agreement
of Thomasville as an Originator and certain other changes, and to
restate the Agreement. Accordingly, the Original Agreement is
hereby amended and restated in its entirety, effective as of the
Effective Date, and the parties agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
SECTION 1.01. Purchase Facility. (a) On the terms
and conditions hereinafter set forth, the Issuer may, in its sole
discretion, purchase Receivable Interests from the Seller from
time to time during the period from the Initial Purchase Date to
the Facility Termination Date. Under no circumstances shall the
Issuer make any such purchase if after giving effect to such
purchase the aggregate outstanding Invested Amount of Receivable
Interests, together with the aggregate outstanding "Invested
Amount" of "Receivable Interests" under the Alternate Receivables
Purchase Agreement, would exceed the Purchase Limit.
Notwithstanding anything to the contrary contained herein, the
Issuer is not obligated to purchase Receivable Interests from the
Seller.
(b) The Seller may, upon at least 30 days' notice to
the Agent, terminate this purchase facility in whole or, from
time to time, reduce in part the unused portion of the Purchase
Limit; provided that each partial reduction shall be in the
amount of at least $5,000,000 or an integral multiple thereof.
(c) Until the Agent gives the Seller the notice
provided in Section 3(b)(v) of Exhibit II to this Agreement, the
Agent, on behalf of the Investors which own Receivable Interests,
shall have the proceeds of Collections attributable to such
Receivable Interests automatically reinvested pursuant to Section
1.04(b)(ii) in additional undivided percentage interests in the
Pool Receivables by making an appropriate readjustment of such
Receivable Interest.
SECTION 1.02. Making Purchases. (a) Each purchase of
a Receivable Interest shall be made (x) in the case of a purchase
of $20,000,000 or less, on at least one Business Day's notice
from the Seller to the Agent, and (y) in the case of a purchase
in excess of $20,000,000, on at least three Business Days' notice
from the Seller to the Agent; provided, however, that no such
notice shall be applicable to reinvestments pursuant to Section
1.04. Each such notice of a purchase shall specify (i) the
amount requested to be paid to the Seller (such amount, which
shall not be less than $1,000,000, being referred to herein as
the initial "Invested Amount" of each Receivable Interest then
being purchased) and (ii) the date of such purchase (which shall
be a Business Day). The Agent shall promptly thereafter notify
the Seller whether the Issuer has determined to make a purchase
and, if so, whether all of the terms specified by the Seller are
acceptable to the Issuer.
(b) Prior to 2:00 P.M., New York City time, on the
date of each such purchase of a Receivable Interest, the Issuer
shall, upon satisfaction of the applicable conditions set forth
in Exhibit II hereto, make available to the Seller in same day
funds, at Account No. 00-196-146 at Bankers Trust Company, ABA
No. 021-001-033, or at such other account in the United States as
the Seller may specify to the Agent in writing, an amount equal
to the initial Invested Amount of such Receivable Interest.
(c) Effective on the date of each purchase pursuant to
this Section 1.02 and each reinvestment pursuant to Section 1.04,
the Seller hereby sells and assigns to the Agent, for the benefit
of the Investors, an undivided percentage ownership interest, to
the extent of the Receivable Interest then being purchased, in
each Pool Receivable then existing and in the Related Security
and Collections with respect thereto.
SECTION 1.03. Receivable Interest Computation. Each
Receivable Interest shall be initially computed on its date of
purchase. Thereafter until the Termination Date for such
Receivable Interest, such Receivable Interest shall be auto-
matically recomputed (or deemed to be recomputed) on each day
other than a Liquidation Day. Any Receivable Interest, as com-
puted (or deemed recomputed) as of the day immediately preceding
the Termination Date for such Receivable Interest, shall there-
after remain constant. Such Receivable Interest shall become
zero when the Invested Amount thereof and Yield thereon shall
have been paid in full, all other amounts owed by the Seller
hereunder to the Investors or the Agent are paid in full and the
Servicer shall have received the accrued Servicer Fee thereon.
SECTION 1.04. Settlement Procedures. (a) Collection
of the Pool Receivables shall be administered by a Servicer, in
accordance with the terms of this Agreement and the Servicer
Agreement. The Seller shall provide to the Servicer (if other
than the Seller) on a timely basis all information needed for
such administration, including notice of the occurrence of any
Liquidation Day and current computations of each Receivable
Interest.
(b) Subject to the provisions of paragraph (l) of
Exhibit IV, the Servicer shall, on each day on which Collections
of Pool Receivables are received by it with respect to any
Receivable Interest:
(i) set aside and hold in trust for the Investors
(but the Servicer shall not be required to segregate
into a separate account, unless the Agent shall so
specifically request or a Daily Settlement Trigger has
occurred), out of the percentage of such Collections
represented by such Receivable Interest, an amount
equal to the Yield and Servicer Fee accrued through
such day for such Receivable Interest and not
previously set aside;
(ii) if such day is not a Liquidation Day,
reinvest with the Seller, on behalf of the Investors,
the remainder of such percentage of Collections, to the
extent representing a return of Invested Amount, by
recomputation of such Receivable Interest pursuant to
Section 1.03;
(iii) if such day is a Liquidation Day, set
aside and hold in trust for the Investors (but the
Servicer shall not be required to segregate into a
separate account, unless the Agent shall so
specifically request) the entire remainder of such per-
centage of Collections; provided that if amounts are
set aside and held in trust on any Liquidation Day, and
thereafter during such Settlement Period the conditions
set forth in Paragraph 3 of Exhibit II are satisfied or
are waived by the Agent, such previously set aside
amounts shall, to the extent representing a return of
Invested Amount, be reinvested in accordance with the
preceding paragraph (ii) on the day of such subsequent
satisfaction or waiver of conditions; and
(iv) during such times as amounts are required
to be reinvested in accordance with the foregoing
paragraph (ii) or the proviso to paragraph (iii),
release to the Seller for its own account any
Collections in excess of such amounts and the amounts
that are required to be set aside pursuant to
paragraph (i) above.
(c) The Servicer shall deposit into the Agent's
Account, on the last day of each Settlement Period for a
Receivable Interest, Collections held for the Investors that
relate to such Receivable Interest pursuant to Section 1.04(b).
(d) Upon receipt of funds deposited into the Agent's
Account, the Agent shall distribute them as follows:
(i) if such distribution occurs on a day that is
not a Liquidation Day, first to the Investors in
payment in full of all accrued Yield and then to the
Servicer in payment in full of all accrued Servicer
Fee.
(ii) if such distribution occurs on a
Liquidation Day, first to the Investors in payment in
full of all accrued Yield, second to the Investors in
reduction to zero of all Invested Amount, third to the
Investors or the Agent in payment of any other amounts
owed by the Seller hereunder, and fourth to the
Servicer in payment in full of all accrued Servicer
Fee.
After the Invested Amount and Yield and Servicer Fee
with respect to a Receivable Interest, and any other amounts
payable by the Seller to the Investors or the Agent hereunder,
have been paid in full, all additional Collections with respect
to such Receivable Interest shall be paid first, to CL-NY in an
amount equal to the aggregate payments, if any, that shall have
been made to the Purchasers under the LAPA from funds on deposit
in the Special CCA and that shall not yet have been repaid,
together with interest thereon at a rate equal to the Assignee
Rate in effect from time to time, second, to the CCA Depositors
(as defined in the LAPA) pro rata in an amount equal to the
aggregate payments, if any, that shall have been made to the
Purchasers under the LAPA from funds on deposit in the July CCA
and that shall not yet have been repaid, together with interest
thereon at a rate equal to the Assignee Rate in effect from time
to time, then, to the Lenders under the Subordinated Loan
Agreement pro rata in an amount equal to the principal (if any)
and interest then due and payable thereunder, and the remainder
to the Seller for its own account.
(e) For the purposes of this Section 1.04:
(i) if on any day the Outstanding Balance of any
Pool Receivable is reduced or adjusted as a result of
any defective, rejected, returned, repossessed or
foreclosed merchandise or services or any cash
discount, credit memo, rebate, cooperative advertising,
chargeback or other adjustment made by the Seller or
the relevant Originator, or any setoff or dispute
between the Seller and an Obligor due to a claim
arising out of the same or any other transaction, the
Seller shall be deemed to have received on such day a
Collection of such Pool Receivable in the amount of
such reduction or adjustment;
(ii) if on any day (x) any of the
representations or warranties in paragraph (h) of
Exhibit III is no longer true with respect to any Pool
Receivable, or (y) the Seller or the Agent determines
that any Pool Receivable which purports to be part of
the Net Receivables Pool Balance was a Defaulted
Receivable on the date of the initial creation of an
undivided ownership interest therein under this
Agreement, the Seller shall be deemed to have received
on such day a Collection of such Pool Receivable in
full equal to the Outstanding Balance thereof;
(iii) except as provided in paragraph (i) or
(ii) of this Section 1.04(e), or as otherwise required
by applicable law or the relevant Contract, all Collec-
tions received from an Obligor of any Receivables shall
be applied to the Receivables of such Obligor in the
order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates
its payment for application to specific Receivables;
and
(iv) if and to the extent the Agent or the
Investors shall be required for any reason to pay over
to an Obligor any amount received on its behalf
hereunder, such amount shall be deemed not to have been
so received but rather to have been retained by the
Seller and, accordingly, the Agent or the Investors, as
the case may be, shall have a claim against the Seller
for such amount, payable when and to the extent that
any distribution from or on behalf of such Obligor is
made in respect thereof.
SECTION 1.05. Fees. The Seller shall pay to the Agent
certain fees in the amounts and on the dates set forth in a
separate fee agreement of even date between the Seller and the
Agent, as amended or restated from time to time (the "Fee
Agreement").
SECTION 1.06. Payments and Computations, Etc.
(a) All amounts to be paid or deposited by the Seller or the
Servicer hereunder or under the Servicer Agreement shall be paid
or deposited no later than 11:00 A.M. (New York City time) on the
day when due in same day funds in United States dollars to the
Agent's Account.
(b) The Seller shall, to the extent permitted by law,
pay interest on any amount not paid or deposited by the Seller
(whether as Servicer or otherwise) when due hereunder, at an
interest rate per annum equal to 1.50% per annum above the CP
Rate, payable on demand.
(c) All computations of interest under subsection (b)
above and all computations of Yield, fees, and other amounts
hereunder shall be made on the basis of a year of 360 days for
the actual number of days elapsed. Whenever any payment or
deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be
included in the computation of such payment or deposit.
SECTION 1.07. Dividing or Combining Receivable
Interests. The Agent, on notice to the Seller on or prior to the
last day of any Fixed Period, may either (i) divide any
Receivable Interest into two or more Receivable Interests having
aggregate Invested Amount equal to the Invested Amount of such
divided Receivable Interest, or (ii) combine any two or more
Receivable Interests originating on such last day or having Fixed
Periods ending on such last day into a single Receivable Interest
having Invested Amount equal to the aggregate of the Invested
Amount of such Receivable Interests.
SECTION 1.08. Increased Costs. (a) If the Agent, an
Investor, any entity which enters into a commitment to purchase
Receivable Interests or interests therein, any entity which
enters into a commitment to lend against Receivable Interests or
interests therein, or any entity which provides credit
enhancement (each an "Affected Person"), or any of their
respective Affiliates, determines that compliance with any law or
regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of
law) affects or would affect the amount of capital required or
expected to be maintained by such Affected Person or its
Affiliate and such Affected Person or its Affiliate determines
that the amount of such capital is increased by or based upon the
existence of any commitment to make purchases of or to lend
against or otherwise to maintain the investment in Pool
Receivables or interests therein related to this Agreement or to
the funding thereof or any related liquidity facility or credit
enhancement facility (or any participation therein) and other
commitments of the same type, then, upon demand by such Affected
Person (with a copy to the Agent), the Seller shall immediately
pay to the Agent, for the account of such Affected Person (as a
third-party beneficiary), from time to time as specified by such
Affected Person, additional amounts sufficient to compensate such
Affected Person or its Affiliate in the light of such
circumstances, to the extent that such Affected Person or its
Affiliate reasonably determines such increase in capital to be
allocable to the existence of any of such commitments. A
certificate as to such amounts submitted to the Seller and the
Agent by such Affected Person shall be conclusive and binding for
all purposes, absent manifest error.
(b) Subject to Section 4.04(f), if the
introduction of or any change in (other than by way of imposition
or increase of reserve requirements referred to in Section 1.10)
or in the interpretation of any law, regulation or applicable
accounting principle by any court or government authority charged
with the interpretation or administration of any United States
federal or state law or foreign law applicable to an Affected
Person or by any fiscal, monetary or other authority having
jurisdiction over such Affected Person shall (i) subject any
Affected Person to any charge or withholding on or with respect
to this Agreement or an Affected Person's obligations with
respect to Receivable Interests, or change the basis of taxation
of payments to any Affected Person or any amounts payable under
this Agreement (except for changes in the rate of tax on the
overall net income of an Affected Person) or (ii) impose any
other condition the result of which is to (x) increase the cost
to an Affected Person of agreeing to purchase or purchasing or to
lend against or to maintain the ownership of Receivable Interests
or (y) reduce the amount of any sum received or receivable by an
Affected Person under this Agreement, then, upon demand by such
Affected Person (with a copy to the Agent), the Seller shall pay
to the Agent for the account of such Affected Person (as a third-
party beneficiary), on each Settlement Date following such
demand, additional amounts sufficient to compensate such Affected
Person for such increased costs or reduction of amounts received,
as the case may be. A certificate as to such amounts submitted
to the Seller and the Agent by such Affected Person shall be
conclusive and binding for all purposes, absent manifest error.
Such Affected Person shall use reasonable efforts consistent with
its internal policy and legal and regulatory restrictions
(including, without limitation, by changing the office from which
it agrees to purchase, purchases or maintains its investment in
Receivable Interests to another office of such Affected Person
regularly available for such purpose) to mitigate the amounts
payable pursuant to this Section 1.08(b); provided, however, that
nothing in this sentence shall obligate such Affected Person to
bear any out-of-pocket expense for which it is not reimbursed by
the Seller.
(c) If any Affected Person makes a demand for
additional amounts pursuant to Section 1.08(a) or (b), then the
Seller may, within 30 calendar days after receipt of such demand,
by notice to such Affected Person (with a copy to the Agent)
designate another Eligible Assignee to purchase and assume the
relevant Investor's rights and obligations hereunder and the
Agent shall use its best efforts to replace such Investor and any
Person providing liquidity or credit enhancement for such
Investor with such designated Eligible Assignee under this
Agreement and any liquidity or credit enhancement agreement
relating to this Agreement and under the Alternate Receivables
Purchase Agreement pursuant to documentation reasonably
satisfactory to such Investor and the Agent. Any such Eligible
Assignee designated by the Seller shall be subject to the
approval of the Agent, which approval shall not be unreasonably
withheld provided that all of the short-term public senior debt
securities of such Eligible Assignee are rated at least A-1 by
Standard & Poor's Ratings Group and at least P-1 by Moody's
Investors Service, Inc.
SECTION 1.09. Security Interest. As collateral
security for the performance by the Seller of all the terms,
covenants and agreements on the part of the Seller (whether as
Seller or otherwise) to be performed under this Agreement or any
document delivered in connection with this Agreement in
accordance with the terms thereof, including the punctual payment
when due of all obligations of the Seller hereunder or
thereunder, whether for indemnification payments, fees, expenses
or otherwise, the Seller hereby assigns to the Agent for its
benefit and the ratable benefit of the Investors, effective on
the Initial Purchase Date, and hereby grants to the Agent for its
benefit and the ratable benefit of the Investors, a security
interest in, all of the Seller's right, title and interest in and
to (a) the Originator Purchase Agreement and the Interco
Agreement, including, without limitation, (i) all rights of the
Seller to receive moneys due or to become due under or pursuant
to the Originator Purchase Agreement or the Interco Agreement,
(ii) all security interests and property subject thereto from
time to time purporting to secure payment of monies due or to
become due under or pursuant to the Originator Purchase
Agreement, (iii) all rights of the Seller to receive proceeds of
any insurance, indemnity, warranty or guaranty with respect to
the Originator Purchase Agreement or the Interco Agreement,
(iv) claims of the Seller for damages arising out of or for
breach of or default under the Originator Purchase Agreement or
the Interco Agreement and (v) the right of the Seller to compel
performance and otherwise exercise all remedies thereunder, (b)
all of the Receivables, the Related Security with respect thereto
and the Collections, and (c) to the extent not included in the
foregoing, all proceeds of any and all of the foregoing
(excluding any proceeds representing the purchase price paid by
the Seller to any Originator for the purchase or contribution of
any of the foregoing).
SECTION 1.10. Additional Yield. The Seller shall pay
to each Investor, so long as such Investor shall be required
under regulations of the Board of Governors of the Federal
Reserve System to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities,
additional Yield on the unpaid Invested Amount of each Receivable
Interest of such Investor during each Fixed Period in respect of
which Yield is computed by reference to the Eurodollar Rate, for
such Fixed Period, at a rate per annum equal at all times during
such Fixed Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Fixed Period from (ii) the rate
obtained by dividing such Eurodollar Rate referred to in
clause (i) above by that percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage of such Investor for such
Fixed Period, payable on each date on which Yield is payable on
such Receivable Interest. Such additional Yield shall be
determined by such Investor and notice thereof given to the
Seller through the Agent within 30 days after any Yield payment
is made with respect to which such additional Yield is requested.
A certificate as to such additional Yield submitted to the Seller
and the Agent by such Investor shall be conclusive and binding
for all purposes, absent manifest error.
ARTICLE II
REPRESENTATIONS AND WARRANTIES; COVENANTS;
EVENTS OF TERMINATION
SECTION 2.01. Representations and Warranties;
Covenants. The Seller hereby makes, as of the Effective Date,
the representations and warranties set forth in Exhibit III
hereto, and hereby agrees, commencing on the Initial Purchase
Date, to perform and observe the covenants set forth in Exhibit
IV hereto.
SECTION 2.02. Events of Termination. If any of the
Events of Termination set forth in Exhibit V hereto shall occur
and be continuing, the Agent may, by notice to the Seller, take
either or both of the following actions: (x) declare the
Facility Termination Date to have occurred (in which case the
Facility Termination Date shall be deemed to have occurred), and
(y) without limiting any right under the Servicer Agreement to
replace the Servicer, designate another Person to succeed the
Originators as the Servicer; provided that, automatically upon
the occurrence of any event described in paragraph (g) of Exhibit
V, the Facility Termination Date shall occur. Upon any such
declaration or designation or upon any such automatic
termination, the Investors and the Agent shall have, in addition
to the rights and remedies which they may have under this
Agreement, all other rights and remedies provided after default
under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
ARTICLE III
INDEMNIFICATION
SECTION 3.01. Indemnities by the Seller. Without
limiting any other rights that the Agent or the Investors or any
of their respective Affiliates or agents (each, an "Indemnified
Party") may have hereunder or under applicable law, the Seller
hereby agrees to indemnify each Indemnified Party from and
against any and all claims, losses and liabilities (including
reasonable attorneys' fees) (all of the foregoing being
collectively referred to as "Indemnified Amounts") arising out of
or resulting from this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of Receivable
Interests or in respect of any Receivable or any Contract,
excluding, however, (a) Indemnified Amounts to the extent
resulting from gross negligence or willful misconduct on the part
of such Indemnified Party, (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible
Receivables or (c) any income taxes or franchise taxes imposed on
such Indemnified Party (other than as provided in Section 1.08(b)
hereof) by (i) the jurisdiction under the laws of which such
Indemnified Party is organized (or any political subdivision
thereof), (ii) any jurisdiction in which an office of such
Indemnified Party funding or maintaining the ownership of
Receivable Interests is located (or any political subdivision
thereof), or (iii) any jurisdiction in which such Indemnified
Party is already subject to tax, and arising out of or as a
result of this Agreement or the ownership of Receivable Interests
or in respect of any Receivable or any Contract. Without
limiting or being limited by the foregoing, the Seller shall pay
on demand to each Indemnified Party any and all amounts necessary
to indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the
following:
(i) the creation of an undivided percentage
ownership interest in any Receivable which purports to
be part of the Net Receivables Pool Balance but which
is not at the date of the creation of such interest an
Eligible Receivable or which thereafter ceases to be an
Eligible Receivable;
(ii) reliance on any representation or warranty
or statement made or deemed made by the Seller (or any
of its officers) under or in connection with this
Agreement which shall have been incorrect in any
material respect when made;
(iii) the failure by the Seller or any
Originator to comply with any applicable law, rule or
regulation with respect to any Pool Receivable or the
related Contract; or the failure of any Pool Receivable
or the related Contract to conform to any such
applicable law, rule or regulation;
(iv) the failure to vest in the Investors a
perfected undivided percentage ownership interest, to
the extent of each Receivable Interest, in the
Receivables in, or purporting to be in, the Receivables
Pool and the Related Security and Collections in
respect thereof, free and clear of any Adverse Claim;
(v) the failure to have filed, or any delay in
filing, financing statements or other similar instru-
ments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to
any Receivables in, or purporting to be in, the
Receivables Pool and the Related Security and Collec-
tions in respect thereof, whether at the time of any
purchase or reinvestment or at any subsequent time;
(vi) any dispute, claim, offset or defense
(other than discharge in bankruptcy of the Obligor) of
the Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including,
without limitation, a defense based on such Receivable
or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against
it in accordance with its terms), or any other claim
resulting from the sale of the merchandise or services
related to such Receivable or the furnishing or failure
to furnish such merchandise or services or relating to
collection activities with respect to such Receivable
(if such collection activities were performed by the
Seller or any of its Affiliates acting as Servicer);
(vii) any failure of the Seller to perform its
duties or obligations in accordance with the provisions
hereof or to perform its duties or obligations under
the Contracts, or any failure of the Servicer (if the
Seller or an Affiliate of the Seller) to perform its
duties or obligations in accordance with the provisions
of the Servicer Agreement;
(viii) any products liability or other claim
arising out of or in connection with merchandise,
insurance or services which are the subject of any
Contract;
(ix) the commingling of Collections of Pool
Receivables at any time with other funds;
(x) any investigation, litigation or proceeding
related to this Agreement or the use of proceeds of
purchases or reinvestments or the ownership of
Receivable Interests or in respect of any Receivable,
Related Security or Contract, excluding, however, any
investigation, litigation or proceeding brought by any
taxing authority with respect to income taxes or
franchise taxes of the type described in clause (c) of
the first sentence of Section 3.01; or
(xi) any claim brought by any Person other than
an Indemnified Party arising from any activity by the
Seller or any Affiliate of the Seller in servicing,
administering or collecting any Receivable.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement or consent to any departure by
the Seller therefrom shall be effective unless in a writing
signed by the Agent, as agent for the Investors, and, in the case
of any amendment, also signed by the Seller, and then such
amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Notwithstanding the foregoing, no amendment or waiver of any
provision of this Agreement or consent to any departure by the
Seller therefrom shall be effective unless a written statement is
obtained from each of the Relevant Rating Agencies that the
rating of the Issuer's commercial paper notes will not be
downgraded or withdrawn solely as a result of such amendment,
waiver or consent. No failure on the part of the Investors or
the Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right.
SECTION 4.02. Notices, Etc. All notices and other
communications hereunder shall, unless otherwise stated herein,
be in writing (which shall include facsimile communication) and
faxed or delivered, to each party hereto, at its address set
forth under its name on the signature pages hereof or at such
other address as shall be designated by such party in a written
notice to the other parties hereto. Notices and communications
by facsimile shall be effective when sent (and shall be followed
by hard copy sent by regular mail), and notices and
communications sent by other means shall be effective when
received.
SECTION 4.03. Assignability. (a) Each Investor may
assign to any Eligible Assignee all or a portion of its rights
and obligations under this Agreement (including any Receivable
Interests or interests therein owned by it); provided, however,
that no such assignment shall be made to an Eligible Assignee if,
immediately after giving effect thereto, the Seller would be
required to pay any additional amounts under Section 1.08(a),
1.08(b) or 4.04(d) that would not otherwise be payable in the
absence of such assignment.
(b) This Agreement and the rights and obligations of
the Agent herein shall be assignable by the Agent and its
successors and assigns.
(c) The Seller may not assign its rights or
obligations hereunder or any interest herein without the prior
written consent of the Agent. Notwithstanding the foregoing, no
assignment by the Seller of its rights or obligations hereunder
shall be effective unless a written statement is obtained from
each of the Relevant Rating Agencies that the rating of the
Issuer's commercial paper notes will not be downgraded or
withdrawn solely as a result of such assignment.
(d) Without limiting any other rights that may be
available under applicable law, the rights of the Investors may
be enforced through them or by their agents.
SECTION 4.04. Costs, Expenses and Taxes. (a) In
addition to the rights to indemnification granted under Sec-
tion 3.01 hereof, the Seller agrees to pay on demand all costs
and expenses in connection with the preparation, execution,
delivery and administration (including periodic auditing of
Receivables) of this Agreement, any asset purchase agreement or
similar agreement relating to the sale or transfer of interests
in Receivable Interests and the other documents and agreements to
be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of one collective
counsel for the Agent, the Issuer and their respective Affiliates
and agents (which counsel shall be the same as the counsel whose
fees the Seller has agreed to pay pursuant to Section 4.04(a) of
the Alternate Receivables Purchase Agreement) with respect
thereto and with respect to advising the Agent, the Issuer and
their respective Affiliates and agents as to their rights and
remedies under this Agreement, and all costs and expenses, if any
(including reasonable counsel fees and expenses), of the Agent,
the Investors and their respective Affiliates and agents, in
connection with the enforcement of this Agreement and the other
documents and agreements to be delivered hereunder.
(b) In addition, the Seller shall pay (i) any and all
costs and expenses of any issuing and paying agent or other
Person responsible for the administration of the Issuer's
commercial paper program in connection with the preparation,
completion, issuance, delivery or payment of commercial paper
notes issued to fund the purchase or maintenance of any
Receivable Interest, and (ii) any and all stamp and other taxes
and fees payable in connection with the execution, delivery,
filing and recording of this Agreement or the other documents or
agreements to be delivered hereunder, and agrees to save each
Indemnified Party harmless from and against any liabilities with
respect to or resulting from any delay in paying or omission to
pay such taxes and fees.
(c) The Seller also shall pay on demand all other
costs, expenses and taxes (excluding income taxes) incurred by
the Issuer or any stockholder or agent of the Issuer ("Other
Costs"), including the cost of administering the operations of
the Issuer, the cost of auditing the Issuer's books by certified
public accountants, the cost of rating the Issuer's commercial
paper by independent financial rating agencies, the taxes
(excluding income taxes) resulting from the Issuer's operations,
and the reasonable fees and out-of-pocket expenses of counsel for
any stockholder or agent of the Issuer with respect to advising
as to rights and remedies under this Agreement, the enforcement
of this Agreement or advising as to matters relating to the
Issuer's operations; provided that the Seller and any other
Persons who from time to time sell receivables or interests
therein to the Issuer ("Other Sellers") each shall be liable for
such Other Costs ratably in accordance with the usage under their
respective facilities; and provided further that if such Other
Costs are attributable to the Seller and not attributable to any
Other Seller, the Seller shall be solely liable for such Other
Costs.
(d) Subject to Section 4.04(f), any and all payments
made under this Agreement shall be made free and clear of and
without deduction for any and all present or future Taxes. If
any amount of Taxes shall be required by law to be deducted from
or in respect of any sum payable hereunder to any non-U.S.
Investor or the Agent, (i) the sum payable shall be increased as
may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under
this section 4.04(d)), such non-U.S. Investor or the Agent, as
the case may be, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Seller
shall make such deductions and (iii) the Seller shall pay the
full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(e) Each non-U.S. Investor and the Agent, on or prior
to the date of its execution and delivery of this Agreement in
the case of the Agent and on the date of the assignment pursuant
to which it becomes an Investor in the case of each non-U.S.
Investor, and from time to time thereafter if requested in
writing by the Seller (unless such non-U.S. Investor can no
longer lawfully do so due to a change in law subsequent to the
date it became an Investor hereunder), shall provide the Seller
with Internal Revenue Service Form 1001 or 4224, as appropriate,
or any successor form prescribed by the Internal Revenue Service,
certifying that such non-U.S. Investor is entitled to benefits
under an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of interest
to zero or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or
business in the United States.
(f) For any period with respect to which a non-U.S.
Investor has failed to provide the Seller with the appropriate
form described in Section 4.04(e) (other than if such failure is
due to a change in law occurring subsequent to the date on which
a form originally was required to be provided), such non-U.S.
Investor shall not be entitled to payments of additional amounts
under Section 1.08(b) or 4.04(d).
SECTION 4.05. CL-NY and Affiliates. CL-NY and its
Affiliates may generally engage in any kind of business with the
Seller or any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of the Seller
or any Obligor or any of their respective Affiliates, all as if
CL-NY were not the Agent and without any duty to account therefor
to the Investors.
SECTION 4.06. No Proceedings. Each of the Seller, the
Agent, the Servicer, each Investor, each assignee of a Receivable
Interest or any interest therein and each entity which enters
into a commitment to purchase Receivable Interests or interests
therein hereby agrees that it will not institute against, or join
any other person in instituting against, the Issuer any
proceeding of the type referred to in paragraph (g) of Exhibit V
so long as any commercial paper issued by the Issuer shall be
outstanding or there shall not have elapsed one year plus one day
since the last day on which any such commercial paper shall have
been outstanding.
SECTION 4.07. Confidentiality. Unless otherwise
required by applicable law, the Seller agrees to maintain the
confidentiality of this Agreement (and all drafts thereof) in
communications with third parties and otherwise; provided that
this Agreement may be disclosed to (a) third parties to the
extent such disclosure is made pursuant to a written agreement of
confidentiality in form and substance reasonably satisfactory to
the Agent, and (b) the Seller's legal counsel and auditors (who
shall also be subject to the terms of this confidentiality
provision).
SECTION 4.08. Integration. This Agreement contains a
final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and
shall constitute the entire Agreement among the parties hereto
with respect to the subject matter hereof, superseding all prior
oral or written understandings.
SECTION 4.09. Construction of the Agreement. The
parties hereto intend that the purchase and sale of Receivable
Interests from the Seller to the Issuer be treated as a sale of
such Receivable Interests and the proceeds thereof, and the
parties hereto shall reflect the purchase and sale of Receivable
Interests in their respective books and records and financial
statements as a purchase and sale. However, if a determination
is made that such transfer shall not be so treated, this
Agreement shall be deemed to constitute a security agreement and
the transactions effected hereby shall be deemed to constitute a
secured financing in each case under applicable law and to that
end, the Seller hereby grants to the Agent, for the benefit of
the Investors, a security interest in the Receivable Interests so
transferred to secure its obligations hereunder.
SECTION 4.10. Right of Set-Off. (a) Without limiting
the foregoing, CL-NY is hereby authorized by the Seller at any
time and from time to time, to the fullest extent permitted by
law, to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held
and other indebtedness at any time owing by CL-NY to or for the
credit or the account of the Seller, against any and all
obligations of the Seller now or hereafter existing under this
Agreement, to any Affected Party, any Indemnified Party or any
Investor, or their respective successors and assigns.
(b) CL-NY agrees that if it shall, through the exercise
by it of a right of setoff under this Section 4.10, obtain
payment with respect to any obligation of the Seller now or
hereafter existing under this Agreement to any Affected Party,
any Indemnified Party or any Investor, or any of their respective
successors and assigns, which payment results in CL-NY receiving
more than its pro rata share of the aggregate payments or
reductions of all obligations of the Seller now or hereafter
existing under this Agreement, it shall be deemed to have
simultaneously purchased from the Investors a participation in
the obligations or interests held by such Investors so that the
amount of unpaid obligations or interests or participations
therein held by CL-NY and the Investors shall be pro rata. If
all or any portion of any such excess payment is thereafter
recovered from CL-NY, the purchase provided for herein shall be
deemed to have been rescinded to the extent of such recovery
without interest.
SECTION 4.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS
PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT THE PERFECTION OF
THE INTERESTS OF THE INVESTORS IN THE RECEIVABLES, THE ORIGINATOR
PURCHASE AGREEMENT, THE INTERCO AGREEMENT OR REMEDIES HEREUNDER,
IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS OF A JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 4.12. No Recourse. The obligations of the
Issuer under this Agreement are solely the corporate obligations
of the Issuer. No recourse shall be had for the payment of any
amount owing by the Issuer under this Agreement, or for the
payment by the Issuer of any fee in respect hereof or any other
obligation or claim of or against the Issuer arising out of or
based on this Agreement, against Lord or against any stockholder,
employee, officer, director or incorporator of the Issuer. For
purposes of this Section 4.12, the term "Lord" shall mean and
include Lord Securities Corporation, a Delaware corporation, and
all affiliates thereof and any employee, officer, director,
incorporator, stockholder or beneficial owner of any of them;
provided, however, that the Issuer shall not be considered to be
an affiliate of Lord for purposes of this Section 4.12.
SECTION 4.13. Execution in Counterparts. This
Agreement may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original and all
of which when taken together shall constitute one and the same
agreement.
SECTION 4.14. Survival of Termination. The provisions
of Sections 1.08, 3.01, 4.04, 4.06 and 4.07 shall survive any
termination of this Agreement.
SECTION 4.15. Restatement of Originator Purchase
Agreement. Pursuant to paragraph (n) of Exhibit IV to the
Original Agreement, the Agent hereby consents to the amendment
and restatement, as of the Effective Date, of the Originator
Purchase Agreement and Amendment No. 1, dated as of the Effective
Date, to the Interco Agreement, in each case in the form
delivered to the Agent pursuant to paragraph 2(n) of Exhibit II
to this Agreement.
SECTION 4.16. References to the Agreement. Each reference
in each document delivered pursuant to the Original Agreement
(including, without limitation, the Certificate of Assignment) to
the "Receivables Purchase Agreement, dated as of November 15,
1994" shall mean and be a reference to this Agreement, as the
same may be amended or restated from time to time.<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
SELLER: INTERCO RECEIVABLES CORP.
By: Lynn Chipperfield
-------------------------------
Name: Lynn Chipperfield
Title: Vice President
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 863-5306
ISSUER: ATLANTIC ASSET SECURITIZATION CORP.
By: Credit Lyonnais New York Branch, as
Attorney-in-Fact
By: Jonathan Kaplan
---------------------------
Name: Jonathan Kaplan
Title: Vice President
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 459-3258
AGENT: CREDIT LYONNAIS NEW YORK BRANCH
By: Jonathan Kaplan
----------------------------------
Name: Jonathan Kaplan
Title: Vice President
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 459-3258<PAGE>
EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"Action" means Action Industries, Inc., a Virginia
corporation.
"Advances Outstanding" has the meaning given that term
in the Subordinated Loan Agreement.
"Adverse Claim" means a lien, security interest or
other charge or encumbrance, or any other type of preferential
arrangement.
"Affected Person" has the meaning assigned to that term
in Section 1.08(a).
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, is in control of, is controlled by
or is under common control with such Person or is a director or
officer of such Person; provided, however, that with respect to
Broyhill, Lane, Action, Thomasville and the Seller, the term
"Affiliate" shall be deemed not to include any Apollo Entity.
"Affiliated Obligor" means any Obligor that is an
Affiliate of another Obligor.
"Agent's Account" means the special account (account
number 01-25680-0001-00-001) of the Agent maintained at the
office of the Agent, ABA No. 026-008073, in New York, New York
for the benefit of the Investors.
"Aggregate Invested Amount" at any time means the sum
of the outstanding Invested Amount of all Receivable Interests
plus the outstanding "Invested Amount" of all "Receivable
Interests" under the Alternate Receivables Purchase Agreement.
"Alternate Base Rate" means a fluctuating interest rate
per annum as shall be in effect from time to time, which rate
shall be at all times equal to the highest of:
(a) the rate of interest established by CL-NY
from time to time as its base rate;
(b) 1/2 of one percent above the latest three-
week moving average of secondary market morning
offering rates in the United States for three-month
certificates of deposit of major United States money
market banks, such three-week moving average being
determined weekly on each Monday (or, if such day is
not a Business Day, on the next succeeding Business
Day) for the three-week period ending on the previous
Friday by CL-NY on the basis of such rates reported by
certificate of deposit dealers to and published by the
Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the
basis of quotations for such rates received by CL-NY
from three New York certificate of deposit dealers of
recognized standing selected by CL-NY, in either case
adjusted to the nearest 1/4 of one percent or, if there
is no nearest 1/4 of one percent, to the next higher
1/4 of one percent; and
(c) the Federal Funds Rate.
"Alternate Receivables Purchase Agreement" means the
Alternate Receivables Purchase Agreement, dated as of November
15, 1994, as amended and restated as of the Effective Date, among
the Seller, CL-NY and the Agent, as the same may, from time to
time, be further amended, modified or supplemented.
"Apollo Entity" means any of (i) Apollo Advisors, L.P.,
(ii) Lion Advisors, L.P., (iii) any accounts managed by Apollo
Advisors, L.P. or Lion Advisors, L.P. and (iv) any Person
directly or indirectly in control of, controlled by, or under
common control with Apollo Advisors, L.P. or Lion Advisors, L.P.,
other than Broyhill, Lane, Action, Thomasville, the Seller or
Interco and any of their respective Subsidiaries.
"Assignee Rate" for any Fixed Period for any Receivable
Interest means an interest rate per annum equal to the Eurodollar
Rate for such Fixed Period; provided, however, that in the case
of
(i) any Fixed Period on or prior to the first day
of which an Investor shall have notified the Agent that
the introduction of or any change in or in the
interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental
authority asserts that it is unlawful, for such
Investor to fund such Receivable Interest at the
Assignee Rate set forth above (and such Investor not
have subsequently notified the Agent that such
circumstances no longer exist),
(ii) any Fixed Period of one to (and including) 29
days (but provided, however, that a Fixed Period running from one
day of a month to the numerically corresponding day of the
following month shall be considered to be one month, regardless
of the number of days therein), or
(iii) any Fixed Period for a Receivable
Interest the Invested Amount of which allocated to the
Investors is less than $500,000,
the "Assignee Rate" for each such Fixed Period shall be an
interest rate per annum equal to the Alternate Base Rate in
effect on the first day of such Fixed Period.
"Average Maturity" means at any time that period of
days equal to the weighted average maturity of the Pool
Receivables calculated by the Servicer in the then most recent
Seller Report; provided if the Agent shall disagree with any such
calculation, the Agent may recalculate such Average Maturity in a
commercially reasonable manner in accordance with industry
practice.
"Bank Credit Agreement" means the Credit Agreement
dated as of November 17, 1994, as amended and restated as of
December 29, 1995, among Interco, Broyhill, Lane, Thomasville,
the banks named therein and Bankers Trust Company, as agent.
"Broyhill" means Broyhill Furniture Industries, Inc., a
North Carolina corporation.
"Business Day" means any day on which (i) banks are not
authorized or required to close in New York City and (ii) if this
definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank
market.
"Capitalized Lease Obligations" of any Person shall
mean all rental obligations which, under generally accepted
accounting principles, are or will be required to be capitalized
on the books of such Person, in each case taken at the amount
thereof accounted for as indebtedness in accordance with such
principles.
"Collection Delay Period" means 10 days or such other
number of days as the Agent may select upon three Business Days'
notice to the Seller.
"Collections" means, with respect to any Receivable,
(a) all funds which are received by the Seller or the Servicer in
payment of any amounts owed in respect of such Receivable
(including, without limitation, purchase price, finance charges,
interest and all other charges), or applied to amounts owed in
respect of such Receivable (including, without limitation,
insurance payments, payments under letters of credit with respect
to such Receivable and net proceeds of the sale or other
disposition of repossessed goods or other collateral or property
of the related Obligor or any other party directly or indirectly
liable for the payment of such Receivable and available to be
applied thereon), (b) all Collections deemed to have been
received pursuant to Section 1.04 and (c) all other proceeds of
such Receivable.
"Consolidated EBIT" means, for any period, the
Consolidated Net Income of Interco and its Restricted
Subsidiaries, determined on a consolidated basis, before
Consolidated Net Interest Expense (to the extent deducted in
arriving at Consolidated Net Income) and provision for taxes or
gains or losses from sales of assets other than inventory sold in
the ordinary course of business, in each case that were included
in arriving at Consolidated Net Income.
"Consolidated EBITDA" means, for any period,
Consolidated EBIT, adjusted by adding thereto the amount of all
amortization of intangibles and depreciation, in each case that
were deducted in arriving at Consolidated EBIT for such period.
"Consolidated Net Income" means, for any period, the
net after tax income of Interco and its Restricted Subsidiaries
determined on a consolidated basis, minus cash Dividends paid in
respect of Disqualified Preferred Stock, without giving effect to
any extraordinary gains or losses.
"Consolidated Net Interest Coverage Ratio" for any
period means the ratio of Consolidated EBITDA to Consolidated Net
Interest Expense for such period.
"Consolidated Net Interest Expense" means, for any
period, the total consolidated interest expense of Interco and
its Restricted Subsidiaries for such period (calculated without
regard to any limitations on the payment thereof) plus, without
duplication, that portion of Capitalized Lease Obligations of
Interco and its Restricted Subsidiaries representing the interest
factor for such period, and capitalized interest expense, plus,
(i) all cash fees, service charges and other costs, as well as
all collections or other amounts retained by the Agent, the
Issuer and the "Banks" under the Alternate Receivables Purchase
Agreement which are in excess of amounts paid to the Seller under
the Agreement and the Alternate Receivables Purchase Agreement
for the purchase of receivables thereunder, and (ii) the product
of (x) the amount of all cash Dividend requirements (whether or
not declared or paid) on Disqualified Preferred Stock paid,
accrued or scheduled to be paid or accrued during such period,
times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated Federal, state, local and foreign tax rate
(expressed as a decimal number between one and zero) of Interco
as reflected in the audited consolidated financial statements of
Interco for its most recently completed Fiscal Year, which
amounts described in the preceding clauses (i) and (ii) shall be
treated as interest expense of Interco and its Restricted
Subsidiaries for purposes of this definition regardless of the
treatment of such amounts under generally accepted accounting
principles, in each case net of the total consolidated cash
interest income of Interco and its Restricted Subsidiaries for
such period, but excluding the amortization of any deferred
financing costs and all amounts in respect of the Interest Rate
Protection Agreements, all determined on a consolidated basis.
"Contract" means an agreement between an Originator and
any Obligor, pursuant to or under which such Obligor shall be
obligated to make payments to such Originator for merchandise,
insurance or services from time to time.
"Courtesy Receivable" means a Receivable which arises
out of the provision of transportation services but does not
arise out of the transportation of goods shipped by an Originator
to an Obligor.
"CP Rate" for any Fixed Period for any Receivable
Interest means an interest rate per annum equal to the per annum
yield equivalent to the published discount for one-month
commercial paper issued by firms whose bonds are rated AA by
Standard & Poor's Corporation (or the equivalent), which is
reported for the first day of such Fixed Period in "Selected
Interest Rates" (Publication H.15 (519)), Federal Reserve
Statistical Release, published by the Board of Governors of the
Federal Reserve System (or successor publication) (or, if such
yield is not published, such other rate as the Agent and the
Seller shall agree to in writing).
"Credit and Collection Policy" means those receivables
credit and collection policies and practices of the Seller in
effect on the date of the Agreement and described in Schedule II
hereto, as modified in compliance with the Agreement.
"Cumulative Consolidated EBITDA" means, at any date, an
amount determined on a cumulative basis of Consolidated EBITDA
for each Fiscal Year ending on or prior to such date, beginning
with Fiscal Year 1996.
"Daily Settlement Trigger" means the occurrence of any
of the following:
(a) The Consolidated Net Interest Coverage Ratio for
any period of four consecutive fiscal quarters (or, if
shorter, the period beginning on January 1, 1996 and ended
on the last day of a fiscal quarter ended after the
Effective Date), in each case taken as one accounting
period, ended on the last day of a fiscal quarter set forth
below, shall be less than the amount set forth opposite such
period below:
Fiscal Quarter Ratio
-------------- -----
March 1996 1.83 : 1.00
June 1996 2.07 : 1.00
September 1996 2.51 : 1.00
December 1996 2.51 : 1.00
March 1997 2.62 : 1.00
June 1997 2.62 : 1.00
September 1997 2.62 : 1.00
December 1997 2.92 : 1.00
March 1998 3.00 : 1.00
June 1998 3.09 : 1.00
September 1998 3.19 : 1.00
December 1998 3.29 : 1.00
March 1999 3.37 : 1.00
June 1999 3.42 : 1.00
September 1999 3.47 : 1.00
December 1999 3.57 : 1.00
March 2000 3.66 : 1.00
June 2000 3.71 : 1.00
September 2000 3.76 : 1.00
December 2000 and thereafter 3.86 : 1.00
(b) The Consolidated EBITDA for any period of four
consecutive fiscal quarters (or, if shorter, the period
beginning on January 1, 1996 and ended on the last day of a
fiscal quarter ended after the Effective Date), in each case
taken as one accounting period, ended on the last day of a
fiscal quarter set forth below, shall be less than the
amount set forth opposite such period below:
Fiscal Quarter Amount
-------------- ------
March 1996 $ 30,000,000
June 1996 $ 65,000,000
September 1996 $105,000,000
December 1996 $145,000,000
March 1997 $147,500,000
June 1997 $150,000,000
September 1997 $152,500,000
December 1997 $155,000,000
March 1998 $158,000,000
June 1998 $162,000,000
September 1998 $166,000,000
December 1998 $170,000,000
March 1999 $172,500,000
June 1999 $175,000,000
September 1999 $177,500,000
December 1999 $180,000,000
March 2000 $182,500,000
June 2000 $185,000,000
September 2000 $187,500,000
December 2000
and thereafter $190,000,000
(c) The Leverage Ratio at any time shall be greater
than the ratio set forth opposite the fiscal quarter most
recently ended as set forth below:
Fiscal Quarter Ratio
-------------- -----
December 1996 4.52 : 1.00
March 1997 4.52 : 1.00
June 1997 4.29 : 1.00
September 1997 4.29 : 1.00
December 1997 4.08 : 1.00
March 1998 4.06 : 1.00
June 1998 3.86 : 1.00
September 1998 3.86 : 1.00
December 1998 3.65 : 1.00
March 1999 3.62 : 1.00
June 1999 3.62 : 1.00
September 1999 3.62 : 1.00
December 1999 3.41 : 1.00
March 2000 3.37 : 1.00
June 2000 3.17 : 1.00
September 2000 2.96 : 1.00
December 2000 and thereafter 2.96 : 1.00
(d) The Cumulative Consolidated EBITDA ending during
any Fiscal Year (beginning with Fiscal Year 1997) set forth below
shall be less than the amount set forth opposite such period
below:
Period Amount
------ ------
1997 $315,000,000
1998 $490,000,000
1999 $665,000,000
2000 and thereafter $890,000,000
provided that, from and after the first date upon which Interco
or any of the Originators shall have used more than $50,000,000
of Net Cash Proceeds from sales or issuances of equity of Interco
(including pursuant to any exercise of the Interco Warrants, any
exercise of any stock options and the issuance of any Preferred
Stock) to repay Term Loans under the Bank Credit Agreement
pursuant to Sections 4.01, 4.02(e) and/or 4.02(f) of the Bank
Credit Agreement, and shall have furnished a certificate to the
Administrative Agent under the Bank Credit Agreement (with a copy
to the Agent) showing in reasonable detail the amount of such
applications pursuant to the respective such Sections, then each
of the amounts required by this clause (d) shall be reduced (i)
by $15,000,000 if the principal amount of Term Loans so repaid
with such Net Cash Proceeds from equity issuances is greater than
$50,000,000 but less than or equal to $75,000,000 or (ii) by
$20,000,000 if the principal amount of Term Loans so repaid with
such Net Cash Proceeds from equity issuances is greater than
$75,000,000;
(e) The Net Dilution Ratio shall be greater than 7%;
(f) The Default Ratio shall be greater than 7%;
(g) Any Event of Termination shall occur under
paragraph (e) or (g) of Exhibit V; or
(h) The Originators shall have repurchased Receivables
(pursuant to indemnity provisions or otherwise) from the
Seller in an aggregate amount exceeding $17,500,000 in any
Fiscal Year.
Deemed Uncollectible Ratio means the ratio (expressed
as a percentage) computed as of the last day of each fiscal month
of the Originators by dividing (i) the sum of (x) three times the
aggregate Outstanding Balance of all Originator Receivables
originated by Lane, Action or Broyhill that met the requirements
of clauses (ii) or (iii) (but not clause (i)) of the definition
of Defaulted Receivable on such day or on the last day of any of
the immediately preceding six fiscal months (in the case of
Receivables originated by Broyhill) or eight fiscal months (in
the case of Receivables originated by Lane or Action) (such
amounts with respect to preceding fiscal months to be computed
net of recoveries on such Defaulted Receivables received on or
prior to such day) plus (y) if such computation is for a fiscal
month prior to December 1996, one times, and otherwise, three
times, the aggregate Outstanding Balance of all Originator
Receivables originated by Thomasville that met the requirements
of clauses (ii) or (iii) (but not clause (i)) of the definition
of Defaulted Receivable on such day or on the last day of any of
the immediately preceding seven fiscal months (such amounts with
respect to preceding fiscal months to be computed net of
recoveries on such Defaulted Receivables received on or prior to
such day) by (ii) the aggregate Outstanding Balance of all
Originator Receivables on such day. For purposes of this
definition, the terms Outstanding Balance and Defaulted
Receivable shall be interpreted as if all references in the
definitions thereof to Receivables were references to
Originator Receivables.
"Default Ratio" means the ratio (expressed as a
percentage) computed as of the last day of each fiscal month of
the Originators by dividing (i) the aggregate Outstanding Balance
of all Originator Receivables that met the requirements of
clause (i) of the definition of Defaulted Receivable on such day
by (ii) the aggregate Outstanding Balance of all Originator
Receivables on such day. For purposes of this definition, the
terms "Outstanding Balance" and "Defaulted Receivable" shall be
interpreted as if all references in the definitions thereof to
"Receivables" were references to "Originator Receivables."
"Defaulted Receivable" means a Receivable:
(i) as to which any payment, or part thereof,
remains unpaid for over 90 days from the original due
date for such payment;
(ii) which is not a Priority DIP Receivable and
as to which the Obligor thereof or any other Person
obligated thereon or owning any Related Security in
respect thereof has taken any action, or suffered any
event to occur, of the type described in paragraph (g)
of Exhibit V; or
(iii) which, consistent with the Credit and
Collection Policy (as in effect at the time of the
creation of such Receivable), is deemed uncollectible.
"Designated Obligor" means, at any time, each Obligor
except any such Obligor as to which the Agent has, at least three
Business Days prior to the date of determination, given notice to
the Seller that such Obligor shall not be considered a Designated
Obligor by reason of the fact that in the reasonable opinion of
the Agent any one of the following shall exist as to such
Obligor: (i) the timely collectibility of the Receivables of
such Obligor has been impaired by reason of a material adverse
change in the financial condition, business, operations or
prospects of such Obligor, or (ii) such Obligor has demonstrated
an inconsistent payment history and in the reasonable opinion of
the Agent such inconsistent payment history materially impairs
the Agent's ability to rely on timely payment by such Obligor in
the future, or (iii) such Obligor is in a class of Obligors which
do not meet criteria of purchasers generally applicable to
obligors for companies which are similarly situated as the Seller
and which are selling receivables or undivided interests therein
in similar transactions. Unless the Agent shall hereafter notify
the Seller to the contrary, Trimble-Western Furniture Inc. shall
not be a Designated Obligor.
"Dilution" means, with respect to any Originator
Receivable, the aggregate amount of (i) any reductions or
adjustments in the Outstanding Balance of such Originator
Receivable as a result of any defective, rejected, returned,
repossessed or foreclosed merchandise or services or any cash
discount, credit memo, rebate, cooperative advertising,
chargeback or other adjustment, dispute or setoff and (ii) any
unresolved disputes relating to such Originator Receivable, which
have not yet resulted in the reduction or adjustment of the
Outstanding Balance of such Originator Receivable.
"Dilution Reserve" for any Receivable Interest at any
time means an amount equal to the product of (i) the Invested
Amount of such Receivable Interest on such date multiplied by
(ii) the greater of (a) 3% and (b) the sum of three times the Net
Dilution Ratio plus two times the difference between the Gross
Dilution Ratio and the Net Dilution Ratio as of the last day of
the preceding fiscal month.
"Effective Date" means December 29, 1995.
"Eligible Assignee" means CL-NY, any of its Affiliates,
any Person managed by CL-NY or any of its Affiliates, or any
financial or other institution acceptable to the Agent.
"Eligible Foreign Receivable" means a Receivable
meeting all of the criteria set forth in either of the following
clauses:
(i) the payment of such Receivable is fully
supported by a letter of credit issued by an office or
branch located in the United States of an Eligible LOC
Bank, the Agent holds a first priority, perfected
security interest in such letter of credit and the
issuer of such letter of credit has been notified of
such security interest; or
(ii) the Obligor of such Receivable is a Canadian
resident, the Agent holds a first priority, perfected
security interest in such Receivable which is
enforceable under applicable Canadian law, the Agent
has received an opinion of Canadian counsel for the
Seller, in form and substance satisfactory to the
Agent, as to perfection, enforcement, taxes and such
other matters as the Agent may reasonably request, and
all of the Relevant Rating Agencies shall have notified
the Agent that the purchase of Receivables of the type
described in this clause (ii) will not result in a
reduction or withdrawal of their respective ratings on
the commercial paper issued by the Issuer;
provided, however, that the aggregate Outstanding Balance of
Eligible Foreign Receivables which shall be considered Eligible
Receivables shall not at any time exceed an amount equal to 10%
of the Purchase Limit.
"Eligible July Receivable" means a Receivable in
existence at the close of business on the last day of the June
fiscal month or arising during the July fiscal month meeting all
of the criteria set forth in any one of the following clauses:
(i) such Receivable satisfies all of the criteria
set forth in the definition of Eligible Receivable
(without regard to the proviso therein) except that the
Obligor of such Receivable is a government or a
governmental subdivision or agency;
(ii) such Receivable satisfies all of the criteria
set forth in the definition of Eligible Receivable
(without regard to the proviso therein) except that the
Obligor of such Receivable is not a United States
resident and such Receivable is not an Eligible Foreign
Receivable; or
(iii) the Seller has requested, and the CCA
Depositors (as defined in the LAPA) have approved, in
their sole discretion, the classification of such
Receivable as an Eligible July Receivable.
"Eligible LOC Bank" means a commercial bank which
(i) has an office or branch in the United States and (ii) has
combined capital and surplus of at least $250,000,000.
"Eligible Receivable" means, at any time, a Receivable:
(i) the Obligor of which is a United States
resident (unless such Receivable is an Eligible Foreign
Receivable), is not an Affiliate of any of the parties
hereto, and is not a government or a governmental
subdivision or agency;
(ii) the Obligor of which, at the time of the
initial creation of an interest therein under the
Agreement, is a Designated Obligor;
(iii) which at the time of the initial creation
of an interest therein under the Agreement is not a
Defaulted Receivable;
(iv) which, according to the Contract related
thereto, is required to be paid in full (A) within 120
days of the original billing date therefor, (B) later
than 120 days but within 150 days of the original
billing date therefor, but only (x) if such Receivable
was originated by Lane or Action and (y) to the extent
that the Outstanding Balance of such Receivable at the
time of the initial creation of an interest therein
under the Agreement, when aggregated with the
Outstanding Balance of all other Pool Receivables
originated by Lane or Action and having similar payment
terms, does not exceed $23,000,000, or (C) later than
150 days but within 180 days of the original billing
date therefor, but only (x) if such Receivable was
originated by Lane or Action and (y) to the extent that
the Outstanding Balance of such Receivable at the time
of the initial creation of an interest therein under
the Agreement, when aggregated with the Outstanding
Balance of all other Pool Receivables originated by
Lane or Action and having similar payment terms, does
not exceed $7,000,000;
(v) which is an "account" or "general
intangible" within the meaning of the UCC of the
applicable jurisdictions governing the perfection of
the interest created by a Receivable Interest;
(vi) which was generated in the ordinary course
of an Originator's business and does not constitute a
Courtesy Receivable;
(vii) which is denominated and payable only in
United States dollars in the United States;
(viii) which arises under a Contract which is
substantially in the form of the form of contract or
the form of invoice (in the case of any open account
agreement) previously approved by the Agent; and which
Contract, together with such Receivable, is in full
force and effect and constitutes the legal, valid and
binding obligation of the Obligor of such Receivable to
pay a determinable amount and which is not subject to
any dispute, offset, counterclaim or defense whatsoever
(except payments for cooperative advertising and the
potential discharge in bankruptcy of such Obligor);
(ix) which, together with the Contract related
thereto, does not contravene in any material respect
any laws, rules or regulations applicable thereto
(including, without limitation, laws, rules and
regulations relating to usury, consumer protection,
truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt
collection practices and privacy) and with respect to
which no party to the Contract related thereto is in
violation of any such law, rule or regulation in any
material respect if such violation would impair the
collectibility of such Receivable;
(x) which satisfies all applicable requirements
of the Credit and Collection Policy in a manner not
materially less stringent than the Credit and
Collection Policy in effect on the date of the Original
Agreement (as to Lane, Action or Broyhill) or on the
Effective Date (as to Thomasville ); provided, however,
that for purposes of this definition, any change in the
Credit and Collection Policy notified to the Agent
pursuant to subsection (f) of Exhibit IV by the Seller
and not objected to within 30 Business Days of such
notice, shall be deemed "not materially less
stringent";
(xi) which complies with such other criteria and
requirements (other than those relating to the
collectibility of such Receivable) as the Agent may
from time to time specify to the Seller upon 30 days'
notice; provided that such criteria and requirements
are specified in good faith, take into account current
market conditions, and are for the purpose of not
permitting the condition of the Receivables, taken as a
whole, to drop below the condition thereof as at the
date of the execution of the Original Agreement (as to
Lane, Action or Broyhill) or as of the Effective Date
(as to Thomasville); and
(xii) the sale or transfer of which does not
contravene or conflict with any law;
provided, however, that for purposes of the computation of the
Net Receivables Pool Balance during the period from (and
including) the first day of the July fiscal month in any year
through (and including) the last day of the July fiscal month in
any year, "Eligible Receivables" shall include Eligible July
Receivables having an Outstanding Balance not in excess of an
amount which will result in July Availability equal to
$25,000,000.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and the regulations
promulgated and rulings issued thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) which together with the Seller would be
treated as a single employer under the provisions of Title I or
Title IV of ERISA.
"Eurocurrency Liabilities" has the meaning assigned to
that term in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Eurodollar Rate" means, for any Fixed Period, an
interest rate per annum (expressed as a decimal and rounded
upwards, if necessary, to the nearest one hundredth of a
percentage point) equal to the offered rate per annum for
deposits in U.S. dollars in a principal amount of not less than
$1,000,000 for such Fixed Period as of 11:00 A.M., London time,
two Business Days before the first day of such Fixed Period,
which appears on the display designated as "Page 3750" on the
Telerate Service (or such other page as may replace "Page 3750"
on that service for the purpose of displaying London interbank
offered rates of major banks) (the "Telerate LIBO Page");
provided that if on any Business Day on which the Eurodollar Rate
is to be determined, no offered rate appears on the Telerate LIBO
Page, the Agent will request the principal London office of each
of Credit Lyonnais and Citibank, N.A. (the "Eurodollar Reference
Banks"), to provide the Agent with its quotation at approximately
11:00 A.M., London time, on such date of the rate per annum it
offers to prime banks in the London interbank market for deposits
in U.S. dollars for the requested Fixed Period in an amount
substantially equal to the Invested Amount associated with such
Fixed Period and, if these two quotations are provided, the
Eurodollar Rate shall be equal to the average (rounded upwards,
if necessary, to the nearest one hundredth of a percentage point)
of such rates; if the Eurodollar Reference Banks do not furnish
timely information to the Agent for determining the Eurodollar
Rate, then the Eurodollar Rate shall be considered to be the
Alternate Base Rate for such Fixed Period.
"Eurodollar Rate Reserve Percentage" of any Investor
for any Fixed Period means the reserve percentage applicable two
Business Days before the first day of such Fixed Period under
regulations issued from time to time by the Board of Governors of
the Federal Reserve System (or any successor) (or if more than
one such percentage shall be applicable, the daily average of
such percentages for those days in such Fixed Period during which
any such percentage shall be so applicable) for determining the
maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement)
for such Investor with respect to liabilities or assets
consisting of or including Eurocurrency Liabilities (or with
respect to any other category of liabilities that includes
deposits by reference to which the interest rate on Eurocurrency
Liabilities is determined) having a term equal to such Fixed
Period.
"Event of Termination" has the meaning specified in
Exhibit V.
"Facility Termination Date" means the earliest of (a)
December 29, 2000 or (b) the date determined pursuant to Section
2.02 or (c) the date the Purchase Limit reduces to zero pursuant
to Section 1.01(b).
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day during
such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds
brokers of recognized standing selected by it.
"Fiscal Year" means each fiscal year of Interco ending
on December 31 of each calendar year.
"Fixed Period" means, with respect to any Receivable
Interest:
(a) in the case of any Fixed Period in respect of
which Yield is computed by reference to the CP Rate, a
period from each Rate Determination Date for such
Receivable Interest to the next succeeding Rate
Determination Date for such Receivable Interest; and
(b) in the case of any Fixed Period in respect of
which Yield is computed by reference to the Assignee
Rate, initially the period commencing on the date of
purchase of such Receivable Interest and ending such
number of days as the Seller shall select and the Agent
shall approve; and thereafter each period commencing on
the last day of the immediately preceding Fixed Period
for such Receivable Interest and ending such number of
days as the Seller shall select and the Agent shall
approve, in each case on notice by the Seller received
by the Agent (including notice by telephone, confirmed
in writing) not later than (x) 12:00 noon (New York
City time) on the third Business Day preceding the date
of purchase or such last day, if Yield is to be
computed by reference to the Eurodollar Rate, or (y)
11:00 A.M. (New York City time) on the date of purchase
or such last day, if Yield is to be computed by
reference to the Alternate Base Rate, except that if
the Agent shall not have received such notice or
approved such period on or before 11:00 A.M. (New York
City time) on the date of purchase or such last day,
such period shall be one day;
provided that (with respect to both clauses (a) and (b) above):
(i) any Fixed Period in respect of which Yield is
computed by reference to the Alternate Base Rate shall
be a period from one to and including 29 days, as the
Seller may select as provided above, and any Fixed
Period in respect of which Yield is computed by
reference to the Eurodollar Rate shall be a period of
one month;
(ii) any Fixed Period (other than of one day)
which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding
Business Day (provided, however, if Yield in respect of
such Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would otherwise
end on a day which is not a Business Day, and there is
no subsequent Business Day in the same calendar month
as such day, such Fixed Period shall end on the next
preceding Business Day);
(iii) in the case of any Fixed Period of one day,
(A) if such Fixed Period is the initial Fixed Period
for a Receivable Interest, such Fixed Period shall be
the day of purchase of such Receivable Interest; (B)
any subsequently occurring Fixed Period which is one
day shall, if the immediately preceding Fixed Period is
more than one day, be the last day of such immediately
preceding Fixed Period, and, if the immediately
preceding Fixed Period is one day, be the day next
following such immediately preceding Fixed Period; and
(C) if such Fixed Period occurs on a day immediately
preceding a day which is not a Business Day, such Fixed
Period shall be extended to the next succeeding
Business Day; and
(iv) in the case of any Fixed Period for any
Receivable Interest which commences before the Termina-
tion Date for such Receivable Interest and would
otherwise end on a date occurring after such
Termination Date, such Fixed Period shall end on such
Termination Date and the duration of each Fixed Period
which commences on or after the Termination Date for
such Receivable Interest shall be of such duration as
shall be selected by the Agent.
"Gross Dilution Ratio" means, on the last day of any
fiscal month of the Originators, the ratio (expressed as a
percentage) computed by dividing (i) the balance of all
Originator Receivables representing resolved or unresolved
Dilutions during such month by (ii) the aggregate Outstanding
Balance of all Originator Receivables on such day; provided,
however, that the balance of all Originator Receivables
originated by Thomasville representing resolved or unresolved
Dilutions during any fiscal month shall be deemed to be an amount
equal to the sum, for the prior seven months, of the amount
deducted for Dilution from the Outstanding Balance of all
Originator Receivables originated by Thomasville. For purposes
of this definition, the term "Outstanding Balance" shall be
interpreted as if all references in the definition thereof to
"Receivables" were references to "Originator Receivables."
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest,
fees and charges) of such Person for borrowed money or for the
deferred purchase price of property or services, (ii) the maximum
amount available to be drawn under all letters of credit issued
for the account of such Person and all unpaid drawings in respect
of such letters of credit, (iii) all Indebtedness of the types
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Adverse Claim on any property owned by
such Person, whether or not such Indebtedness has been assumed by
such Person (to the extent of the value of the respective
property), (iv) the aggregate amount required to be capitalized
under leases under which such Person is the lessee, (v) all
obligations of such Person to pay a specified purchase price for
goods or services, whether or not delivered or accepted, i.e.,
take-or-pay and similar obligations, (vi) all obligations of such
Person under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of kinds
referred to in clauses (i) through (v) above or in clause (vii),
and (vii) all obligations under any Interest Rate Protection
Agreement or under any similar type of agreement. In addition to
the foregoing, for the purposes of calculating Consolidated Debt
and making adjustments on a Pro Forma Basis, the Invested Amount
under the Agreement and the "Invested Amount" under the Alternate
Receivables Purchase Agreement shall constitute Indebtedness.
"Initial Purchase Date" means November 17, 1994;
provided, however, that when used in connection with Receivables
originated by Thomasville , Initial Purchase Date shall mean
the Effective Date.
"Interco" means Interco Incorporated, a Delaware
corporation.
"Interco Agreement" means the Interco Agreement dated
as of November 15, 1994, as amended by Amendment No. 1 thereto
dated as of the Effective Date, made by Interco in favor of the
Seller, as the same may be further amended, modified or restated
from time to time.
"Interest Rate Protection Agreement" means any interest
rate swap agreement, interest rate cap agreement, interest collar
agreement, interest rate hedging agreement, interest rate floor
agreement or other similar agreement or arrangement.
"Invested Amount" of each Receivable Interest means the
original amount paid to the Seller for such Receivable Interest
at the time of its purchase by the Issuer pursuant to the
Agreement, or such amount divided or combined in accordance with
Section 1.07, in each case reduced from time to time by
Collections distributed on account of such Invested Amount
pursuant to Section 1.04(d); provided that if such Invested
Amount shall have been reduced by any distribution and thereafter
all or a portion of such distribution is rescinded or must
otherwise be returned for any reason, such Invested Amount shall
be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"Investor" means the Issuer and all other owners by
assignment or otherwise of a Receivable Interest or any interest
therein and, to the extent of the undivided interests so
purchased, shall include any participants.
"Issuer" means Atlantic Asset Securitization Corp. and
any successor or assign of the Issuer that is a receivables
investment company which in the ordinary course of its business
issues commercial paper or other securities to fund its
acquisition and maintenance of receivables.
"July Availability" means, on the last day of the July
fiscal month of each year prior to the occurrence of the Facility
Termination Date, an amount equal to the lowest of (i) the
aggregate outstanding Invested Amount on such date minus the
maximum outstanding Invested Amount that would be permitted on
such date under the Receivables Agreement if the Receivables Pool
did not include any Eligible July Receivables, such amount to be
calculated and included in the Seller Report for the July fiscal
month, (ii) $25,000,000 and (iii) the Total Unutilized Revolving
Loan Commitment (as such term is defined in the Bank Credit
Agreement).
"July CCA" has the meaning given that term in the LAPA.
"Lane" means The Lane Company, Incorporated, a Virginia
corporation.
"LAPA" means the Liquidity Asset Purchase Agreement,
dated as of December 29, 1995, among CL-NY, as purchaser and
liquidity agent, the Issuer and the Agent, as the same may be
amended, modified, restated or supplemented.
"Lenders" means the Lenders party to the Subordinated
Loan Agreement.
"Leverage Ratio" means on any date the ratio of (i)
Consolidated Debt on such date to (ii) Consolidated EBITDA for
the period of four consecutive fiscal quarters most recently
ended on or prior to such date, in each case taken as one
accounting period.
"Liquidation Day" means, for any Receivable Interest,
(i) each day during a Settlement Period for such Receivable
Interest on which the conditions set forth in paragraph 2 of
Exhibit II are not satisfied, and (ii) each day which occurs on
or after the Termination Date for such Receivable Interest.
"Liquidation Fee" means, for any Fixed Period during
which a Liquidation Day occurs, the amount, if any, by which
(i) the additional Yield (calculated without taking into account
any Liquidation Fee or any shortened duration of such Fixed
Period pursuant to the proviso in the definition thereof) which
would have accrued during such Fixed Period on the reductions of
Invested Amount of the Receivable Interest relating to such Fixed
Period had such reductions remained as Invested Amount, exceeds
(ii) the income, if any, received by the Investors' investing the
proceeds of such reductions of Invested Amount.
"Lock-Box Account" means one or more accounts in the
name of the Agent maintained at a bank or other financial
institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in
substantially the form of Annex B, among an Originator, the
Seller, the Agent and each Lock-Box Bank.
"Lock-Box Bank" means any of the banks or other
financial institutions holding one or more Lock-Box Accounts.
"Loss Percentage" means, for any Receivable Interest on
any date, the greater of (i) the sum of (a) three times the
Default Ratio plus (b) the Deemed Uncollectible Ratio, in each
case as of the last day of the fiscal month immediately preceding
such date and (ii) 10%.
"Loss Reserve" means, for any Receivable Interest on
any date, an amount equal to
LP x IA
where:
LP = the Loss Percentage for such Receivable
Interest on such date.
IA = the Invested Amount of such Receivable
Interest at the close of business of the
Servicer on such date.
"Net Dilution Ratio" means on any date the ratio
(expressed as a percentage) computed as of the last day of the
preceding fiscal month of the Originators, by dividing (i) the
balance of all Originator Receivables representing resolved or
unresolved Dilutions (other than Dilutions arising out of
cooperative advertising payments or discounts for early payment)
during such month by (ii) the aggregate Outstanding Balance of
all Originator Receivables on such day; provided, however, that
the balance of all Originator Receivables originated by
Thomasville representing resolved or unresolved Dilutions (other
than Dilutions arising out of cooperative advertising payments or
discounts for early payment) during any fiscal month shall be
deemed to be an amount equal to the sum, for the prior seven
months, of the amount deducted for Dilution (other than Dilution
arising out of cooperative advertising payments or discounts for
early payment) from the Outstanding Balance of all Originator
Receivables originated by Thomasville. For purposes of this
definition, the term "Outstanding Balance" shall be interpreted
as if all references in the definition thereof to "Receivables"
were references to "Originator Receivables".
"Net Receivables Pool Balance" means at any time the
Outstanding Balance of Eligible Receivables then in the Receiv-
ables Pool reduced by the sum of (i) the Outstanding Balance of
such Eligible Receivables that have become Defaulted Receivables,
plus (ii) the aggregate amount by which the Outstanding Balance
of Eligible Receivables (other than Defaulted Receivables) of
each Obligor then in the Receivables Pool exceeds the product of
(A), the Normal Concentration Percentage for such Obligor, or the
Special Concentration Percentage for such Obligor, as the case
may be, multiplied by (B) the Aggregate Invested Amount at such
time, plus (iii) the excess, if any, of the Outstanding Balance
of Priority DIP Receivables over $500,000.
"Normal Concentration Percentage" for any Obligor means
at any time 2%, or such other percentage ("Special Concentration
Percentage") set forth below for such Obligor; provided that in
the case of an Obligor with any Affiliated Obligor, the Normal
Concentration Percentage and the Special Concentration Percentage
shall be calculated as if such Obligor and such Affiliated
Obligor are one Obligor; provided further that in the case of an
Obligor having Receivables fully supported by a letter of credit
issued by an Eligible LOC Bank, the Normal Concentration
Percentage and the Special Concentration Percentage shall be
calculated as if such Eligible LOC Bank is the Obligor and the
chart in the next sentence referred to certificate of deposit
ratings; provided further that the Agent may cancel any Special
Concentration Percentage upon three Business Days' notice to the
Seller. The Special Concentration Percentages for J.C. Penney
Company, Inc. and Sears Roebuck & Co. shall be 15% and 10%,
respectively, for so long as the short-term public senior debt
ratings of such Obligors by Standard & Poor's Ratings Group and
Moody's Investors Service, Inc. remain at least equal to those in
effect on the date of the Original Agreement; provided, however,
that such Special Concentration Percentages shall be increased
(subject to the Agent's right to cancel any Special Concentration
Percentage upon three Business Days' notice to the Seller) or
reduced based on subsequent changes in such debt ratings as set
forth below:
Short-Term Public Special Concentration
Senior Debt Rating Percentage
------------------- ---------------------
A-1/P-1 15%
A-2/P-2, A-1/P-2 or A-2/P-1 10%
A-3/P-3, A-2/P-3 or A-3/P-2 2%
The Special Concentration Percentage of Haverty Furniture
Companies, Inc. and Wal-Mart Stores, Inc. shall each be 5%. At
each annual anniversary of the execution of the Agreement, the
foregoing Special Concentration Percentages for Haverty Furniture
Companies, Inc. and Wal-Mart Stores, Inc. may be revised by
request of the Seller, provided that such revision is consented
to by the Agent (it being understood that the Agent agrees to
duly consider such request but shall have no obligation to give
such consent). The Agent shall provide the Relevant Rating
Agencies with prior notice of any proposed increase in any
Special Concentration Percentage or the establishment of any new
Special Concentration Percentage.
"Obligor" means a Person obligated to make payments to
any Originator pursuant to a Contract.
"Original Agreement" has the meaning attributed thereto
in the Preliminary Statements.
"Original Bank Credit Agreement" means the Bank Credit
Agreement as defined in the Original Agreement, without giving
effect to the amendment and restatement thereof as of the
Effective Date.
"Original Originator" means each of Lane, Action and
Broyhill.
"Original PCA" means the Originator Purchase Agreement
as defined in the Original Agreement.
"Originator" means each of Lane, Action, Broyhill and
Thomasville.
"Originator Purchase Agreement" means the Purchase and
Contribution Agreement dated as of November 15, 1994, as amended
and restated as of the Effective Date, between Lane, Action,
Broyhill and Thomasville, as sellers, and the Seller, as
purchaser, as the same may be further amended, modified or
restated from time to time.
"Originator Receivables" means, collectively, all
receivables created by each Originator (regardless of whether
such receivables have been transferred to the Seller or any
assignee or transferee of the Seller).
"Other Corporations" means Interco and all of its
Subsidiaries except the Seller.
"Outstanding Balance" of any Receivable at any time
means the then outstanding principal balance thereof; provided,
however, that in the case of any Receivable originated by
Broyhill which is subject to a third-party guarantee and entitled
to a cash discount for quick payment, the Outstanding Balance of
such Receivable shall be reduced by the amount of such cash
discount.
"Pension Plan" means any Plan which is subject to the
provisions of Title IV of ERISA.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"Plan" means any employee benefit plan within the
meaning of Section 3(3) of ERISA and which is maintained (in
whole or in part) for employees of Interco, any of its
Subsidiaries or any ERISA Affiliate.
"Pool Receivable" means a Receivable in the Receivables
Pool.
"Priority DIP Receivable" means a Receivable:
(i) the Obligor of which is the subject of a
federal bankruptcy case; and
(ii) the indebtedness of which constitutes a
priority under 11 U.S.C. Section 507(a)(1).
"Pro Forma Basis" means, as to any Person, for any of
the following events which occur subsequent to the commencement
of a period for which the financial effect of such event is being
calculated, and giving effect to the event for which such
calculation is being made, such calculation as will give pro
forma effect to such event as if same had occurred at the
beginning of such period of calculation, and
(i) for purposes of the foregoing calculation, the
transaction giving rise to the need to calculate the pro
forma effect to any of the following events shall be assumed
to have occurred on the first day of the four fiscal quarter
period last ended before the occurrence of the respective
event for which such pro forma effect is being determined
(the "Reference Period"), and
(ii) in making any determination with respect to the
incurrence or assumption of any Indebtedness or issuance of
any Disqualified Preferred Stock during the Reference Period
or subsequent to the Reference Period and on or prior to the
date of the transaction referenced in clause (i) above (the
"Transaction Date"), (w) all Indebtedness or Disqualified
Preferred Stock (including the Indebtedness or Disqualified
Preferred Stock incurred or assumed and for which the
financial effect is being calculated) incurred or
permanently repaid during the Reference Period shall be
deemed to have been incurred or repaid at the beginning of
such period, (x) Consolidated Net Interest Expense of such
Person attributable to interest or dividends on any
Indebtedness or Disqualified Preferred Stock, as the case
may be, bearing floating interest rates should be computed
on a pro forma basis as if the rate in effect on the
Transaction Date had been the applicable rate for the entire
period, (y) Consolidated Net Interest Expense of such Person
attributable to interest on any Indebtedness under any
revolving credit facility which was in effect during the
respective Reference Period shall be computed on a pro forma
basis based upon the average daily balance of such
Indebtedness outstanding during the applicable period (or,
if shorter, the portion of the period during which the
revolving credit facility was in effect) and (z)
Consolidated Net Interest Expense will be increased or
reduced by the net cost (including amortization of discount)
or benefit (after giving effect to amortization of discount)
associated with the Interest Rate Protection Agreements,
which will remain in effect for the twelve-month period
after the Transaction Date and which shall have the effect
of fixing the interest rate on the date of computation, and
(iii) in making any determination of Consolidated
EBITDA, pro forma effect shall be given to any acquisition
of part or all of a business or division of another Person
or any Significant Divestiture which occurred during the
Reference Period or subsequent to the Reference Period and
prior to the Transaction Date, Consolidated EBITDA shall be
determined as if such acquisition or Significant Divestiture
occurred on the first day of the Reference Period, taking
into account cost savings and expenses which would otherwise
be accounted for as an adjustment pursuant to Article 11 of
Regulation S-X under the Securities Act of 1933, as amended,
as if such cost savings or expenses were realized on the
first day of the Reference Period.
Purchase Limit means $210,000,000. The Purchase
Limit may be increased by the Seller, at its option, effective as
of March 1, 1996, June 1, 1996 and/or December 1, 1996 by a
written notice to the Agent received no later than five Business
Days prior to the applicable effective date; provided that (i) no
increase in the Purchase Limit shall be effective if an Event of
Termination shall exist on the proposed effective date, (ii) any
increase in the Purchase Limit shall be in the amount of at least
$1,000,000 or an integral multiple thereof, and (iii) in no event
shall the Purchase Limit exceed $225,000,000. The Purchase Limit
may be reduced pursuant to Section 1.01. References to the
unused portion of the Purchase Limit shall mean, at any time, the
Purchase Limit, as then reduced pursuant to Section 1.01(b) or
pursuant to the next sentence, minus the sum of the then
outstanding Invested Amount of Receivable Interests under the
Agreement and the then outstanding "Invested Amount" of
"Receivable Interests" under the Alternate Receivables Purchase
Agreement. Furthermore, on each day on which the Seller reduces
the unused portion of (or terminates) the "Total Commitment"<PAGE>
under the Alternate Receivables Purchase Agreement, the Purchase
Limit automatically shall reduce by the same amount (or so
terminate).
"Rate Determination Date" means, for any Receivable
Interest, the date of purchase of such Receivable Interest and
thereafter the eleventh day of each calendar month (provided that
(i) if the tenth day of any calendar month is not a Business Day,
the Rate Determination date for such month shall be the second
Business Day following the tenth day of such month, and (ii) if
the tenth day of any calendar month is a Business Day, but the
eleventh day is not, the Rate Determination Date for such month
shall be the first Business Day following the eleventh day of
such month) or any other day as shall have been agreed to in
writing by the Seller and the Agent prior to the immediately
preceding Rate Determination Date for such Receivable Interest.
"Rating Agency" means, collectively, Moody's Investors
Service, Inc. and Standard & Poor's Ratings Group, and their
respective successors in interest.
"Receivable" means the indebtedness of any Obligor
under a Contract (including the right to payment of any interest
or finance charges and other obligations of such Obligor with
respect thereto), which indebtedness has been acquired by the
Seller from one of the Originators by purchase or by capital
contribution pursuant to the Originator Purchase Agreement.
"Receivable Interest" means, at any time, an undivided
percentage ownership interest in (i) all then outstanding Pool
Receivables arising prior to the time of the most recent
computation or recomputation of such undivided percentage
interest pursuant to Section 1.03, (ii) all Related Security with
respect to such Pool Receivables, and (iii) all Collections with
respect to, and other proceeds of, such Pool Receivables and
Related Security. Each undivided percentage interest shall be
computed as
IA + YR + LR + SFR + DR
-----------------------
NRPB
where:
IA = the Invested Amount of each such
Receivable Interest at the time of
computation.
YR = the Yield Reserve of each such
Receivable Interest at the time of
computation.
LR = the Loss Reserve of each such Receivable
Interest at the time of computation.
SFR = the Servicer Fee Reserve of each such
Receivable Interest at the time of
computation.
DR = the Dilution Reserve of each such
Receivable Interest at the time of
computation.
NRPB = the Net Receivables Pool Balance at the
time of computation.
Each Receivable Interest shall be determined from time to time
pursuant to the provisions of Section 1.03.
"Receivables Pool" means at any time the aggregation of
each then outstanding Receivable in respect of which the Obligor
is a Designated Obligor at such time or was a Designated Obligor
on the date of the initial creation of an interest in such
Receivable under the Agreement or the Alternate Receivables
Purchase Agreement.
"Related Security" means with respect to any
Receivable:
(i) all of the Seller's right, title and interest
in and to all Contracts or other agreements that relate to
such Receivable;
(ii) all of the Seller's interest in any
merchandise (including returned merchandise) relating to any
sale giving rise to such Receivable;
(iii) all other security interests or liens and
property subject thereto from time to time purporting to
secure payment of such Receivable, whether pursuant to the
Contract related to such Receivable or otherwise, together
with all financing statements signed by an Obligor
describing any collateral securing such Receivable;
(iv) all guaranties, insurance and other agree-
ments or arrangements of whatever character from time to
time supporting or securing payment of such Receivable
whether pursuant to the Contract related to such Receivable
or otherwise; and
(v) all other books, records and other
information (including, without limitation, computer
programs, tapes, discs, punch cards, data processing
software and related property and rights) relating to such
Receivable and the related Obligor.
"Relevant Rating Agencies" means, collectively, each of
the Rating Agencies then rating the Issuer's commercial paper
notes at the request of the Issuer.
"Reportable Event" means a Reportable Event as defined
in Section 4043(b) of ERISA.
"Required Rating" means, with respect to any Person's
long-term public senior debt securities, a rating of at least B
by Standard & Poor's Ratings Group and at least B2 by Moody's
Investors Service, Inc. If such Person does not have long-term
public senior debt securities outstanding, such Person shall be
deemed to have a senior debt rating of at least B/B2 (a) if such
Person has public subordinated debt securities outstanding which
are rated and the equivalent senior debt rating of such Person
based on standard benchmarks above such Person's outstanding
public subordinated rated debt is at least B/B2, or (b) if such
Person does not have public subordinated rated debt securities
outstanding, based on the Agent's commercially reasonable
determination that such Person's long-term public senior debt
securities would receive a rating of at least B/B2 if such Person
did have such securities outstanding.
"Seller Report" means a report, in substantially the
form of Annex A hereto furnished by the Servicer to the Agent
pursuant to the Servicer Agreement.
"Servicer" means, at any time, the Person or Persons
then authorized pursuant to the Servicer Agreement to administer
and collect Pool Receivables.
"Servicer Agreement" means an agreement among the
Originators, the Seller and the Agent (and, if the Originators do
not act as Servicer, consented to by the Originators), in form
and substance satisfactory to them, governing the appointment and
responsibilities of the Servicer as to administration and
collection of the Pool Receivables, and requiring the Servicer to
perform its obligations set forth in the Agreement, as the same
may be amended, modified, restated or supplemented from time to
time.
"Servicer Fee" means the servicer fee referred to in
the Servicer Agreement.
"Servicer Fee Reserve" for any Receivable Interest at
any time means the sum of (i) the unpaid Servicer Fee relating to
such Receivable Interest accrued to such time, plus (ii) an
amount equal to (a) the aggregate Pool Receivables relating to
such Receivable Interest on such date multiplied by (b) the
product of (x) the percentage per annum at which the Servicer Fee
is accruing on such date and (y) a fraction having the sum of the
Average Maturity plus the Collection Delay Period (each as in
effect at such date) as its numerator and 360 as its denominator.
"Settlement Date" for any Receivable Interest means the
last day of each Settlement Period for such Receivable Interest.
"Settlement Period" for any Receivable Interest means
each period commencing on the first day and ending on the last
day of each Fixed Period for such Receivable Interest and, on and
after the Termination Date for such Receivable Interest, such
period (including, without limitation, a period of one day) as
shall be selected from time to time by the Agent or, in the
absence of any such selection, each period of thirty days from
the last day of the immediately preceding Settlement Period.
"Special CCA" has the meaning given that term in the
LAPA.
"Special Concentration Percentage" has the meaning
assigned to that term in the definition of Normal Concentration
Percentage.
"Subordinated Loan Agreement" means the subordinated
loan agreement which may hereafter be entered into between the
Seller and the Lenders party thereto, substantially in the form
of Annex D hereto, pursuant to which such Lenders will agree to
make revolving loans to the Seller not exceeding $15,000,000 in
outstanding principal amount at any time, which loans shall be
secured by a subordinate lien on the same collateral that has
been granted to the Agent for the benefit of the Investors
pursuant to Section 1.09 of the Agreement, and which loans shall
be subordinate in right of payment to the payment of the Invested
Amount and Yield.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture, or other
business entity of which more than 50% of the total voting power
of shares of stock or other ownership interests entitled (without
regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other persons performing similar functions) having
the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Tangible Net Worth" means at any time the excess of
(i) the Outstanding Balance of all Receivables plus cash and Cash
Equivalents of the Seller, minus (ii) the sum of (a) the
Outstanding Balance of such Receivables which have become
Defaulted Receivables, plus (b) Invested Amount, Yield Reserve,
Loss Reserve, Servicing Fee Reserve and Dilution Reserve, plus
(c) "Invested Amount", "Yield Reserve", "Loss Reserve",
"Servicing Fee Reserve" and "Dilution Reserve" under the
Alternate Receivables Purchase Agreement.
"Taxes" means, in the case of any Investor or the
Agent, taxes, levies, imposts, deductions, charges, withholdings
and liabilities, now or hereafter imposed, levied, collected,
withheld or assessed by any country (or any political subdivision
thereof), excluding income or franchise taxes imposed on it by
(i) the jurisdiction under the laws of which such Investor or the
Agent, as the case may be, is organized (or by any political
subdivision thereof), (ii) any jurisdiction in which an office of
such Investor or the Agent funding or maintaining the ownership
of Receivable Interests is located (or any political subdivision
thereof), or (iii) any jurisdiction in which such Investor or the
Agent is already subject to tax.
"Termination Date" for any Receivable Interest means
the earlier of (i) the Business Day which the Seller or the Agent
so designates by notice to the other at least one Business Day in
advance for such Receivable Interest and (ii) the Facility
Termination Date.
"Thomasville" means Thomasville Furniture Industries,
Inc., a Pennsylvania corporation.
"Thomasville Availability" means, on any date, an
amount equal to (i) the aggregate outstanding Invested Amount on
such date minus (ii) the maximum outstanding Invested Amount that
would be permitted on such date if the Receivables Pool did not
include any Receivables originated by Thomasville, such amount to
be calculated based on the most recent Seller Report.
"UCC" means the Uniform Commercial Code as from time to
time in effect in the specified jurisdiction.
"Yield" means, for any Receivable Interest for any
Fixed Period:
(i) to the extent the Issuer will be funding
such Receivable Interest during such Fixed Period through
the issuance of commercial paper,
CPR x IA x ED + LF
---
360
(ii) to the extent the Investors will not be
funding such Receivable Interest during such Fixed Period
through the issuance of commercial paper,
AR x IA x ED + LF
---
360
where:
CPR = the CP Rate for such Receivable Interest
for such Fixed Period
AR = the Assignee Rate for such Receivable
Interest for such Fixed Period
IA = the Invested Amount of such Receivable
Interest during such Fixed Period<PAGE>
ED = the actual number of days elapsed during
such Fixed Period
LF = the Liquidation Fee, if any, for such
Receivable Interest for such Fixed
Period;
provided that no provision of the Agreement shall require the
payment or permit the collection of Yield in excess of the
maximum permitted by applicable law; and provided further that
Yield for any Receivable Interest shall not be considered paid by
any distribution to the extent that at any time all or a portion
of such distribution is rescinded or must otherwise be returned
for any reason.
"Yield Reserve" for any Receivable Interest at any time
means the sum of (i) the Liquidation Yield at such time for such
Receivable Interest, plus (ii) the then accrued and unpaid Yield
for such Receivable Interest, plus (iii) the accrued and unpaid
program fee set forth in the Fee Agreement multiplied by a
fraction, the numerator of which is the Invested Amount of such
Receivable Interest and the denominator of which is the Aggregate
Invested Amount. For purposes of this definition, "Liquidation
Yield" means, for any Receivable Interest on any date, an amount
equal to:
[IA x (ABR + 1.0%) x (AM + CDP)] + [PL x PFR x IA x (AM + CDP)]
-------- -- --------
360 AIA 360
where:
IA = the Invested Amount of such Receivable
Interest on such date
ABR = the Alternate Base Rate for such Receivable
Interest for a 30-day Fixed Period deemed to
commence on such date
AM = the Average Maturity as in effect at such
date
CDP = the Collection Delay Period as in effect at
such date
PL = the Purchase Limit
PFR = the rate per annum at which the program fee
set forth in the Fee Agreement is accruing on
such date
AIA = the Aggregate Invested Amount on such date.
- - - - - -<PAGE>
Other Terms. The terms "Cash Equivalents",
"Consolidated Debt", "Disqualified Preferred Stock", "Dividends",
"Interco Warrants", "Net Cash Proceeds", "Preferred Stock",
"Restricted Subsidiaries", "Significant Divestiture", "Term
Loans" and "Transaction" shall have the meanings attributed
thereto in the Bank Credit Agreement as in effect on the date
hereof, without giving effect to any further amendments to the
Bank Credit Agreement (unless the Agent shall have consented to
such amendments in writing), and regardless of any subsequent
expiration or termination of the Bank Credit Agreement. All
accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting
principles. All terms used in Article 9 of the UCC in the State
of New York, and not specifically defined herein, are used herein
as defined in such Article 9.<PAGE>
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase under the
Original Agreement. The initial purchase of a Receivable
Interest under the Original Agreement was subject to the
conditions precedent that the Agent shall have received on or
before the date of such purchase the following, each (unless
otherwise indicated) dated such date, in form and substance
satisfactory to the Agent:
(a) Certified copies of the resolutions of the Board
of Directors of the Seller approving the Original Agreement and
certified copies of all documents evidencing other necessary
corporate action and governmental approvals, if any, with respect
to the Original Agreement.
(b) A copy of the certificate or articles of
incorporation, as amended, of the Seller, certified as of a
recent date by the Secretary of State or other appropriate
official of Delaware, and a certificate as to the good standing
of the Seller from such Secretary of State or other official,
dated as of a recent date.
(c) A certificate of the Secretary or Assistant
Secretary of the Seller certifying (i) that attached thereto is a
true and complete copy of the By-Laws of the Seller as in effect
on the date of such certificate and at all times since a date
prior to the date of the resolutions described in paragraph (a)
above, (ii) that the certificate or articles of incorporation of
the Seller has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
furnished pursuant to paragraph (b) above, and (iii) the names
and true signatures of the officers of the Seller authorized to
sign the Original Agreement and the other documents to be
delivered by it hereunder.
(d) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, duly filed on or before
the date of such initial purchase under the UCC of all
jurisdictions that the Agent may deem necessary or advisable in
order to perfect the ownership and security interests
contemplated by the Original Agreement and the Original PCA.
(e) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, if any, necessary to
release all security interests and other rights of any Person in
the Receivables, Contracts or Related Security previously granted
by the Seller or any Original Originator.
(f) Completed requests for information, dated on or
before the date of such initial purchase, listing the financing
statements referred to in subsection (d) above and all other
effective financing statements filed in the jurisdictions<PAGE>
referred to in subsection (d) above that name the Seller or any
Original Originator as debtor, together with copies of such other
financing statements (none of which shall cover any Receivables,
Contracts or Related Security).
(g) Copies of executed Lock-Box Agreements with the
Lock-Box Banks.
(h) Certified copies of the resolutions of the Board
of Directors of each Original Originator approving the Original
PCA and the Servicer Agreement and certified copies of all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Originator
Purchase Agreement and the Servicer Agreement.
(i) A copy of the certificate or articles of
incorporation, as amended, of each Original Originator, certified
as of a recent date by the Secretary of State or other
appropriate official of the state of its organization, and a
certificate as to the good standing of each Original Originator
from such Secretary of State or other official, dated as of a
recent date.
(j) A certificate of the Secretary or Assistant
Secretary of each Original Originator certifying (i) that
attached thereto is a true and complete copy of the By-Laws of
such Original Originator as in effect on the date of such
certificate and at all times since a date prior to the date of
the resolutions described in paragraph (i) above, (ii) that the
certificate or articles of incorporation of such Original
Originator has not been amended since the date of the last
amendment thereto shown on the certificate of good standing
furnished pursuant to paragraph (i) above, and (iii) the names
and true signatures of the officers thereof authorized to sign
the Original PCA and the Servicer Agreement.
(k) A favorable opinion of Morgan, Lewis & Bockius,
counsel for the Seller and the Original Originators,
substantially in the form of Annex C to the Original Agreement
and as to such other matters as the Agent may reasonably request.
(l) The Servicer Agreement.
(m) The Certificate of Assignment, substantially in
the form of Annex D to the Original Agreement, evidencing the
assignment by the Seller to the Agent for the benefit of the
Investors of the Receivable Interests.
(n) The fee agreement referred to in Section 1.05.
(o) The Original PCA and the Interco Agreement, duly
executed by the parties thereto, and evidence that all of the
conditions precedent to the initial purchase under the Original
PCA have been satisfied.<PAGE>
(p) A reliance letter from Morgan, Lewis & Bockius,
counsel for the Original Originators and Interco, stating that
the Agent and the Investors may rely on the opinion delivered to
the Seller pursuant to Section 3.01 (g) of the Original PCA as if
such opinion had been addressed to them.
(q) Evidence of payment of all fees and expenses,
including the fees and expenses of counsel to the Agent, incurred
in connection with the preparation, execution and delivery of the
Original Agreement and any other documents executed in connection
herewith and the transactions contemplated hereby.
(r) A certificate of the Secretary or Assistant
Secretary of Lane, and Broyhill certifying that attached thereto
is a true and complete copy of the Original Bank Credit Agreement
and the Security Agreement referred to therein.
(s) An intercreditor agreement among Bankers Trust
Company, as agent, the Seller and the Agent, duly executed by the
parties thereto.
(t) Written confirmation from each of the Relevant
Rating Agencies that the rating of the Issuer's commercial paper
notes will not be downgraded or withdrawn solely as a result of
entering into the Original Agreement.
2. Conditions Precedent to Effectiveness of Amended
and Restated Agreement. The effectiveness of the Agreement and
the initial purchase on or after the Effective Date of a
Receivable Interest under the Agreement are each subject to the
conditions precedent that the Agent shall have received on or
before the Effective Date the following, each (unless otherwise
indicated) dated such date, in form and substance satisfactory to
the Agent:
(a) Certified copies of the resolutions of the Board
of Directors of the Seller approving the Agreement and certified
copies of all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the
Agreement.
(b) A copy of the certificate or articles of
incorporation, as amended, of the Seller, certified as of a
recent date by the Secretary of State or other appropriate
official of Delaware, and a certificate as to the good standing
of the Seller from such Secretary of State or other official,
dated as of a recent date.
(c) A certificate of the Secretary or Assistant
Secretary of the Seller certifying (i) that attached thereto is a
true and complete copy of the By-Laws of the Seller as in effect
on the date of such certificate and at all times since a date
prior to the date of the resolutions described in paragraph (a)
above, (ii) that the certificate or articles of incorporation of
the Seller has not been amended since the date of the last
amendment thereto shown on the certificate of good standing<PAGE>
furnished pursuant to paragraph (b) above, and (iii) the names
and true signatures of the officers of the Seller authorized to
sign the Agreement and the other documents to be delivered by it
hereunder.
(d) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, duly filed on or before
the Effective Date under the UCC of all jurisdictions that the
Agent may deem necessary or advisable in order to perfect the
ownership and security interests contemplated by the Agreement
and the Originator Purchase Agreement.
(e) Acknowledgment copies, or time stamped receipt
copies of proper financing statements, if any, necessary to
release all security interests and other rights of any Person in
the Receivables, Contracts or Related Security originated by
Thomasville .
(f) Completed requests for information, dated on or
before the Effective Date, listing the financing statements
referred to in subsection (d) above and all other effective
financing statements filed in the jurisdictions referred to in
subsection (d) above that name the Seller or Thomasville as
debtor, together with copies of such other financing statements
(none of which shall cover any Receivables, Contracts or Related
Security).
(g) Copies of executed Lock-Box Agreements with
Corestates Bank, N.A. and Wachovia Bank of North Carolina,
relating to Collections of Receivables originated by Thomasville.
(h) Certified copies of the resolutions of the Board
of Directors of each Originator approving the Originator Purchase
Agreement and the Servicer Agreement and certified copies of all
documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Originator
Purchase Agreement and the Servicer Agreement.
(i) A copy of the certificate or articles of
incorporation, as amended, of each Originator, certified as of a
recent date by the Secretary of State or other appropriate
official of the state of its organization, and a certificate as
to the good standing of each Originator from such Secretary of
State or other official, dated as of a recent date.
(j) A certificate of the Secretary or Assistant
Secretary of each Originator certifying (i) that either (A)
attached thereto is a true and complete copy of the By-Laws of
such Originator as in effect on the date of such certificate and
at all times since a date prior to the date of the resolutions
described in paragraph (i) above, or (B) in the case of the
Original Originators, that there has been no change to the
By-Laws of such Originator since November 15, 1994, (ii) that the
certificate or articles of incorporation of such Originator has
not been amended since the date of the last amendment thereto
shown on the certificate of good standing furnished pursuant to<PAGE>
paragraph (i) above, and (iii) the names and true signatures of
the officers thereof authorized to sign the Originator Purchase
Agreement and the Servicer Agreement.
(k) A favorable opinion of Morgan, Lewis & Bockius,
counsel for the Seller and the Originators, substantially in the
form of Annex C hereto and as to such other matters as the Agent
may reasonably request.
(l) An amendment to the Servicer Agreement.
(m) An amendment to the fee agreement referred to in
Section 1.05.
(n) The Originator Purchase Agreement and Amendment
No. 1 to the Interco Agreement, duly executed by the parties
thereto, and evidence that all of the conditions precedent to the
initial purchase of Receivables from Thomasville under the
Originator Purchase Agreement have been satisfied.
(o) A reliance letter from Morgan, Lewis & Bockius,
counsel for the Originators and Interco, stating that the Agent
and the Investors may rely on the opinion delivered to the Seller
pursuant to Section 3.01A(g) of the Originator Purchase Agreement
as if such opinion had been addressed to them.
(p) Evidence of payment of all fees and expenses,
including the fees and expenses of counsel to the Agent, incurred
in connection with the preparation, execution and delivery of
this Agreement and any other documents executed in connection
herewith and the transactions contemplated hereby.
(q) A certificate of the Secretary or Assistant
Secretary of Lane, Broyhill and Thomasville certifying that
attached thereto is a true and complete copy of the Bank Credit
Agreement (as amended and restated) and the Security Agreement
(as amended and restated) referred to therein.
(r) The intercreditor agreement (as amended and
restated) among Bankers Trust Company, as agent, the Seller and
the Agent, duly executed by the parties thereto.
(s) Written confirmation from each of the Relevant
Rating Agencies that the rating of the Issuer's commercial paper
notes will not be downgraded or withdrawn solely as a result of
entering into the Agreement.
(t) Two completed Seller Reports, prepared on a pro
forma basis for the period ended November 30, 1995, one including
and the other excluding Receivables originated by Thomasville.
(u) Evidence of the deposit, into the Special CCA, of
an amount equal to the Thomasville Availability.
3. Conditions Precedent to All Purchases and Reinvest-
ments. Each purchase (including the initial purchase) and each<PAGE>
reinvestment shall be subject to the further conditions precedent
that
(a) the Servicer shall have delivered to the Agent on
or prior to such purchase or reinvestment, in form and substance
satisfactory to the Agent, a completed Seller Report containing
information covering the most recently ended reporting period for
which information is required pursuant to the Servicer Agreement
and, if requested by the Agent, a listing by Obligor of all Pool
Receivables and such additional information as may reasonably be
requested by the Agent,
(b) on the date of such purchase or reinvestment the
following statements shall be true (and acceptance of the
proceeds of such purchase or reinvestment shall be deemed a
representation and warranty by the Seller that such statements
are then true):
(i) On the Effective Date, the representations
and warranties contained in Exhibit III are correct on and
as of such date as though made on and as of such date, and
on the date of each subsequent purchase and each
reinvestment, the representations contained in paragraphs
(g), (h), (j), (k) and (o) of Exhibit III are correct on and
as of the date of such purchase or reinvestment as though
made on and as of such date,
(ii) No event has occurred and is continuing, or
would result from such purchase or reinvestment, that
constitutes an Event of Termination or that would constitute
an Event of Termination but for the requirement that notice
be given or time elapse or both (unless such event or Event
of Termination shall have been specifically waived in
writing by the Agent; provided that the parties hereto
acknowledge that the Events of Termination set forth in
paragraphs (g) and (h) of Exhibit V cannot be waived by the
Agent for this purpose),
(iii) No event described in paragraph (g) of
Exhibit V has occurred and is continuing (without giving
effect to the 30-day period provided therein for dismissal
or stay),
(iv) All of the long-term public senior debt
securities of Interco shall have the Required Rating,
(v) The Agent shall not have given the Seller at
least one Business Day's notice that the Investors have
terminated the reinvestment of Collections in Receivable
Interests,
(c) the Agent shall have received, on or prior to the
date of any such purchase or reinvestment during the period from
August 10 to September 10 of each year prior to the occurrence of
the Facility Termination Date, evidence of the deposit, into the
July CCA, of an amount equal to the July Availability, and<PAGE>
(d) the Agent shall have received such other
approvals, opinions or documents as it may reasonably request.<PAGE>
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) The Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the state
of Delaware, and is duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of its business
requires it to be so qualified.
(b) The execution, delivery and performance by the
Seller of the Agreement and the other documents to be delivered
by it thereunder, including the Seller's use of the proceeds of
purchases and reinvestments, (i) are within the Seller's
corporate powers, (ii) have been duly authorized by all necessary
corporate action, (iii) do not contravene (1) the Seller's
charter or by-laws, (2) any law, rule or regulation applicable to
the Seller, (3) any contractual restriction binding on or
affecting the Seller or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the
Seller or its property, and (iv) do not result in or require the
creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties, other
than in favor of the Agent. The Agreement has been duly executed
and delivered by the Seller.
(c) No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Seller of the Agreement or any other document
to be delivered thereunder; or to the extent authorization,
approval or other action by, or notice to or filing with, any
governmental authority or regulatory body is required, it has
been obtained, notice has been given or the appropriate filing
has been made.
(d) The Agreement constitutes the legal, valid and
binding obligation of the Seller enforceable against the Seller
in accordance with its terms.
(e) The consolidated and consolidating balance sheets
of Interco and its Subsidiaries as at December 31, 1994 and
September 30, 1995, and the related consolidated and
consolidating statements of income and cash flow and changes in
shareholders' equity of Interco and its Subsidiaries for the
fiscal year and nine-month period ended on such dates, copies of
which have been furnished to the Agent, fairly present the
financial condition of Interco and its Subsidiaries as at such
dates and the results of the operations of Interco and its
Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles
consistently applied, and since September 30, 1995 there has been<PAGE>
no material adverse change in the business, operations, property
or financial or other condition of Interco. The pro forma
balance sheet of the Seller as at November 30, 1995, giving
effect to the purchase to be made on the Effective Date of a
Receivable Interest under the Agreement, a copy of which has been
furnished to the Agent, fairly presents the financial condition
of the Seller as at such date, in accordance with generally
accepted accounting principles, and since November 30, 1995 there
has been no material adverse change in the business, operations,
property or financial or other condition of the Seller.
(f) There is no pending or threatened action or
proceeding affecting the Seller or Interco or any of its
Subsidiaries before any court, governmental agency or arbitrator
which may materially adversely affect the financial condition or
operations of the Seller, Interco or any Originator or the
ability of the Seller to perform its obligations under the
Agreement, or which purports to affect the legality, validity or
enforceability of the Agreement.
(g) No proceeds of any purchase or reinvestment will
be used to acquire any equity security of a class which is
registered pursuant to Section 12 of the Securities Exchange Act
of 1934.
(h) The Seller is the legal and beneficial owner of
the Pool Receivables and Related Security free and clear of any
Adverse Claim, except for a subordinated security interest
created under the Subordinated Loan Agreement. Upon each
purchase of or reinvestment in a Receivable Interest, the
Investors shall acquire a valid and perfected first priority
undivided percentage ownership interest to the extent of the
pertinent Receivable Interest in each Pool Receivable then
existing or thereafter arising and in the Related Security and
Collections with respect thereto. No effective financing
statement or other instrument similar in effect covering any
Contract or any Pool Receivable or the Related Security or
Collections with respect thereto is on file in any recording
office, except those filed in favor of the Agent relating to the
Agreement, the Alternate Receivable Purchase Agreement and the
Subordinated Loan Agreement and those filed in favor of the
Seller pursuant to the Originator Purchase Agreement.
(i) Each Seller Report (if prepared by the Seller or
one of its Affiliates, or to the extent that information
contained therein is supplied by the Seller or an Affiliate),
information, exhibit, financial statement, document, book, record
or report furnished or to be furnished at any time by or on
behalf of the Seller to the Agent or the Investors in connection
with the Agreement is or will be accurate in all material
respects as of its date or (except as otherwise disclosed to the
Agent or the Investors, as the case may be, at such time) as of
the date so furnished, and no such document contains or will
contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the<PAGE>
statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(j) The principal place of business and chief
executive office of the Seller and the office where the Seller
keeps its records concerning the Pool Receivables are located at
the address or addresses referred to in paragraph (b) of Exhibit
IV.
(k) The names and addresses of all the Lock-Box Banks,
together with the account numbers of the Lock-Box Accounts of the
Seller at such Lock-Box Banks, are specified in Schedule I hereto
(or at such other Lock-Box Banks and/or with such other Lock-Box
Accounts as have been notified to the Agent in accordance with
the Agreement).
(l) The Seller was incorporated on November 4, 1994,
and the Seller did not engage in any business activities prior to
November 15, 1994. The Seller has no Subsidiaries.
(m) Without limiting the generality of paragraph (f)
above, (i) there are no pending claims or litigation and (ii)
neither the Seller nor any of the Originators has received or
given any written communication from or to any governmental
authority or any other Person, in each case concerning the
possible presence of any asbestos or hazardous wastes including,
without limitation, toxic or hazardous substances, wastes or
contaminants and discharges of sewage or effluents, for which the
Seller or any Originator may be responsible under any applicable
federal, state or local law, rule, regulation or order, which in
the case of either clause (i) or (ii), may materially adversely
affect the financial condition or operations of the Seller or any
of the Originators or the ability of the Seller to perform its
obligations under the Agreement.
(n) The fair value of the property of the Seller is
greater than the total amount of liabilities, including
contingent liabilities, of the Seller, (ii) the present fair
salable value of the assets of the Seller is not less than the
amount that will be required to pay all probable liabilities of
the Seller on its debts as they become absolute and matured,
(iii) the Seller does not intend to, and does not believe that it
will, incur debts or liabilities beyond the Seller's abilities to
pay such debts and liabilities as they mature and (iv) the Seller
is not engaged in a business or a transaction, and is not about
to engage in a business or a transaction, for which the Seller's
property would constitute unreasonably small capital.
(o) With respect to each Pool Receivable, the Seller
(i) shall have received such Pool Receivable as a contribution to
the capital of the Seller by one of the Originators or (ii) shall
have purchased such Pool Receivable from one of the Originators
in exchange for payment (made by the Seller to such Originator in
accordance with the provisions of the Originator Purchase
Agreement) of cash in an amount which constitutes fair
consideration and reasonably equivalent value. Each such sale<PAGE>
referred to in clause (ii) of the preceding sentence shall not
have been made for or on account of an antecedent debt owed by an
Originator to the Seller and no such sale is or may be voidable
or subject to avoidance under any section of the Federal
Bankruptcy Code.
(p) On the Initial Purchase Date, and after giving
effect to the purchase on such date, the Tangible Net Worth of
the Seller was equal to at least 3% of the Aggregate Invested
Amount.<PAGE>
EXHIBIT IV
COVENANTS
Covenants of the Seller. Until the latest of the
Facility Termination Date, the date on which no Invested Amount
of or Yield on any Receivable Interest shall be outstanding or
the date all other amounts owed by the Seller hereunder to the
Investors or the Agent are paid in full:
(a) Compliance with Laws, Etc. The Seller will comply
in all material respects with all applicable laws, rules,
regulations and orders and preserve and maintain its corporate
existence, rights, franchises, qualifications, and privileges
except to the extent that the failure so to comply with such
laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and
privileges would not materially adversely affect the collecti-
bility of the Receivables Pool or the ability of the Seller to
perform its obligations under the Agreement.
(b) Offices, Records and Books of Account. The Seller
will keep its principal place of business and chief executive
office and the office where it keeps its records concerning the
Pool Receivables at the address of the Seller set forth under its
name on the signature page to the Agreement or, upon 30 days'
prior written notice to the Agent, at any other locations in
jurisdictions where all actions reasonably requested by the Agent
to protect and perfect the interest in the Pool Receivables have
been taken and completed. The Seller also will maintain and
implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing
Pool Receivables and related Contracts in the event of the
destruction of the originals thereof), and keep and maintain all
documents, books, records and other information reasonably
necessary or advisable for the collection of all Pool Receivables
(including, without limitation, records adequate to permit the
daily identification of each Pool Receivable and all Collections
of and adjustments to each existing Pool Receivable).
(c) Performance and Compliance with Contracts and
Credit and Collection Policy. The Seller will, at its expense,
timely and fully perform and comply with all material provisions,
covenants and other promises required to be observed by it under
the Contracts related to the Pool Receivables, and timely and
fully comply in all material respects with the Credit and
Collection Policy in regard to each Pool Receivable and the
related Contract.
(d) Sales, Liens, Etc. The Seller will not sell,
assign (by operation of law or otherwise) or otherwise dispose
of, or create or suffer to exist any Adverse Claim upon or with
respect to, any Pool Receivable, Related Security, related
Contract or Collections, or upon or with respect to any account<PAGE>
to which any Collections of any Pool Receivable are sent, or
assign any right to receive income in respect thereof, other than
in favor of the Agent (with respect to the Agreement, the
Alternate Receivables Purchase Agreement and the Subordinated
Loan Agreement).
(e) Extension or Amendment of Receivables. Except as
provided in the Servicer Agreement, the Seller will not extend
the maturity or adjust the Outstanding Balance or otherwise
modify the terms of any Pool Receivable, or amend, modify or
waive any term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection
Policy. The Seller will not make any change in the character of
its business or in the Credit and Collection Policy that would,
in either case, materially adversely affect the collectibility of
the Receivables Pool or the ability of the Seller to perform its
obligations under the Agreement without the prior written consent
of the Agent. The Seller shall not make any other change without
30 Business Days prior written notice to the Agent. The Agent
shall promptly forward to the Relevant Rating Agencies all
changes to the Credit and Collection Policy which it receives
from the Seller.
(g) Audits. The Seller will, and will obtain the
contractual agreement of each Originator to, from time to time
during regular business hours as may be reasonably requested by
the Agent, permit the Agent, or its agents or representatives, at
the Seller's expense, (i) to examine and make copies of and
abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession
or under the control of the Seller or any Originator relating to
Pool Receivables and the Related Security, including, without
limitation, the related Contracts, and (ii) to visit the offices
and properties of the Seller or any Originator for the purpose of
examining such materials described in clause (i) above, and to
discuss matters relating to Pool Receivables and the Related
Security or the Seller's performance hereunder or under the
Contracts with any of the officers or employees of the Seller or
any Originator having knowledge of such matters.
(h) Change in Payment Instructions to Obligors. The
Seller will not add or terminate any bank as a Lock-Box Bank from
those listed in Schedule I to the Agreement, or make any change
in its instructions to Obligors regarding payments to be made to
the Seller or payments to be made to any Lock-Box Bank, without
the prior written consent of the Agent and receipt by the Agent
of executed copies of Lock-Box Agreements with each new Lock-Box
Bank; provided, however, that within sixty (60) days following
the date hereof, the Agent shall have received copies of executed
Lock-Box Agreements, in form and substance satisfactory to the
Agent, relating to the Lock-Box Accounts of Thomasville which are
maintained at Mellon Bank, N.A. and Bank of America as of the
date hereof.<PAGE>
(i) Deposits to Lock-Box Accounts. The Seller will
deposit, or cause to be deposited, all Collections of Pool
Receivables into Lock-Box Accounts. The Seller will not deposit
or otherwise credit, or cause or permit to be so deposited or
credited, to any Lock-Box Account cash or cash proceeds other
than Collections of Pool Receivables.
(j) Marking of Records. At its expense, the Seller
will mark its financial statements and master data processing
records evidencing Pool Receivables and related Contracts with a
legend evidencing that Receivable Interests related to such Pool
Receivables and related Contracts have been sold in accordance
with the Agreement.
(k) Reporting Requirements. The Seller will provide
(or, in the case of clauses (xiv) and (xv) below, cause the
Servicer to provide) to the Agent (in multiple copies, if
requested by the Agent) the following:
(i) as soon as available and in any event within
45 days after the end of the first three quarters of each
fiscal year of the Seller, a balance sheet of the Seller and
a consolidated and consolidating balance sheet of Interco
and its Subsidiaries as of the end of such quarter and
statements of income and retained earnings of the Seller and
consolidated and consolidating statements of income and
retained earnings of Interco and its Subsidiaries for the
period commencing at the end of the previous fiscal year and
ending with the end of such quarter, certified by the chief
financial officer of the Seller and Interco, as the case may
be; provided, however, that the requirements of this clause
(i) as to financial statements of Interco and its
Subsidiaries may be satisfied by delivery of Interco's form
10-Q filed with the Securities and Exchange Commission;
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year of the
Seller, a copy of the annual report for such year for the
Seller and Interco and its Subsidiaries, containing
financial statements for such year audited by Peat Marwick
or other independent public accountants acceptable to the
Agent; provided, however, that the requirements of this
clause (ii) as to financial statements of Interco and its
Subsidiaries may be satisfied by delivery of Interco's form
10-K filed with the Securities and Exchange Commission;
(iii) as soon as possible and in any event
within five days after the occurrence of each Event of
Termination or event which, with the giving of notice or
lapse of time, or both, would constitute an Event of
Termination, a statement of the chief financial officer of
the Seller setting forth details of such Event of
Termination or event and the action that the Seller has
taken and proposes to take with respect thereto;<PAGE>
(iv) promptly after the sending or filing
thereof, copies of all reports that Interco sends to any of
its security holders, and copies of all reports and
registration statements that Interco or any of its
Subsidiaries files with the Securities and Exchange
Commission or any national securities exchange;
(v) promptly after the filing or receiving
thereof, copies of all reports and notices that Interco or
any Affiliate files under ERISA with the Internal Revenue
Service or the Pension Benefit Guaranty Corporation or the
U.S. Department of Labor or that Interco or any Affiliate
receives from any of the foregoing or from any multiemployer
plan (within the meaning of Section 4001(a)(3) of ERISA) to
which Interco or any Affiliate is or was, within the
preceding five years, a contributing employer, in each case
in respect of the assessment of withdrawal liability or an
event or condition which could, in the aggregate, result in
the imposition of liability on Interco and/or any such
Affiliate in excess of $1,000,000;
(vi) at least ten Business Days prior to any
change in the name of the Seller or any Originator, a notice
setting forth the new name and the effective date thereof;
(vii) such other information respecting the
Receivables or the condition or operations, financial or
otherwise, of the Seller or any Originator as the Agent may
from time to time reasonably request;
(viii) promptly (and in any event within ten
Business Days) after the Seller obtains knowledge thereof,
notice of any (a) litigation, investigation or proceeding
which may exist at any time between the Seller or any
Originator and any governmental authority which, in either
case, if not cured or if adversely determined, as the case
may be, would have a material adverse effect on the
business, operations, property or financial or other
condition of the Seller or such Originator; (b) litigation
or proceeding adversely affecting the Seller's ability to
perform its obligations under this Agreement or the Servicer
Agreement; (c) litigation or proceeding adversely affecting
the Seller or any Originator in which the amount involved is
$1,000,000 or more and not covered by insurance or in which
injunctive or similar relief is sought; or (d) any "Event of
Termination" under the Originator Purchase Agreement;
(ix) promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition of the
Seller or any Originator;
(x) as soon as possible and in any event within
one Business Day after the occurrence thereof, notice of any
period of ten consecutive Business Days occurring prior to
the "Facility Termination Date" under the Originator<PAGE>
Purchase Agreement during which no purchases of Receivables
by and no contributions of Receivables to the Seller are
made pursuant to the Originator Purchase Agreement;
(xi) promptly (and in any event within ten
Business Days) after the Seller's receipt thereof, a copy of
the quarterly and annual financial statements of Haverty
Furniture Companies, Inc.;
(xii) promptly, and in any event within three
Business Days after an executive officer of the Seller
obtains knowledge thereof, notice of the occurrence of any
event which constitutes a Daily Settlement Trigger;
(xiii) at the time of the delivery of the
financial statements provided for in clauses (i) and (ii) of
this paragraph, a certificate of the chief financial officer
of the Seller to the effect that, to the best of such
officer's knowledge, no Event of Termination or Daily
Settlement Trigger has occurred and is continuing or, if any
Event of Termination or Daily Settlement Trigger has
occurred and is continuing, specifying the nature and extent
thereof, which certificate shall set forth the calculations
required to establish compliance with the ratios and tests
set forth in clauses (a), (b), (c), (d) and (h) of the
definition of Daily Settlement Trigger;
(xiv) so long as monies shall be on deposit in
the Special CCA, on the date on which each Seller Report is
due, a second Seller Report prepared without including any
Receivables originated by Thomasville; and
(xv) on the date on which the Seller Report for
the fiscal month of July is due, and, so long as any monies
shall be on deposit in the July CCA, on each date thereafter
on which each Seller Report is due, Seller Reports prepared
both including and not including Eligible July Receivables
as Eligible Receivables.
(l) Daily Settlement Trigger. From and after the fifth
day after the occurrence of a Daily Settlement Trigger, and so
long as any Daily Settlement Trigger is continuing, the Seller
shall (a) cause the Servicer to submit daily reports in form and
substance satisfactory to the Agent listing the aggregate
Outstanding Balance of all Eligible Receivables generated by each
Originator on the preceding Business Day, (b) use its best
efforts to cause each Lock-Box Bank to submit daily reports to
the Agent listing the aggregate amount of Collections received in
the Lock-Box Account(s) at such Lock-Box Bank on the preceding
Business Day, and (c) cause all Collections (and only
Collections) to be deposited daily, from the Lock-Box Accounts or
other locations in which Collections are received, into an
account (the "Concentration Account") maintained in a bank
acceptable to the Agent in the name of both the Seller and the
Agent. Without in any way affecting the provisions of Section
1.04 of the Agreement relating to the disbursement of funds to<PAGE>
the Agent or the Investors, no funds in the Concentration Account
shall be distributed to or for the benefit of the Seller until
the Agent notifies the bank in which the Concentration Account is
located to release funds therein to the Seller; provided that the
Agent shall notify such bank to release funds to the Seller
representing Collections received on any Business Day so long as
the Agent has received all daily reports as required by clauses
(a) and (b) above through the third Business Day preceding such
release date and the Agent is satisfied that the Net Receivables
Pool Balance based on such reports is sufficient for the Seller
to meet its obligations under the Agreement. The funds in the
Concentration Account shall be invested in a manner acceptable to
the Agent. If all events constituting a Daily Statement Trigger
shall have been cured or shall no longer be continuing, and no
Event of Termination shall then exist, the Seller and Servicer
may resume processing Collections and delivering reports as they
did immediately prior to the occurrence of a Daily Settlement
Trigger.
(m) Corporate Separateness.
(1) The Seller shall at all times maintain at least two
independent directors each of whom (x) is not currently and
has not been during the five years preceding the date of the
Agreement an officer, director or employee of an Affiliate
of the Seller or any Other Corporation, (y) is not a current
or former officer or employee of the Seller and (z) is not a
stockholder of any Other Corporation or any of their
respective Affiliates.
(2) The Seller shall not direct or participate in the
management of any of the Other Corporations' operations.
(3) The Seller shall conduct its business from an
office separate from that of the Other Corporations (but
which may be located in the same facility as one or more of
the Other Corporations). The Seller shall have stationery
and other business forms and a mailing address and a
telephone number separate from that of the Other
Corporations.
(4) The Seller shall at all times be adequately
capitalized in light of its contemplated business.
(5) The Seller shall at all times provide for its own
operating expenses and liabilities from its own funds.
(6) The Seller shall maintain its assets and
transactions separately from those of the Other Corporations
and reflect such assets and transactions in financial
statements separate and distinct from those of the Other
Corporations and evidence such assets and transactions by
appropriate entries in books and records separate and
distinct from those of the Other Corporations. The Seller
shall hold itself out to the public under the Seller's own
name as a legal entity separate and distinct from the Other<PAGE>
Corporations. The Seller shall not hold itself out as
having agreed to pay, or as being liable, primarily or
secondarily, for, any obligations of the Other Corporations.
(7) The Seller shall not maintain any joint account
with any Other Corporation or become liable as a guarantor
or otherwise with respect to any Indebtedness or contractual
obligation of any Other Corporation.
(8) The Seller shall not make any payment or
distribution of assets with respect to any obligation of any
Other Corporation or grant an Adverse Claim on any of its
assets to secure any obligation of any Other Corporation.
(9) The Seller shall not make loans, advances or
otherwise extend credit to any of the Other Corporations,
other than such loans, advances or extensions which are made
on arm's-length terms and conditions and in accordance with
the consolidated cash management system for Interco and its
Subsidiaries.
(10) The Seller shall hold regular duly noticed
meetings of its Board of Directors and make and retain
minutes of such meetings.
(11) The Seller shall have bills of sale (or similar
instruments of assignment) and, if appropriate, UCC-1
financing statements, with respect to all assets purchased
from any of the Other Corporations.
(12) The Seller shall not engage in any transaction
with any of the Other Corporations, except as permitted by
the Agreement and as contemplated by the Originator Purchase
Agreement.
(13) The Seller shall comply with (and cause to be true
and correct) each of the facts and assumptions contained in
paragraphs (a) - (r) on pages [3-6] of the opinion of
Morgan, Lewis & Bockius delivered pursuant to
paragraphs 1(k) and 2(k) of Exhibit II to the Agreement.
(n) Originator Purchase Agreement; Interco Agreement.
The Seller will not amend, waive or modify any provision of the
Originator Purchase Agreement or the Interco Agreement or waive
the occurrence of any "Event of Termination" under the Originator
Purchase Agreement, without in each case the prior written
consent of the Agent. The Seller will perform all of its
obligations under the Originator Purchase Agreement in all
material respects and will enforce the Originator Purchase
Agreement and the Interco Agreement in accordance with their
respective terms in all material respects.
(o) Nature of Business. The Seller will not engage in
any business other than the purchase of Receivables, Related
Security and Collections from the Originators and the
transactions contemplated by the Agreement, the Alternate<PAGE>
Receivables Purchase Agreement and the Subordinated Loan
Agreement.
(p) Mergers, Etc. The Seller will not merge with or
into or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series
of transactions), all or substantially all of its assets (whether
now owned or hereafter acquired) to, or acquire all or
substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or
partnership agreement with, any Person, other than as
contemplated by the Agreement and the Originator Purchase
Agreement.
(q) Distributions, Etc. The Seller will not declare
or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of
any shares of any class of capital stock of the Seller, or return
any capital to its shareholders as such, or purchase, retire,
defease, redeem or otherwise acquire for value or make any
payment in respect of any shares of any class of capital stock of
the Seller or any warrants, rights or options to acquire any such
shares, now or hereafter outstanding; provided, however, that the
Seller may declare and pay cash dividends on its capital stock to
its shareholders so long as (i) no Event of Termination shall
then exist or would occur as a result thereof, (ii) after giving
effect to such dividends, the Tangible Net Worth of the Seller
shall be equal to at least 3% of the Aggregate Invested Amount,
(iii) such dividends are in compliance with all applicable law
including the Delaware General Corporation Law, and (iv) such
dividends have been approved by all necessary and appropriate
corporate action of the Seller.
(r) Indebtedness. The Seller will not incur any
Indebtedness, other than any Indebtedness incurred pursuant to
the Agreement, the Alternate Receivables Purchase Agreement or
the Subordinated Loan Agreement.
(s) Certificate of Incorporation. The Seller will not
amend or delete Articles Third, Ninth or Tenth of its certificate
of incorporation.<PAGE>
EXHIBIT V
EVENTS OF TERMINATION
Each of the following shall be an "Event of
Termination":
(a) A "Servicer Default" shall occur under the
Servicer Agreement; or
(b) The Seller or the Servicer shall fail to transfer
to the Agent when requested any rights, pursuant to the Agreement
or the Servicer Agreement, which the Seller or the Servicer then
has as Servicer, or the Seller shall fail to make any payment
required under Section 1.04; or
(c) Any representation or warranty made or deemed made
by the Seller or the Servicer (or any of their respective
officers) under or in connection with the Agreement, the Original
Agreement or the Servicer Agreement or any information or report
delivered by the Seller pursuant to the Agreement or the Original
Agreement or by the Servicer pursuant to the Servicer Agreement
shall prove to have been incorrect or untrue in any material
respect when made or deemed made or delivered and (if
correctable) shall remain incorrect or untrue for ten days after
the earlier of actual knowledge by the Seller or the Servicer of
such incorrectness or untruth or written notice to the Seller or
Servicer thereof; or
(d) The Seller shall fail to perform or observe (i)
any covenant contained in Exhibit IV, paragraph (a), (b) or (c)
and any such failure shall remain unremedied for twenty days
after the earlier of Seller's actual knowledge thereof or written
notice to the Seller thereof, or (ii) any other term, covenant or
agreement contained in the Agreement (other than as described in
paragraph (a) above or clause (i) of this paragraph (d)) or in
any other agreement delivered in connection herewith on its part
to be performed or observed and any such failure shall remain
unremedied for ten days after the earlier of Seller's actual
knowledge thereof or written notice thereof shall have been given
to the Seller by the Agent; or
(e) The Seller or Interco or any of its Subsidiaries
shall fail to pay any principal of or premium or interest on any
of its Indebtedness which is outstanding in a principal amount of
at least $10,000,000 in the aggregate when the same becomes due
and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), or any other event shall
occur or condition shall exist under any agreement or instrument
relating to any such Indebtedness, and such failure to pay, event
or condition shall continue after the applicable grace period, if
any, specified in such agreement or instrument, and as a result
thereof, the maturity of such Indebtedness is accelerated; or any
such Indebtedness shall be declared to be due and payable, or
required to be prepaid in full (other than by a regularly<PAGE>
scheduled required prepayment), redeemed, purchased or defeased,
or an offer to repay, redeem, purchase or defease such
Indebtedness in full shall be required to be made, in each case
prior to the final stated maturity thereof; or any such
Indebtedness shall fail to be paid at the final stated maturity
thereof; or
(f) Any purchase or any reinvestment pursuant to the
Agreement shall for any reason (other than pursuant to the terms
hereof) cease to create, or any Receivable Interest shall for any
reason cease to be, a valid and perfected first priority
undivided percentage ownership interest to the extent of the
pertinent Receivable Interest in each applicable Pool Receivable
and the Related Security and Collections with respect thereto;
provided, however, that no Event of Termination shall occur under
this paragraph (f) if (i) the aggregate Outstanding Balance of
the Pool Receivables in which the Investors cease to have a valid
and perfected first priority undivided percentage ownership
interest does not exceed $250,000 at any time and (ii) the Seller
makes any deemed Collection payment with respect thereto which is
required pursuant to Section 1.04(e)(ii) on or prior to the next
Settlement Date; or
(g) The Seller or any Originator shall make a general
assignment for the benefit of creditors; or any proceeding shall
be instituted by or against the Seller or any Originator seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of
a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property and, in the case of
any such proceeding instituted against the Seller or any
Originator (but not instituted by any of them), either such
proceeding shall remain undismissed or unstayed for a period of
30 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its
property) shall occur; or the Seller or any Originator shall take
any corporate action to authorize any of the actions set forth
above in this paragraph (g); or
(h) The sum of the Receivable Interests plus the
"Receivable Interests" under the Alternate Receivables Purchase
Agreement shall for a period of two consecutive Business Days be
greater than 100%; or
(i) (i) A Reportable Event shall have occurred with
respect to a Pension Plan, (ii) the filing by Interco, any ERISA
Affiliate, or an administrator of any Plan of a notice of intent
to terminate such a Plan in a "distress termination" under the
provisions of Section 4041 of ERISA, or (iii) the receipt of
notice by Interco, any ERISA Affiliate, or an administrator of a
Plan that the Pension Benefit Guaranty Corporation has instituted<PAGE>
proceedings to terminate (or appoint a trustee to administer)
such a Pension Plan, and in each case in clauses (i) through
(iii) of this paragraph (i), such event or conditions, if any,
could subject Interco or any ERISA Affiliate to any taxes,
penalties or other liabilities which, in the opinion of the
Agent, could have a material adverse effect on the financial
condition of Interco or any ERISA Affiliate; or
(j) An "Event of Termination" or "Facility Termination
Date" shall occur under the Originator Purchase Agreement, or the
Originator Purchase Agreement shall cease to be in full force and
effect; or
(k) All of the outstanding capital stock of the Seller
shall cease to be owned, directly or indirectly, by Interco; or
(l) The Advances Outstanding under the Subordinated
Loan Agreement shall at any time for a period of two consecutive
Business Days be greater than the sum of (i) one-half of the Loss
Reserve plus (ii) one-half of the Dilution Reserve plus (iii)
one-half of the "Loss Reserve" under the Alternate Receivables
Purchase Agreement plus (iv) one-half of the "Dilution Reserve"
under the Alternate Receivables Purchase Agreement. <PAGE>
