<PAGE> 1
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------------- to ---------------
Commission File Number 1-7340
KELLWOOD COMPANY
- ---------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-2472410
- ------------------------------------- ------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
600 KELLWOOD PARKWAY, P.O. BOX 14374, ST. LOUIS, MO 63178
- --------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 576-3100
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES X NO
--- ---
Number of shares of common stock, par value $.01, outstanding at January
31, 1995 (only one class): 21,107,486
--------------
<PAGE> 2
<TABLE>
KELLWOOD COMPANY
----------------
INDEX
-----
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Condensed Consolidated Balance Sheet 3
Condensed Consolidated Statement of Earnings 4
Condensed Consolidated Statement of Cash Flows 5
Notes to Condensed Consolidated Financial
Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 10
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
------------------------------
<TABLE>
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
------------------------------------------------
(Amounts in thousands)
<CAPTION>
January 31,
------------------- April 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
ASSETS
- ------
Current assets:
Cash and time deposits $ 11,525 $ 19,946 $ 17,666
Receivables, net 196,753 144,814 180,724
Inventories 253,938 196,957 196,017
Prepaid taxes and expenses 20,179 17,000 18,650
-------- -------- --------
Total Current Assets 482,395 378,717 413,057
Property, plant and equipment, net 68,772 67,550 67,975
Intangible assets, net 134,394 105,915 107,692
Other assets 59,190 51,466 53,133
-------- -------- --------
$ 744,751 $ 603,648 $ 641,857
======== ======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
- -----------------------------------
Current liabilities:
Current portion of long-term debt $ 8,221 $ 8,955 $ 8,916
Notes payable 115,160 227 9,010
Accounts payable 71,269 48,890 63,238
Accrued expenses 46,132 64,419 69,487
-------- -------- --------
Total current liabilities 240,782 122,491 150,651
Long-term debt 145,238 154,503 153,014
Deferred income taxes and other 39,013 28,798 31,236
Shareowners' equity:
Common stock 93,219 90,028 90,657
Retained earnings 265,616 246,940 255,290
Cumulative translation adjustment (8,901) (8,997) (8,926)
-------- -------- --------
349,934 327,971 337,021
Less treasury stock, at cost (30,216) (30,115) (30,065)
-------- -------- --------
Total shareowners' equity 319,718 297,856 306,956
-------- -------- --------
$ 744,751 $ 603,648 $ 641,857
======== ======== ========
See notes to condensed consolidated financial statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS (UNAUDITED)
--------------------------------------------------------
(Amounts in thousands except per share data)
<CAPTION>
Three Months Ended Nine Months Ended
January 31, January 31,
------------------- ---------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 291,493 $ 251,600 $ 968,454 $ 892,138
Costs and expenses:
Cost of products sold 239,984 200,650 775,211 706,674
Selling, general and
administrative expenses 46,882 38,855 138,214 126,276
Amortization of intangible
assets 4,092 3,051 10,951 9,583
Gain on disposal of assets - - (104) (3,047)
Interest expense 4,862 3,626 13,244 11,841
Interest income and other, net (908) (741) (2,671) (1,512)
-------- -------- -------- --------
Earnings before income taxes (3,419) 6,159 33,609 42,323
Income taxes (1,400) 2,650 13,800 18,200
-------- -------- -------- --------
Net earnings $ (2,019) $ 3,509 $ 19,809 $ 24,123
======== ======== ======== ========
Weighted average shares
outstanding:
Primary 21,100 20,898 21,068 20,822
======== ======== ======== ========
Fully diluted 21,479 21,368 21,453 21,303
======== ======== ======== ========
Earnings per share:
Primary $ (.10) $ .17 $ .94 $ 1.16
======== ======== ======== ========
Fully diluted $ (.09) $ .17 $ .93 $ 1.14
======== ======== ======== ========
Dividends paid per share $ .15 $ .13 $ .45 $ .40
======== ======== ======== ========
See notes to condensed consolidated financial statements.
</TABLE>
-4-
<PAGE> 5
<TABLE>
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
----------------------------------------------------------
(Amounts in thousands)
<CAPTION>
Nine Months Ended
January 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Operating activities:
Net earnings $ 19,809 $ 24,123
Add (deduct) items not affecting operating
cash flows:
Depreciation and amortization 20,319 18,832
Increase in prepaid pension cost (5,547) (5,223)
Gain on disposal of assets (104) (3,047)
Deferred taxes and other (501) 996
------- -------
33,976 35,681
Changes in noncash working capital components,
net of effects of acquisitions:
Receivables 19,431 42,057
Inventories (34,577) 6,479
Prepaid expenses (371) (1,247)
Accounts payable (4,405) (16,853)
Accrued expenses (29,199) (14)
------- -------
Net cash (used for) provided by
operating activities (15,145) 66,103
------- -------
Investing activities:
Additions to property, plant and equipment (7,636) (8,570)
Proceeds from disposal of assets 4,724 3,047
Investment in subsidiaries (52,885) (23,350)
Other investing activities 529 763
------- -------
Net cash (used for) investing activities (55,268) (28,110)
------- -------
Financing activities:
Proceeds from (reduction of) notes payable, net 79,815 (104,172)
Proceeds from issuance of long-term debt - 60,000
Reduction of long-term debt (8,471) (7,041)
Dividends paid (9,483) (8,328)
Stock transactions under incentive plans 2,411 2,316
------- -------
Net cash provided by (used for)
financing activities 64,272 (57,225)
------- -------
Net (decrease) in cash and time deposits (6,141) (19,232)
Cash and time deposits - beginning of period 17,666 39,178
------- -------
Cash and time deposits - end of period $ 11,525 $ 19,946
======= =======
See notes to condensed consolidated financial statements.
</TABLE>
-5-
<PAGE> 6
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Amounts in thousands except per share data)
1. It is the opinion of management that all adjustments necessary
for a fair statement of results for the interim periods have
been reflected in the statements presented. Such adjustments
were normal and recurring in nature.
Accounting policies have been continued without change and are
described in the Summary of Significant Accounting Policies
contained in the Company's 1994 Annual Report to Shareowners.
For additional information regarding the Company's financial
condition, refer to the footnotes accompanying the annual
financial statements. Details in those notes have not changed
significantly except as a result of normal transactions in the
interim.
<TABLE>
2. Total inventory consisted of:
<CAPTION>
January 31,
------------------- April 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C>
Finished goods $ 114,491 $ 88,917 $ 81,998
Work in process 65,918 45,873 46,896
Raw materials 73,529 62,167 67,123
-------- -------- --------
$ 253,938 $ 196,957 $ 196,017
======== ======== ========
</TABLE>
If inventories were valued at current replacement costs, they
would have totalled $262,796, $207,326 and $205,188 at
January 31, 1995, January 31, 1994, and April 30, 1994,
respectively.
<TABLE>
3. Intangible assets consisted of:
<CAPTION>
January 31,
------------------- April 30,
1995 1994 1994
-------- -------- --------
<S> <C> <C> <C>
Goodwill $ 97,874 $ 68,434 $ 73,373
Other identifiable
intangibles 107,371 94,148 94,218
-------- -------- --------
205,245 162,582 167,591
Less accumulated
amortization 70,851 56,667 59,899
-------- -------- --------
$ 134,394 $ 105,915 $ 107,692
======== ======== ========
</TABLE>
4. Revolving credit agreements dated June 24, 1994, and totalling
$120,000 expire June 23, 1995 ($50,000), and June 24, 1997
($70,000). Each borrowing under the agreements bears interest
at one of several specified rates dependent upon several
factors including the Company's leverage ratio, senior debt
rating and the applicable eurodollar margin. Facility fees
can range from .1% to .25% of the committed amount
outstanding. At January 31, 1995, the entire $120,000 was
available for future borrowings. Covenants are more flexible
than those currently existing for Kellwood's notes due
insurance companies.
-6-
<PAGE> 7
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Amounts in thousands except per share data)
(Continued)
5. All of the capital stock of Goodman Knitting Co., Inc., a
designer and marketer of branded apparel, and Halmode Apparel,
Inc., a multi-divisional women's apparel maker, was purchased
for cash on July 1, 1993 and September 30, 1994, respectively.
These acquisitions were accounted for using the purchase
method and, accordingly, the results of operations are
included in the consolidated statement of earnings from the
dates of acquisition. Assets acquired and liabilities assumed
were recorded at their estimated fair value, and the excess
costs over net tangible assets are being amortized over the
estimated useful lives of the related intangible assets. Had
the purchases taken place May 1, 1993, unaudited pro forma
consolidated net sales would have been $291,493 and $274,238
for the three months ended January 31, 1995 and 1994, and
$1,029,966 and $981,630 for the nine months ended January 31,
1995 and 1994, respectively. Consolidated net earnings and
earnings per share would not have been significantly
different.
6. The gain on disposal of assets resulted from the sale of
certain excess export quota rights.
-7-
<PAGE> 8
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
OPERATING RESULTS
- -----------------
Sales reached record levels for both the quarter and nine months
ended January 31, 1995. Despite the growth in sales volume, net
earnings for the quarter declined principally due to charges booked
in the third quarter attendant with accounting for recent
acquisitions, loss on the sale of the Home Fashions division, and
costs incurred in the consolidation and repositioning of certain
underperforming domestic divisions in addition to intense margin
pressure.
Kellwood generally sells its products prior to the principal retail
selling seasons including spring, summer, fall and holiday. Sales
and earnings for the third quarter, ending January 31, have
historically been lower than other quarters of the fiscal year
since the last half of the third quarter falls between the peak
periods for the holiday and spring selling seasons.
Sales by Domestic branded operations increased 26% for the quarter
and 14% for the nine month period. The increase in branded sales
is principally attributable to recent acquisitions of Halmode and
David Dart. While these acquisitions are expected to contribute
earnings in future periods they were dilutive year to date because
of initial purchase accounting requirements. Sales from the
branded portfolio accounted for 67% of Kellwood's total volume for
the nine months ended January 31, 1995. This compares to 64% for
the same period last year and puts the Company well on its way to
achieving its goal of 75% from the branded sector.
Sales by Domestic private label operations increased 2% for the
quarter and 5% for the nine month period. Apparel sales, which
accounted for approximately 90% of the Domestic private label
sales, were up a strong 15% for the nine month period due primarily
to growth in the private label programs with several key retailers.
The Home Fashions business which represented the remaining portion
of the Domestic Private Label portfolio was sold on December 8,
1994 at an after tax loss of approximately $1 million.
Sales by Far East operations were flat for the quarter and down 8%
for the nine month period. Weak demand for woven dress shirts,
intense margin pressure, and production difficulties in Saipan have
all contributed to lower Far East margins. On February 23, 1995
Kellwood's Board of Directors announced a plan to close the plant
in Saipan. The Saipan plant was originally set up for long run
basic shirt products. These products are in weak demand and at
very low margins in the market place. The situation is further
aggravated by a combination of labor shortages and actual and
expected minimum wage rate increases. Under these conditions,
keeping the plant open is cost prohibitive. The Company will wind-
down production and close the facility by the fall of this year.
The closure of the operation is expected to result in a one time
business and facilities realignment charge not to exceed $14
million after tax which will be recorded in Kellwood's fourth
quarter ending April 30, 1995.
Last year's nine month results were favorably impacted by a $3
million gain on the disposal of certain excess export quota rights.
This year the value of Hong Kong quota was severely depressed. As
a result, Kellwood only sold a small amount of excess quota
realizing a negligible gain of $0.1 million.
The increase in amortization expense results from increased
intangible assets associated with recent acquisitions. The
increase in interest expense correlates with the increase in
average outstanding debt. The decrease in the effective tax rate
is due to changes in the earnings mix.
-8-
<PAGE> 9
KELLWOOD COMPANY AND SUBSIDIARIES
---------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
(Continued)
Financial condition
- -------------------
The current ratio was 2.0 to 1 at January 31, 1995 as compared to
2.7 to 1 at April 30, 1994 and 3.1 to 1 at January 31, 1994. The
decrease in the current ratio was primarily due to increased notes
payable associated with recent acquisitions. Accounts receivable
and inventory levels have also increased as a result of recent
acquisitions and increased sales.
The increase in the cash used for investing activities primarily
resulted from the acquisition of Halmode Apparel, Inc. on
September 30, 1994. This acquisition also contributed to the
increase in intangible assets. Viable acquisition candidates that
would expand and complement Kellwood's existing portfolio of
companies are continually being considered.
Total debt represents 46% of capitalization at January 31, 1995 as
compared to 36% at April 30, 1994 and 35% at January 31, 1994. The
increase resulted from recent acquisitions and increased working
capital needed to fund internal growth. In June, 1994 Kellwood
negotiated a $120 million fully committed revolving credit
agreement. At January 31, 1995 the entire $120 was available for
future borrowings.
Cash provided by operations and borrowings under various lines of
credit are the primary sources of liquidity. The combined
operating, cash and equity position of the Company should continue
to provide the capital flexibility necessary to fund future
opportunities as well as to meet existing obligations.
OUTLOOK
- -------
On a total company basis, Kellwood expects sales to be strong in
the last quarter of the year. However, earnings will be negatively
impacted in the fourth quarter due to the consolidation and
repositioning of certain domestic divisions initiated during the
third quarter, continued margin pressure, and the charge related to
closing the Saipan plant. Many of these recent actions, while
financially detrimental to the current fiscal year, will better
position Kellwood in the year ahead and beyond.
-9-
<PAGE> 10
PART II. OTHER INFORMATION
---------------------------
KELLWOOD COMPANY
----------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
<TABLE>
a) EXHIBITS:
<CAPTION>
S.E.C. Exhibit
Reference No. Description
------------- -----------------------------------
<C> <S>
10.8 Reimbursement Agreement between
Kellwood Company, certain banking
institutions, and the Bank of
America, N.T. & S.A., as the Agent,
dated December 30,1994, filed
herewith.
27 Financial Data Schedule, filed
herewith.
</TABLE>
b) REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the three months
ended January 31, 1995.
-10-
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be duly signed
on its behalf by the undersigned thereunto duly authorized.
KELLWOOD COMPANY
March 3, 1995 /s/ Thomas H. Pollihan
---------------------------------
Thomas H. Pollihan
Vice President, Secretary and
General Counsel
March 3, 1995 /s/ James C. Jacobsen
---------------------------------
James C. Jacobsen
Vice Chairman
(Chief Financial Officer)
-11-
<PAGE> 1
EXHIBIT 10.8
REIMBURSEMENT AGREEMENT
between
KELLWOOD COMPANY,
as the Company,
BANK OF AMERICA ILLINOIS,
as Issuing Bank,
THE BANKING INSTITUTIONS PARTY HERETO,
as the Banks,
and
BANK OF AMERICA N.T. & S.A.,
as the Agent
dated
December 30, 1994
<PAGE> 2
REIMBURSEMENT AGREEMENT
THIS AGREEMENT is made as of December 30, 1994 between
KELLWOOD COMPANY, a Delaware corporation (the "Company") the
undersigned banking institutions which are designated on the
signature pages as "Banks" (in such capacity, herein collectively
called the "Banks" and individually called a "Bank"), BANK OF
AMERICA ILLINOIS, an Illinois banking corporation, as letter of
credit issuing bank (hereinafter, together with any successor
thereto in such capacity, called the "Issuing Bank") and BANK OF
AMERICA N.T. & S.A. ("BofA"), as Agent for the Banks (hereinafter,
in such capacity, together with any successors thereto in such
capacity, called the "Agent").
W I T N E S S E T H:
WHEREAS, the Company is desirous that the Issuing Bank issue
from time to time irrevocable Letters of Credit, as defined below,
in all cases for the account of the Company, whether for its use or
for the use of its Designated Affiliates, as defined below, as
applicant;
WHEREAS, the Issuing Bank is willing to issue Letters of
Credit on the terms and conditions set forth herein and on the
further condition that the representations, warranties, covenants,
and events of default contained in that certain U.S. $70,000,000
Long-Term Credit Agreement, dated as of June 24, 1994, among the
Company, certain commercial lending institutions and The Bank of
Nova Scotia, as Agent (as amended, modified or supplemented from
time to time the "Credit Agreement") be incorporated by reference
herein;
WHEREAS, each Bank desires to purchase from the Issuing Bank
an undivided ownership participation in the Letters of Credit
issued by the Issuing Bank pursuant to this Agreement and in and to
the Issuing Bank's obligations hereunder and thereunder and an
undivided ownership interest in the Company's Reimbursement
Obligations hereunder; and
WHEREAS, the Issuing Bank is willing to sell such
participations to the Banks on the terms and subject to the
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for
other valuable consideration, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; FINANCIAL TERMS
1.1 Definitions. In addition to the terms defined elsewhere
-----------
in this Agreement, the following terms shall have the meanings
<PAGE> 3
indicated for purposes of this Agreement (such meanings to be
equally applicable to both the singular and plural forms of the
terms defined):
"Affiliate" and "Affiliates" mean, when used with respect to
--------- ----------
any Person, respectively, (a) any Person which, directly or
indirectly, controls, is controlled by, or is under common control
with, such first person, and (b) all such Persons. As used herein,
"control" means possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether
through ownership of voting securities, by contract or otherwise).
"Agency Fee Letter" is defined in Section 3.1.
----------------- -----------
"Agent" has the meaning assigned to that term in the preamble.
----- --------
"Agent-Related Persons" means BofA in its capacity as Agent
---------------------
and any successor agent arising under Section 12.9, together with
------------
their respective Affiliates, and the officers, directors,
employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agreement" means this Agreement, as the same may at any time
---------
be amended or modified and in effect.
"Application" means an Application for Irrevocable Documentary
-----------
Credit (Commercial), attached hereto as Exhibit A.
"Banks" and "Bank" are defined in the preamble.
----- ---- --------
"Bank's Interest" is defined in Section 4.
--------------- ---------
"Base Rate" means, for any day, the higher of: (a) 0.50% per
---------
annum plus the latest Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate."
(The "reference rate" is a rate set by BofA based upon various
factors including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate.)
"Beneficiary" means the beneficiary named in a Letter of
-----------
Credit.
"BofA" is defined in the preamble.
---- --------
"Business Day" means any day other than a Saturday, Sunday or
------------
other day on which commercial banks in New York, New York, Chicago,
Illinois or San Francisco, California are authorized or required to
close.
2
<PAGE> 4
"Cash Collateral" means cash deposited in a non-interest
---------------
bearing account by the Company with the Agent.
"Continuing L/C Agreement" means the Continuing Documentary
------------------------
Letter of Credit Agreement (Electronic Access-Confirm L/C Express)
attached hereto as Exhibit B and the related Master Confirm
Agreement and Software Sublicense Agreement, pursuant to which the
Company or its Designated Affiliates will give Issuance Requests to
the Issuing Bank.
"Credit Agreement" is defined in the second recital.
---------------- --------------
"Company" is defined in the preamble hereto.
------- --------
"Designated Affiliate" means an Affiliate listed in Exhibit E
--------------------
attached hereto, authorized by the Company to give Issuance
Requests to the Issuing Bank in connection with Letters of Credit
issued for such Affiliate, as applicant, and for the account of the
Company, as account party.
"Effective Date" means that date that all of the conditions in
--------------
Section 10.1 are satisfied.
- ------------
"Eligible Assignee" means (i) a commercial bank organized
-----------------
under the laws of the United States, or any state thereof, and
having a combined capital and surplus of at least $100,000,000;
(ii) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic
Cooperation and Development (the "OECD") or a political subdivision
of any such country, and having a combined capital and surplus of
at least $100,000,000, provided that such bank is acting through a
branch or agency located in the United States; or (iii) a Person
that is primarily engaged in the business of commercial banking and
that is (A) a subsidiary of a Bank, (B) a Subsidiary of a Person of
which a Bank is a Subsidiary, or (C) a Person of which a Bank is a
Subsidiary.
"Event of Default" means any of the events described in
----------------
Section 11.1.
- ------------
"Existing Credit Agreement" is defined in Section 8.
------------------------- ---------
"Expiration Date" means December 28, 1995.
---------------
"Facility Fee" is defined in Section 3.1.
------------ -----------
"Federal Funds Rate" means, for any day, the rate set forth in
------------------
the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Bank of New
York (including any such successor, "H.15(519)") on the preceding
Business Day opposite the caption "Federal Funds (Effective)"; or,
3
<PAGE> 5
if for any relevant day such rate is not so published on any such
preceding Business Day, the rate for such day will be the
arithmetic mean as determined by the Agent of the rates for the
last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York City time) on that day by each of three leading
brokers of Federal funds transactions in New York City selected by
the Agent.
"Fee Letter" is defined in Section 2.3.
---------- -----------
"Indemnified Parties" is defined in Section 13.6.
------------------- ------------
"Indemnified Liabilities" is defined in Section 13.6.
----------------------- ------------
"Issuance Date" is defined in Section 2.1(b).
------------- --------------
"Issuance Request" means a request, given in accordance with
----------------
the terms of this Agreement and the Continuing L/C Agreement, to
issue, amend, modify, extend or renew a Letter of Credit,
including, without limitation, any instructions as to the
disposition of documents and any unutilized funds, waiver of
discrepancies or instructions otherwise relating to a Letter of
Credit.
"Issuing Bank" is defined in the preamble.
------------ --------
"L/C Documents" means this Agreement, any Application, the
-------------
Continuing L/C Agreement, any Letter of Credit, any Issuance
Request and all other documents delivered to the Agent, the Issuing
Bank or any Bank in connection herewith.
"Letter of Credit" means any letter of credit issued by the
----------------
Issuing Bank pursuant to clause (a) of Section 2.1, including,
-----------
without limitation, any letter of credit issued by the Issuing Bank
for a Designated Affiliate, as applicant.
"Letter of Credit Availability" means, at any time, an amount
-----------------------------
equal to the excess of (i) $100,000,000 over (ii) the then Letters
of Credit Outstanding. ----
"Letter of Credit Commitment" means, at the time any
---------------------------
determination thereof is to be made, the amount of the Banks'
aggregate commitment under this Agreement to make credit available
to the Company by means of outstanding Letters of Credit in an
aggregate amount not to exceed $100,000,000.
"Letters of Credit Outstanding" means, at any time, an amount
-----------------------------
equal to the sum of
(a) the aggregate Stated Amount at such time of all
Letters of Credit then outstanding and undrawn (as such
4
<PAGE> 6
aggregate Stated Amount shall be adjusted, from time to time,
as a result of drawings, the issuance of Letters of Credit, or
otherwise),
plus
----
(b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations.
"Majority Banks" means, at the time any determination thereof
--------------
is to be made and for any specific purpose, any combination of
Banks having Participation Commitments which at such time aggregate
more than 66 2/3 percent of the Letter of Credit Commitment at such
time.
"Maturity Date" means (a) June 28, 1996 for any Letter of
-------------
Credit with a Stated Expiry Date of 180 days or less after the
Issuance Date or (b) December 29, 1996 for any Letter of Credit
(issued in accordance with the proviso to Section 2.1(b)) with a
Stated Expiry Date no later than one year (but no less than 181
days) from the Issuance Date.
"Obligations" means all obligations of the Company to the
-----------
Agent, the Issuing Bank or any Bank under or in connection with
this Agreement, and with respect to Designated Affiliates and the
Company, the other L/C Documents, or any other documents executed
pursuant hereto, including, without limitation, the Reimbursement
Obligations, howsoever created, arising or evidenced, whether
direct or indirect, absolute or contingent, or now or hereafter
existing, or due or to become due.
"Participation Commitment" means, when used with reference to
------------------------
any Bank at the time any determination thereof is to be made, the
amount of such Bank's commitment hereunder to purchase a risk
participation in an outstanding Letter of Credit, which, subject to
Section 13.9, shall be the amount set opposite the name of such
Bank's signature below.
"Payment Demand" means any demand for payment including,
--------------
without limitation, any draft and other documents required by the
terms of and presented by a Beneficiary under a Letter of Credit.
"Person" and "Persons" mean, respectively, (a) an individual
------ -------
or a corporation, partnership, trust (including a business trust),
incorporated or unincorporated association, joint venture, joint
stock company, government (or an agency or political subdivision
thereof) or other entity of any kind, and (b) any two or more of
any of the foregoing, collectively.
"Pro Rata Share" means, on any date, when used with reference
--------------
to any Bank and any described aggregate or total amount, an amount
5
<PAGE> 7
equal to the result obtained by multiplying such described
aggregate or total amount by a fraction, the numerator of which
shall be such Bank's Participation Commitment on such date and the
denominator of which shall be the Letter of Credit Commitment on
such date.
"Reimbursement Account" is defined in Section 2.4.
--------------------- -----------
"Reimbursement Obligation" is defined in Section 2.4.
------------------------ -----------
"Relevant Taxes" means all taxes other than taxes on the net
--------------
income of the Issuing Bank or any Bank pursuant to the income tax
laws of the jurisdiction where the Issuing Bank's or such Bank's
principal office is located.
"Replacement Issuing Bank" is defined in Section 6.
------------------------ ---------
"Responsible Officer" means the Chief Executive Officer, the
-------------------
Vice Chairman, President, Vice President-Controller, Vice
President-Treasurer or General Counsel of the Company.
"Stated Amount" of each Letter of Credit means the "Stated
-------------
Amount" as defined therein.
"Stated Expiry Date" is defined in Section 2.1.
------------------ -----------
"Subsidiary" means with respect to any Person, a corporation
----------
or other business entity if shares constituting a majority of its
outstanding capital stock (or other form of ownership) are owned
directly or indirectly at the time in question by such Person or
another subsidiary of such Person or any combination of the
foregoing.
"UCP" is defined in Section 2.7.
--- -----------
"Unmatured Event of Default" means any event or condition
--------------------------
which with the lapse of time or giving of notice to the Company, or
both, would constitute an Event of Default.
1.2 Financial Terms. Unless otherwise defined or the context
---------------
otherwise requires, all financial and accounting terms shall be
defined in accordance with generally accepted accounting
principles.
SECTION 2. LETTERS OF CREDIT
2.1 Issuance Requests. Subject to the terms of this
-----------------
Agreement, all Issuance Requests shall be made, and the Letters of
Credit shall be issued, in accordance with the terms of the
Continuing L/C Agreement. The Company, or any Designated
Affiliate, as applicable, by delivering to the Issuing Bank an
6
<PAGE> 8
Issuance Request on or before 3 p.m., Chicago time, may request
from time to time prior to the Expiration Date, that the Issuing
Bank issue irrevocable documentary letters of credit in such form
as may be requested by the Company and approved by the Issuing Bank
in support of financial obligations of the Company incurred in the
Company's or its Designated Affiliate's ordinary course of their
import business and which are described in such Issuance Request.
The Issuing Bank shall issue its Letter of Credit on the date of
receipt of such Issuance Request. The Issuing Bank, upon receipt
by the Issuing Bank of Issuance Requests made by Company after 3
p.m., Chicago time, shall use its best efforts to issue its Letter
of Credit on that date, but may otherwise issue the Letter of
Credit on the next succeeding Business Day. The Issuing Bank shall
notify the Agent of the Stated Amount and material terms of each
Letter of Credit prior to issuance of any Letter of Credit. Each
Letter of Credit requested shall by its terms:
(a) be issued in a Stated Amount which
(i) is at least $2,500;
(ii) does not exceed (or would not exceed) the then
Letter of Credit Availability; and
(b) be stated to expire on a date (its "Stated Expiry
-------------
Date") no later than the earlier of 180 days from its date of
----
issuance (the "Issuance Date") and the Maturity Date;
-------------
provided, however, that the Stated Expiry Date of Letters of
Credit issued by the Issuing Bank in an aggregate amount not
to exceed $30,000,000 may be a date no later than the earlier
of one year from the Issuance Date and the Maturity Date; and
(c) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the
Issuing Bank from the Beneficiary thereunder that
all obligations covered thereby have been
terminated, paid, or otherwise satisfied in full,
or
(ii) reduce in part immediately and to the extent
the Beneficiary thereunder has notified the Issuing
Bank that the obligations covered thereby have been
paid or otherwise satisfied in part.
So long as no Event of Default or Unmatured Event of Default has
occurred and is continuing and prior to the Expiration Date, the
Company may request the Issuing Bank, in accordance with the terms
of the Continuing L/C Agreement, to extend the Stated Expiry Date
of a Letter of Credit for an additional period not to exceed the
earlier of 180 days (or 1 year in the case of Letters of Credit
7
<PAGE> 9
issued in accordance with the proviso to Section 2.1(b)) from its
date of extension and the Maturity Date.
2.2 Issuances and Extensions. On the terms and subject to
------------------------
the conditions of this Agreement and the Continuing L/C Agreement,
the Issuing Bank shall issue Letters of Credit, and extend the
Stated Expiry Dates of outstanding Letters of Credit, in accordance
with the Issuance Requests made therefor. The Issuing Bank will
make available the original of each Letter of Credit which it
issues in accordance with the Issuance Request therefor to the
Beneficiary thereof and will notify the Beneficiary under any
Letter of Credit of any extension of the Stated Expiry Date
thereof. On the last Business Day of each calendar month, the
Agent will provide a summary to the Banks of (i) the Letters of
Credit Outstanding, (ii) the number of Letters of Credit issued and
outstanding, and (iii) any other information reasonably requested
by a Bank.
2.3 Expenses. The Company agrees to pay to the Issuing Bank
--------
for its own account all administrative expenses of the Issuing Bank
in connection with the issuance, maintenance, modification (if any)
and administration of each Letter of Credit issued by the Issuing
Bank upon demand from time to time in accordance with the fee
schedule set forth in that letter agreement between the Company and
the Issuing Bank dated December 30, 1994 (the "Fee Letter").
----------
2.4 Letter of Credit Drawings. The Company hereby authorizes
-------------------------
the Issuing Bank to honor and pay Payment Demands conforming with
the terms of each Letter of Credit and under, or purporting to be
under, a Letter of Credit. The Company agrees to reimburse the
Issuing Bank (and any Bank which has funded its Pro Rata Share) for
any payment made by the Issuing Bank under the Letters of Credit
(including Letters of Credit issued for any Designated Affiliate as
applicant) pursuant to any such Payment Demand on the later of
either two (2) Business Days after such payment or upon demand for
reimbursement. All payments shall include interest on the amount
so paid by the Issuing Bank from and including the date paid by the
Issuing Bank to but not including the date the Issuing Bank is
reimbursed therefor by the Company, at the Base Rate in effect from
time to time plus two percent (2%); provided, however, that if any
-------- -------
payment shall be reimbursed to the Issuing Bank on the same date
payment is made by the Issuing Bank, no interest shall be payable
on the amount so paid. Such reimbursement to the Issuing Bank
shall be made by a transfer of immediately available funds into an
account maintained at the Issuing Bank (the "Reimbursement
-------------
Account") or in such other account at the Issuing Bank as
- -------
designated by the Issuing Bank to the Company in writing. The
Company's obligations under this Section 2.4 shall be referred to
as the "Reimbursement Obligation."
------------------------
8
<PAGE> 10
2.5 Unconditional Reimbursement Obligations. Except as
---------------------------------------
otherwise expressly provided herein, the payment by the Company of
the Reimbursement Obligation under this Agreement shall be
absolute, unconditional, and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement,
notwithstanding the following circumstances:
(a) any lack of validity or enforceability of the
Letters of Credit, this Agreement, or any other instrument,
document, or agreement issued or entered into in connection
therewith;
(b) the existence of any claim, set off, defense or
other right of the Company against the Issuing Bank, the
Agent, any Bank or any other person or entity, whether in
connection with this Agreement or otherwise;
(c) any statement, certification, or 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
whatsoever provided each Payment Demand examined by the
Issuing Bank appears on it face to be in compliance with the
terms of the applicable Letter of Credit;
(d) any amendment or waiver by the Company of or any
consent by the Company or any waiver or consent by any
Designated Affiliate to any discrepancy from the terms and
conditions of any Letter of Credit; or
(e) any other circumstance or happening whatsoever,
which is similar to any of the foregoing.
2.6 Correspondence at Company's Risk. Notwithstanding
--------------------------------
Section 13.4, all directions and correspondence relating to the
- ------------
Letters of Credit are to be sent at the Company's risk and the
Issuing Bank does not assume any responsibility for any inaccuracy,
interruption, error, or delay in transmission or delivery by mail,
courier, telegraph or cable, provided that the Company shall not
--------
bear the risk of any such inaccuracy, interruption, error, or delay
which occurs while any such correspondence is under the direct
control of the Issuing Bank.
2.7 Law Governing the Letters of Credit. The Letters of
-----------------------------------
Credit shall be governed by the laws of the State of Illinois,
including, but not limited to, the Illinois Uniform Commercial
Code, as the same may be amended from time to time, and by the
Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500,
as the same may be amended or replaced from time to time by
subsequent Congresses of the International Chamber of Commerce (the
9
<PAGE> 11
"UCP"). In the event of any conflict between the Illinois Uniform
---
Commercial Code and the UCP, the Illinois Uniform Commercial Code
shall govern.
2.8 Trustee in Bankruptcy; Receiver. The Issuing Bank may
-------------------------------
receive, accept and pay, as complying with the terms of any Letter
of Credit, any Payment Demands, otherwise in order, which may be
signed by the trustee in bankruptcy, or the receiver for any of the
property of, a Beneficiary or any other successor by operation of
law.
2.9 Termination of Continuing L/C Agreement. Effective upon
---------------------------------------
the termination of the Continuing L/C Agreement pursuant to
paragraph 8 thereof, the Letter of Credit Commitment shall
terminate and the Facility Fee shall be calculated upon the Letters
of Credit Outstanding. Any termination of the Continuing L/C
Agreement shall in no way affect any outstanding Letters of Credit,
the Reimbursement Obligations or any other obligations and
liabilities incurred hereunder, whether or not then due or payable.
SECTION 3. FEES; LOAN ACCOUNT
3.1 Fees. In consideration of the Issuing Bank's issuance of
----
the Letters of Credit, the Company agrees to pay the Agent for the
benefit of the Banks a facility fee (the "Facility Fee") equal to
------------
one tenth of one percent (.10%) per annum of (i) the Letter of
Credit Commitment or (ii) the Letters of Credit Outstanding after
the Expiration Date, or if earlier, in the event that the
Continuing L/C Agreement has expired or been terminated as
described in Section 2.9. In any case, such Facility Fee shall be
-----------
payable in arrears on the last Business Day of each calendar
quarter. The Facility Fee shall be computed for the actual number
of days elapsed on the basis of a year of 360 days. The Company
shall also pay an agency fee to the Agent for the Agent's own
account, as required by the letter agreement (the "Agency Fee
Letter") between the Company and the Agent. ----------
- ------
3.2 Loan Account. Principal, interest and all other sums
------------
owing to the Issuing Bank and the Banks hereunder shall be
evidenced by entries in the respective books and records maintained
by the Issuing Bank and each Bank. Each payment on and any other
credits with respect to principal, interest and all other sums
owing to the Issuing Bank and each Bank hereunder shall be
evidenced by entries in such respective books and records. The
failure to so record, or any error in so recording, any such amount
shall not, however, limit or otherwise affect the obligations of
the Company hereunder. The Company hereby agrees that such records
shall be presumptive evidence of the amounts owed, absent manifest
error on the part of the Issuing Bank or any Bank. The Issuing
Bank and the Agent will provide the Company with written advices of
10
<PAGE> 12
credit and debit, together with quarterly summary statements,
showing calculation of any amounts due.
SECTION 4. PURCHASE AND SALE OF PARTICIPATIONS IN LETTERS OF
CREDIT
On the terms and subject to the conditions of this Agreement,
each Bank hereby purchases from the Issuing Bank, and the Issuing
Bank hereby sells to each Bank, an undivided participation in and
to each Letter of Credit and the Obligations of the Company under
this Agreement with respect to each Letter of Credit equal to the
proportion that the relevant Bank's Participation Commitment bears
to the Letter of Credit Commitment; provided, however, that any
-------- -------
interest accruing under Section 2.4 with respect to any payment or
-----------
disbursement made by the Issuing Bank under the outstanding Letter
of Credit shall be for the account of the Issuing Bank, and not for
the account of any Bank, unless and until the Issuing Bank shall
have received funds from the Agent for the account of such Bank in
an amount equal to such Bank's Pro Rata Share of such payment or
disbursement pursuant to Section 5.1, it being understood and
-----------
agreed that any funds received by the Issuing Bank after 1:00 p.m.,
Chicago time, on any day shall for purposes of this proviso be
deemed to have been received on the next succeeding Business Day.
The Company and the Issuing Bank acknowledge and agree that, upon
payment by a Bank of its Pro Rata Share of any payment or
disbursement made by the Issuing Bank under any outstanding Letter
of Credit honoring a demand for payment by a Beneficiary
thereunder, such Bank: (a) will have an undivided ownership
interest in the Company's Reimbursement Obligation with respect
thereto, including interest accruing thereon, in the amount of its
Pro Rata Share (a "Bank's Interest"); (b) will be a direct creditor
of the Company, and not of the Issuing Bank, with respect to its
Bank's Interest; (c) the Bank's Interest will constitute part of
the Obligations of the Company to such Bank; and (d) may exercise
all of its rights of payment (including offset) with respect to its
Bank's Interest.
SECTION 5. LETTER OF CREDIT OPERATIONS
5.1 Letter of Credit Operations.
---------------------------
(a) Demand and Payment to Beneficiary. The Issuing Bank
---------------------------------
shall, promptly following its receipt thereof, examine all
documents purporting to represent a Payment Demand by a
Beneficiary under any outstanding Letter of Credit to
ascertain that the same appear on their face to be in
conformity with the terms and conditions of such outstanding
Letter of Credit. If, after examination, the Issuing Bank
shall have determined that a Payment Demand under such
outstanding Letter of Credit does not conform to the terms and
conditions of such outstanding Letter of Credit, the Issuing
Bank shall, as soon as reasonably practicable, give notice to
11
<PAGE> 13
such Beneficiary to the effect that such Payment Demand was
not in accordance with the terms and conditions of such
outstanding Letter of Credit, stating the reasons therefor.
Thereupon, such Beneficiary may attempt to correct any such
non-conforming Payment Demand under such outstanding Letter of
Credit if, and to the extent that, such Beneficiary is
entitled (without regard to the provisions of this sentence)
and able to do so. After determining that a Payment Demand
under such outstanding Letter of Credit conforms to the terms
and conditions thereof, the Issuing Bank shall make available
to such Beneficiary, in immediately available funds (which
shall be the Issuing Bank's own funds, and not funds of the
Company on deposit with the Issuing Bank), the amount so
demanded in accordance with the terms of such outstanding
Letter of Credit. The Issuing Bank's obligation to honor a
conforming Payment Demand under such outstanding Letter of
Credit is a separate obligation of the Issuing Bank and is
independent of the Company's obligations to the Issuing Bank
with respect to such outstanding Letter of Credit including,
without limitation, the Company's obligations under Sections
2.4 and 2.5. --------
--- ---
(b) Reimbursement by Banks. In the event that any
----------------------
failure by the Company to reimburse the Issuing Bank for any
such payment or disbursement shall continue until noon,
Chicago time on the Business Day immediately succeeding the
day on which such reimbursement is required, the Issuing Bank
shall prior to 1:00 p.m., Chicago time on such immediately
succeeding Business Day send to the Agent a written notice (or
if given by telecopier or telephone confirmed in writing
promptly thereafter) demanding payment from each Bank of such
Bank's Pro Rata Share of such unreimbursed payment or
disbursement. After receiving such demand from the Issuing
Bank, the Agent shall promptly (and, if the Agent receives
such demand prior to 1:00 p.m. Chicago time on a Business Day,
then no later than 4:00 p.m. Chicago time on such Business
Day) send to each Bank a notice demanding payment of such
Bank's Pro Rata Share of such payment or disbursement. On
receipt of such notice from the Agent, each Bank shall,
forthwith, make available to the Agent such Bank's Pro Rata
Share of such unreimbursed payment or disbursement at the
Agent's address specified in or for the purpose of this
Agreement, in immediately available funds, before 10:00 a.m.,
Chicago time, on the Business Day immediately succeeding the
day on which such demand by the Agent was made. On receipt of
any such amount from a Bank, the Agent will promptly pay such
amount to the Issuing Bank, and, provided that the Agent has
received any such amount prior to 10:00 a.m. Chicago time on
any Business Day, the Agent will pay such amount to the
Issuing Bank prior to 1:00 p.m. Chicago time on such Business
Day. Each Bank shall indemnify and hold harmless the Agent
and the Issuing Bank from and against any and all losses,
12
<PAGE> 14
liabilities (including liabilities for penalties), actions,
suits, judgments, demands, damages, costs and expenses
(including, without limitation, reasonable attorneys' fees and
expenses) resulting from any failure on the part of such Bank
to provide, or from any delay in providing, the Agent and
Issuing Bank with such Bank's Pro Rata Share of the amount of
any payment or disbursement made by the Issuing Bank under any
outstanding Letter of Credit in accordance with the provisions
of this clause (b).
----------
(c) Obligations of Banks are Unconditional. The
--------------------------------------
obligation of each Bank set forth in clause (b) of this
----------
Section 5.1 to provide the Issuing Bank with such Bank's Pro
-----------
Rata Share of the amount of any payment or disbursement made
by the Issuing Bank under any outstanding Letter of Credit
honoring a Payment Demand made by a Beneficiary thereunder
which conforms with the terms thereof, shall be absolute,
unconditional and irrevocable under any and all circumstances
whatsoever.
(d) Repayment of Banks following Reimbursement by the
-------------------------------------------------
Company. If any Bank shall make a payment to the Issuing Bank
-------
under clause (b) of this Section 5.1 in respect of an amount
---------- -----------
drawn under a Letter of Credit and the Issuing Bank shall
thereafter receive any reimbursement for all or any part of
such amount, as provided in Section 2.4, the Issuing Bank
-----------
shall hold any amounts so received in trust for the Issuing
Bank and such Bank, and shall promptly pay such amounts to the
Agent for distribution to the Issuing Bank and such Bank of
its Pro Rata Share of such amounts. Any interest accrued on
the amount drawn under such Letter of Credit and received by
the Issuing Bank as provided in Section 2.4 shall be held by
-----------
the Issuing Bank in trust for the Issuing Bank and those Banks
who have paid their Pro Rata Shares of such amounts and shall
be promptly paid to the Agent for distribution to such Banks.
(e) Payment by Agent. Unless the Agent shall have been
----------------
notified by any party hereto (a "payor"), prior to the date on
which such payor is obligated to make a payment hereunder to
the Agent for the account of any other party hereto (a
"payee"), that such payor does not intend to make such payment
available to the Agent prior to the time when such payment is
due, the Agent may assume that such payor has made such
payment available to the Agent prior to the time when such
payment is due and the Agent in its sole discretion may, but
shall not be obligated to, make available to such payee a
corresponding amount on such date. If such payment is not in
fact made available to the Agent by such payor prior to the
time on which it is due, the Agent shall be entitled to
recover such corresponding amount on demand from such payor
together with interest thereon, for each day from such date
until the date such amount is paid to the Agent at the Federal
13
<PAGE> 15
Funds Rate (or, if the Company is the payor, at the rate set
forth in Section 2.4). If such payor does not pay such
-----------
corresponding amount upon the Agent's demand, the Agent shall
promptly notify such payee and such payee shall immediately
repay such corresponding amount to the Agent with interest at
the Federal Funds Rate. Nothing in this section shall be
deemed to relieve any party from its obligation to make any
payment hereunder or to prejudice any rights which any payee
may have against any payor as a result of any default by such
payor hereunder.
SECTION 6. REPLACEMENT OF ISSUING BANK
In the event that the Issuing Bank shall default in the
performance of any of its obligations hereunder or under any Letter
of Credit then, provided no Event of Default shall have occurred
and be continuing, the Company may nominate another bank (the
"Replacement Issuing Bank") to replace the Issuing Bank under this
------------------------
Agreement. Each such Replacement Issuing Bank must be approved in
writing by the Agent and the Majority Banks, such approval not to
be unreasonably withheld. Following such nomination and approval
of a Replacement Issuing Bank, the parties hereto and such
Replacement Issuing Bank will negotiate in good faith to amend this
Agreement and the other L/C Documents so as to remove the Issuing
Bank from its position as Issuing Bank hereunder and to substitute
such Replacement Issuing Bank as Issuing Bank hereunder in place of
the Issuing Bank, provided that: (i) nothing herein shall
-------------
prejudice the right of the Issuing Bank to receive payment of all
amounts due to it hereunder up to and including the day on which it
ceases to have any further obligations as Issuing Bank hereunder
and under the Letters of Credit then outstanding, but the Issuing
Bank shall not be entitled to any further payment as a condition of
its ceasing to be the Issuing Bank hereunder; and (ii) nothing
herein shall relieve or discharge the Issuing Bank from any
obligation hereunder or under the Letters of Credit then
outstanding unless (1) such obligation is expressly assumed by the
Replacement Issuing Bank; and (2) the Company, the Agent and each
Bank shall have consented in writing to such assumption and
discharge.
SECTION 7. PAYMENTS
7.1 General Payment Procedures. Except as otherwise
--------------------------
provided in this Agreement, all payments to be made by the Company
to the Agent, the Issuing Bank or any Bank hereunder shall be made
to the Agent at its address specified in or for the purpose of this
Agreement, for the account of the Agent, the Issuing Bank or such
Bank, as the case may be, in immediately available funds. All
payments to be made by the Company to the Issuing Bank in respect
of payments made under or in respect of any outstanding Letter of
Credit, including, without limitation, interest thereon pursuant to
Section 2.4, shall be made to the Issuing Bank by payment in
- -----------
14
<PAGE> 16
immediately available funds into the Reimbursement Account. All
payments out of the Reimbursement Account in respect of payments
made under or in respect of the outstanding Letters of Credit
(including, without limitation, interest thereon as aforesaid)
shall be made (i) to the Issuing Bank solely for the account of the
Issuing Bank, to the extent that the Issuing Bank has not
theretofore been reimbursed therefor by the Banks and, (ii) to the
extent that the Issuing Bank has been so reimbursed by the Banks,
to the Issuing Bank for the account of the Issuing Bank and the
Banks ratably in accordance with their respective Pro Rata Shares;
provided, however, that each Bank shall be entitled to its Pro Rata
- -------- -------
Share of any payment in respect of such interest accrued on any day
only if the Issuing Bank shall have received the amount of any such
reimbursement due from such Bank prior to 1:00 p.m., Chicago time,
on such day. The Issuing Bank shall promptly remit in immediately
available funds to the Agent, for the account of each Bank, such
Bank's share of all such payments received by the Issuing Bank for
the account of such Bank.
7.2 Payments to the Issuing Bank. All amounts payable by the
----------------------------
Company to the Issuing Bank shall be made to the Reimbursement
Account not later than noon, Chicago time, on the date due and
funds received on any day after the time specified herein shall be
deemed to have been received by the Issuing Bank on the next
succeeding Business Day.
7.3 Payment to Agent. All amounts payable to the Agent by
----------------
the Company shall be made to the Agent at its address specified in
or for the purpose of this Agreement not later than noon, Chicago
time, on the date due and funds received after the time specified
herein shall be deemed to have been received by the Agent on the
next succeeding Business Day. The Agent shall promptly remit in
immediately available funds (i) to the Issuing Bank all such
payments received by the Agent for the account of the Issuing Bank
and (ii) to each Bank such Bank's share of all such payments
received by the Agent for the account of such Bank. Provided that
the Agent has received any such amount from the Company for the
account of the Issuing Bank or a Bank prior to noon, Chicago time,
on any Business Day, the Agent will pay such amount to the Issuing
Bank or such Bank, as the case may be, prior to 3:00 p.m., Chicago
time, on such Business Day.
7.4 Net Payments. All payments by the Company of any amounts
------------
in respect of a payment or disbursement made by the Issuing Bank in
respect of the outstanding Letters of Credit, including interest
thereon, and in respect of all other amounts payable hereunder
shall be made free of setoff or counterclaim and free and clear of
and without withholding or deduction for any taxes, fees or other
charges of any nature whatsoever imposed by any taxing authorities.
7.5 Setoff. Upon the occurrence of any Event of Default, the
------
Agent, the Issuing Bank and each Bank are hereby authorized at any
15
<PAGE> 17
time and from time to time without notice to the Company (any such
notice being expressly waived by the Company), to the fullest
extent permitted by law, to set off, to exercise any banker's lien
or any right of attachment or garnishment and to apply any and all
balances, credits, deposits (general or special, time or demand,
provisional or final), accounts or monies at any time held and
other indebtedness at any time owing by any of the Agent, the
Issuing Bank or such Bank to or for the account of the Company
against any and all of the obligations of the Company now or
hereafter existing under or in connection with this Agreement, the
other L/C Documents or the outstanding Letters of Credit. The
rights of the Agent, the Issuing Bank and each Bank under this
Section 7.5 are in addition to and in augmentation of, and do not
- -----------
derogate from or impair, other rights and remedies (including,
without limitation, other rights of setoff) which any such party
may have.
SECTION 8. INCORPORATION BY REFERENCE OF REPRESENTATION AND
WARRANTIES
As of the date hereof and of any Issuance Date, the Company
hereby makes all the representations and warranties contained in
Article 6 of the Credit Agreement (as modified by the statements
- ---------
set forth in Sections 5.2.1(a) and (b) therein) without giving
effect to any future amendment or waiver after the date hereof,
unless otherwise agreed to by the Majority Banks (the "Existing
Credit Agreement"). All of such representations and warranties
together with related definitions and ancillary provisions are
incorporated into this Agreement by reference as if such terms were
set forth in this Agreement in full, without regard to any
expiration of any commitment thereunder and without regard to the
final payment in full of any obligations of the Company thereunder.
For purposes of this Agreement, the following terms in the Credit
Agreement shall have the meanings specified below for purposes of
this Agreement, including without limitation Sections 8, 9, and 11:
---------- - --
"Affiliate" means an Affiliate.
---------
"Agreement" means this Agreement.
---------
"Agent" means BofA, as the Agent.
-----
"Borrowing" means payment of a Payment Demand for which
---------
a Reimbursement Obligation is created.
"Company" means the Company.
-------
"Commitments" means the Letter of Credit
-----------
Commitment and each Participation Commitment.
"Default" means an Event of Default or
-------
Unmatured Event of Default.
16
<PAGE> 18
"Effective Date" means the Effective Date.
--------------
"Event of Default" means an Event of Default
----------------
under this Agreement and the Credit Agreement.
"Lender" means the Banks.
------
"Loan Document" means an L/C Document.
-------------
"Loan" means the Letters of Credit Outstanding
----
and all fees under this Agreement and the
other L/C Documents.
"Obligations" means the Obligations under this
-----------
Agreement and the Credit Agreement.
"Person" means a Person.
------
"Required Lenders" mean the Majority Banks.
----------------
"Responsible Officer" means a Responsible Officer.
-------------------
"Subsidiary" means a Subsidiary.
----------
SECTION 9. INCORPORATION BY REFERENCE OF COVENANTS
The Company covenants and agrees that, from and after the date
hereof and thereafter until all obligations of the Company
hereunder are paid in full and this Agreement is terminated, it
shall:
(a) Reports. Furnish to the Agent, the Issuing Bank and
-------
each Bank the deliveries set forth in Section 7.18 of the
Existing Credit Agreement at the time required therein.
(b) Incorporation by Reference. Duly keep, perform and
--------------------------
observe each and every covenant set forth in Article 7 of the
---------
Existing Credit Agreement. All of such covenants, together
with related definitions and ancillary provisions, are hereby
incorporated into this Agreement by reference, as if such
terms were set forth in this Agreement in full, without regard
to any termination of such Credit Agreement, without regard to
any expiration of any commitment thereunder and without regard
to the final payment in full of any obligations of the Company
or any other person or entity thereunder. If an event is the
subject of both a covenant incorporated herein by reference
and another covenant set forth in this Agreement, the Company
shall comply with the covenant which imposes on it the
stricter requirement. To the extent that any covenant
incorporated herein by reference is inconsistent with the
other terms of this Agreement, the Agent, Issuing Bank and
Banks shall not be deemed to have waived any rights hereunder
17
<PAGE> 19
by virtue of such inconsistency. If the Credit Agreement
terminates, any commitment thereunder expires or any
obligations of the Company thereunder are paid in full and any
covenant incorporated herein by reference requires the Company
to obtain the consent of any agent, lender or lenders, then,
for the purpose of this Agreement, the Company shall be
required to obtain the consent of the Agent, Issuing Bank and
Majority Banks. The Reference to Notes in Section 7.11.1 of
the Credit Agreement is a reference to the Reimbursement
Obligations.
SECTION 10. CONDITIONS PRECEDENT TO ISSUANCE OF LETTERS OF CREDIT
10.1 Initial Letter of Credit. The obligation of the Issuing
------------------------
Bank to issue Letters of Credit is subject to the satisfaction of
each of the following conditions precedent:
(a) Default. No Event of Default or Unmatured Event of
-------
Default shall have occurred and be continuing.
(b) Warranties. The warranties contained in Section 8
---------- ---------
shall be true and correct.
(c) Certification. The Company shall have delivered to
-------------
the Agent a certificate of the Company's president or chief
financial officer as to the matters set out in Sections 10.1
and 10.2. -------------
----
(d) Delivery of Documents. The Company shall have
---------------------
delivered or caused to be delivered to the Agent (with a copy
for each Bank):
(i) Resolutions, etc. A copy, duly certified as of
----------------
the Effective Date by the Company's secretary or
assistant secretary, of (v) the resolutions of the
Company's Board of Directors authorizing the execution
and delivery of this Agreement and the issuance of
Letters of Credit thereunder, (w) a true and correct copy
of the Company's certificate of incorporation and all
amendments as filed with the Secretary of State of its
state of incorporation, (x) a true and correct copy of
the Company's bylaws as in effect on the Effective Date,
(y) all documents evidencing other corporate action, and
(z) all approvals or consents, if any, with respect to
this Agreement.
(ii) Company Incumbency. A certificate of the
------------------
Company's secretary or assistant secretary, dated the
Effective Date, certifying the names of the Company's
officers authorized to sign this Agreement and all other
documents or certificates to be delivered hereunder,
together with the true signatures of such officers.
18
<PAGE> 20
(iii) Opinion. An opinion of McDermott, Will &
-------
Emery, counsel to the Company, addressed to the Agent and
the Banks and dated the date of the Effective Date, in
substantially the form of Exhibit C.
---------
(e) L/C Documents. The Agent shall have received
-------------
counterparts of this Agreement and the Continuing L/C
Agreement for each of the Banks duly executed by the Company.
(f) Fee Letter. The Issuing Bank shall have a copy of
----------
the Fee Letter duly executed by the Company.
(g) Agency Fee Letter. The Agent shall have a copy of
-----------------
the Agency Fee Letter duly executed by the Company.
10.2 All Issuances. The obligation of the Issuing Bank to
-------------
issue each Letter of Credit shall be subject to the satisfaction of
each of the following conditions precedent:
(a) Default. No Event of Default or Unmatured Event of
-------
Default shall have occurred and be continuing.
(b) Warranties. The warranties contained in Section 8
---------- ---------
shall be true and correct in all material respects.
(c) Issuance Request. The Issuing Bank shall have
----------------
received an Issuance Request.
SECTION 11. EVENTS OF DEFAULT AND REMEDIES
11.1 Incorporation By Reference of Events of Default. Each
-----------------------------------------------
of the following shall constitute an Event of Default:
(a) Non-Payment of Reimbursement Obligation. Default in
---------------------------------------
the payment when due of a Reimbursement Obligation; or
default, and continuance thereof for three Business Days, in
the payment when due of any interest on any Reimbursement
Obligation or any fee or other amount payable by the Company
hereunder or under any other L/C Document.
(b) Event of Default under the Credit Agreement. The
-------------------------------------------
occurrence of any "Event of Default" as defined and set forth
in the Existing Credit Agreement shall constitute an Event of
Default hereunder. All of such "Events of Default", together
with related definitions and ancillary provisions, are hereby
incorporated into this Agreement by reference, as if such
terms were set forth in this Agreement in full, without regard
to any termination of the Credit Agreement, without regard to
any expiration of any commitment thereunder and without regard
to the final payment in full of any obligations of the Company
or any other person or entity thereunder. To the extent that
any Event of Default incorporated herein by reference is
19
<PAGE> 21
inconsistent with the other terms of this Agreement, the
Agent, Issuing Bank or Banks shall not be deemed to have
waived any rights hereunder by virtue of such inconsistency.
The reference to Article 5 in Section 8.1.2 of the Credit
Agreement is also a reference to Section 10 of this Agreement.
----------
(c) Other. Failure to comply with or to perform any
-----
covenant set forth in this Agreement (other than as set forth
in Section 11.1(a) and 11.1(b)) and continuance thereof for 30
--------------- -------
Business Days after the earlier of (x) notice thereof to the
Company from the Agent, the Issuing Bank or any Bank or (y) a
Responsible Officer becomes aware of such failure.
11.2 Action if Event of Default. If any Event of Default
--------------------------
shall occur and be continuing, the Agent may, unless otherwise
directed by the Majority Banks, and at the direction of the
Majority Banks shall, at the same or different times, take one or
more of the following actions:
(a) declare the Letter of Credit Commitment to be
terminated, whereupon the Letter of Credit Commitment (and
each Bank's Participation Commitment) shall forthwith
terminate; or
(b) enforce the Company's Reimbursement Obligations
under Section 2.4; or
-----------
(c) declare, at one or more times, all or any part of
the Stated Amount of the Letters of Credit to be forthwith due
and payable, whereupon all such sums shall become and be
immediately due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby
expressly waived by the Company. Such payment shall be made
in immediately available funds or in similar Cash Collateral
acceptable to the Agent, pledged to the Agent for the benefit
of the Banks. Any Cash Collateral shall be held by the Agent
in a cash collateral account and shall be applied in the
following order of priority: (i) the payment of any
outstanding fees owing hereunder, (ii) the payment of any
interest owing hereunder, (iii) payment of any outstanding
Reimbursement Obligations (other than interest), (iv) payment
of any other remaining Obligations hereunder, and (v) any
remaining Cash Collateral shall be returned to the Company.
The Company acknowledges and agrees that the Agent would not
have an adequate remedy at law for failure by the Company to
immediately pay the Issuing Bank the amount provided under
this Section 11.2(c) and that the Agent shall have the right
---------------
to require the Company to specifically perform such
undertaking whether or not any drawings have been made under
the Letter of Credit;
20
<PAGE> 22
provided, however, that upon the occurrence of any bankruptcy Event
- -------- -------
of Default, the Letter of Credit Commitment (and each Bank's
Participation Commitment) shall forthwith terminate, and all sums
then owing by the Company hereunder and under each other L/C
Document executed pursuant hereto shall become and be immediately
due and payable without further action on the part of any Person
and without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived by the Company.
Simultaneously with or promptly following the making of any
such declaration, the Agent shall give notice thereof to the
Company, the Issuing Bank, and each Bank, but failure to do so
shall not impair the effect thereof. Upon such declaration, the
Agent may, unless otherwise directed by the Majority Banks, and at
the direction of the Majority Banks shall, proceed to execute
independently, any rights or remedies available hereunder or under
any applicable law.
SECTION 12. THE AGENT AND THE BANKS
12.1 Appointment and Authorization. Each Bank hereby
-----------------------------
irrevocably (subject to Section 12.9) appoints, designates and
------------
authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and each other L/C Document and to
exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other L/C
Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other L/C Document, the Agent
shall not have any duties or responsibilities, except those
expressly set forth herein, nor shall the Agent have or be deemed
to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other L/C
Document or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Agreement or any other L/C Document by or through
agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct
of any agent or attorney-in-fact that it selects with reasonable
care.
12.3 Liability of Agent. None of the Agent-Related Persons
------------------
shall (i) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other
L/C Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any
Subsidiary or Affiliate of the Company, or any officer thereof,
21
<PAGE> 23
contained in this Agreement or in any other L/C Document, or in any
certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection
with, this Agreement or any other L/C Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other L/C Document, or for any failure of the
Company or any other party to any L/C Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other L/C Document, or
to inspect the properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
12.4 Reliance by Agent.
-----------------
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram,
facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal
counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any
action under this Agreement or any other L/C Document unless
it shall first receive such advice or concurrence of the
Majority Banks or all Banks as applicable as it deems
appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks against any and
all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action unless
the Agent has not acted in good faith, been grossly negligent
or engaged in wilful misconduct in connection with any such
action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or
any other L/C Document in accordance with a request or consent
of the Majority Banks or all Banks as applicable and such
request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Section 10.1, each Bank that has
------------
executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or
other matter either sent by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required
thereunder to be consented to or approved by or acceptable or
satisfactory to the Agent.
22
<PAGE> 24
12.5 Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Event of Default,
except with respect to defaults in the payment of reimbursements,
interest and fees required to be paid to the Agent for the account
of the Banks and the Issuing Bank, unless the Agent shall have
received written notice from a Bank or the Company referring to
this Agreement, describing such Event of Default and stating that
such notice is a "notice of default". The Agent will notify the
Banks of its receipt of any such notice. The Agent shall take such
action with respect to such Event of Default as may be requested by
the Majority Banks in accordance with Section 11.2; provided,
------------ --------
however, that unless and until the Agent has received any such
- -------
request, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such
Event of Default as it shall deem advisable or in the best interest
of the Banks.
12.6 Credit Decision. Each Bank acknowledges that none of the
---------------
Agent-Related Persons has made any representation or warranty to
it, and that no act by the Agent hereafter taken, including any
review of the affairs of the Company and its Subsidiaries, shall be
deemed to constitute any representation or warranty by any Agent-
Related Person to any Bank. Each Bank represents to the Agent that
it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Company and its Subsidiaries,
and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Company and
its Subsidiaries hereunder. Each Bank also represents that it
will, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this
Agreement and the other L/C Documents, and to make such
investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other
condition and creditworthiness of the Company. Except for notices,
reports and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not have any
duty or responsibility to provide any Bank with any credit or other
information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of the
Company which may come into the possession of any of the
Agent-Related Persons.
12.7 Indemnification. Whether or not the transactions
---------------
contemplated hereby are consummated, the Banks shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by
or on behalf of the Company and without limiting the obligation of
23
<PAGE> 25
the Company to do so), pro rata, from and against any and all
Indemnified Liabilities; provided, however, that no Bank shall be
-------- -------
liable for the payment to the Agent-Related Persons of any portion
of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Agent upon demand for its
ratable share of any costs or out-of-pocket expenses (including
attorney fees and any allocated costs of internal legal counsel to
the Agent) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights
or responsibilities under, this Agreement, any other L/C Document,
or any document contemplated by or referred to herein, to the
extent that the Agent is not reimbursed for such expenses by or on
behalf of the Company; provided, however, that no Bank shall be
-------- -------
liable for the payment to the Agent-Related Persons of any portion
of such costs or out-of-pocket expenses resulting solely from such
Person's gross negligence or willful misconduct. The undertaking
in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
12.8 Agent in Individual Capacity. BofA and its Affiliates
----------------------------
may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Company and its
Subsidiaries and Affiliates as though BofA were not the Agent
hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such
Affiliate) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
issuances and participation in of Letters of Credit, BofA (in the
event that BofA becomes a Bank hereunder) shall have the same
rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent, and the terms
"Bank" and "Banks" include BofA in its individual capacity.
12.9 Successor Agent. The Agent may, and at the request of
---------------
the Majority Banks shall, resign as Agent upon 30 days' notice to
the Banks. If the Agent resigns under this Agreement, the Majority
Banks shall appoint from among the Banks a successor agent for the
Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after
consulting with the Banks and the Company, a successor agent from
among the Banks. Upon the acceptance of its appointment as
successor agent hereunder, such successor agent shall succeed to
all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring
24
<PAGE> 26
Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as
Agent, the provisions of this Article 12 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted
appointment as Agent by the date which is 30 days following a
retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Agent hereunder until
such time, if any, as the Majority Banks appoint a successor agent
as provided for above.
12.10 Withholding Tax.
---------------
(a) If any Bank is a "foreign corporation, partnership
or trust" within the meaning of the Code and such Bank claims
exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Bank agrees with and
in favor of the Agent, to deliver to the Agent:
(i) if such Bank claims an exemption from, or a
reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before
the payment of any interest in the first calendar year
and before the payment of any interest in each third
succeeding calendar year during which interest may be
paid under this Agreement;
(ii) if such Bank claims that interest paid under
this Agreement is exempt from United States withholding
tax because it is effectively connected with a United
States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year
of such Bank and in each succeeding taxable year of such
Bank during which interest may be paid under this
Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required
under the Code or other laws of the United States as a
condition to exemption from, or reduction of, United
States withholding tax.
Such Bank agrees to promptly notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Bank claims exemption from, or reduction of,
withholding tax under a United States tax treaty by providing
IRS Form 1001 and such Bank sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of the Company to such Bank, such Bank agrees to
25
<PAGE> 27
notify the Agent of the percentage amount in which it is no
longer the beneficial owner of Obligations of the Company to
such Bank. To the extent of such percentage amount, the Agent
will treat such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells,
assigns, grants a participation in, or otherwise transfers all
or part of the Obligations of the Company to such Bank, such
Bank agrees to undertake sole responsibility for complying
with the withholding tax requirements imposed by Sections 1441
and 1442 of the Code.
(d) If any Bank is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest payment to such Bank an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent,
then the Agent may withhold from any interest payment to such
Bank not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other governmental authority of
the United States or other jurisdiction asserts a claim that
the Agent did not properly withhold tax from amounts paid to
or for the account of any Bank (because the appropriate form
was not delivered, was not properly executed, or because such
Bank failed to notify the Agent of a change in circumstances
which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such
Bank shall indemnify the Agent fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the
Agent under this Section, together with all costs and expenses
(including attorney costs). The obligation of the Banks under
this subsection shall survive the payment of all Obligations
and the resignation or replacement of the Agent.
SECTION 13. MISCELLANEOUS
13.1 Special Terms Relating to Letters of Credit.
-------------------------------------------
(a) Documentation. Unless specified to the contrary in
-------------
any Application, any Letter of Credit or any amendment
thereto, Company agrees that the Issuing Bank and its
correspondents may receive and accept (a) as "bills of lading"
any documents issued or purportedly issued by or on behalf of
any carrier which acknowledges receipt of property for
transportation, (b) either insurance policies or insurance
certificates as documents of insurance, (c) the description of
26
<PAGE> 28
property contained in any invoice as sufficient and
controlling against other descriptions contained in any bills
of lading, insurance or other documents accepted, as long as
such descriptions are not inconsistent with one another, (d)
any document containing stamped, written, or typewritten
provisions, whether or not signed and initialled, as if the
same were placed with authority on the document at the time of
its issuance by the carrier, other issuer, or one of their
agents, (e) any items or documents otherwise in order, issued
or purportedly issued by an agent, executor, trustee in
bankruptcy, receiver or other representative of the party who
is authorized under the Letter of Credit to issue such items
or other documents, as complying with the terms of the Letter
of Credit and (f) documents which comply with the UCP or which
comply with the laws, regulations, customs or usages of the
place of shipment or negotiation/payment/acceptance, or both.
The provisions of clause (e) above shall in no way be deemed
to preclude the Beneficiary of any Letter of Credit from
issuing and presenting items or documents under the terms of
such Letter of Credit.
In the event that, at Company's request, some of the
documents required under any Letter of Credit are forwarded
directly to Company or any other party designated by Company,
or the Issuing Bank, at Company's request, releases or
consents to the release of some or all of the property shipped
under any Letter of Credit prior to the presentation of the
relative Payment Demand, Company agrees to pay the Issuing
Bank on demand the amount of any claim made against the
Issuing Bank by reason thereof and authorizes the Issuing Bank
to honor such Payment Demand when it is presented regardless
of whether or not such item or any document which may
accompany it complies with the terms of such Letter of Credit.
In case of the Issuing Bank's issuance of a carrier indemnity
for Company's account, the Issuing Bank is authorized to
retain original bills of lading for delivery to the shipping
company to secure the release of the Issuing Bank's indemnity.
(b) Risks. Company agrees that any action or omission
-----
by it under or in connection with any Letter of Credit or any
Payment Demand, documents or property shall, unless in breach
of good faith, be binding on Company and shall not put the
Issuing Bank under any resulting liability to Company unless
Issuing Bank has not acted in good faith, been grossly
negligent or engaged in wilful misconduct in connection with
any such action or omission; Company will indemnify the
Issuing Bank and each Bank and hold them harmless from and
against each and every claim, demand, liability, loss, cost or
expense (including, but not limited to, reasonable attorneys'
fees and allocated costs of internal legal counsel) to which
the Issuing Bank or any Bank may be subjected or which the
Issuing Bank or any Bank may incur by reason of any such
27
<PAGE> 29
action or omission, or by reason of any action taken pursuant
to this Agreement and any Application, unless in breach of
good faith or due to the Issuing Bank's or any Bank's gross
negligence or wilful misconduct. In no event shall the
Issuing Bank or any Bank be liable for incidental,
consequential or special damages.
(c) Discrepancies. Company, or any Designated
-------------
Affiliate, as applicable, will promptly examine the copy of
each Letter of Credit (and any amendments thereto) sent to
Company by the Issuing Bank, as well as any and all
instruments and documents delivered to Company or any
Designated Affiliate from time to time, and, in the event
Company or such Designated Affiliate has any claim of non-
compliance with its instructions or of discrepancies or other
irregularity, Company will promptly notify the Issuing Bank
thereof by electronically transmitted instructions as agreed
in the Continuing L/C Agreement, but in no event later than
the end of the next Business Day, and Company will
conclusively be deemed to have waived any such claim against
the Issuing Bank unless such notice is given as stated above.
(d) Exculpation. In addition to the exculpatory
-----------
provisions contained in the UCP, the Issuing Bank, or its
correspondents and the Banks shall not be responsible to the
Company for, and/or Company's obligation to reimburse the
Issuing Bank shall not be affected by: (a) the time, place,
manner, or order in which shipment is made, or partial or
incomplete shipment or insurance of any property of any risk
connected with insurance, delay in arrival or failure to
arrive of any property or any relative documents, delay in
giving or failure to give notice of arrival of goods or any
other notice, (b) compliance with any laws, customs or
regulations in effect in countries of negotiation or payment
of such Letter of Credit, (c) failure of any Payment Demand to
refer adequately to the relevant Letter of Credit, or failure
of documents to accompany any Payment Demand at negotiation/
payment/acceptance, or failure of any person to note the
amount of any Payment Demand on the reverse of the relevant
Letter of Credit or to surrender or to take up such Letter of
Credit or to forward required documents with any Payment
Demand, unless required by the terms of the Letter of Credit
itself, (d) any irregularity in connection with shipment,
including any default, oversight or fraud by the shipper
and/or any others in connection with the property or documents
or the shipment, non-shipment or transmittal thereof, (e) any
failure to act by Issuing Bank or its agents or correspondents
or refusal by the Issuing Bank or its agents or correspondents
to honor any Payment Demand because of any applicable law,
regulation or ruling of any governmental agency (domestic or
foreign) whether now or hereafter in effect, or (f) the
identity of any transferee of a Letter of Credit or the
28
<PAGE> 30
sufficiency of the transfer if any Letter of Credit is
transferable.
(e) Regulatory Compliance. Company hereby certifies
---------------------
that the merchandise to be shipped under any Letter of Credit
will not be prohibited under the Foreign Assets Control
Regulations of the United States Treasury Department and that
any importation covered by any Letter of Credit will conform
in every material respect with all existing United States
government regulations.
13.2 No Waiver; Modifications in Writing.
-----------------------------------
(a) No failure or delay on the part of the Agent, the
Issuing Bank or any Bank in exercising any right, power or
remedy hereunder, and no course of dealing between the
Company, on the one hand and the Agent, the Issuing Bank or
any Bank, on the other, shall operate as a waiver of any such
right, power or remedy, nor shall any single or partial
exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other
right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be
available to the Agent, the Issuing Bank or any Bank at law,
in equity or otherwise.
(b) No amendment, modification, supplement, termination
or waiver of or to any provision of this Agreement, or any
other document executed pursuant hereto, nor consent to any
departure by the Company therefrom, shall be effective unless
the same shall be in writing and signed by or on behalf of the
Majority Banks; provided, however, that no such amendment,
-------- -------
modification, supplement, termination, waiver or consent, as
the case may be, which has the effect of (i) reducing the rate
or amount, or extending the stated maturity or due date, of
any sum payable by the Company to the Agent, the Issuing Bank
or any Bank hereunder or under any document executed pursuant
hereto, or (ii) increasing the amount, or extending the stated
expiration or termination date, of the Letter of Credit
Commitment or any Bank's Participation Commitment, or (iii)
changing this Section 13.2 or the definitions of the terms
------------
"Event of Default", "Letter of Credit Commitment", "Majority
Banks", "Participation Commitment" or "Pro Rata Share", or
(iv) releasing any collateral from any security interest
granted hereunder or (v) changing any condition that requires
the consent or approval of all the Banks, shall be effective
unless the same shall be signed by or on behalf of the Agent,
the Issuing Bank and the Banks; provided, further that no such
-------- -------
amendment, modification, supplement, termination, waiver or
consent, as the case may be, which has the effect of (x)
increasing the duties or obligations of the Agent hereunder,
or (xi) increasing the standard of care or performance
29
<PAGE> 31
required on the part of the Agent hereunder, or (xii) reducing
or eliminating the indemnities or immunities to which the
Agent is entitled hereunder (including, without limitation,
any amendment or modification of this Section 13.2), shall be
------------
effective unless the same shall be signed by or on behalf of
the Agent.
(c) Any waiver pursuant to this Section 13.2 shall not
------------
affect the obligations of the Company or the rights of the
Issuing Bank, the Banks or the Agent under any provision of
this Agreement or any other documents, except to the extent
set forth in this Section 13.2 and in such waiver. Any waiver
------------
of any provision of this Agreement, and any consent to any
departure by the Company from the terms of any provision of
this Agreement, shall be effective only in the specific
instance and for the specific purpose for which given. No
notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in
similar or other circumstances.
13.3 Further Assurances. The Company agrees to do such
------------------
further acts and things and to execute and deliver to the Agent
such additional assignments, agreements, powers and instruments, as
the Agent may reasonably require or deem advisable to carry into
effect the purposes of this Agreement or to better assure and
confirm unto the Agent its rights, powers and remedies hereunder.
13.4 Notices, Etc.
------------
(a) Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands
instructions and other communications required or permitted to
be given to or made upon any party hereto or any other Person
shall be in writing and shall be personally delivered or sent
by registered or certified mail, postage prepaid, return
receipt requested, or by prepaid Telex or by telecopier, or by
prepaid courier, and shall be deemed to be given for purposes
of this Agreement on the day that such writing is delivered
(in the case of personal delivery or by telex or telecopier)
or sent to the intended recipient thereof (or in the case of
(i) any notice which is sent by mail, five days after the
deposit thereof, postage prepaid, in the mail and (ii) any
notice which is sent through a public courier company, on the
next Business Day after the day on which such notice is
delivered to such courier company) in each case in accordance
with the provisions of this Section 13.4. Unless otherwise
------------
specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13.4, notices, demands,
------------
instructions and other communications in writing shall be
given to or made upon any party at its address (or to its
telex or telecopier numbers) indicated next to its signature
on the signature pages hereof and, in the case of telephonic
30
<PAGE> 32
instructions or notices, by calling the telephone number or
numbers indicated for such Person next to its signature on the
signature pages hereof, or to such address, telex, telecopier
or telephone number from time to time notified by any
recipient to the other parties hereto.
(b) Anything herein to the contrary notwithstanding, any
notice from the Company pursuant to clause (a) of Section 2.1
---------- -----------
hereof shall be effective, for purposes of this Agreement,
only when actually received by all Persons to whom such
notices are required to be sent or given.
13.5 Costs, Expenses and Taxes. The Company agrees to pay all
-------------------------
costs and expenses of the Agent in connection with the negotiation,
preparation, reproduction, execution and delivery of this Agreement
and each other document executed pursuant hereto or thereto, any
amendments or modifications of (or supplements to) any of the
foregoing and any and all other documents furnished pursuant hereto
or thereto or in connection herewith or therewith, including the
reasonable fees and out-of-pocket expenses of Mayer, Brown & Platt,
counsel to the Agent, and the reasonable allocated cost of Agent's
internal legal counsel and out-of-pocket expenses of internal
counsel relative thereto. The Company further agrees to pay all
costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses), if any, of the Issuing Bank, each
Bank and the Agent in connection with the enforcement of this
Agreement or any other document, other than amendments or renewals
executed pursuant hereto or thereto or in connection herewith or
therewith (other than reasonable attorneys' fees and expenses
incurred by the Agent and the reasonable allocated cost and
expenses of Agent's internal legal counsel). In addition, the
Company shall pay any and all stamp or transfer taxes and other
Relevant Taxes payable or determined to be payable in connection
with the execution and delivery or enforcement of this Agreement or
any other documents executed pursuant hereto or thereto and agrees
to save and hold harmless each party from and against any and all
liabilities with respect to or resulting from any delay in paying
or omission to pay such Relevant Taxes.
13.6 Indemnity. The Company shall pay and indemnify and hold
---------
harmless the Agent, the Issuing Bank and each Bank, and their
respective officers, directors, shareholders, employees, agents and
servants (herein called the "Indemnified Parties") from and
-------------------
against, any and all losses, liabilities (including liabilities for
penalties and any liabilities which may arise or be created by its
acceptance of telecommunication instructions in connection with any
Letter of Credit, including, but not limited to, telephonic
instructions in connection with any waiver of discrepancies),
actions, suits, judgments, demands, damages, costs or expenses
including, without limitation, reasonable attorneys' fees and
expenses (herein called the "Indemnified Liabilities") of any
-----------------------
nature arising from or relating to this Agreement or any other
31
<PAGE> 33
document executed pursuant hereto or thereto, except that
notwithstanding anything herein to the contrary, no Indemnified
Party shall be entitled to indemnification under this Section 13.6
------------
for any loss, liability, action, suit, judgment, demand, damage,
cost or expense which is caused by such Indemnified Party's bad
faith or gross negligence, willful misconduct or breach of good
faith. If any action, suit or proceeding arising from any of the
foregoing is brought against any Indemnified Party or any other
Person indemnified or intended to be indemnified pursuant to this
Section 13.6, the Company, to the extent and in the manner directed
- ------------
by the Agent or the relevant Indemnified Party, will resist and
defend such action, suit or proceeding or cause the same to be
resisted and defended by counsel designated by the Company (which
counsel shall be satisfactory to the Person or Persons indemnified
or intended to be indemnified). If and to the extent that the
foregoing provisions of this Section 13.6 may be unenforceable for
------------
any reason, the Company hereby agrees to make the maximum
contribution to payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
13.7 Survival of Obligations. The obligations of the Company
-----------------------
under Sections 13.5, 13.6, and 13.16 shall survive the termination
------------- ---- -----
of this Agreement and the discharge of the Company's other
Obligations hereunder.
13.8 Binding Effect; Assignment. This Agreement shall be
--------------------------
binding upon, and inure to the benefit of, the Company, the Issuing
Bank, each Bank and the Agent, and their respective successors and
assigns; provided, however, that the Company may not assign its
-------- -------
rights or obligations hereunder or in connection herewith or any
interest herein (voluntarily, by operation of law or otherwise)
without the prior written consent of the Agent, the Issuing Bank
and each Bank. The Banks and the Issuing Bank may assign all or a
part of their respective interests in this Agreement in accordance
with Section 13.9.
------------
13.9 Assignments, Participations, etc.
--------------------------------
(a) Any Bank may, with the written consent of the
Company (other than during the existence of an Event of
Default) and the Agent, which consent of the Company shall not
be unreasonably withheld, at any time assign and delegate to
one or more Eligible Assignees (provided that no written
consent of the Company or the Agent shall be required in
connection with any assignment and delegation by a Bank to an
Eligible Assignee that is an Affiliate of such Bank) (each an
"Assignee") all, or any ratable part of all, of the
----------
Participation Commitments and the other rights and obligations
of such Bank hereunder, in a minimum amount of $5,000,000;
32
<PAGE> 34
provided, however, that the Company and the Agent may continue
-------- -------
to deal solely and directly with such Bank in connection with
the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions,
addresses and related information with respect to such
Assignee, shall have been given to the Company and the Agent
by such Bank and such Assignee; (ii) such Bank and its
Assignee shall have delivered to the Company and the Agent an
Assignment and Acceptance in the form of Exhibit D
---------
("Assignment and Acceptance") and (iii) the assignor Bank or
-------------------------
Assignee has paid to the Agent a processing fee in the amount
of $2,000.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received (and provided its consent
with respect to) an executed Assignment and Acceptance and
payment of the above-referenced processing fee, (i) the
Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, shall have the
rights and obligations of a Bank under this Agreement and the
other L/C Documents, and (ii) the assignor Bank shall, to the
extent that rights and obligations hereunder and under the
other L/C Documents have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be
released from its obligations under the L/C Documents.
(c) Immediately upon each Assignee's or assignor Bank's
making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to
the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the
Participation Commitments arising therefrom. The
Participation Commitment allocated to each Assignee shall
reduce such Participation Commitment of the assigning Bank pro
---
tanto.
-----
(d) Any Bank may at any time sell to one or more
commercial banks or other Persons not Affiliates of the
Company (a "Participant") participating interests in the
-----------
Participation Commitments of that Bank and the other interests
of that Bank (the "originating Bank") hereunder and under the
other L/C Documents; provided, however, that (i) the
-------- -------
originating Bank's obligations under this Agreement shall
remain unchanged, (ii) the originating Bank shall remain
solely responsible for the performance of such obligations,
(iii) the Company and the Agent shall continue to deal solely
and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement
and the other L/C Documents, and (iv) no Bank shall transfer
or grant any participating interest under which the
Participant has rights to approve any amendment to, or any
33
<PAGE> 35
consent or waiver with respect to, this Agreement or any other
L/C Document, except to the extent such amendment, consent or
waiver would require unanimous consent of the Banks as
described in the first proviso to Section 13.2. In the case
----- ------- ------------
of any such participation, the Participant shall not have any
rights under this Agreement, or any of the other L/C
Documents, and all amounts payable by the Company hereunder
shall be determined as if such Bank had not sold such
participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or
shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the
right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent as if
the amounts of its participating interest were owing directly
to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the
confidentiality of all information provided to it by the
Company or any Subsidiary, or by the Agent on the Company's or
such Subsidiary's behalf, under this Agreement or any other
L/C Document, and neither it nor any of its Affiliates shall
use any such information other than in connection with or in
enforcement of this Agreement and the other L/C Documents;
except to the extent such information (i) was or becomes
generally available to the public other than as a result of
disclosure by such Bank, or (ii) was or becomes available on
a non-confidential basis from a source other than the Company,
provided that such source is not bound by a confidentiality
agreement with the Company known to such Bank; provided,
--------
however, that any Bank may disclose such information (A) at
-------
the request or pursuant to any requirement of any governmental
authority to which such Bank is subject or in connection with
an examination of such Bank by any such authority; (B)
pursuant to subpoena or other court process; (c) when required
to do so in accordance with the provisions of any applicable
requirement of law; (D) to the extent reasonably required in
connection with any litigation or proceeding to which the
Agent, any Bank or their respective Affiliates may be party;
(E) to the extent reasonably required in connection with the
exercise of any remedy hereunder or under any other L/C
Document; (F) to such Bank's independent auditors or attorneys
and other professional advisors; (G) to any Participant or
Assignee, actual or potential, provided that such Person
agrees in writing to keep such information confidential to the
same extent required of the Banks hereunder, and (H) as to any
Bank, as expressly permitted under the terms of any other
document or agreement regarding confidentiality to which the
Company is party or is deemed party with such Bank.
34
<PAGE> 36
(f) Notwithstanding any other provision in this
Agreement, any Bank may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve
Board or U.S. Treasury Regulation 31 CFR Section 203.14, and such
Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
13.10 Waiver of Jury Trial. THE COMPANY, THE ISSUING
--------------------
BANK, EACH OF THE BANKS AND THE AGENT EACH HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, OR ARISING OUT
OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT OR ANY INSTRUMENT
EXECUTED PURSUANT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OR ANY
SUCH PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT, THE ISSUING BANK AND EACH BANK TO ENTER INTO THIS AGREEMENT.
13.11 Liability of the Issuing Bank. The Company hereby
-----------------------------
assumes all risks of the acts or omissions of any Beneficiary with
respect to its use of any Letter of Credit. Except as otherwise
expressly provided herein, neither the Issuing Bank, any Bank nor
any of their respective officers or directors shall be liable or
responsible for (i) the use which may be made of any Letter of
Credit or for any acts or omissions of a Beneficiary and any
transferee in connection therewith; (ii) the validity or
genuineness of documents, or of any endorsement(s) thereon, even if
such documents should in fact prove to be in any or all respect
invalid, fraudulent or forged provided each Payment Demand examined
by the Issuing Bank appears on its face to be in compliance with
the terms of the relevant Letter of Credit, or (iii) any other
circumstances whatsoever in making or failing to make payment under
any Letter of Credit. The Company shall have a claim against the
Issuing Bank, and the Issuing Bank shall be liable to the Company,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by the Company which were caused by
the Issuing Bank's willful misconduct, gross negligence, or breach
of good faith in determining whether documents presented under any
Letter of Credit comply with the terms of such Letter of Credit.
In furtherance and not in limitation of the foregoing, the Issuing
Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, unless the
Issuing Bank has knowledge of such information.
13.12 Severability. Any provision of this Agreement which is
------------
prohibited, unenforceable or not authorized in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any other
jurisdiction.
35
<PAGE> 37
13.13 Governing Law. This Agreement and each other document
-------------
executed pursuant hereto shall be governed by, and construed in
accordance with, the law of the State of Illinois.
13.14 Headings. Section headings in this Agreement are
--------
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
13.15 Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which shall be deemed to be an
original and shall be binding upon the parties, their successors
and permitted assigns.
13.16 Reserve and Capital Requirements. If any change in, or
--------------------------------
the introduction, application, adoption, effectiveness,
interpretation, reinterpretation or phase-in of, any law or
regulation, note, directive, decision, request, treaty or guideline
(whether or not having the force of law) of any court, central
bank, regulator or other governmental authority (x) affects or
would affect the amount of capital required or expected to be
maintained by any Bank or the Issuing Bank or any Person
controlling such Bank or the Issuing Bank, or (y) imposes any
reserve, special deposit, or similar requirements or any similar
restrictions, which would materially increase the costs, or would,
as a consequence of its Participation Commitment made by such Bank,
reduce the rate of return on its capital (the "Rate of Return")
--------------
below that which such Bank or such controlling Person could have
achieved but for the occurence of any such circumstance, to the
Issuing Bank, such Bank, or any Person controlling such Bank, of
continuing or participating in a Letter of Credit financing
hereunder or materially affect the profitability (on an after-tax
basis) to the Issuing Bank of a Letter of Credit transaction
contemplated hereby, then the Issuing Bank or such Bank may give
thirty days' written notice thereof to the Company and of the
additional costs, or loss or prospective loss of profitability, or
reduction in the Rate of Return, resulting therefrom. Upon such
notice the Company shall compensate the Issuing Bank, such Bank or
any Person controlling such Bank, for all additional costs, or for
any loss of profit or reduction in the Rate of Return, accruing to
the Issuing Bank or such Bank, or any Person controlling such Bank,
from and including the date of such imposition, application or
holding to but not including the expiration of all Letters of
Credit. A statement of such Bank as to any such additional amount
or amounts shall, in the absence of manifest error, be conclusive
and binding on the Company.
36
<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, or caused it to be executed and delivered by their duly
authorized officers, all as of the day and year first above
written.
KELLWOOD COMPANY
By: /s/ R. D. Joseph
--------------------------------
Title: Roger D. Joseph, Vice
-----------------------------
President Treasurer
Address: 600 Kellwood Parkway
Chesterfield, MO 63017
Telecopy: (314) 576-3388
BANK OF AMERICA N.T. & S.A.,
as Agent
By: /s/ Doris v. G. Bergum
--------------------------------
Title: Vice President
-----------------------------
Address: 1455 Market Street
12th Floor
San Francisco, CA 94103
Telecopy: (415) 622-4894
BANK OF AMERICA ILLINOIS, as
Issuing Bank
By: /s/ Dennis Dubois
--------------------------------
Title: Vice President
-----------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
Telecopy: (312) 987-5833
By: /s/ Kevin P. Morrison
Title: AVP
37
<PAGE> 39
Participation Commitment BANKS
- ------------------------
$50,000,000 BANK OF AMERICA ILLINOIS, as Bank
By: /s/ M. Kathleen McVay
--------------------------------
Title: Authorized Officer
-----------------------------
Address: 231 South LaSalle Street
Chicago, Illinois 60697
By: /s/ Kevin P. Morrison, AVP
$15,000,000 CHEMICAL BANK
By: /s/ Daniel M. Tulloch
--------------------------------
Title: Vice President
-----------------------------
Address: 111 West 40th Street
10th Floor
New York, NY 10018
$15,000,000 THE BANK OF NEW YORK
By: /s/ Natalie Egleston
--------------------------------
Title: Vice President
-----------------------------
Address: One Wall Street
19th Floor
New York, NY 10286
$10,000,000 MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: /s/ Elizabeth W. Vahlkamp
--------------------------------
Title: Banking Officer
-----------------------------
Address: 8th & Locusts Streets
St. Louis, MO 63166
$10,000,000 SOCIETE GENERALE
By: /s/ Seth Asofsky
--------------------------------
Title: Vice President
-----------------------------
Address: 181 West Madison St.
Chicago, IL 60602
38
<PAGE> 40
<TABLE>
TABLE OF CONTENTS
-----------------
<CAPTION>
SECTION PAGE
- ------- ----
<S> <C>
SECTION 1. DEFINITIONS; FINANCIAL TERMS . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . 1
1.2 Financial Terms. . . . . . . . . . . . . . . . . . . 6
SECTION 2. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . 6
2.1 Issuance Requests. . . . . . . . . . . . . . . . . . 6
2.2 Issuances and Extensions . . . . . . . . . . . . . . 8
2.3 Expenses . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Letter of Credit Drawings. . . . . . . . . . . . . . 8
2.5 Unconditional Reimbursement Obligations. . . . . . . 9
2.6 Correspondence at Company's Risk . . . . . . . . . . 9
2.7 Law Governing the Letters of Credit. . . . . . . . . 9
2.8 Trustee in Bankruptcy; Receiver. . . . . . . . . . . 10
2.9 Termination of Continuing L/C Agreement. . . . . . . 10
SECTION 3. FEES; LOAN ACCOUNT . . . . . . . . . . . . . . . . . 10
3.1 Fees . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Loan Account . . . . . . . . . . . . . . . . . . . . 10
SECTION 4. PURCHASE AND SALE OF PARTICIPATIONS IN
LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . 11
SECTION 5. LETTER OF CREDIT OPERATIONS. . . . . . . . . . . . . 11
5.1 Letter of Credit Operations. . . . . . . . . . . . . 11
(a) Demand and Payment to Beneficiary . . . . . . . 11
(b) Reimbursement by Banks . . . . . . . . . . . . 12
(c) Obligations of Banks are
Unconditional . . . . . . . . . . . . . . . . . 13
(d) Repayment of Banks following Reimbursement by
the Company . . . . . . . . . . . . . . . . . . 13
(e) Payment by Agent. . . . . . . . . . . . . . . . 13
SECTION 6. REPLACEMENT OF ISSUING BANK. . . . . . . . . . . . . 14
SECTION 7. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 14
7.1 General Payment Procedures . . . . . . . . . . . . . 14
7.2 Payments to the Issuing Bank . . . . . . . . . . . . 15
7.3 Payment to Agent . . . . . . . . . . . . . . . . . . 15
7.4 Net Payments . . . . . . . . . . . . . . . . . . . . 15
7.5 Setoff . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE> 41
SECTION 8. INCORPORATION BY REFERENCE OF
REPRESENTATION AND WARRANTIES. . . . . . . . . . . . 16
SECTION 9. INCORPORATION BY REFERENCE OF COVENANTS. . . . . . . 17
SECTION 10. CONDITIONS PRECEDENT TO ISSUANCE OF
LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . 18
10.1 Initial Letter of Credit . . . . . . . . . . . . . . 18
(a) Default . . . . . . . . . . . . . . . . . . . . 18
(b) Warranties. . . . . . . . . . . . . . . . . . . 18
(c) Certification . . . . . . . . . . . . . . . . . 18
(d) Delivery of Documents . . . . . . . . . . . . . 18
(e) L/C Documents . . . . . . . . . . . . . . . . . 19
(f) Fee Letter. . . . . . . . . . . . . . . . . . . 19
(g) Agency Fee Letter . . . . . . . . . . . . . . . 19
10.2 All Issuances. . . . . . . . . . . . . . . . . . . . 19
(a) Default . . . . . . . . . . . . . . . . . . . . 19
(b) Warranties. . . . . . . . . . . . . . . . . . . 19
(c) Issuance Request. . . . . . . . . . . . . . . . 19
SECTION 11. EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . 19
11.1 Incorporation By Reference of Events of Default. . . 19
(a) Non-Payment of Reimbursement Obligation . . . . 19
(b) Event of Default under the Credit Agreement . . 19
(c) Other . . . . . . . . . . . . . . . . . . . . . 20
11.2 Action if Event of Default . . . . . . . . . . . . . 20
SECTION 12. THE AGENT AND THE BANKS. . . . . . . . . . . . . . . 21
12.1 Appointment and Authorization. . . . . . . . . . . . 21
12.2 Delegation of Duties . . . . . . . . . . . . . . . . 21
12.3 Liability of Agent . . . . . . . . . . . . . . . . . 21
12.4 Reliance by Agent. . . . . . . . . . . . . . . . . . 22
12.5 Notice of Default. . . . . . . . . . . . . . . . . . 22
12.6 Credit Decision. . . . . . . . . . . . . . . . . . . 23
12.7 Indemnification. . . . . . . . . . . . . . . . . . . 23
12.8 Agent in Individual Capacity . . . . . . . . . . . . 24
12.9 Successor Agent. . . . . . . . . . . . . . . . . . . 24
12.10 Withholding Tax. . . . . . . . . . . . . . . . . . . 24
SECTION 13. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . 26
13.1 Special Terms Relating to Letters of Credit. . . . . 26
(a) Documentation . . . . . . . . . . . . . . . . . 26
(b) Risks . . . . . . . . . . . . . . . . . . . . . 27
(c) Discrepancies . . . . . . . . . . . . . . . . . 28
(d) Exculpation . . . . . . . . . . . . . . . . . . 28
(e) Regulatory Compliance . . . . . . . . . . . . . 29
13.2 No Waiver; Modifications in Writing. . . . . . . . . 29
13.3 Further Assurances . . . . . . . . . . . . . . . . . 30
ii
<PAGE> 42
13.4 Notices, Etc.. . . . . . . . . . . . . . . . . . . . 30
13.5 Costs, Expenses and Taxes. . . . . . . . . . . . . . 31
13.6 Indemnity. . . . . . . . . . . . . . . . . . . . . . 31
13.7 Survival of Obligations. . . . . . . . . . . . . . . 32
13.8 Binding Effect; Assignment . . . . . . . . . . . . . 32
13.9 Assignments, Participations, etc.. . . . . . . . . . 32
13.10 Waiver of Jury Trial . . . . . . . . . . . . . . . . 35
13.11 Liability of the Issuing Bank. . . . . . . . . . . . 35
13.12 Severability . . . . . . . . . . . . . . . . . . . . 35
13.13 Governing Law. . . . . . . . . . . . . . . . . . . . 35
13.14 Headings . . . . . . . . . . . . . . . . . . . . . . 36
13.15 Counterparts . . . . . . . . . . . . . . . . . . . . 36
13.16 Reserve and Capital Requirements . . . . . . . . . . 36
</TABLE>
iii
<PAGE> 43
<TABLE>
LIST OF EXHIBITS
----------------
<CAPTION>
<C> <S>
Exhibit A Application for Irrevocable Documentary Letter of Credit
(Commercial) (Section 1.1)
Exhibit B Continuing Documentary Letter of Credit Agreement (Section
1.1)
Exhibit C Legal Opinion (Section 10.1(d)(iii))
Exhibit D Form of Assignment and Acceptance
Exhibit E List of Designated Affiliates
</TABLE>
iv
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Kellwood
Company and Subsidiaries Condensed Consolidated Balance Sheet at January 31,
1995, and from the Condensed Consolidated Statement of Earnings and Condensed
Consolidated Statement of Cash Flows for the nine months ended January 31, 1995,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1994
<PERIOD-START> MAY-01-1994
<PERIOD-END> JAN-31-1995
<CASH> 11,525
<SECURITIES> 0
<RECEIVABLES> 201,912
<ALLOWANCES> 5,159
<INVENTORY> 253,938
<CURRENT-ASSETS> 482,395
<PP&E> 179,227
<DEPRECIATION> 110,455
<TOTAL-ASSETS> 744,751
<CURRENT-LIABILITIES> 240,782
<BONDS> 145,238
<COMMON> 93,219
0
0
<OTHER-SE> 226,499
<TOTAL-LIABILITY-AND-EQUITY> 744,751
<SALES> 968,454
<TOTAL-REVENUES> 968,454
<CGS> 775,211
<TOTAL-COSTS> 775,211
<OTHER-EXPENSES> 146,390
<LOSS-PROVISION> 312
<INTEREST-EXPENSE> 13,244
<INCOME-PRETAX> 33,609
<INCOME-TAX> 13,800
<INCOME-CONTINUING> 19,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,809
<EPS-PRIMARY> .94
<EPS-DILUTED> .93
</TABLE>
