<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
X OF THE SECURITIES EXCHANGE ACT OF 1934
--------
For quarterly period ended February 28, 1994
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 1-8501
HARTMARX CORPORATION
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3217140
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
101 NORTH WACKER DRIVE
CHICAGO, ILLINOIS 60606
------------------- -----
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number,
including area code 312/372-6300
------------
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, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
------- -------
At March 31, 1994, there were 32,264,589 shares of the Company's common stock
outstanding.
<PAGE>
HARTMARX CORPORATION
INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statement of Earnings for the
three months ended February 28, 1994 and
February 28, 1993. 3
Consolidated Balance Sheet as of February 28,
1994, November 30, 1993 and February 28, 1993. 4
Condensed Consolidated Statement of Cash Flows
for the three months ended February 28, 1994
and February 28, 1993. 6
Notes to Consolidated Financial Statements. 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. 9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings 11
ITEM 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HARTMARX CORPORATION
CONSOLIDATED STATEMENT OF EARNINGS
(000'S OMITTED)
<TABLE>
<CAPTION>
Three Months Ended February 28,
-------------------------------
1994 1993
-------- --------
<S> <C> <C>
Net sales $177,891 $186,931
Interest and other income 1,487 995
-------- --------
179,378 187,926
-------- --------
Cost of goods sold 127,688 132,938
Selling, administrative and
occupancy expenses 47,317 50,479
-------- --------
175,005 183,417
-------- --------
Earnings before interest and taxes 4,373 4,509
Interest expense 5,113 5,744
-------- --------
Loss before taxes (740) (1,235)
Tax benefit (20) -
-------- --------
Net loss for the period $ (720) $ (1,235)
======== ========
Loss per common share
and common share equivalent $ (.02) $ (.04)
======== =========
Dividends per common share $ - $ -
======== =========
Average number of common shares
and common share equivalents 31,976 29,785
======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
3
<PAGE>
HARTMARX CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
(000'S OMITTED)
<TABLE>
<CAPTION>
Feb. 28, Nov. 30, Feb. 28,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 1,118 $ 1,507 $ 1,336
Accounts receivable, less allowance
of $10,663, $9,914 and $12,786
for doubtful accounts 135,337 120,442 154,441
Inventories 177,962 193,818 185,496
Prepaid expenses 18,740 15,346 29,552
Recoverable income taxes 659 659 7,908
Deferred income taxes 6,025 5,943 5,728
-------- -------- --------
Total current assets 339,841 337,715 384,461
-------- -------- --------
OTHER ASSETS 11,419 10,919 11,458
-------- -------- --------
PROPERTIES
Land 3,876 3,882 3,913
Building and building improvements 58,959 58,345 56,319
Furniture, fixtures and equipment 112,581 114,574 116,105
Leasehold improvements 30,006 32,155 34,802
-------- -------- --------
205,422 208,956 211,139
Accumulated depreciation and amortization (151,072) (152,479) (147,820)
-------- -------- --------
Net properties 54,350 56,477 63,319
-------- -------- --------
TOTAL ASSETS $405,610 $405,111 $459,238
======== ======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
4
<PAGE>
HARTMARX CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(000'S OMITTED)
<TABLE>
<CAPTION>
Feb. 28, Nov. 30, Feb. 28,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
CURRENT LIABILITIES
Notes payable to banks $35,000 $25,000 $ 50,000
Current maturities of long term debt 703 697 776
Accounts payable and accrued expenses 58,954 63,001 73,208
-------- -------- --------
Total current liabilities 94,657 88,698 123,984
-------- -------- --------
LONG TERM DEBT, less current maturities
Notes payable to banks 123,635 128,696 156,196
Notes payable to insurance companies 44,880 45,000 45,000
Industrial development bonds 20,594 20,643 21,048
ESOP loan guarantee 12,186 12,219 12,219
Other debt, extending to 2003 755 858 1,006
-------- -------- --------
202,050 207,416 235,469
-------- -------- --------
SHAREHOLDERS' EQUITY
Preferred shares, $1 par value;
2,500,000 authorized and unissued - - -
Common shares, $2.50 par value; authorized
75,000,000; issued 32,021,381 in February 1994,
31,951,464 in November 1993 and
31,740,902 in February 1993. 80,053 79,878 79,352
Capital surplus 74,522 74,256 73,594
Retained earnings (deficit) (34,099) (33,379) (40,844)
Unearned employee benefits (11,573) (11,758) (12,311)
-------- -------- --------
108,903 108,997 99,791
Common shares in treasury, at cost,
546 in February 1993. - - (6)
-------- -------- --------
Total shareholders' equity 108,903 108,997 99,785
-------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $405,610 $405,111 $459,238
======== ======== ========
</TABLE>
(See accompanying notes to consolidated financial statements)
5
<PAGE>
HARTMARX CORPORATION
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
(000'S OMITTED)
<TABLE>
<CAPTION>
Three Months Ended February 28,
-------------------------------
1994 1993
------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (720) $ (1,235)
Reconciling items to adjust net loss to
net cash provided by operating activities:
Depreciation and amortization 3,129 3,973
Changes in:
Receivables, inventories and prepaids (2,433) 24,213
Other assets (500) 3,882
Accounts payable and accrued expenses (4,047) (53,724)
Taxes on earnings (82) 79
Adjustment of properties to net realizable value 93 505
------- --------
Net cash used in operating activities (4,560) (22,307)
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,095) (951)
-------- --------
Net cash used in investing activities (1,095) (951)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in notes payable to banks 4,939 (28,100)
Decrease in other long term debt (299) (257)
Proceeds from equity sale - 29,880
Proceeds from other equity transactions 626 715
-------- --------
Net cash provided by financing activities 5,266 2,238
-------- --------
Net decrease in cash and cash equivalents (389) (21,020)
Cash and cash equivalents at beginning of period 1,507 22,356
-------- --------
Cash and cash equivalents at end of period $ 1,118 $ 1,336
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Net cash paid (received) during period for:
Interest expense $ 4,700 $ 5,800
Income taxes 100 (100)
</TABLE>
(See accompanying notes to consolidated financial statements)
6
<PAGE>
HARTMARX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
The accompanying financial statements are unaudited, but in the opinion of
management include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results of operations and
financial position for the applicable period. Results of operations for any
interim period are not necessarily indicative of results for any other periods
or for the full year. These interim financial statements should be read in
conjunction with the financial statements and related notes contained in the
Annual Report on Form 10-K for the year ended November 30, 1993. Effective
December 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106 -- Employers' Accounting for Postretirement Benefits Other
Than Pensions. This statement requires recognition of a liability for
postretirement benefits as the employee renders service, rather than as claims
are paid or incurred. Since the retiree contributions offset the full cost of
the available medical programs, no transition obligation existed at adoption
and, accordingly, there was no effect on either net income or shareholders'
equity.
NOTE 2
The calculation of loss per share for each period is computed based on the
weighted average number of common shares outstanding. When dilutive, stock
options and warrants are included as share equivalents using the treasury stock
method. None of the 2,500,000 authorized preferred shares for Hartmarx
Corporation have been issued.
NOTE 3
As described in the "Restructuring and Retail Consolidation Charges" footnote to
the 1993 Annual Report on Form 10-K, fiscal 1992 third quarter and full year
results included pre-tax restructuring charges aggregating $190.8 million ("the
Restructuring"). The operational aspects of the Restructuring have been
implemented. Following the sale of Hartmarx Specialty Stores, Inc. ("HSSI") in
September, 1992 for a note due on September 18, 1994, all of the Old Mill stores
operated by the Company's Country Miss subsidiary were closed. The store
closings associated with the Company's Kuppenheimer subsidiary were
substantially completed by January, 1994. Production facilities supporting the
above noted operations have been closed or sold along with facilities related to
the rainwear and military and commercial uniform businesses. At February 28,
1994, accrued restructuring charges of $6 million were included in the accounts
payable and accrued expenses caption in the accompanying balance sheet ($8
million at November 30, 1993 and $22 million at February 28, 1993) principally
relating to lease, severance and employee benefit obligations.
NOTE 4
On March 23, 1994, the Company issued $100 million principal amount of 10 7/8%
Senior Subordinated Notes due January 15, 2002 ("the Notes") in a public
offering, and also entered into a new three year financing agreement ("the
Credit Facility") with a group of nine lenders providing for maximum borrowings
of $175 million (including a $25 million letter of credit facility) secured by
inventories, accounts receivable and
7
<PAGE>
intangibles of the Company and its subsidiaries. Proceeds from these two
transactions were utilized to repay $236 million of borrowings then outstanding
related to the Override Agreement, the Company's principal lending facility then
in effect. The Override Agreement and related Bridge Facility were terminated
upon completion of the Notes and Credit Facility transactions.
Borrowing availability under the Credit Facility will be utilized to finance
ongoing working capital and letter of credit requirements and for general
corporate purposes. Borrowings are subject to a borrowing base formula based
upon eligible accounts receivable and eligible inventory and are maintained as
either base rate or LIBOR loans, at rates which are (i) 1.5% over the greater of
(a) a rate based on the weighted average of rates of the 90-day commercial paper
rate or (b) the base rate utilized by Bankers Trust Company or (ii) LIBOR plus
2.50%. The Credit Facility contains certain provisions for these rates to
decline upon the achievement of certain operating performance ratios. Financing
fees pertaining to the Notes and Credit Facility aggregated $5.9 million and
will be amortized over the life of the respective agreements. Certain other
fees are also payable under the Credit Facility and Notes based on services
provided.
The Notes and Credit Facility contain various restrictive covenants pertaining
to minimum net worth, additional debt incurrence, capital expenditures, asset
sales, operating leases, and ratios relating to minimum accounts payable to
inventory, maximum funded debt to EBITDA and minimum fixed charge coverage, as
well as other customary covenants, representations and warranties, funding
conditions and events of default.
Earlier in fiscal 1994, two industrial development bonds (IDBs) aggregating
$15.5 million associated with the Override Agreement, were refinanced
independent of the Override Agreement. The $7.5 million IDB matures on July 1,
2014, while the $8.0 million IDB is due on July 1, 2015. The IDBs are callable
by the Company beginning July 1, 2000 at a 3% premium, declining to par on July
1, 2003; the effective interest rate on these obligations is 7.5%.
As a result of the refinancing noted above, the Company will record an
extraordinary pre-tax charge in the second fiscal quarter of 1994 of
approximately $4.0 million, representing the loss from early extinguishment of
debt.
NOTE 5
Inventories at each date consisted of (000's omitted):
<TABLE>
<CAPTION>
Feb. 28, Nov. 30, Feb. 28,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
Raw materials $ 40,736 $ 44,370 $ 48,270
Work-in-process 25,260 26,468 22,091
Finished goods 111,966 122,980 115,135
-------- -------- --------
$177,962 $193,818 $185,496
======== ======== ========
</TABLE>
Inventories are stated at the lower of cost or market. Approximately 18%, 23%
and 12% of the Company's inventories, primarily work-in-process and finished
goods, are valued using the last-in, first-out (LIFO) method at February 28,
1994, November 30, 1993 and February 28, 1993, respectively. The first-in,
first-out (FIFO) method is used for substantially all raw materials and the
remaining inventories.
8
<PAGE>
HARTMARX CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Changes in Financial Condition from November 30, 1993 to February 28, 1994
- --------------------------------------------------------------------------
Since November 30, 1993, net accounts receivable increased $14.9 million or
12.4% to $135.3 million, reflecting the normal seasonal increase from shipments
by the Men's Apparel Group. Inventories of $178.0 million declined $15.9
million or 8.2%, principally due to seasonal shipments by the Men's Apparel
Group and Kuppenheimer sales during the Christmas selling season. Net
properties decreased $2.1 million to $54.4 million reflecting depreciation
exceeding additions; capital expenditures are anticipated to be approximately $1
million less than depreciation expense for the year. Total debt, including
current maturities and the ESOP loan guarantee, increased $4.6 million to $237.8
million and represented 68.6% of total capitalization compared to 68.1% at
November 30, 1993.
Changes in Financial Condition from February 28, 1993 to February 28, 1994
- --------------------------------------------------------------------------
Net accounts receivable declined $19.1 million or 12.4% to $135.3 million,
principally attributable to the Men's Apparel Group reflecting improved
collections in continuing businesses and the disposition of its uniform and
outerwear businesses. The allowance for doubtful accounts decreased $2.1
million to $10.7 million representing 7.3% and 7.6% of gross receivables in 1994
and 1993, respectively; the higher 1993 amount and ratio was primarily
attributable to higher reserves for consumer receivables that remained after
disposal of certain retail operations. Inventories of $178.0 million declined
$7.5 million or 4.1%, principally attributable to discontinued operations,
including 53 fewer Kuppenheimer stores. Prepaid expenses of $18.7 million
decreased $10.8 million, as 1993 included payments and deposits associated with
employee benefits and a commercial letter of credit program with a financial
institution. Net properties of $54.4 million declined $9.0 million, primarily
reflecting depreciation expense exceeding capital additions. Accounts payable
and accrued expenses declined $14.3 million, principally attributable to
payments related to the Restructuring. Total debt of $237.8 million decreased
$48.5 million compared to February 28, 1993 and represented 68.6% of total
capitalization compared to 74.2% last year. The lower percentage this year
primarily reflected the repayment of debt along with higher equity from the
trailing year earnings and the proceeds from stock sales to employee benefit
plans.
Results of Operations -- First Quarter 1994 Compared to First Quarter 1993
- --------------------------------------------------------------------------
Consolidated sales declined $9.0 million or 4.8% to $178.0 million from $186.9
million in 1993. After reflecting the disposition of a uniform business, the
closing of more than 50 Kuppenheimer locations and a reduction in sales to HSSI,
the Company's former specialty stores unit, revenues increased approximately $5
million in 1994 compared to 1993. Sales in the continuing businesses of the
Men's Apparel Group increased approximately 5% after excluding the first quarter
sales to HSSI which declined to $7 million in 1994 compared to $13 million 1993.
Kuppenheimer's sales declined approximately 10%, attributable to the fewer
Kuppenheimer stores, as Kuppenheimer's comparable store sales improved slightly.
First quarter sales in the women's businesses declined 3% as increases in the
Barrie Pace catalog were more than offset by a decline
9
<PAGE>
at International Women's Apparel. Interest and other income increased $.5
million, principally from higher licensing income.
The consolidated gross margin percentage to sales was 28.2% compared to 28.9%
last year. The Men's Apparel Group comprised a greater percentage of
consolidated sales in 1994 compared to 1993, while Kuppenheimer's proportionate
percentage declined; as gross margins are lower in the Men's Apparel Group
compared to Kuppenheimer (along with a lower selling, administrative and
occupancy expense ratio to sales), this mix change represented the principal
factor causing the lower gross margin percentage to sales. The Men's Apparel
Group and Kuppenheimer first quarter 1994 gross margin rate was each
approximately the same as the comparable period of 1993; gross margins in the
women's businesses declined, principally attributable to International Women's
Apparel. Consolidated selling, administrative and occupancy expenses declined
$3.2 million to $47.3 million and represented 26.6% of sales compared to 27.0%
last year. The lower percentage to sales reflected in part the greater
proportion of Men's Apparel Group sales to total sales; also, the Men's Apparel
Group and Kuppenheimer each achieved dollar decreases in operating expenses.
The ratio in the women's businesses was unfavorable to 1993, in part
attributable to lower sales. Earnings before interest, taxes and depreciation
("EBITDA") were $7.5 million in 1994 compared to $8.5 million in 1993; EBITDA
was approximately the same as the prior period after considering the effect of
the lower sales to HSSI, sales of the Kuppenheimer stores that have been closed
and the disposition of the uniform business. Earnings before interest expense
and taxes were $4.4 million in 1994 compared to $4.5 million last year.
Interest expense declined $.6 million to $5.1 million, primarily attributable to
lower average borrowings; interest expense included amortization of financing
fees of $.5 million in 1994 and $.4 million in 1993. The consolidated net loss
for 1994 was $.7 million or $.02 per share compared to a net loss of $1.2
million or $.04 per share in 1993.
10
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with the Chapter 11 bankruptcy proceedings, Cook County,
Illinois Circuit Court proceedings and related federal court proceedings
involving HSSI, HSSA Group, Ltd. ("HSSA") and Maurice L. Rothschild & Co.
("MLR") described in the Company's Annual Report on Form 10-K for the year ended
November 30, 1993, the Company, HSSI, HSSA and MLR have agreed, under certain
conditions, to forebear from prosecuting their claims in such proceedings until
May 15, 1994 in order to facilitate discussions regarding a possible consensual
resolution of such matters. Pursuant to such agreement, the Company dismissed
without prejudice its January 19, 1994 complaint against the directors of HSSA.
The agreement may be terminated by any party upon ten days' written notice and
there can be no assurance that any such resolution will result from such
discussions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 4-D Indenture, dated as of March 15, 1994, between the Company
and Bank One Wisconsin Trust Company, N.A., Trustee,
relating to the 10 7/8% Senior Subordinated Notes due 2002
of Hartmarx Corporation.
Exhibit 4-E Credit Agreement, dated as of March 23, 1994, among the
Company, the Lenders listed therein and General Electric
Capital Corporation, as Managing Agent and Collateral
Agent.
(b) No reports on Form 8-K were filed during the first quarter of 1994.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARTMARX CORPORATION
April 13, 1994 By WALLACE L. RUECKEL
-----------------------------------
Wallace L. Rueckel
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
April 13, 1994 By GLENN R. MORGAN
-----------------------------------
Glenn R. Morgan
Senior Vice President and Controller
(Chief Accounting Officer)
12
<PAGE>
EXHIBIT 4-D
[Execution Copy]
===============================================================================
HARTMARX CORPORATION
10 7/8% Senior Subordinated Notes Due 2002
--------------------
INDENTURE
Dated as of March 15, 1994
--------------------
Bank One Wisconsin Trust Company, NA,
Trustee
===============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1
Definitions and Incorporation by Reference
<TABLE>
<S> <C> <C>
SECTION 1.1 Definitions............................. 1
SECTION 1.2 Other Definitions....................... 15
SECTION 1.3 Incorporation by Reference of Trust
Indenture Act........................... 15
SECTION 1.4 Rules of Construction................... 15
ARTICLE 2
The Securities
SECTION 2.1 Form and Dating......................... 16
SECTION 2.2 Execution and Authentication............ 16
SECTION 2.3 Registrar and Paying Agent.............. 17
SECTION 2.4 Paying Agent To Hold Money in Trust..... 18
SECTION 2.5 Securityholder Lists.................... 18
SECTION 2.6 Transfer and Exchange................... 18
SECTION 2.7 Replacement Securities.................. 19
SECTION 2.8 Outstanding Securities.................. 19
SECTION 2.9 Temporary Securities.................... 20
SECTION 2.10 Cancellation............................ 20
SECTION 2.11 Defaulted Interest...................... 20
ARTICLE 3
Redemption
SECTION 3.1 Notices to Trustee...................... 20
SECTION 3.2 Selection of Securities To Be Redeemed.. 21
SECTION 3.3 Notice of Redemption.................... 21
SECTION 3.4 Effect of Notice of Redemption.......... 22
SECTION 3.5 Deposit of Redemption Price............. 22
SECTION 3.6 Securities Redeemed in Part............. 22
ARTICLE 4
Covenants
SECTION 4.1 Payment of Securities................... 22
SECTION 4.2 SEC Reports............................. 23
SECTION 4.3 Limitation on Debt...................... 23
SECTION 4.4 Limitation on Debt and Preferred Stock
of Subsidiaries......................... 25
SECTION 4.5 Limitation on Restricted Payments....... 26
SECTION 4.6 Limitation on Restrictions on Distri-
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS (cont'd)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
butions from Subsidiaries.............. 30
SECTION 4.7 Limitation on Sales of Assets and
Subsidiary Stock....................... 31
SECTION 4.8 Limitation on Transactions with Affili-
ates................................... 34
SECTION 4.9 Change of Control...................... 35
SECTION 4.10 Compliance Certificate................. 36
ARTICLE 5
Successor Company
SECTION 5.1 When Company May Merge or Transfer
Assets................................. 36
ARTICLE 6
Defaults and Remedies
SECTION 6.1 Events of Default...................... 37
SECTION 6.2 Acceleration........................... 39
SECTION 6.3 Other Remedies......................... 40
SECTION 6.4 Waiver of Past Defaults................ 40
SECTION 6.5 Control by Majority.................... 40
SECTION 6.6 Limitation on Suits.................... 40
SECTION 6.7 Rights of Holders To Receive Payment... 41
SECTION 6.8 Collection Suit by Trustee............. 41
SECTION 6.9 Trustee May File Proofs of Claim....... 41
SECTION 6.10 Priorities............................. 42
SECTION 6.11 Undertaking for Costs.................. 42
SECTION 6.12 Waiver of Stay or Extension Laws....... 42
ARTICLE 7
Trustee
SECTION 7.1 Duties of Trustee...................... 43
SECTION 7.2 Rights of Trustee...................... 44
SECTION 7.3 Individual Rights of Trustee........... 44
SECTION 7.4 Trustee's Disclaimer................... 45
SECTION 7.5 Notice of Defaults..................... 45
SECTION 7.6 Reports by Trustee to Holders.......... 45
SECTION 7.7 Compensation and Indemnity............. 45
SECTION 7.8 Replacement of Trustee................. 46
SECTION 7.9 Successor Trustee by Merger............ 47
SECTION 7.10 Eligibility; Disqualification.......... 47
SECTION 7.11 Preferential Collection of Claims
Against Company........................ 47
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS (cont'd)
Page
ARTICLE 8
Discharge of Indenture; Defeasance
<TABLE>
<S> <C> <C>
SECTION 8.1 Discharge of Liability on Securities;
Defeasance.............................. 48
SECTION 8.2 Conditions to Defeasance................ 49
SECTION 8.3 Application of Trust Money.............. 50
SECTION 8.4 Repayment to Company.................... 50
SECTION 8.5 Indemnity for Government Obligations.... 50
SECTION 8.6 Reinstatement........................... 50
ARTICLE 9
Amendments
SECTION 9.1 Without Consent of Holders.............. 51
SECTION 9.2 With Consent of Holders................. 52
SECTION 9.3 Compliance with Trust Indenture Act..... 53
SECTION 9.4 Revocation and Effect of Consents and
Waivers................................. 53
SECTION 9.5 Notation on or Exchange of Securities... 53
SECTION 9.6 Trustee To Sign Amendments.............. 53
SECTION 9.7 Payment for Consent..................... 54
ARTICLE 10
Subordination
SECTION 10.1 Agreement To Subordinate................ 54
SECTION 10.2 Liquidation, Dissolution, Bankruptcy.... 54
SECTION 10.3 Default on Senior Debt.................. 55
SECTION 10.4 Acceleration of Payment of Securities... 56
SECTION 10.5 When Distribution Must Be Paid Over..... 56
SECTION 10.6 Payment Permitted If No Default......... 56
SECTION 10.7 Subrogation............................. 56
SECTION 10.8 Relative Rights......................... 56
SECTION 10.9 Subordination May Not Be Impaired by
Company................................. 57
SECTION 10.10 Rights of Trustee and Paying Agent...... 57
SECTION 10.11 Distribution or Notice to
Representative.......................... 58
SECTION 10.12 Article 10 Not To Prevent Events of
Default or Limit Right To Accelerate.... 58
SECTION 10.13 Trustee Not Fiduciary for Holders of
Senior Debt............................. 58
SECTION 10.14 Trust Moneys Not Subordinated........... 58
SECTION 10.15 Trustee Entitled To Rely................ 58
SECTION 10.16 Trustee To Effectuate Subordination..... 59
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS (cont'd)
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 10.17 Reliance by Holders of Senior Debt on
Subordination Provisions.............. 59
ARTICLE 11
Miscellaneous
SECTION 11.1 Trust Indenture Act Controls.......... 59
SECTION 11.2 Notices............................... 59
SECTION 11.3 Communication by Holders with Other
Holders............................... 60
SECTION 11.4 Certificate and Opinion as to
Conditions Precedent.................. 60
SECTION 11.5 Statements Required in Certificate or
Opinion............................... 61
SECTION 11.6 When Securities Disregarded........... 61
SECTION 11.7 Rules by Trustee, Paying Agent and
Registrar............................. 61
SECTION 11.8 Legal Holidays........................ 61
SECTION 11.9 Governing Law......................... 62
SECTION 11.10 No Recourse Against Others............ 62
SECTION 11.11 Successors............................ 62
SECTION 11.12 Multiple Originals.................... 62
SECTION 11.13 Table of Contents; Headings........... 62
EXHIBIT A - Form of Security
</TABLE>
-iv-
<PAGE>
INDENTURE dated as of March 15, 1994,
between HARTMARX CORPORATION, a Delaware
corporation (the "Company"), and Bank One
Wisconsin Trust Company, NA, a national
banking association (the "Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Company's 10 7/8% Senior
Subordinated Notes Due 2002 (the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
------------------------------------------
SECTION 1.1 Definitions.
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"Affiliate" of any specified person means (i) any other person which,
directly or indirectly, is in control of, is controlled by or is under common
control with such specified person or (ii) any other person who is a director or
officer (A) of such specified person, (B) of any subsidiary of such specified
person or (C) of any person described in clause (i) above. For purposes of this
definition, control of a person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such person whether by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) of
shares of Capital Stock of a Subsidiary (other than directors' qualifying
shares), property or other assets (each referred to for the purposes of this
definition as a "disposition") by the Company or any of its Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction, other than (i) a disposition by a Subsidiary to the Company or by
the Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
property or assets in the ordinary course of business, (iii) a disposition of
obsolete or worn out assets in the ordinary course of business, (iv) a
disposition subject to Section 4.5 and (v) a disposition of receivables pursuant
to an accounts receivable financing facility.
"Average Life" means, as of the date of determination, with respect to
any Debt or Preferred Stock, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the date
of each successive scheduled principal payment of such Debt or redemption
payment on such Preferred Stock multiplied by the amount of such payment by (ii)
the sum of all such payments.
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"Bank Debt" means any and all amounts payable under or in respect of
the New Credit Facility, including any and all amounts payable in respect of
letters of credit and Interest Rate Protection Agreements included in the
obligations under the New Credit Facility, and all documents, instruments and
agreements executed in connection with the New Credit Facility (and any other
agreement or agreements which refinances or replaces the New Credit Facility in
whole or in part), as amended from time to time, including principal, premium
(if any), interest, fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect thereof
including, without limitation, any and all of the foregoing amounts arising
before or after any petition in bankruptcy or for reorganization relating to the
Company whether or not a claim for such amounts is allowed, avoided or
subordinated in such proceedings.
"Bank Guarantee" means, for any Subsidiary, the guarantee by such
Subsidiary of the Bank Debt and any other Debt of any Subsidiary which Debt,
directly or indirectly, guaranties or secures any Bank Debt.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligations" of a person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such person prepared in accordance with generally accepted
accounting principles; the amount of such obligation shall be the capitalized
amount thereof, determined in accordance with generally accepted accounting
principles; and the Stated Maturity thereof shall be the date of the last
payment of rent or any other amount due under such lease prior to the first date
upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or interests
in (however designated) corporate stock, including any Preferred Stock.
"Change of Control" means the occurrence of any of the following
events:
(i) any "person" or "group" (within the meaning of Section 13(d)
of the Exchange Act), together with any Affiliates or Associates thereof,
is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have a
beneficial ownership of all shares that any such person has
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the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total voting power of equity securities entitled to vote in the election of
directors of the Company;
(ii) liquidation or dissolution of the Company; or
(iii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the
Company was approved by a vote of 66-2/3% of the directors of the Company
then still in office who were either directors at the beginning of such
period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office. A Change of Control will be
deemed to have occurred if an event described in any of the foregoing
clauses (i), (ii) or (iii) has occurred, regardless of whether one of the
events in any of the other clauses has also occurred.
"Company" means the party named as such in this Indenture until a
successor replaces it in accordance with the terms hereof and, thereafter, means
the successor and, for purposes of any provision contained herein and required
by the TIA, each other obligor on the indenture securities.
"Consolidated EBITDA Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the Reference Period
to (ii) Consolidated Interest Expense for the Reference Period; provided,
however, that (1) if the Company or any Subsidiary has issued any Debt since the
beginning of such period that remains outstanding or if the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage Ratio is an
issuance of Debt, or both, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving effect on a pro forma basis to such Debt
as if such Debt had been issued on the first day of such period and the
discharge of any other Debt repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Debt as if any such discharge had
occurred on the first day of such period, (2) if since the beginning of such
period the Company or any Subsidiary shall have made any Asset Disposition, the
EBITDA for such period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject of such
Asset Disposition for such period, or increased by an amount equal to the EBITDA
(if negative) directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Debt of the Company
or any Subsidiary repaid, repurchased, defeased or otherwise discharged with
respect to the Company and
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its continuing Subsidiaries in connection with such Asset Dispositions for such
period (or, if the Capital Stock of any Subsidiary is sold, the Consolidated
Interest Expense for such period directly attributable to the Debt of such
Subsidiary to the extent the Company and its continuing Subsidiaries are no
longer liable for such Debt after such sale), (3) if since the beginning of such
period the Company or any Subsidiary (by merger or otherwise) shall have made an
Investment in any Subsidiary (or any person which becomes a Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring in
connection with a transaction causing a calculation to be made hereunder, which
constitutes all or substantially all of an operating unit of a business, EBITDA
and Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the issuance of any Debt), as if such
Investment or acquisition occurred on the first day of such period, and (4) if
since the beginning of such period any person (that subsequently became a
Subsidiary or was merged with or into the Company or any Subsidiary since the
beginning of such period) shall have made any Asset Disposition or any
Investment that would have required an adjustment pursuant to clause (2) or (3)
above if made by the Company or a Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition or Investment occurred on
the first day of such period. For purposes of this definition, whenever pro
forma effect is to be given to an acquisition of assets, the amount of income or
earnings relating thereto, and the amount of Consolidated Interest Expense
associated with any Debt issued in connection therewith, the pro forma
calculations shall be determined in good faith by a responsible financial or
accounting Officer of the Company. If any Debt bears a floating rate of
interest and is being given pro forma effect, the interest on such Debt shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Protection Agreement applicable to such Debt to the extent that the remaining
term of such Interest Rate Protection Agreement exceeds 12 months).
"Consolidated Interest Expense" means, for any period and without
duplication, the total interest expense of the Company and its consolidated
Subsidiaries, including (i) interest expense attributable to capital leases,
(ii) amortization of debt discount and debt issuance cost (except to the extent
incurred in connection with the issuance of the Securities), (iii) capitalized
interest, (iv) non-cash interest payments, (v) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) net costs under Interest Rate Protection Agreements (including
amortization of fees), (vii) Preferred Stock dividends in respect of all
Preferred Stock held by persons other than the Company or a Wholly Owned
Subsidiary, (viii) interest incurred in connection with investments in
discontinued operations and (ix) interest actually paid by the
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Company or any of its consolidated subsidiaries under any guarantee of Debt or
any other obligation of any other person.
"Consolidated Net Income" means, for any period, the net income of the
Company and its consolidated subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(i) any net income or loss of any person if such person is not a
Subsidiary, except that the Company's equity in the net income of any such
person for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such person during
such period to the Company or a Subsidiary as a dividend or other
distribution (subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (iii) below);
(ii) any net income of any person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to
the date of such acquisition;
(iii) any net income of any Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the
making of distributions by such Subsidiary, directly or indirectly, to the
Company, except that (A) the Company's equity in the net income of any such
Subsidiary for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such
Subsidiary during such period to the Company or another Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution to another Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Subsidiary
for such period shall be included in determining such Consolidated Net
Income;
(iv) any gain or loss realized upon the sale or other disposition of
any property, plant or equipment of the Company or its consolidated
subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain or loss realized upon the sale or other disposition
of any Capital Stock of any person; or
(v) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" of any person means the total amounts shown
on the balance sheet of such person and its consolidated subsidiaries,
determined on a consolidated basis in accordance with generally accepted
accounting principles, as of the end of the most recent fiscal quarter of such
person ending at
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least 45 days prior to (or, if earlier, the date on which the Company files a
quarterly or annual periodic report under the Exchange Act with the Commission
which includes consolidated financial statements including such quarter) the
taking of any action for the purpose of which the determination is being made,
as (i) the par or stated value of all outstanding Capital Stock of such person
plus (ii) paid-in capital or capital surplus relating to such Capital Stock plus
(iii) any retained earnings or earned surplus less (A) any accumulated deficit,
(B) any amounts attributable to Redeemable Stock and (C) any amounts
attributable to Exchangeable Stock.
"Debt" of any person means, without duplication,
(i) the principal of and premium (if any) in respect of (A)
indebtedness of such person for money borrowed and (B) indebtedness
evidenced by notes, debentures, bonds or other similar instruments for the
payment of which such person is responsible or liable;
(ii) all Capital Lease Obligations of such person;
(iii) all obligations of such person issued or assumed as the
deferred purchase price of property, all conditional sale obligations of
such person and all obligations of such person under any title retention
agreement (but excluding trade accounts payable and other accrued expenses
arising in the ordinary course of business);
(iv) all obligations of such person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit
securing obligations (other than obligations described in (i) through (iii)
above) entered into in the ordinary course of business of such person to
the extent such letters of credit are not drawn upon or, if and to the
extent drawn upon, such drawing is reimbursed no later than the third
Business Day following receipt by such person of a demand for reimbursement
following payment on the letter of credit);
(v) the amount of all obligations of such person with respect to the
redemption, repayment or other repurchase of any Redeemable Stock or
Exchangeable Stock (but excluding any accrued dividends);
(vi) all obligations of the type referred to in clauses (i) through (v)
of other persons and all dividends of other persons for the payment of
which, in either case, such person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee; and
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(vii) all obligations of the type referred to in clauses (i)
through (vi) of other persons secured by any Lien on any property or asset
of such person (whether or not such obligation is assumed by such person),
the amount of such obligation being deemed to be the lesser of the value of
such property or assets or the amount of the obligation so secured.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Debt" means (i) the Bank Debt and (ii) other Senior
Debt that (A) is issued at one time or under a common agreement in an aggregate
outstanding principal amount of at least $25,000,000 and (B) has been designated
Designated Senior Debt in an Officers' Certificate received by the Trustee.
"EBITDA" for any period means the Consolidated Net Income for such
period (but without giving effect to adjustments, accruals, deductions or
entries resulting from purchase accounting, extraordinary losses or gains and
any gains or losses from any Asset Dispositions), plus the following to the
extent deducted in calculating such Consolidated Net Income: (i) income tax
expense, (ii) Consolidated Interest Expense, (iii) depreciation expense, (iv)
amortization expense and (v) all other non-cash charges (excluding any such non-
cash charge constituting an extraordinary item of loss or any non-cash charge
which requires an accrual of or a reserve for cash charges for any future
period).
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder.
"Exchangeable Stock" means any Capital Stock which is exchangeable or
convertible into another security (other than Capital Stock of the Company which
is neither Exchangeable Stock nor Redeemable Stock).
"Guarantee" means any obligation, contingent or otherwise, of any
person directly or indirectly guaranteeing any Debt or other obligation of any
person and any obligation, direct or indirect, contingent or otherwise, of such
person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation of such person (whether arising by
virtue of partnership arrangements, or by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Debt or other obligation of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
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"Holder" or "Securityholder" means the person in whose name a Security
is registered on the Registrar's books.
"Indenture" means this Indenture as amended or supplemented from time
to time.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any loan or advance to, any
acquisition of Capital Stock, equity interest, obligation or other security of,
or capital contribution or other investment in, such person. Any subsequent
issuance or transfer of any Capital Stock that results in a Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary shall not be deemed to
constitute the making of a new Investment by the Company to the extent of the
Company's then outstanding Investments therein, except with respect to that
portion of such Investment that was made in connection with or otherwise in
anticipation of such issuance or transfer.
"issue" means issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock of a person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be issued by such
Subsidiary at the time it becomes a Subsidiary.
"Lien" means any mortgage, pledge, security interest, lien,
conditional sale or other title retention agreement.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received, but excluding any other consideration received in the form of
assumption by the acquiring person of Debt or other obligations relating to such
properties or assets or received in any other non-cash form) therefrom, in each
case net of all legal, title and recording tax expenses, commissions and other
fees and expenses incurred, all federal, state, provincial, foreign and local
taxes paid or required to be accrued as a liability under generally accepted
accounting principles as a consequence of such Asset Disposition, and in each
case net of all payments made on any Debt which is secured by any assets subject
to such Asset Disposition, in accordance with the terms of any lien upon or
other security agreement of any kind with respect to such assets, or which must
by its terms, or in order to obtain a necessary consent to such Asset
Disposition, or by applicable law be repaid out of the proceeds from such Asset
Disposition, and net of all distributions and other payments required to be made
to minority interest holders in
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Subsidiaries or joint ventures as a result of such Asset Disposition.
"Net Proceeds," with respect to any issuance or sale of Capital Stock,
means the aggregate proceeds of such issuance or sale including the fair market
value of property other than cash (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
resolution) net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage, consultant and
other fees actually incurred in connection with such issuance or sale and net of
taxes paid or payable as a result thereof.
"New Credit Facility" means the Credit Agreement, dated as of March
23, 1994, among the Company and certain financial institutions named therein as
Lenders and General Electric Capital Corporation, as Managing Agent, as amended,
restated, replaced, refinanced, supplemented or otherwise modified from time to
time.
"Nonconvertible Capital Stock" means, with respect to any corporation,
any nonconvertible Capital Stock of such corporation and any Capital Stock of
such corporation convertible solely into nonconvertible common stock of such
corporation; provided, however, that Nonconvertible Capital Stock shall not
include any Redeemable Stock or Exchangeable Stock.
"Nonrecourse Debt" means Debt or that portion of Debt (i) as to which
neither the Company nor its Subsidiaries (other than a Nonrecourse Subsidiary)
(A) provide credit support (including any undertaking, agreement or instrument
which would constitute Debt), (B) is directly or indirectly liable, or (C)
constitute the lender and (ii) no default with respect to which (including any
rights which the holders thereof may have to take enforcement action against a
Nonrecourse Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Debt of the Company or its Subsidiaries to declare a default
on such other Debt or cause the payment thereof to be accelerated or payable
prior to its Stated Maturity.
"Nonrecourse Subsidiary" means a Subsidiary which (i) has not acquired
any assets (other than cash) directly or indirectly from the Company or any
Subsidiary, (ii) only owns properties acquired after the date of this Indenture
and (iii) has no Debt other than Nonrecourse Debt.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer or the Secretary of the Company.
"Officers' Certificate" means a certificate signed by two Officers.
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"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Investments" shall mean (i) short-term obligations of, or
fully guaranteed by, the United States of America; (ii) commercial paper rated
A-1 or better by Standard and Poor's Corporation or P-1 or better by Moody's
Investors Service, Inc.; (iii) deposit accounts maintained in the ordinary
course of business at a bank or trust company which is organized under the laws
of the United States of America or any state thereof having capital, surplus and
undivided profits aggregating in excess of $500,000,000; (iv) certificates of
deposit issued by and time deposits with commercial banks (whether domestic or
foreign) having capital, surplus and undivided profits aggregating in excess of
$500,000,000; (v) deposits maintained as cash collateral with banks and
financial institutions providing cash management services to the Company or its
Wholly Owned Subsidiaries having an aggregate value which is at all times less
than $4,000,000; (vi) the receipt of notes or other Investments by the Company
or any Subsidiary in settlement of delinquent or defaulted accounts or notes
receivable; and (vii) deposit accounts maintained by the Company or Subsidiaries
under the terms of the Bank Debt. Notwithstanding the foregoing, the
Investments described in clauses (i), (ii) and (iv) above shall constitute
Permitted Investments only to the extent such Investments mature within 90 days
of the date of acquisition thereof.
"person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security plus the
premium, if any, payable on the Security which is due or overdue or is to become
due at the relevant time.
"Public Equity Offering" means an underwritten public offering of
common stock of the Company for cash pursuant to an effective registration
statement under the Securities Act.
"Redeemable Stock" means any Capital Stock that by its terms or
otherwise is required to be redeemed on or prior to the first anniversary of the
Stated Maturity of the Securities or is redeemable at the option of the holder
thereof at any time on or
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prior to the first anniversary of the Stated Maturity of the Securities.
"Reference Period", with respect to any computation of the
Consolidated EBITDA Coverage Ratio, means the most recent four consecutive
fiscal quarters ending at least 45 days prior to (or, if earlier, the date on
which the Company files a quarterly or annual periodic report under the Exchange
Act with the Commission which includes consolidated financial statements
including such quarter) the date of determination of the Consolidated EBITDA
Coverage Ratio.
"Reorganization Securities" means shares of stock of the Company, or
its successor, as reorganized, or other equity or debt securities of the Company
or any other person provided for by a plan of reorganization, the payment of
which is subordinated, at least to the same extent as the Securities, to the
payment of all Senior Debt which may at the time be outstanding and the
principal of which is due no earlier than the principal of the Securities;
provided that the legal, equitable and contractual rights of the holders of the
Senior Debt are not impaired thereby or the holders of the Senior Debt, or their
agents or representatives, as the case may be, shall have approved such plan of
reorganization.
"Representative" means the trustee, agent or representative (if any)
for an issue of Senior Debt.
"SEC" means the Securities and Exchange Commission.
"Secured Debt" means any Debt of the Company secured by a Lien.
"Securities" means the Securities issued under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and the rules and regulations thereunder.
"Senior Debt" means:
(i) all Bank Debt;
(ii) all obligations consisting of the principal of and premium
(if any) and accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization
relating to the Company whether or not post-filing interest is allowed in
such proceeding), whether existing on the date of the Indenture or
thereafter incurred, in respect of (A) indebtedness of the Company for
money borrowed and (B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which the Company is
responsible or liable;
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(iii) all Capital Lease Obligations of the Company;
(iv) all obligations of the Company (A) for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (B) under interest rate swaps, caps, collars, options and
similar arrangements and foreign currency hedges entered into in respect of
any obligations described in clauses (i), (ii) and (iii) or generally to
hedge foreign exchange risks, (C) under receivables financing facilities or
(D) issued or assumed as the deferred purchase price of property or
services and all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement;
(v) all obligations of other persons of the type referred to in
clauses (ii), (iii) and (iv) and all dividends of other persons for the
payment of which, in either case, the Company is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by
means of any agreement which has the economic effect of a guarantee; and
(vi) all obligations of the Company consisting of modifications,
renewals, extensions, replacements, refinancings and refundings of any
obligations described in clause (i), (ii), (iii), (iv) or (v);
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that such obligations are not superior
in right of payment to the Securities. However, Senior Debt will not be deemed
to include (1) any obligation of the Company to any Subsidiary, (2) any
liability for federal, state, local or other taxes owed or owing by the Company,
(3) any accounts payable or other liability to trade creditors arising in the
ordinary course of business (including guarantees thereof or instruments
evidencing such liabilities), (4) any indebtedness, guarantee or obligation of
the Company (other than the Bank Debt) which is contractually subordinate or
junior in right of payment to any other indebtedness, guarantee or obligation of
the Company or (5) the portion of any Debt issued in violation of Section 4.3.
"Senior Subordinated Debt" means the Securities and any other
indebtedness, guarantee or obligation of the Company that specifically provides
that such indebtedness, guarantee or obligation is to rank pari passu with other
Senior Subordinated Debt of the Company and is not subordinated by its terms to
any indebtedness, guarantee or obligation of the Company which is not Senior
Debt.
"Significant Subsidiary" means (i) any domestic Subsidiary of the
Company which at the time of determination either (A) had assets which, as of
the date of the Company's most recent quarterly consolidated balance sheet,
constituted at least 3% of
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the Company's total assets on a consolidated basis as of such date or (B) had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which constituted at least 3% of the
Company's total revenues on a consolidated basis for such period (each such
determination being made in accordance with generally accepted accounting
principles), (ii) any foreign Subsidiary of the Company which at the time of
determination either (A) had assets which, as of the date of the Company's most
recent quarterly consolidated balance sheet, constituted at least 5% of the
Company's total assets on a consolidated basis as of such date or (B) had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which constituted at least 5% of the
Company's total revenues on a consolidated basis for such period (each such
determination being made in accordance with generally accepted accounting
principles) or (iii) any Subsidiary of the Company which, if merged with all
Defaulting Subsidiaries of the Company, would at the time of determination
either (A) have had assets which, as of the date of the Company's most recent
quarterly consolidated balance sheet, would have constituted at least 10% of the
Company's total assets on a consolidated basis as of such date or (B) have had
revenues for the 12-month period ending on the date of the Company's most recent
quarterly consolidated statement of income which would have constituted at least
10% of the Company's most recent quarterly consolidated statement of income
which would have constituted at least 10% of the Company's total revenues on a
consolidated basis for such period (each such determination being made in
accordance with generally accepted accounting principles). "Defaulting
Subsidiary" means any Subsidiary of the Company (other than a Nonrecourse
Subsidiary) with respect to which an event described under clause (5), (6), (7)
or (8) of Section 6.1 has occurred and is continuing.
"Stated Maturity" means, with respect to any Security, the date
specified in such Security as the fixed date on which the principal of such
Security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
Security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Debt of the Company (whether
outstanding on the date hereof or hereafter incurred) which is subordinate or
junior in right of payment to the Securities.
"Subsidiary" means any corporation, association, partnership or other
business entity of which more than 50% of the total voting power of shares of
Capital Stock or other interests (including partnership interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (i) the Company, (ii) the
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Company and one or more Subsidiaries or (iii) one or more Subsidiaries;
provided, that Hartmarx Specialty Stores, Inc. ("HSSI") shall not be considered
a Subsidiary of the Company as long as the financial results of HSSI are not
properly required to be consolidated in the consolidated financial statements
of the Company and its subsidiaries under generally accepted accounting
principles (including as a result of any ownership of HSSI by the Company that
is other than temporary in nature) and the Company has not assumed, guaranteed
or taken such other actions so as to become responsible for, directly or under
an alter ego, substantive consolidation or other similar legal theory, the
liabilities of HSSI.
"Tangible Property" means all land, buildings, machinery and equipment
and leasehold interests and improvements which would be reflected on a balance
sheet of the Company prepared in accordance with generally accepted accounting
principles, excluding (i) all such tangible property located outside the United
States of America, (ii) all rights, contracts and other intangible assets of any
nature whatsoever and (iii) all inventories and other current assets.
"TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939
(15 U.S.C. (S)(S)77aaa-77bbbb), as in effect from time to time.
"Traco Warrant Exercise" means the sale of common stock of the Company
for cash pursuant to any exercise of the three-year Warrant to Purchase
1,649,000 shares of Common Stock issued pursuant to the Purchase Agreement,
dated September 20, 1992, between the Company and Traco International, N.V.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the terms hereof and, thereafter, means
the successor.
"Trust Officer" means the Chairman of the Board, the President or any
other officer or assistant officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock of
which (other than directors' qualifying shares) is owned by the Company or
another Wholly Owned Subsidiary.
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SECTION 1.2 Other Definitions.
-----------------
<TABLE>
<CAPTION>
Defined
Term in Section
---- ----------
<S> <C>
"Bankruptcy Law"............................................... 6.1
"covenant defeasance option"................................... 8.1(b)
"Custodian".................................................... 6.1
"Event of Default"............................................. 6.1
"legal defeasance option"...................................... 8.1(b)
"Legal Holiday"................................................ 11.8
"Offer"........................................................ 4.7(b)
"Offer Amount"................................................. 4.7(c)
"Offer Period"................................................. 4.7(c)
"pay the Securities"........................................... 10.3
"Paying Agent"................................................. 2.3
"Payment Blockage Period"...................................... 10.3
"Payment Notice"............................................... 10.3
"Purchase Date"................................................ 4.7(c)
"Registrar".................................................... 2.3
"Restricted Payment"........................................... 4.5
</TABLE>
SECTION 1.3 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
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(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured debt shall not be deemed to be subordinate or junior to
secured debt merely by virtue of its nature as unsecured debt;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the issuer dated such date prepared in
accordance with generally accepted accounting principles and accretion of
principal on such security shall be deemed to be the issuance of Debt; and
(8) the principal amount of any Redeemable Stock shall be (i) the
maximum liquidation value of such Redeemable Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Redeemable Stock, whichever is greater.
ARTICLE 2
The Securities
--------------
SECTION 2.1 Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture.
The Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreements to which the Company is subject, if any, or
usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in Exhibit A are part of
the terms of this Indenture.
SECTION 2.2 Execution and Authentication. Two Officers shall sign
the Securities for the Company by manual or facsimile signature. The Company's
seal shall be impressed, affixed, imprinted or reproduced on the Securities and
may be in facsimile form.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security, the Security shall be
valid nevertheless.
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A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount of not more than $100,000,000, upon a
written order of the Company signed by two officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed that
amount except as provided in Section 2.7.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by
the Trustee includes authentication by such agent. An authenticating agent has
the same rights as any Registrar, Paying Agent or agent for service of notices
and demands.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and integral multiples thereof.
SECTION 2.3 Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange. The
Company may have one or more co-registrars and one or more additional paying
agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and
shall be entitled to appropriate compensation therefor pursuant to Section 7.7.
The Company or any Subsidiary or Affiliate may act as Paying Agent, Registrar,
co-registrar or transfer agent.
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The Company initially appoints the Trustee as Registrar and Paying
Agent in connection with the Securities.
SECTION 2.4 Paying Agent To Hold Money in Trust. On or before each
due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent not later than 11:30 a.m. on such due date and in
funds available on such due date a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Securityholders or the Trustee all money held by the
Paying Agent for the payment of principal of or interest on the Securities, and
shall notify the Trustee of any default by the Company in making any such
payment. If the Company or a Subsidiary acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund. The Company at any time may require a Paying Agent to pay all money held
by it to the Trustee and to account for any funds disbursed by the Paying Agent.
Upon complying with this Section, the Paying Agent shall have no further
liability for the money delivered to the Trustee.
SECTION 2.5 Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least ten
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.6 Transfer and Exchange. The Securities shall be issued
in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of Section 8-401(1)
(or any successor provision) of the Uniform Commercial Code are met. When
Securities are presented to the Registrar or a co-registrar with a request to
exchange them for an equal principal amount of Securities of other
denominations, the Registrar shall make the exchange as requested if the same
requirements are met. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar's or co-registrar's request. The Company may require payment of a sum
sufficient to pay all taxes, assessments or other governmental charges in
connection with any exchange pursuant to Sections 2.9, 3.6 or 9.5. The Company
shall not be required to make and the Registrar need not register transfers or
exchanges of Securities selected for redemption (except, in the case of
Securities to be redeemed in part, the portion thereof not to be redeemed) or
any Securities for a period of 15 days before a
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selection of Securities to be redeemed or 15 days before an interest payment
date.
Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any co-
registrar may deem and treat the person in whose name a Security is registered
as the absolute owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other purposes
whatsoever, whether or not such Security is overdue, and none of the Company,
the Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
All Securities issued upon any transfer or exchange pursuant to the
terms of this Indenture will evidence the same debt and will be entitled to the
same benefits under this Indenture as the Securities surrendered upon such
transfer or exchange.
SECTION 2.7 Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements of
Section 8-405 (or any successor provision) of the Uniform Commercial Code are
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any co-
registrar from any loss which any of them may suffer if a Security is replaced.
The Company and the Trustee may charge the Holder for their expenses in
replacing a Security.
Every replacement Security is an obligation of the Company.
SECTION 2.8 Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those cancelled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security does not cease to be outstanding because
the Company or an Affiliate of the Company holds the Security.
If a security is replaced pursuant to Section 2.7, it ceases to be
outstanding and is not entitled to any rights hereunder.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
to be redeemed or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Securityholders on that date pursuant
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to the terms of this Indenture, then on and after that date such Securities
cease to be outstanding for all purposes of this Indenture and interest on them
ceases to accrue.
SECTION 2.9 Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee shall authenticate definitive Securities and
deliver them in exchange for temporary Securities.
SECTION 2.10 Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The Trustee and no one else shall cancel and
destroy (subject to the record retention requirements of the Exchange Act) all
Securities surrendered for registration of transfer, exchange, payment or
cancellation and deliver a certificate of such destruction to the Company unless
the Company directs the Trustee to deliver cancelled Securities to the Company.
The Company may not issue new Securities to replace Securities it has redeemed,
paid or delivered to the Trustee for cancellation.
SECTION 2.11 Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest, to the extent lawful, at the rate
borne by the Securities) in any lawful manner. The Company may pay the
defaulted interest to the persons who are Securityholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Trustee, in consultation with the Company, shall fix or
cause to be fixed any such special record date and payment date, and, at least
15 days before any such special record date the Company shall mail to each
Securityholder a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
ARTICLE 3
Redemption
----------
SECTION 3.1 Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 45 days before the redemption
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date unless the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from the
Company to the effect that such redemption will comply with the conditions
herein. If fewer than all the Securities are to be redeemed, the record date
relating to such redemption shall be selected by the Company and given to the
Trustee, which record date shall be not less than 15 days after the date of
notice to the Trustee.
SECTION 3.2 Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee
considers fair and appropriate and in accordance with methods generally used at
the time of selection by fiduciaries in similar circumstances. The Trustee
shall make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or an integral
multiple of $1,000. Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for
redemption. The Trustee shall notify the Company promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.3 Notice of Redemption. At least 30 days but not more
than 60 days before a date for redemption of Securities, the Company shall mail
a notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such redemption
payment, interest on Securities (or portion thereof) called for redemption
ceases to accrue on and after the redemption date; and
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(7) the paragraph of the Securities pursuant to which the Securities
called for redemption are being redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4 Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.5 Deposit of Redemption Price. On or before the
redemption date, the Company shall deposit with the Paying Agent not later than
11:30 a.m. on such redemption date and in funds available on such redemption
date (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which have been delivered by the
Company to the Trustee for cancellation.
SECTION 3.6 Securities Redeemed in Part. On the redemption date,
upon surrender of a Security that is redeemed in part, the Company shall execute
and the Trustee shall authenticate for the Holder (at the Company's expense) a
new Security equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
---------
SECTION 4.1 Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholder on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
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SECTION 4.2 SEC Reports. The Company shall file with the Trustee and
provide Securityholders, within 15 days after it files them with the SEC, copies
of its annual report and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which the Company is required to file with the SEC
pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the
Company may not be required to remain subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with
the SEC and provide the Trustee and Securityholders with such annual reports and
such information, documents and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) which are
specified in Sections 13 and 15(d) of the Exchange Act as long as the Securities
remain outstanding. The Company also shall comply with the other provisions of
TIA (S)314(a).
SECTION 4.3 Limitation on Debt.
------------------
(a) The Company shall not issue, directly or indirectly, any Debt
unless the Consolidated EBITDA Coverage Ratio (as shown by a consolidated pro
forma income statement of the Company and its consolidated subsidiaries for the
Reference Period prepared in accordance with the definition of "Consolidated
EBITDA Coverage Ratio") exceeds 2.0 to 1.0.
(b) Notwithstanding Section 4.3(a), the Company may issue the
following Debt:
(1) Debt issued pursuant to the New Credit Facility or any
agreement or agreements which refinance or replace the New Credit Facility,
in whole or in part, but only to the extent that the aggregate of all Debt
issued or issuable by the Company under all such refinancing agreements
does not exceed the greater of (A) $175,000,000 and (B) the sum of (x) 55%
of the book value of the inventory of the Company and its Wholly Owned
Subsidiaries (other than Nonrecourse Subsidiaries) and (y) 85% of the book
value of the accounts receivable of the Company and its Wholly Owned
Subsidiaries (other than Nonrecourse Subsidiaries), in each case as
determined in accordance with generally accepted accounting principles
(such sum of (x) and (y) is referred to herein as the "Borrowing Base");
(2) Debt under Capital Lease Obligations which does not exceed
$10,000,000 in the aggregate (less the amount of any Debt under Capital
Lease Obligations of any Subsidiary then outstanding and incurred pursuant
to clause (2) of Section 4.4).
(3) Debt owed to and held by a Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock which results in any such Wholly
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Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any transfer of
such Debt by such Wholly Owned Subsidiary (other than to a Wholly Owned
Subsidiary) shall be deemed, in each case, to constitute the issuance of
such Debt by the Company;
(4) the Securities and Debt issued in exchange for, or the
proceeds of which are used to refund or refinance, any Debt permitted by
this clause (4); provided, however, that (i) the principal amount of the
Debt so issued shall not exceed the principal amount of the Debt being
exchanged, refunded or refinanced plus an amount no greater than any
prepayment premium due under the terms of the Debt being exchanged,
refunded or refinanced and fees, costs and expenses of issuance of the Debt
so issued and (ii) either (x) the Debt so issued shall not mature prior to
the earlier of (A) the Stated Maturity of the Debt being exchanged,
refunded or refinanced and (B) the first anniversary of the Stated Maturity
of the Securities or (y) the portion, if any, of the Debt so issued that is
scheduled to mature on or prior to the Stated maturity of the Securities
has a weighted average life to maturity at the time such Debt is incurred
that is equal to or greater than the weighted average life to maturity of
the portion of the Debt being exchanged, refunded or refinanced that is
scheduled to mature on or prior to the Stated Maturity of the Securities;
(5) Debt (other than Debt described in clause (1), (2), (3) or
(4) of this Section) outstanding on the date on which the Securities were
originally issued and Debt issued in exchange for, or the proceeds of which
are used to refund or refinance, any Debt permitted by this clause (5);
provided, however, that (i) the principal amount of the Debt so issued
shall not exceed the principal amount of the Debt being exchanged, refunded
or refinanced plus an amount no greater than any prepayment premium due
under the terms of the Debt being exchanged, refunded or refinanced and
fees, costs and expenses of issuance of the Debt so issued and (ii) either
(x) the Debt so issued shall not mature prior to the earlier of (A) the
Stated Maturity of the Debt being exchanged, refunded or refinanced and (B)
the first anniversary of the Stated Maturity of the Securities or (y) the
portion, if any, of the Debt so issued that is scheduled to mature on or
prior to the Stated Maturity of the Securities has a weighted average life
to maturity at the time such Debt is incurred that is equal to or greater
than the weighted average life to maturity of the portion of the Debt being
exchanged, refunded or refinanced that is scheduled to mature on or prior
to the Stated Maturity of the Securities; and
(6) Debt in an aggregate principal amount which, together with
all other Debt of the Company then outstanding (other than Debt permitted
by clauses (1) through (5) of this
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Section and in Section 4.3(a)) does not exceed $10,000,000 (less the amount
of any Subsidiary Debt or Preferred Stock then outstanding and incurred
pursuant to clause (7) of Section 4.4).
(c) Notwithstanding Sections 4.3(a) and 4.3(b), the Company shall not
issue any Debt (i) if the proceeds thereof are used, directly or indirectly, to
repay, prepay, redeem, defease, retire, refund or refinance any Subordinated
Obligations unless such Debt shall be subordinated to the Securities to at least
the same extent as such Subordinated Obligations or (ii) if such Debt is
subordinate or junior in ranking in any respect to any Senior Debt unless such
Debt is Senior Subordinated Debt or is expressly subordinated in right of
payment to Senior Subordinated Debt. In addition, the Company shall not issue
any Secured Debt which is not Senior Debt unless contemporaneously therewith
effective provision is made to secure the Securities equally and ratably with
such Secured Debt for so long as such Secured Debt is secured by a Lien. For
purposes of the preceding sentence, the granting of liquidation or other
preferences by the holders of Senior Debt to providers of trade credit to the
Company or any Subsidiary shall not render such trade credit Secured Debt.
SECTION 4.4 Limitation on Debt and Preferred Stock of Subsidiaries.
The Company shall not permit any Subsidiary to issue, directly or indirectly,
any Debt or Preferred Stock except:
(1) (i) any Bank Guarantee, (ii) any guarantee by a Subsidiary
of any Senior Debt permitted to be issued pursuant to Section 4.3 and (iii)
Debt or Preferred Stock issued to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock which results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any subsequent transfer of such Debt or
Preferred Stock (other than to the Company or a Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the issuance of such Debt or
Preferred Stock by the issuer thereof;
(2) Debt under Capital Lease Obligations which does not exceed
$10,000,000 in the aggregate (less the amount of any Debt under Capital
Lease Obligations then outstanding and incurred pursuant to Section
4.3(b)(2);
(3) Debt or Preferred Stock of a Subsidiary issued and
outstanding on or prior to the date on which such Subsidiary was acquired
by the Company (other than Debt or Preferred Stock issued as consideration
in, or to provide all or any portion of the funds or credit support
utilized to consummate, the transaction or series of related transactions
pursuant to which such Subsidiary became a Subsidiary or was acquired by
the Company);
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(4) Debt or Preferred Stock issued and outstanding on or prior
to the date on which the Securities were originally issued (other than Debt
or Preferred Stock described in clause (1), (2) or (3) of this Section);
(5) Debt or Preferred Stock issued in exchange for, or the
proceeds of which are used to refund or refinance, Debt or Preferred Stock
referred to in clause (2), (3) or (4) of this Section; provided, however,
that (i) the principal amount or liquidation value of such Debt or
Preferred Stock so issued shall not exceed the principal amount or
liquidation value of the Debt or Preferred Stock so refunded or refinanced
plus an amount no greater than any prepayment premium due under the terms
of the Debt or Preferred Stock so refunded or refinanced and reasonable
expenses of issuance of the Debt or Preferred Stock so issued and (ii)
either (x) the Debt or Preferred Stock so issued shall not mature prior to
the earlier of (A) the Stated Maturity of the Debt or Preferred Stock being
exchanged, refunded or refinanced and (B) the first anniversary of the
Stated Maturity of the Securities or (y) the portion, if any, of the Debt
or Preferred Stock so issued that is scheduled to mature on or prior to the
Stated Maturity of the Securities has a weighted average life to maturity
at the time such Debt or Preferred Stock is incurred or issued that is
equal to or greater than the weighted average life to maturity of the
portion of the Debt or Preferred Stock being exchanged, refunded or
refinanced that is scheduled to mature on or prior to the Stated Maturity
of the Securities;
(6) Nonrecourse Debt of a Nonrecourse Subsidiary issued after
the date of this Indenture to finance the acquisition of new assets
acquired by the Company or its Subsidiaries after such date; provided,
however, that if any such debt thereafter ceases to be Nonrecourse Debt of
a Nonrecourse Subsidiary, then such event will be deemed to constitute the
issuance of such Debt by the issuer thereof; and
(7) Debt and Preferred Stock in an aggregate principal amount
which, together with all other Debt and Preferred Stock of Subsidiaries
then outstanding (other than Debt or Preferred Stock permitted by clauses
(1) through (6) of this Section) does not exceed $10,000,000 (less the
amount of any Debt then outstanding and incurred pursuant to Section
4.3(b)(6).
SECTION 4.5 Limitation on Restricted Payments.
---------------------------------
(a) The Company shall not, and shall not permit any Subsidiary,
directly or indirectly, to (i) declare or pay any dividend or make any
distribution on or in respect of its Capital Stock (including any distribution
in connection with any merger or consolidation involving the Company) or to the
direct or indirect
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holders of its Capital Stock (except dividends or distributions payable solely
in its Nonconvertible Capital Stock or in options, warrants or other rights to
purchase its Nonconvertible Capital Stock and except dividends or distributions
payable to the Company or a Subsidiary which is not a Nonrecourse Subsidiary),
(ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock
of the Company, a Subsidiary or any direct or indirect parent of the Company,
(iii) purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking
fund payment, any Subordinated Obligations (other than the purchase, repurchase
or other acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final maturity,
in each case due within one year of the date of acquisition) or (iv) make any
Investment (other than a Permitted Investment) in any Affiliate of the Company
or person, other than a Wholly Owned Subsidiary which is not a Nonrecourse
Subsidiary or a person which will become a Wholly Owned Subsidiary which is not
a Nonrecourse Subsidiary as a result of any such Investment (any such dividend,
distribution, purchase, redemption, repurchase, defeasance, other acquisition,
retirement or Investment being hereinafter referred to as a "Restricted
Payment") if at the time the Company or such Subsidiary makes such Restricted
Payment:
(1) a Default shall have occurred and be continuing (or would
result therefrom);
(2) the Company is not able to issue $1.00 of additional Debt in
accordance with the provisions of Section 4.3(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the date on which the Securities were originally
issued would exceed the sum of
(a) 50% of the Consolidated Net Income accrued during the
period (treated as one accounting period) from March 1, 1994 to the
end of the most recent fiscal quarter ending at least 45 days prior to
(or, if earlier, the date on which the Company files a quarterly or
annual periodic report under the Exchange Act with the Commission
which includes consolidated financial statements including such
quarter) the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(b) the aggregate Net Proceeds received by the Company from
the issue or sale of, or as a capital contribution in respect of, its
Capital Stock (other than Redeemable Stock or Exchangeable Stock)
subsequent to the date on which the Securities were originally issued
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(other than an issuance or sale to a Subsidiary or an employee stock
ownership plan or similar trust);
(c) the aggregate Net Proceeds received by the Company from
the issue or sale of its Capital Stock (other than Redeemable Stock or
Exchangeable Stock) to an employee stock ownership plan on or after
March 1, 1994, but (if such employee stock ownership plan incurs any
Debt) only to the extent that any such proceeds are equal to any
increase in the Consolidated Net Worth of the Company resulting from
principal repayments made by such employee stock ownership plan with
respect to Debt incurred by it to finance the purchase of such Capital
Stock; and
(d) the amount by which Debt of the Company is reduced on
the Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary) subsequent to the date on which the Securities
were originally issued of any Debt of the Company convertible or
exchangeable for Capital Stock (other than Redeemable Stock or
Exchangeable Stock) of the Company (less the amount of any cash, or
other property, distributed by the Company upon such conversion or
exchange).
(b) The provisions of Section 4.5(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or Subordinated
Obligations of the Company made by exchange for, or out of the proceeds of
the substantially concurrent sale of, Capital Stock of the Company (other
than Redeemable Stock or Exchangeable Stock and other than Capital Stock
issued or sold to a Subsidiary or an employee stock ownership plan);
provided, however, that (A) such purchase or redemption shall be excluded
in the calculation of the amount of Restricted Payments and (B) the Net
Proceeds from such sale shall be excluded from clauses (3)(b) and (3)(c) of
Section 4.5(a);
(ii) any purchase or redemption of Subordinated Obligations of
the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company; provided, however,
that such Debt (A) shall be subordinated to the Securities and shall be
subordinated to Senior Debt and Senior Subordinated Debt to at least the
same extent as the Subordinated Obligations so exchanged, purchased or
redeemed and (B) either (x) shall not mature prior to the earlier of (1)
the Stated Maturity of the Subordinated Obligations so exchanged, purchased
or redeemed and (2) the first anniversary of the Stated Maturity of the
Securities or (y) the portion, if any, of the Debt that is scheduled to
mature on or prior to the Stated Maturity of the Securities has a weighted
average life to maturity at the time such Debt is incurred that is equal to
or greater than the weighted
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average life to maturity of the portion of the Subordinated Obligations
being exchanged, purchased or redeemed that is scheduled to mature on or
prior to the Stated Maturity of the Securities; provided further, however,
that such purchase or redemption shall be excluded in the calculation of
the amount of Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations from
Net Available Cash to the extent permitted by Section 4.7; provided,
however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have complied
with this Section; provided further, however, that such dividend shall be
included in the calculation of the amount of Restricted Payments;
(v) the redemption by the Company of any rights to purchase
Capital Stock of the Company which rights were issued pursuant to the
Rights Agreement, dated as of January 17, 1986, as amended, for an amount
not to exceed on a per right basis the redemption price of such right at
the date of the Indenture, as adjusted for stock dividends and similar
transactions; provided, however, that such redemption shall be included in
the calculation of the amount of Restricted Payments;
(vi) the purchase, redemption, acquisition, cancellation or other
retirement for value of shares of Capital Stock of the Company, options on
any such shares or related stock appreciation rights or similar securities
held by officers or employees or former officers or employees (or their
estates or beneficiaries under their estates) or by any employee benefit
plan, upon death, disability, retirement or termination of employment or
pursuant to the terms of any employee benefit plan approved by the Board of
Directors or a committee thereof or under any other agreement approved by
the Board of Directors or a committee thereof under which such shares of
stock or related rights were issued; provided, however, that the aggregate
cash consideration paid for such purchase, redemption, acquisition,
cancellation or other retirement of such shares of Capital Stock or related
rights after the date of the Indenture does not exceed $2,500,000 in any
fiscal year or $1,000,000 payable to any individual in any fiscal year;
provided further, however, that all such payments shall be included in the
calculation of the amount of Restricted Payments; and
(vii) loans or advances to officers, directors and employees of
the Company and its Subsidiaries made after the date of this Indenture in
the ordinary course of business
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consistent with past practices for the advancement of travel and other
normal business expenses or relocation expenses; provided, however, that
such loans and advances shall be excluded from the calculation of the
amount of Restricted Payments.
SECTION 4.6 Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to (i) pay dividends
or make any other distributions on its Capital Stock or pay any Debt or other
obligation owed to the Company, (ii) make any loans or advances to the Company
or (iii) transfer any of its property or assets to the Company, except:
(1) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the date on which the Securities were
originally issued;
(2) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Debt issued by such Subsidiary on
or prior to the date on which such Subsidiary became a Subsidiary or was
acquired by the Company (other than Debt issued as consideration in, or to
provide all or any portion of the funds utilized to consummate, the
transaction or series of related transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the Company) and
outstanding on such date;
(3) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Debt issued pursuant to an agreement referred to
in clause (1) or (2) of this Section or contained in any amendment to an
agreement referred to in clause (1) or (2) of this Section; provided,
however, that the encumbrances and restrictions contained in any such
refinancing agreement or amendment are no less favorable to the holders of
the Securities than encumbrances and restrictions contained in such prior
agreements;
(4) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases, licenses or other contractual
obligations governing leasehold interests, licenses or contractual rights
and entered into in the ordinary course of business consistent with past
practices to the extent such provisions restrict the transfer of the lease,
license or contractual rights or of customary restrictions on transfer of
assets or business and interim conduct of business entered into in
contracts providing for the disposition of such assets or business;
(5) in the case of clause (iii) above, restrictions contained in
agreements relating to purchase money financing
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arrangements of Subsidiaries or contained in security agreements securing
Debt of the Company or a Subsidiary to the extent such restrictions
restrict the transfer of the property subject to such purchase money
financing arrangements or security agreements; and
(6) encumbrances or restrictions on Nonrecourse Debt of a
Nonrecourse Subsidiary.
SECTION 4.7 Limitation on Sales of Assets and Subsidiary Stock.
--------------------------------------------------
(a) The Company shall not, and shall not permit any Subsidiary to,
make any Asset Disposition unless (i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Board of Directors (including
as to the value of all non-cash consideration) of the shares and assets subject
to such Asset Disposition and, to the extent that the proceeds of such Asset
Dispositions exceed $5,000,000 in any 12-month period, at least 75% of the
consideration thereof received by the Company or such Subsidiary is in the form
of cash or cash equivalents or the assumption of Debt of the Company or other
obligations relating to such assets and release from all liability on the Debt
or other obligations assumed and (ii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be) (A) first, to the extent the Company elects (or
is required by the terms of any Senior Debt) to prepay, repay or purchase Senior
Debt or Debt (other than any Redeemable Stock) of a Wholly Owned Subsidiary (in
each case other than Debt owed to the Company or an Affiliate of the Company)
within 60 days from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; (B) second, to the extent of the balance of
such Net Available Cash after application in accordance with clause (A), at the
Company's election, to the investment by the Company or any Wholly Owned
Subsidiary in assets to replace the assets that were the subject of such Asset
Disposition or an asset that (as determined by the Board of Directors) will be
used in the business of the Company and the Wholly Owned Subsidiaries existing
on the date of the original issuance of the Securities or in business reasonably
related thereto, in each case within the later of one year from the date of such
Asset Disposition or the receipt of such Net Available Cash; (C) third, to the
extent of the balance of such Net Available Cash after application and in
accordance with clauses (A) and (B), to make an Offer to purchase Securities
pursuant to and subject to the condition of Section 4.7(b), and (D) fourth, to
the extent of the balance of such Net Available Cash after application in
accordance with clauses (A), (B) and (C), to (x) any investment in the business
or operations of the Company or any Wholly Owned Subsidiary or (y) the
prepayment, repayment or purchase of Debt (other than any Redeemable Stock) of
the Company or Debt of any Subsidiary (other than Debt owed to the Company or an
Affiliate of
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the Company), in each case within one year from the later of the receipt of such
Net Available Cash and the date the Offer described in Section 4.7(b) is
consummated; provided, however, that in connection with any prepayment,
repayment or purchase of Debt pursuant to clause (A) or (D) above, the Company
shall cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased; provided,
further, that the Company shall not be required to reduce the loan commitment
pursuant to clause (A) below the greater of (x) $175,000,000 and (y) the
Borrowing Base after giving effect to the transaction giving rise to the
obligations under this Section 4.7(a). Notwithstanding the foregoing provisions
of this Section, (i) the Company and the Subsidiaries shall not be required to
apply any Net Available Cash in accordance with this Section except to the
extent that the aggregate Net Available Cash from all Asset Dispositions which
is not applied in accordance with this Section exceeds $10,000,000, and (ii) the
Company and the Subsidiaries shall not be required to receive any minimum amount
of cash consideration in the event of a sale of all or substantially all of the
assets or stock of any Subsidiary of the Company which is or has been a
Subsidiary of the Company prior to the date hereof, the revenues of which are
derived primarily from the direct retail sale of apparel. Pending application
of Net Available Cash pursuant to this Section, such Net Available Cash shall be
invested in Permitted Investments of the type specified in clauses (i) or (ii)
of the definition of Permitted Investments.
(b) In the event of an Asset Disposition that requires the purchase of
Securities pursuant to Section 4.7(a)(ii)(C), the Company will be required to
purchase Securities tendered pursuant to an offer by the Company for the
Securities (the "Offer") at a purchase price of 100% of their principal amount
plus accrued interest to the Purchase Date in accordance with the procedures
(including prorationing in the event of oversubscription) set forth in Section
4.7(c). If the aggregate purchase price of Securities tendered pursuant to the
Offer is less than the Net Available Cash allotted to the purchase of the
Securities, the Company shall apply the remaining Net Available Cash in
accordance with Section 4.7(a)(ii)(D). The Company shall not be required to
make an Offer for Securities pursuant to this Section if the Net Available Cash
available therefor (after application of the proceeds as provided in Section
4.7(a)(ii)(A) and (B)) is less than $5,000,000 for any particular Asset
Disposition (which lesser amounts shall not be carried forward for purposes of
determining whether an Offer is required with respect to the Net Available Cash
from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within one year after the later
of the date of each Asset Disposition as to which the Company must make an Offer
or the receipt of Net Available Cash therefrom, the Company shall be obligated
to deliver to the Trustee and send, by first-class mail to each Holder, a
written notice stating that the Holder may elect to have his Securities
purchased
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by the Company either in whole or in part (subject to prorationing as
hereinafter described in the event the Offer is oversubscribed) in integral
multiples of $1,000 of principal amount, at the applicable purchase price. The
notice shall specify a purchase date not less than 30 days nor more than 60 days
after the date of such notice (the "Purchase Date") and shall contain
information concerning the business of the Company which the Company in good
faith believes will enable such Holders to make an informed decision (which at a
minimum will include (i) the most recently filed Annual Report on Form 10-K
(including audited consolidated financial statements) of the Company, the most
recent subsequently filed Quarterly Report on Form 10-Q and any Current Report
on Form 8-K of the Company filed subsequent to such Quarterly Report, other than
Current Reports describing Asset Dispositions otherwise described in the
offering materials (or corresponding successor reports), (ii) a description of
material developments in the Company's business subsequent to the date of the
latest of such Reports, and (iii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to tender Securities
pursuant to the Offer, together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an Offer is
delivered to the Trustee as provided below, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the amount of the Offer (the "Offer
Amount"), (ii) the allocation of the Net Available Cash from the Asset
Dispositions pursuant to which such Offer is being made and (iii) the compliance
of such allocation with the provisions of Section 4.7(a). On such date, the
Company shall also irrevocably deposit with the Trustee or with a paying agent
(or, if the Company is acting as its own paying agent, segregate and hold in
trust) in immediately available funds an amount equal to the Offer Amount to be
held for payment in accordance with the provisions of this Section. Upon the
expiration of the period for which the Offer remains open (the "Offer Period"),
the Company shall deliver to the Trustee the Securities or portions thereof
which have been properly tendered to and are to be accepted by the Company. The
Trustee shall, on the Purchase Date, mail or deliver payment to each tendering
Holder in the amount of the purchase price. In the event that the aggregate
purchase price of the securities delivered by the Company to the Trustee is less
than the Offer Amount, the Trustee shall deliver the excess to the Company
immediately after the expiration of the Offer Period.
(3) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least ten Business Days prior to the
Purchase Date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than three Business Days prior to the
Purchase Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount
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of the Security which was delivered for purchase by the Holder and a statement
that such Holder is withdrawing his election to have such Security purchased.
If at the expiration of the Offer Period the aggregate principal amount of
Securities surrendered by Holders exceeds the Offer Amount, the Company shall
select the Securities to be purchased on a pro rata basis (with such adjustments
as may be deemed appropriate by the Company so that only Securities in
denominations of $1,000, or integral multiples thereof, shall be purchased).
Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(4) At the time the Company delivers Securities to the Trustee which
are to be accepted for purchase, the Company will also deliver an Officers'
Certificate stating that such Securities are to be accepted by the Company
pursuant to and in accordance with the terms of this Section. A Security shall
be deemed to have been accepted for purchase at the time the Trustee, directly
or through an agent, mails or delivers payment therefor to the surrendering
Holder.
(d) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.8 Limitation on Transactions with Affiliates. The
Company shall not, and shall not permit any Subsidiary to, conduct any business
or enter into any transaction or series of similar transactions (including the
purchase, sale, lease or exchange of any property or the rendering of any
service) with any Affiliate of the Company or any legal or beneficial owner of
5% or more of any class of Capital Stock of the Company or with an Affiliate of
any such owner (other than a Wholly Owned Subsidiary or an employee stock
ownership plan for the benefit of the Company's or a Subsidiary's employees)
unless (i) the terms of such business, transaction or series of transactions are
(a) set forth in writing and (b) as favorable to the Company or such Subsidiary
as terms that would be obtainable at the time for a comparable transaction or
series of similar transactions in arm's- length dealings with an unrelated third
person and (ii) the Board of Directors has, by resolution, determined in good
faith that such business or transaction or series of transactions meets the
criteria set forth in (i)(b) above. This Section, however, will not prohibit
(1) any dividend, distribution or other transaction permitted under Section 4.5
or (2) customary compensation and employee benefit arrangements entered into
with any officer or director of the Company or of any Subsidiary in their
capacity as
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officer or director in the ordinary course of business and substantially
consistent with past practices.
SECTION 4.9 Change of Control.
-----------------
(a) Upon a Change of Control, each Holder shall have the right to
require that the Company repurchase such Holder's Securities at a purchase price
in cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date), in accordance with the terms contemplated in Section
4.9(b).
(b) Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's Securities
at a purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of purchase (subject
to the right of holders of record on the relevant record date to receive
interest due on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of
Control (including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to such Change of
Control);
(3) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(4) the instructions determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate election form duly completed, to the
Company at the address specified in the notice at least 10 Business Days prior
to the purchase date. Holders will be entitled to withdraw their election if
the Trustee or the Company receives not later than three Business Days prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered by the Trustee
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for cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue thereof.
SECTION 4.10 Compliance Certificate. The Company shall deliver to
the Trustee within 120 days after the end of each fiscal year of the Company an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as officers of the Company they would normally have
knowledge of any Default by the Company and whether or not the signers know of
any Default that occurred during such period. For purposes of this Section
4.10, the Officers' Certificate required need not comply with Section 11.5. If
they do, the certificate shall describe the Default, its status and what action
the Company is taking or proposes to take with respect thereto. The Company
also shall comply with TIA (S)314(a)(4).
ARTICLE 5
Successor Company
-----------------
SECTION 5.1 When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets to, any person, unless:
(i) the resulting, surviving or transferee person (if not the
Company) shall be a person organized and existing under the laws of the
United States of America, any state thereof or the District of Columbia and
such person shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
all the obligations of the Company under the Securities and this Indenture;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of the
resulting, surviving or transferee person or any Subsidiary as a result of
such transaction as having been issued by such person or such Subsidiary at
the time of such transaction), no Default shall have occurred and be
continuing;
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(iii) immediately after giving effect to such transaction, the
resulting, surviving or transferee person would be able to issue at least
$1.00 of Debt pursuant to Section 4.3(a); provided, however, that the
Consolidated EBITDA Coverage Ratio of the resulting, surviving or
transferee person for the Reference Period shall be calculated on a pro
forma basis as if the transaction occurred at the beginning of the
Reference Period;
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee person shall have Consolidated Net Worth
in an amount which is not less than the Consolidated Net Worth of the
Company prior to such transaction; and
(v) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture.
The resulting, surviving or transferee person shall be the successor
Company and shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture, but the predecessor
Company in the case of a conveyance, transfer or lease shall not be released
from the obligation to pay the principal of and interest on the Securities.
Notwithstanding the foregoing, this Section shall not restrict the
merger of a Wholly Owned Subsidiary (other than a Nonrecourse Subsidiary) into
the Company.
ARTICLE 6
Defaults and Remedies
---------------------
SECTION 6.1 Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such payment
shall be prohibited by Article 10, and such default continues for a period
of 30 days;
(2) the Company (i) defaults in the payment of the principal of
any Security when the same becomes due and payable at its Stated Maturity,
upon redemption, upon declaration or otherwise, whether or not such payment
shall be prohibited by Article 10 or (ii) fails to redeem or purchase
Securities when required pursuant to this Indenture or the Securities,
whether or not such redemption or purchase shall be prohibited by Article
10;
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(3) the Company fails to comply with Section 4.7 (other than a
failure described in (2) above), 4.9 (other than a failure described in (2)
above) or 5.1 and such failure continues for 30 days after the notice
specified below;
(4) the Company fails to comply with any of its agreements in the
Securities or this Indenture (other than those referred to in (1), (2) or
(3) above) and such failure continues for 60 days after the notice
specified below;
(5) Debt of the Company or any Significant Subsidiary (other than
Nonrecourse Debt of a Nonrecourse Subsidiary) is not paid within any
applicable grace period after final maturity or is accelerated by the
holders thereof because of a default, the total amount of such Debt unpaid
or accelerated exceeds $10,000,000 or its foreign currency equivalent and
such default continues for 10 days after the notice specified below;
(6) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case;
(b) consents to the entry of an order for relief against it
in an involuntary case;
(c) consents to the appointment of a Custodian of it or for
any substantial part of its property; or
(d) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(7) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(b) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(c) orders the winding up or liquidation of the Company or
any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order or
decree remains unstayed and in effect for 30 days; or
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(8) any judgment or decree for the payment of money in excess of
$10,000,000 is rendered against the Company or any Significant Subsidiary
and is not discharged and either (A) an enforcement proceeding has been
commenced by any creditor upon such judgment or decree or (B) there is a
period of 60 days following such judgment or decree during which such
judgment or decree is not discharged, waived or the execution thereof
stayed and, in the case of (B), such default continues for 10 days after
the notice specified below.
The foregoing will constitute Events of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (3), (4), (5) or (8)(B) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the Securities notify the Company of the Default and the Company does not cure
such Default within the time specified after receipt of such Notice. Such
Notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any event which with the giving of notice and the lapse of time would become an
Event of Default under clause (3), (4), (5) or (8), its status and what action
the Company is taking or proposes to take with respect thereto.
SECTION 6.2 Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.1(6) or (7) with respect to the Company)
occurs and is continuing, the Trustee by notice to the Company, or the Holders
of at least 25% in principal amount of the Securities by notice to the Company
and the Trustee, may declare the principal of and accrued interest on all the
Securities to be due and payable. Upon such a declaration, such principal and
interest shall be due and payable immediately. If an Event of Default specified
in Section 6.1(6) or (7) with respect to the Company occurs, the principal of
and interest on all the Securities shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Securityholders. The Holders of a majority in principal amount of the
Securities by notice to the Trustee may rescind an acceleration and its
consequences if the rescission
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would not conflict with any judgment or decree and if all existing Events of
Default have been cured or waived except nonpayment of principal or interest
that has become due solely because of acceleration. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
SECTION 6.3 Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.4 Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by notice to the Trustee may waive an
existing Default and its consequences except (i) a Default in the payment of the
principal of or interest on a Security or (ii) a Default in respect of a
provision that under Section 9.2 cannot be amended without the consent of each
Securityholder affected. When a Default is waived, it is deemed cured, but no
such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.5 Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.1, that the Trustee determines is unduly prejudicial to the
rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses caused
by taking or not taking such action.
SECTION 6.6 Limitation on Suits. A Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
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(2) the Holders of at least 25% in principal amount of the
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.7 Rights of Holders To Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of and interest on the Securities held by such Holder, on
or after the respective due dates expressed in the Securities, or to bring suit
for the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of such Holder.
SECTION 6.8 Collection Suit by Trustee. If an Event of Default in
payment of interest or principal specified in Section 6.1(1) or (2) occurs and
is continuing, the Trustee may recover judgment in its own name and as trustee
of an express trust against the Company for the whole amount of principal and
interest remaining unpaid (together with interest on such unpaid interest to the
extent lawful) and the amounts provided for in Section 7.7.
SECTION 6.9 Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its creditors or
its property and, unless prohibited by law or applicable regulations, may vote
on behalf of the Holders in any election of a trustee in bankruptcy or other
person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.7.
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SECTION 6.10 Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Debt to the extent required by
Article 10;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any such
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Trustee shall mail to each Securityholder and the Company
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7 or a suit by Holders of more
than 10% in principal amount of the Securities then outstanding.
SECTION 6.12 Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
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SECTION 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise the rights and powers vested in it by this Indenture and use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
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(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur financial liability in the performance
of any of its duties hereunder or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2 Rights of Trustee.
-----------------
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect of any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
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SECTION 7.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5 Notice of Defaults. If a Default occurs and is
continuing and if it is known to a Trust Officer of the Trustee, the Trustee
shall mail to each Securityholder and to the Company notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment of
principal of, premium, if any, or interest on any Security (including payments
pursuant to the redemption provisions of such Security), the Trustee may
withhold notice if and so long as a committee of its Trust Officers in good
faith determines that withholding the notice is in the interests of
Securityholders.
SECTION 7.6 Reports by Trustee to Holders. As promptly as
practicable after each March 31 beginning with March 31, 1995, and in any event
prior to June 1 in each year, the Trustee shall mail to each Securityholder a
brief report dated as of December 31 that complies with TIA (S)313(a). The
Trustee also shall comply with TIA (S)313(b).
A copy of each report at the time of its mailing to Securityholders
shall be filed by the Company with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.7 Compensation and Indemnity. The Company shall pay to
the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, in addition to the compensation for its services.
Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Trustee shall notify the Company promptly of any claim for which
it may seek indemnity. Failure by the Trustee to so notify the Company shall
not relieve the Company of its obligations hereunder. The Company shall defend
the claim and the Trustee may have separate counsel and the Company shall pay
the fees and expenses of such counsel. The Company need not reimburse
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any expense or indemnify against any loss, liability or expense incurred by the
Trustee through the Trustee's own wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.1(6) or (7) with respect to
the Company, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
SECTION 7.8 Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least a majority in principal amount of the Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
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If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10 Eligibility; Disqualification. The Trustee shall at
all times satisfy the requirements of TIA (S)310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
(S)310(b), including the optional provision permitted by the second sentence of
TIA (S)310(b)(9); provided, however, that there shall be excluded from the
operation of TIA (S)310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA (S)310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA (S)311(a), excluding any creditor relationship
listed in TIA (S)311(b). A Trustee who has resigned or been removed shall be
subject to TIA (S)311(a) to the extent indicated.
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ARTICLE 8
Discharge of Indenture; Defeasance
----------------------------------
SECTION 8.1 Discharge of Liability on Securities; Defeasance.
------------------------------------------------
(a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.7) for
cancellation or (ii) all outstanding Securities have become due and payable and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity all outstanding Securities, including interest thereon (other than
Securities replaced pursuant to Section 2.7), and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture shall,
subject to Sections 8.1(c) and 8.6, cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and at
the cost and expense of the Company.
(b) Subject to Sections 8.1(c), 8.2 and 8.6, the Company at any time
may terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.2, 4.3,
4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 5.1 (iii) and 5.1(iv) and the operation of
Sections 6.1(3), 6.1(5), 6.1(6) (with respect to any Significant Subsidiary),
6.1(7) (with respect to any Significant Subsidiary) and 6.1(8) ("covenant
defeasance option"). The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.1(3),
6.1(5), 6.1(6) (with respect to any Significant Subsidiary), 6.1(7) (with
respect to any Significant Subsidiary) or 6.1(8) or because of the failure of
the Company to comply with Section 5.1(iii) or 5.1(iv).
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.4, 8.5 and 8.6
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.7, 8.4 and 8.5 shall survive.
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SECTION 8.2 Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal and
interest on the Securities to maturity or redemption, as the case may be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts (but, in the case of the legal defeasance option only, not
more than such amounts) as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case may
be;
(3) 123 days pass after the deposit is made and during the 123-
day period no Default specified in Section 6.1(6) or (7) with respect to
the Company occurs which is continuing at the end of the period;
(4) no Default has occurred and is continuing on the date of such
deposit and after giving effect thereto;
(5) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(6) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute,
or is qualified as, a regulated investment company under the Investment
Company Act of 1940;
(7) in the case of the legal defeasance option, the Company shall
have delivered to the Trustee an opinion of counsel of nationally
recognized standing stating that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling, or (ii)
since the date of this Indenture there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion of counsel shall confirm that, the Securityholders
will not recognize income, gain or loss for federal income tax purposes as
a result of such defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(8) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an opinion of
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counsel of nationally recognized standing to the effect that the
Securityholders will not recognize income, gain or loss for federal income
tax purposes as a result of such covenant defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
(9) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities as contemplated by this
Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
SECTION 8.3 Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and Securities so held in trust are not subject to Article 10.
SECTION 8.4 Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal or interest that remains unclaimed for two years and,
thereafter, Securityholders entitled to the money must look to the Company for
payment as general creditors.
SECTION 8.5 Indemnity for Government Obligations. The Company
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.
SECTION 8.6 Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8.
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ARTICLE 9
Amendments
----------
SECTION 9.1 Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code of 1986, as amended, or in a
manner such that the uncertificated Securities are described in Section
163(f)(2)(B) of the Internal Revenue Code of 1986, as amended;
(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Debt (or
Representatives therefor) under Article 10;
(5) to add guarantees with respect to the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the Trust Indenture Act; or
(8) to make any change that does not adversely affect the rights
of any Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Debt then
outstanding or in effect unless the holders of such Senior Debt or their
authorized Representative (required pursuant to the terms of such Senior Debt to
give consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
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SECTION 9.2 With Consent of Holders. The Company and the Trustee may
amend this Indenture or the Securities without notice to any Securityholder but
with the written consent of the Holders of at least a majority in principal
amount of the Securities. However, without the consent of each Securityholder
affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to
an amendment;
(2) reduce the rate of or extend the time for payment of interest
on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may or shall be redeemed;
(5) make any Security payable in money other than that stated in
the Security;
(6) impair the right of any Securityholder to receive payment of
principal of and interest on or with respect to such Holder's Securities;
(7) make any change in Article 10 that adversely affects the
rights of any Securityholder under Article 10;
(8) make any change in Section 6.4 or 6.7 or the second sentence
of this Section; or
(9) make any change that adversely affects the requirement of the
Company to purchase the Securities in accordance with the terms thereof and
this Indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 of any holder of Senior Debt then
outstanding or in effect unless the holders of such Senior Debt or their
authorized Representative (required pursuant to the terms of such Senior Debt to
give consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all
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Securityholders, or any defect therein, shall not impair or affect the validity
of an amendment under this Section.
SECTION 9.3 Compliance with Trust Indenture Act. Every amendment
to this Indenture or the Securities shall comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those persons who were Securityholders at such
record date (or their duly designated proxies), and only those persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any such action, whether or not such persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 120
days after such record date.
SECTION 9.5 Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
SECTION 9.6 Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.1) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
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<PAGE>
SECTION 9.7 Payment for Consent. Neither the Company, any Affiliate
of the Company nor any Subsidiary shall, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid or agreed to be paid to all Holders which so
consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
ARTICLE 10
Subordination
-------------
SECTION 10.1 Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10 (subject to the provisions of Section 8.1),
to the prior payment in full of all Senior Debt and that the subordination is
for the benefit of and enforceable by the holders of Senior Debt. The
Securities shall in all respects rank pari passu with all other Senior
Subordinated Debt of the Company and only indebtedness of the Company which is
Senior Debt shall rank senior to the Securities in accordance with the
provisions set forth herein. All provisions of this Article 10 shall be subject
to Section 10.14.
SECTION 10.2 Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Company to creditors upon a total or
partial liquidation or a total or partial dissolution of the Company or in a
bankruptcy, insolvency, reorganization, receivership or similar proceeding
relating to the Company or its property:
(1) holders of Senior Debt shall be entitled to receive payment
in full in cash or cash equivalents (including, without limitation, cash
collateralization in accordance with the terms of such Senior Debt of any
outstanding contingent obligations thereunder such as letters of credit) of
the Senior Debt before Securityholders shall be entitled to receive any
payment of principal of, or premium, if any, or interest on the Securities;
and
(2) until the Senior Debt is paid in full in cash or cash
equivalents (including, without limitation, cash collateralization in
accordance with the terms of such Senior Debt of any outstanding contingent
obligations thereunder such as letters of credit), any distribution to
which Securityholders would be entitled but for this Article 10 shall be
made to holders of Senior Debt as their interests may appear,
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except that Securityholders may receive Reorganization Securities.
SECTION 10.3 Default on Senior Debt. The Company may not pay the
principal of, premium, if any, or interest on, the Securities or make any
deposit pursuant to Section 8.1 and may not repurchase, redeem or otherwise
retire any Securities (collectively, "pay the Securities") if (i) any Senior
Debt is not paid in full in cash or cash equivalents (including, without
limitation, cash collateralization in accordance with the terms of such Senior
Debt of any outstanding contingent obligations thereunder such as letters of
credit) when due or (ii) any other default on Senior Debt occurs and the
maturity of such Senior Debt is accelerated in accordance with its terms unless,
in either case, the default has been cured or waived and any such acceleration
has been rescinded or such Senior Debt has been paid in full in cash or cash
equivalents (including, without limitation, cash collateralization in accordance
with the terms of such Senior Debt of any outstanding contingent obligations
thereunder such as letters of credit); provided, however, that the Company may
pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representatives
of the Designated Senior Debt. During the continuance of any default (other
than a default described in clause (i) or (ii) of the preceding sentence) with
respect to any Designated Senior Debt pursuant to which the maturity thereof may
be accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Company and the Trustee of
written notice of such default from the Representative of such Designated Senior
Debt specifying an election to effect a Payment Blockage Period (a "Payment
Notice") and ending 179 days thereafter (or earlier if such Payment Blockage
Period is terminated (i) by written notice to the Trustee and the Company from
the Representative who gave such Payment Notice, (ii) because the default giving
rise to such Payment Notice is no longer continuing or (iii) by repayment in
full in cash or cash equivalents (including, without limitation, cash
collateralization in accordance with the terms of such Senior Debt of any
outstanding contingent obligations thereunder such as letters of credit) of such
Designated Senior Debt). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such Designated Senior
Debt or the Representative of such holders shall have accelerated the maturity
of such Designated Senior Debt, the Company may resume payments on the
Securities after such Payment Blockage Period expires or is otherwise
terminated. Not more than one Payment Notice may be given in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Debt during such period; provided, however, that if any
Payment Notice within such 360-day period is given by the
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<PAGE>
Representative of any Designated Senior Debt (other than the Bank Debt), the
Representative of the Bank Debt may give another Payment Notice within such
period; provided further, however, that in no event may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed 179 days
in the aggregate during any consecutive 360-day period.
SECTION 10.4 Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee shall promptly notify the holders of the Designated Senior Debt (or
their Representatives) of the acceleration. If any Designated Senior Debt is
outstanding, the Company may not pay the Securities until five days after such
notice is received and, thereafter, may pay the Securities only if this Article
10 otherwise permits the payment at that time.
SECTION 10.5 When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article 10 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Debt and pay it over to them or their designees as
their interests may appear.
SECTION 10.6 Payment Permitted If No Default. Subject to Sections
10.2 and 10.3, nothing contained in this Article 10 or elsewhere in this
Indenture or in any of the Securities shall prevent (a) the Company from making
payments when required of amounts due on the Securities, or (b) the application
by the Trustee of any moneys deposited with it hereunder to the payment of or on
account of amounts due on the Securities or the retention of such payment by the
Holders if, at the time of such application by the Trustee, it did not have
notice that such payment would have been prohibited by the provisions of this
Article 10.
SECTION 10.7 Subrogation. After all Senior Debt is paid in full in
cash or cash equivalents (including, without limitation, cash collateralization
in accordance with the terms of such Senior Debt of any outstanding contingent
obligations thereunder such as letters of credit) and until the Securities are
paid in full, Securityholders shall be subrogated to the rights of holders of
Senior Debt (without any duty on the part of the holders of the Senior Debt to
warrant, create, effectuate, preserve or protect such subrogation) to receive
distributions applicable to Senior Debt. A distribution made under this Article
10 to holders of Senior Debt which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment by
the Company on Senior Debt.
SECTION 10.8 Relative Rights. This Article 10 defines the relative
rights of Securityholders and holders of Senior Debt. Nothing in this Indenture
shall:
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<PAGE>
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of, premium, if any, and interest on the Securities in accordance
with their terms;
(2) impair, as among the Company, its creditors other than the
holders of Senior Debt, and the Holders of the Securities, the obligation
of the Company, which is absolute and unconditional, to pay to the Holders
of the Securities the principal and interest, if any, as the case may be,
in respect of the Securities as and when the same shall become due and
payable in accordance with their terms;
(3) affect the relative rights against the Company of the Holders
of the Securities and creditors of the Company other than holders of Senior
Debt; or
(4) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Debt to receive distributions otherwise payable to Securityholders.
SECTION 10.9 Subordination May Not Be Impaired by Company. No right
of any holder of Senior Debt to enforce the subordination of the indebtedness
evidenced by the Securities shall be impaired by any act or failure to act by
the Company or any Securityholder or by its respective failure to comply with
this Indenture.
SECTION 10.10 Rights of Trustee and Paying Agent. Notwithstanding
Section 10.3, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice that payments may not be made under this Article 10. The
Company, the Registrar or co-registrar, the Paying Agent, a Representative or a
holder of Senior Debt may give the notice; provided, however, that, if an issue
of Senior Debt has a Representative, only the Representative may give the
notice.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. The Registrar
and co-registrar and the Paying Agent may do the same with like rights. The
Trustee shall be entitled to all the rights set forth in this Article 10 with
respect to any Senior Debt which may at any time be held by it, to the same
extent as any other holder of Senior Debt, and nothing in Article 7 shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article 10 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.7.
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<PAGE>
SECTION 10.11 Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Debt, the
distribution may be made and the notice given to their Representative (if any).
SECTION 10.12 Article 10 Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities
by reason of any provision in this Article 10 shall not be construed as
preventing the occurrence of a Default. Subject to Section 10.4, nothing in
this Article 10 shall have any effect on the right of the Securityholders or the
Trustee to accelerate the maturity of the Securities.
SECTION 10.13 Trustee Not Fiduciary for Holders of Senior Debt. The
Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior
Debt and shall not be liable to any such holders if it shall in good faith
mistakenly pay over or distribute to Holders of Securities or to the Company or
to any other person cash, property or securities to which any holders of Senior
Debt shall be entitled by virtue of this Article 10 or otherwise. The Trustee
shall not be charged with knowledge of the existence of Senior Debt or of any
facts that would prohibit any payment hereunder or that would permit the
resumption of any such payment unless a Trust Officer of the Trustee shall have
received notice to that effect at the address of the Trustee set forth in
Section 11.2. With respect to the holders of Senior Debt, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Indenture and no implied covenants or
obligations with respect to holders of Senior Debt shall be read into this
Indenture against the Trustee.
SECTION 10.14 Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Debt or subject to the
restrictions set forth in this Article 10, and neither the Trustee nor the
Securityholders shall be obligated to pay over any such amount to the Company or
any holder of Senior Debt of the Company or any other creditor of the Company.
SECTION 10.15 Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior Debt
for the purpose of ascertaining the persons entitled to participate in such
payment or distribution, the
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holders of the Senior Debt and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10. In the event that
the Trustee determines, in good faith, that evidence is required with respect to
the right of any person as a holder of Senior Debt to participate in any payment
or distribution pursuant to this Article 10, the Trustee may request such person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Debt held by such person, the extent to which such person is
entitled to participate in such payment or distribution and other facts
pertinent to the rights of such person under this Article 10, and, if such
evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such person to receive such
payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 10.
SECTION 10.16 Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Debt as provided in this Article 10 and appoints the Trustee as attorney-
in-fact for any and all such purposes.
SECTION 10.17 Reliance by Holders of Senior Debt on Subordination
Provisions. Each Securityholder by accepting a Security acknowledges and agrees
that the foregoing subordination provisions are, and are intended to be, an
inducement and a consideration to each holder of any Senior Debt, whether such
Senior Debt was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold or fund, or to continue to hold or
fund, such Senior Debt and such holder of Senior Debt shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold and fund, or in continuing to hold and fund, such Senior
Debt.
ARTICLE 11
Miscellaneous
-------------
SECTION 11.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
SECTION 11.2 Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
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if to the Company:
Hartmarx Corporation
101 North Wacker Drive
23rd Floor
Chicago, Illinois 60606
Attention: Corporate Secretary
if to the Trustee:
Bank One Wisconsin Trust Company, National
Association
831 North Grand Avenue
Waukesha, Wisconsin 53186
Attention: Corporate Trust Division
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.3 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA (S)312(b) with other
Securityholders with respect to their rights under this Indenture and the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S)312(c).
SECTION 11.4 Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with; provided, however,
that with respect to
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matters of law, an Officers' Certificate may be based upon an Opinion of
Counsel.
SECTION 11.5 Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
person, such covenant or condition has been complied with.
; provided, however, that with respect to matters of law, an Officers'
Certificate may be based upon an Opinion of Counsel.
SECTION 11.6 When Securities Disregarded. In determining whether
the Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.
SECTION 11.7 Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 11.8 Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of New York or in the state in which the Trustee has its principal
business office. If a payment date is a Legal Holiday, payment shall be made on
the next succeeding day that is not a Legal Holiday, and no interest shall
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accrue for the intervening period. If a regular record date is a Legal Holiday,
the record date shall not be affected.
SECTION 11.9 Governing Law. This Indenture and the Securities shall
be governed by, and construed in accordance with, the laws of the State of New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
SECTION 11.10 No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 11.11 Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
SECTION 11.12 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of
them together represent the same agreement. One signed copy is enough to prove
this Indenture.
SECTION 11.13 Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
* * * * *
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
HARTMARX CORPORATION
/s/ Wallace L. Rueckel
By:_________________________________
Name: Wallace L. Rueckel
Title: Executive Vice President
Attest:
/s/ Glenn R. Morgan
_____________________________
Name: Glenn R. Morgan
Title: Senior Vice President
BANK ONE WISCONSIN TRUST COMPANY, NA
/s/ John R. Rudolph
By:_________________________________
Name: John R. Rudolph
Title: Vice President
Attest:
/s/ Mary A. Newby
_______________________________
Name: Mary A. Newby
Title: Assistant Vice President
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EXHIBIT A
[FORM OF FACE OF SECURITY]
No. $
10 7/8% Senior Subordinated Note Due 2002
HARTMARX CORPORATION, a Delaware corporation, promises to pay to
or registered assigns, the principal sum of
Dollars on January 15, 2002.
Interest Payment Dates: July 15 and January 15.
Record Dates: July 1 and January 1.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated:
HARTMARX CORPORATION
By:_________________________________
President
____________________________________
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
BANK ONE WISCONSIN TRUST [SEAL]
COMPANY, NA
as Trustee, certifies that this
is one of the Securities referred
to in the Indenture.
By:________________________
Authorized Signatory
A-1
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
10 7/8% Senior Subordinated Note Due 2002
1. Interest.
--------
Hartmarx Corporation, a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above. The Company will pay
interest semiannually on January 15 and July 15 of each year. Interest on the
Securities will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from March 23, 1994. Interest will be
computed on the basis of a 360-day year of twelve 30-day months. The Company
shall pay interest on overdue principal at the rate borne by the Securities, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment.
-----------------
The Company will pay interest on the Securities to the persons who are
registered holders of Securities at the close of business on the July 1 or
January 1 next preceding the interest payment date even if Securities are
cancelled after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect principal
payments. The Company will pay principal and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts. However, the Company may pay principal and interest by check
payable in such money. The Paying Agent may mail an interest check to a
Holder's registered address.
3. Paying Agent and Registrar.
--------------------------
Initially, Bank One Wisconsin Trust Company, NA ("Trustee"), will act
as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any of its
domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture.
---------
The Company issued the Securities under an Indenture dated as of March
15, 1994 ("Indenture"), between the Company and the Trustee. The terms of the
Securities include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
(S)(S)77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Capitalized terms
A-2
<PAGE>
used herein and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the Company
limited to $100,000,000 aggregate principal amount (subject to Section 2.7 of
the Indenture). The Indenture imposes certain limitations on the issuance of
Debt by the Company, the issuance of Debt and preferred stock by the
Subsidiaries, the payment of dividends and other distributions and acquisitions
or retirements of the Company's Capital Stock and Subordinated Obligations, the
sale or transfer of assets and Subsidiary stock, transactions with Affiliates,
the merger or consolidation of the Company and the sale of all or substantially
all the assets of the Company. In addition, the Indenture limits the ability of
the Company and the Subsidiaries to restrict distributions and dividends from
Subsidiaries.
5. Optional Redemption.
-------------------
Except as set forth in the next paragraph, the Securities may not be
redeemed prior to January 15, 1999. On and after that date, the Company may
redeem the Securities in whole at any time or in part from time to time at the
following redemption prices (expressed in percentages of principal amount), plus
accrued and unpaid interest (if any) to the redemption date (subject to the
right of holders of record on the relevant record date to receive interest due
on the relevant interest payment date):
<TABLE>
<CAPTION>
Optional
Redemption
Period Percentage
------ ----------
<S> <C>
From January 15, 1999 through January 14, 2000 103.107%
From January 15, 2000 through January 14, 2001 101.554%
From January 15, 2001 and thereafter 100.00%
</TABLE>
Notwithstanding the foregoing, at any time prior to January 15, 1997,
the Company may redeem, in part and from time to time, with the net proceeds of
one or more Public Equity Offerings or Traco Warrant Exercises, up to
$25,000,000 aggregate principal amount of the Securities, at 110% of the
principal amount thereof, plus accrued and unpaid interest (if any) to the date
of redemption (subject to the right of holders of record on the relevant record
date to receive interest due on the relevant interest payment date).
6. Notice of Redemption.
--------------------
Notice of redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each Holder of
A-3
<PAGE>
Securities to be redeemed at his registered address. Securities in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000. If money sufficient to pay the redemption price of and
accrued interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Change of Control Provisions.
----------------------------
Upon a Change of Control, any Holder of Securities will have the right
to cause the Company to repurchase all or any part of the Securities of such
Holder at a repurchase price equal to 101% of the principal amount of the
Securities to be repurchased plus accrued interest to the date of repurchase as
provided in, and subject to the terms of, the Indenture.
8. Subordination.
-------------
The Securities are subordinated to Senior Debt, as defined in the
Indenture. To the extent provided in the Indenture, Senior Debt must be paid in
full in cash or cash equivalents (including, without limitation, cash
collateralization in accordance with the terms of such Senior Debt of any
outstanding contingent obligations thereunder such as letters of credit) before
the Securities may be paid. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints the Trustee
as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange.
---------------------------------
The Securities are in registered form without coupons in denominations
of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange
Securities in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners.
---------------------
The registered Holder of this Security may be treated as the owner of
it for all purposes.
A-4
<PAGE>
11. Unclaimed Money.
---------------
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee or Paying Agent shall pay the money back to the
Company at its request unless an abandoned property law designates another
person. After any such payment, Holders entitled to the money must look only to
the Company and not to the Trustee for payment.
12. Defeasance.
----------
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if the
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment; Waiver.
-----------------
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities,
or to comply with the Act or to add additional covenants or surrender Company
rights, or to make certain changes in the subordination provisions, or to make
any change that does not adversely affect the rights of any Securityholder.
14. Defaults and Remedies.
---------------------
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities; (ii) default in payment of principal
on the Securities at maturity, upon redemption pursuant to paragraph 5 of the
securities, upon declaration or otherwise, or failure by the Company to redeem
or purchase Securities when required; (iii) failure by the Company to comply
with other agreements in the Indenture or the Securities, in certain cases
subject to notice and lapse of time; (iv) certain accelerations (including
failure to pay within any grace period after final maturity) of other Debt of
the Company or any Significant Subsidiary if the amount accelerated (or so
unpaid) exceeds $10,000,000 and continues for 10 days after the required notice
to the Company; (v) certain events of bankruptcy or insolvency with respect to
the Company or any Significant Subsidiary;
A-5
<PAGE>
and (vi) certain judgments or decrees for the payment of money in excess of
$10,000,000. If an Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the Securities may declare
all the Securities to be due and payable immediately. Certain events of
bankruptcy or insolvency with respect to the Company are Events of Default which
will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Securityholders notice of any continuing Default
(except a Default in payment of principal or interest) if it determines that
withholding notice is in their interest.
15. Trustee Dealings with the Company.
---------------------------------
Subject to certain limitations imposed by the Act, the Trustee under
the Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its affiliates and may otherwise deal with the Company
or its affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others.
--------------------------
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. Authentication.
--------------
This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations.
-------------
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint
A-6
<PAGE>
tenants with rights of survivorship and not as tenants in common), CUST
(=custodian) and U/G/M/A (=Uniform Gift to Minors Act).
19. CUSIP Numbers.
-------------
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH HAS IN IT
THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: HARTMARX
CORPORATION, 101 NORTH WACKER DRIVE, 23RD FLOOR, CHICAGO, ILLINOIS 60606,
ATTENTION: CORPORATE SECRETARY.
A-7
<PAGE>
- -------------------------------------------------------------------------------
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on
the books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
------------------- --------------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Security)
-------
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.7 of the Indenture, check the box:
/_/
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.7 of the Indenture, state the amount and check
the box: $_________________
/_/
If you want to elect to have this Security repurchased by the Company
pursuant to Section 4.9 of the Indenture, check the box:
/_/
If you want to elect to have only part of this Security repurchased by
the Company pursuant to Section 4.9 of the Indenture, state the amount and check
the box: $________________
/_/
Date: Your Signature:
--------------- ------------------------------------------
(Sign exactly as your name appears on the other side of the Security)
-------
Signature Guarantee:
----------------------------------------------------------
(Signature must be guaranteed by a member of the Medallion
System)
A-9
<PAGE>
EXHIBIT 4-E
EXECUTION
================================================================================
CREDIT AGREEMENT
DATED AS OF MARCH 23, 1994
AMONG
HARTMARX CORPORATION,
AS BORROWER,
THE LENDERS LISTED HEREIN,
AS LENDERS,
GENERAL ELECTRIC CAPITAL CORPORATION
AS MANAGING AGENT AND
COLLATERAL AGENT,
AND
THE BANK OF NEW YORK,
AND
CONTINENTAL BANK N.A.,
AS CO-AGENTS
================================================================================
<PAGE>
HARTMARX CORPORATION
CREDIT AGREEMENT
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
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----
<S> <C> <C>
SECTION 1.
DEFINITIONS................................. 2
1.1 Certain Defined Terms ................................................ 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
Under Agreement ..................................................... 28
1.3 Other Definitional Provisions ....................................... 29
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS .......................... 29
2.1 Commitments; Loans; Notes ........................................... 29
2.2 Interest on the Loans. .............................................. 36
2.3 Fees ................................................................ 40
2.4 Prepayments and Reductions in Commitments; General Provisions
Regarding Payments. ................................................. 41
2.5 Use of Proceeds. .................................................... 44
2.6 Special Provisions Governing LIBOR Rate Loans. ...................... 44
2.7 Increased Costs; Taxes; Capital Adequacy. ........................... 46
2.8 Obligation of Lenders and Issuing Lender to Mitigate. ............... 50
2.9 Affected Lenders. ................................................... 50
SECTION 3.
LETTERS OF CREDIT ............................ 51
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
Therein. ............................................................ 51
3.2 Letter of Credit Fees ............................................... 54
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters of
Credit. ............................................................. 55
3.4 Obligations Absolute ................................................ 58
3.5 Indemnification; Nature of Issuing Lenders' Duties .................. 59
3.6 Increased Costs and Taxes Relating to Letters of Credit ............. 60
3.7 Existing Letters of Credit. ......................................... 61
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT ................ 61
4.1 Conditions to Initial Loans. ....................................... 61
4.2 Conditions to All Loans. ........................................... 66
4.3 Conditions to Letters of Credit .................................... 67
SECTION 5.
BORROWER'S REPRESENTATIONS AND WARRANTIES ................ 69
5.1 Organization, Powers, Qualification, Good Standing, Business and
Subsidiaries. ..................................................... 69
5.2 Authorization of Borrowing, etc. .................................. 71
5.3 Financial Condition. .............................................. 72
5.4 No Material Adverse Change; No Restricted Junior Payments. ........ 72
5.5 Title to Properties; Liens. ....................................... 73
5.6 Litigation; Adverse Facts. ........................................ 73
5.7 Payment of Taxes. ................................................. 73
5.8 Performance of Agreements; Materially Adverse Agreements. ......... 74
5.9 Governmental Regulation. .......................................... 74
5.10 Securities Activities. ............................................ 74
5.11 Employee Benefit Plans. ........................................... 74
5.12 Certain Fees. ..................................................... 75
5.13 Environmental Protection .......................................... 75
5.14 Employee Matters. ................................................. 76
5.15 Solvency. ......................................................... 76
5.16 Inventory. ........................................................ 76
5.17 Genuineness of Accounts. .......................................... 76
5.18 Representations Concerning Credit and Collection Policy. .......... 78
5.19 Representations Concerning Cash Management System. ................ 78
5.20 Intellectual Property ............................................. 78
5.21 Disclosure. ....................................................... 79
SECTION 6.
BORROWER'S AFFIRMATIVE COVENANTS ..................... 79
6.1 Financial Statements and Other Reports. ........................... 79
6.2 Corporate Existence, etc. ......................................... 85
6.3 Payment of Taxes and Claims; Tax Consolidation. ................... 85
6.4 Maintenance of Properties; Insurance. ............................. 85
6.5 Inspection; Lender Meeting. ....................................... 86
6.6 Compliance with Laws, etc. ........................................ 86
(ii)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
6.7 Environmental Matters. ............................................ 86
6.8 Borrowing Base Certificates; Operating Reports. ................... 87
6.9 Receivables Reporting; Other Requirements. ........................ 88
6.10 Cash Management System. ........................................... 89
6.11 Subsidiaries. ..................................................... 91
6.12 Collateral Access Agreements; Cash Management Letters. ............ 93
SECTION 7.
BORROWER'S NEGATIVE COVENANTS ........................ 94
7.1 Indebtedness. ..................................................... 94
7.2 Liens and Related Matters. ........................................ 95
7.3 Investments; Joint Ventures ....................................... 97
7.4 Contingent Obligations. ........................................... 98
7.5 Restricted Junior Payments ........................................ 99
7.6 Financial Covenants. .............................................. 100
7.7 Restriction on Fundamental Changes; Asset Sales. .................. 103
7.8 Consolidated Capital Expenditures ................................. 104
7.9 Restriction on Leases. ............................................ 105
7.10 Sales and Lease-Backs. ............................................ 105
7.11 Sale or Discount of Receivables. .................................. 105
7.12 Transactions with Shareholders and Affiliates. .................... 106
7.13 Disposal of Subsidiary Stock. ..................................... 106
7.14 Conduct of Business. .............................................. 106
7.15 Amendments of Related Documents; License Agreements. .............. 106
7.16 Fiscal Year ....................................................... 108
7.17 Designated Senior Debt. ........................................... 108
SECTION 8.
EVENTS OF DEFAULT ........................... 108
8.1 Failure to Make Payments When Due. ................................ 108
8.2 Default in Other Agreements. ...................................... 108
8.3 Breach of Certain Covenants. ...................................... 109
8.4 Breach of Warranty. ............................................... 109
8.5 Other Defaults Under Loan Documents. .............................. 109
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc. ............. 109
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc. ............... 109
8.8 Judgments and Attachments. ........................................ 110
8.9 Dissolution. ...................................................... 110
8.10 Employee Benefit Plans. ........................................... 110
8.11 Impairment of Collateral; Failure of Security ..................... 110
</TABLE>
(iii)
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
8.12 Material Adverse Effect ........................................... 111
8.13 Change of Control. ................................................ 111
SECTION 9.
AGENT ................................. 112
9.1 Appointment. ....................................................... 112
9.2 Powers; General Immunity. .......................................... 112
9.3 Representations and Warranties; No Responsibility For Appraisal of
Creditworthiness. .................................................. 114
9.4 Right to Indemnity. ................................................ 114
9.5 Payee of Note Treated as Owner ..................................... 114
9.6 Successor Agent and Swing Line Lender. ............................. 115
9.7 Collateral Documents. .............................................. 115
SECTION 10.
MISCELLANEOUS ............................. 116
10.1 Assignments and Participations in Loans and Letters of Credit. ... 116
10.2 Expenses. ........................................................ 118
10.3 Indemnity. ....................................................... 119
10.4 Set-Off; Security Interest in Deposit Accounts. .................. 120
10.5 Ratable Sharing. ................................................. 120
10.6 Amendments and Waivers. .......................................... 121
10.7 Independence of Covenants. ....................................... 122
10.8 Notices. ......................................................... 122
10.9 Survival of Representations, Warranties and Agreements. .......... 122
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative. ........... 123
10.11 Marshalling; Payments Set Aside. ................................. 123
10.12 Severability. .................................................... 123
10.13 Obligations Several; Independent Nature of Lenders' Rights. ...... 123
10.14 Headings. ........................................................ 124
10.15 Applicable Law. .................................................. 124
10.16 Successors and Assigns. .......................................... 124
10.17 Consent to Jurisdiction and Service of Process ................... 124
10.18 Waiver of Jury Trial ............................................. 125
10.19 Confidentiality. ................................................. 125
10.20 Counterparts; Effectiveness. ..................................... 126
10.21 Intercompany Note Collateral. .................................... 126
Signature pages ......................................................... S-1
</TABLE>
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF REVOLVING NOTE
IV-A FORM OF SWING LINE NOTE
V FORM OF COMPLIANCE CERTIFICATE
VI FORM OF OPINION OF CREDIT PARTY COUNSEL
VII FORM OF OPINION OF O'MELVENY & MYERS
VIII FORM OF ASSIGNMENT AND ACCEPTANCE
IX FORM OF GUARANTY
X FORM OF PLEDGE AND SECURITY AGREEMENT
X-A FORM OF TRADEMARK SECURITY AGREEMENT
XI FORM OF COLLATERAL ACCESS AGREEMENT
XII FORM OF CASH MANAGEMENT LETTER
XIII FORM OF BORROWING BASE CERTIFICATE
XIV FORM OF INTERCOMPANY NOTE
XV FORM OF INTERCOMPANY NOTE SECURITY AGREEMENT
XV-A FORM OF INTERCOMPANY NOTE TRADEMARK AGREEMENT
(v)
<PAGE>
SCHEDULES
1.1A ELIGIBLE ACCOUNTS
1.1B ELIGIBLE INVENTORY
1.1C EXCLUDED ACCOUNTS
1.1D EXISTING LETTERS OF CREDIT
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF BORROWER; NON-OPERATING SUBSIDIARIES;
COLLATERAL MATTERS
5.6 LITIGATION
5.13 ENVIRONMENTAL MATTERS
5.18 CREDIT AND COLLECTION POLICY
5.19 CASH MANAGEMENT SYSTEM
5.20 INTELLECTUAL PROPERTY; LICENSE AGREEMENTS
6.8 OPERATING REPORTS
7.2 EXISTING LIENS
7.3 EXISTING INVESTMENTS
(iv)
<PAGE>
HARTMARX CORPORATION
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of March 23, 1994 and entered into by and
among HARTMARX CORPORATION, a Delaware corporation (``BORROWER''), THE FINANCIAL
INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to
herein as a ``LENDER'' and collectively as ``LENDERS''), GENERAL ELECTRIC
CAPITAL CORPORATION (``GE CAPITAL''), as managing agent for Lenders (in such
capacity, including its successors and assigns, ``MANAGING AGENT'') and as
collateral agent for Lenders (in such capacity, including its successors and
assigns, ``COLLATERAL AGENT'') and THE BANK OF NEW YORK and CONTINENTAL BANK
N.A., as co-agents for Lenders (in such capacity, ``CO-AGENTS'').
R E C I T A L S
- - - - - - - -
WHEREAS, Borrower desires that Lenders extend certain credit facilities to
Borrower for the repayment and termination of the Existing Credit Facilities
(such term and other capitalized terms used in these recitals without definition
having the meanings set forth in subsection 1.1 of this Agreement) and for
working capital and general corporate purposes as set forth herein;
WHEREAS, the Existing Credit Facilities constitute enforceable debt
obligations of Borrower and each of the direct and indirect wholly-owned
Subsidiaries of Borrower (collectively, together with any direct or indirect
wholly-owned Subsidiaries of the Borrower which may hereafter be created or
acquired, the ``GUARANTORS'') and the repayment of the Existing Credit
Facilities and the provision of working capital credit as provided for herein
will directly benefit Borrower and such Guarantors.
WHEREAS, each of the Guarantors desires to guaranty the obligations of
Borrower hereunder pursuant to the Guaranty; and
WHEREAS, Borrower and the Guarantors desire to secure their respective
obligations hereunder and under the other Loan Documents by granting to
Collateral Agent on behalf of Lenders a first priority security interest in
their respective accounts receivable (excluding third party credit card
receivables which are non-recourse to Borrower or any Guarantor), inventory,
cash, intercompany notes and intangible assets all as set forth in the Pledge
and Security Agreement and other Collateral Documents;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Borrower, Lenders, Managing Agent,
Collateral Agent and Co-Agents hereby agree as follows:
1
<PAGE>
SECTION 1.
DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
---------------------
The following terms used in this Agreement shall have the following
meanings:
``ACCELERATION'' means the declaration (whether automatic, by notice or
otherwise) of all or any portion of the Loans or other Obligations to be
immediately due and payable pursuant to Section 8.
``ACCOUNT DEBTOR'' means any Person who is or who may become obligated to
Borrower or any of its Subsidiaries under, with respect to, or on account of, an
Account.
``ACCOUNTS'' means all accounts, accounts receivable, other receivables and
rights to payment of every nature, contract rights, chattel paper, instruments,
documents and notes, whether now owned or hereafter acquired by Borrower or any
of its Subsidiaries and whether or not earned by performance; provided that, for
purposes of subsection 5.17 herein, ``ACCOUNTS'' shall mean ``accounts'' as such
term is defined in the UCC.
``ADJUSTED LIBOR RATE'' means, for any Interest Rate Determination Date
with respect to a LIBOR Rate Loan, the rate per annum obtained by dividing (i)
the offered quotation (rounded upward to the nearest 1/16 of one percent) to
first class banks in the London interbank LIBOR market by Reference Bank for
U.S. dollar deposits of amounts in same day funds comparable to the principal
amount of the LIBOR Rate Loan of Reference Bank for which the Adjusted LIBOR
Rate is then being determined with maturities comparable to the Interest Period
for which such Adjusted LIBOR Rate will apply as of approximately 9:00 A.M. (New
York time) on such Interest Rate Determination Date by (ii) a percentage equal
to 100% minus the stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) applicable on such Interest Rate Determination Date to any member bank
of the Federal Reserve System in respect of ``Eurocurrency liabilities'' as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
``AFFECTED LENDER'' has the meaning assigned to that term in subsection
2.6C.
``AFFILIATE'', as applied to any Person, means any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, ``control'' (including, with
correlative meanings, the terms ``controlling'', ``controlled by'' and ``under
common control with''), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise.
``AGENT'' means GE Capital in its capacity as Managing Agent and Collateral
Agent, and The Bank of New York and Continental Bank N.A., in their respective
capacities as Co-
2
<PAGE>
Agents, hereunder and under the other Loan Documents and also means and includes
any successor Agent appointed pursuant to subsection 9.6.
``AGREEMENT'' means this Credit Agreement dated as of March 23, 1994.
``APPLICABLE MARGIN'' has the meaning assigned to that term in subsection
2.2A.
``ASSET SALE'' means the sale by Borrower or any of its Subsidiaries to any
Person other than Borrower or any of its wholly-owned Subsidiaries of (i) any of
the capital stock of any of their respective Subsidiaries, (ii) substantially
all of the assets of any division or line of business or product brands of
Borrower or any of its Subsidiaries, or (iii) any other assets (whether tangible
or intangible) of Borrower or any of its Subsidiaries outside of the ordinary
course of business; provided that Asset Sales shall not include the sale in the
ordinary course of business by Borrower or any of its Subsidiaries of any
machinery or equipment which is obsolete or no longer useful in the business of
such Person.
``ASSIGNMENT AND ACCEPTANCE'' means an Assignment and Acceptance entered
into by a Lender and an Eligible Assignee, and accepted by Agent, in
substantially the form of Exhibit VIII annexed hereto.
``BANKRUPTCY CODE'' means Title 11 of the United States Code entitled
``Bankruptcy'', as now and hereafter in effect, or any successor statute.
``BORROWER'' has the meaning assigned to that term in the introduction to
this Agreement.
``BORROWING BASE'' shall mean, as of any date of determination, the sum of
(i) 85% of the Dollar value of Eligible Accounts (less such reserves against
such Eligible Accounts as Collateral Agent in its reasonable business discretion
elects to establish) and (ii) 55% of the Dollar value of Eligible Inventory
determined at the lower of cost or market (on a first-in, first-out basis) (less
such reserves against such Eligible Inventory as Collateral Agent in its
reasonable business discretion elects to establish including, without
limitation, reserves for markdowns and shrinkage). Collateral Agent, at any
time shall be entitled to (i) establish and increase or decrease reserves
against Eligible Accounts and Eligible Inventory, (ii) reduce any advance rate
set forth above, or restore such advance rate to any level equal to or below the
advance rate stated above, and (iii) impose additional restrictions (or
eliminate the same) to the standards of eligibility set forth in the definitions
of ``Eligible Account'' and ``Eligible Inventory'' in each case in the exercise
of its reasonable business discretion. Collateral Agent may, but shall not be
required to, rely on each Borrowing Base Certificate and any other schedules or
reports delivered to Collateral Agent in connection herewith in determining the
then eligibility of Accounts and Inventory. Reliance thereon by Collateral
Agent from time to time shall not be deemed to limit the right of Collateral
Agent to revise advance rates or standards of eligibility as provided herein.
3
<PAGE>
``BORROWING BASE CERTIFICATE'' means a certificate substantially in the
form of Exhibit XIII annexed hereto delivered by Borrower to Collateral Agent
and Lenders pursuant to subsection 6.8.
``BRIDGE FACILITY'' means the Senior Bridge Loan and Letter of Credit
Agreement, dated as of December 30, 1992, as amended through the Closing Date
among certain of the Borrower's Subsidiaries as borrowers and guarantors, the
Borrower and certain other Subsidiaries of the Borrower as guarantors, certain
financial institutions named therein, National Westminster Bank PLC, New York
Branch, as agent, and The First National Bank of Chicago, as co-Agent and as
collateral Agent.
``BUSINESS DAY'' means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of Connecticut, New York or Illinois or is a
day on which banking institutions located in such states are authorized or
required by law or other governmental action to close, and (ii) with respect to
all notices, determinations, fundings and payments in connection with the
Adjusted LIBOR Rate or any LIBOR Rate Loans, any day that is a Business Day
described in clause (i) above and that is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
``CAPITAL LEASE'', as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
``CASH'' means money, currency or a credit balance in a Deposit Account.
``CASH EQUIVALENTS'' means (i) marketable securities issued or directly and
unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within 90 days from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within 90 days from the date of acquisition
thereof and, at the time of acquisition, having the highest rating obtainable
from either Standard & Poor's Corporation or Moody's Investors Service, Inc.;
(iii) commercial paper maturing no more than 90 days from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.; (iv) certificates of deposit or bankers' acceptances maturing within 90
days from the date of acquisition thereof issued by any Lender or any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia having unimpaired capital and surplus of not
less than $500,000,000 (each Lender and each such commercial bank herein called
a ``CASH EQUIVALENT BANK''); (v) time deposits having a maturity of 90 days or
less with any Cash Equivalent Bank (whether such deposit is with such Cash
Equivalent Bank or any other Cash Equivalent Bank) and (vi) balances maintained
in Deposit Accounts included in the Cash Management System and in Excluded
Accounts.
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``CASH MANAGEMENT SYSTEM'' means the system of Deposit Accounts (other than
Excluded Accounts) of Borrower and its Subsidiaries pursuant to which all
Receipts of Borrower and its Subsidiaries are collected and distributed all as
described in Schedule 5.19 annexed hereto, as it may be modified from time to
time in accordance with the terms hereof.
``CASH MANAGEMENT LETTERS'' means each of the letter agreements among
Borrower, its Subsidiaries (if applicable), the financial institutions at which
Deposit Accounts are located pursuant to the Cash Management System and
Collateral Agent in each case substantially in the form of Exhibit XII annexed
hereto with such changes as are acceptable to Collateral Agent, pursuant to
which Collateral Agent may, in accordance with subsection 6.10, give notice to
such financial institutions to redirect funds from such Deposit Accounts to the
Collection Account.
``CASH PROCEEDS'' means, with respect to any Asset Sale, Cash payments
(including any Cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale.
``CASH SWEEP PERIOD'' means any period during which Collateral Agent is
applying Receipts to the payment of Loans and other Obligations in accordance
with subsection 6.10.
``CHANGE OF CONTROL'' means any of the following events: (i) any person or
any two or more persons acting in concert within the meaning of Section 13(d) of
the Exchange Act is or becomes the ``beneficial owner'' (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person or Persons shall be
deemed to have beneficial ownership of all shares that any such Person or
Persons has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 40% of
the total voting power of equity securities entitled to vote in the election of
directors of the Borrower; or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Borrower (together with any new directors whose election by
such Board of Directors or whose nomination for election by the shareholders of
the Borrower was approved by a vote of 66-2/3% of the directors of the Borrower
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors of the
Borrower then in office. A Change of Control will be deemed to have occurred if
an event described in any of the foregoing clauses (i) or (ii) has occurred,
regardless of whether one of the events in any of the other clauses has also
occurred.
``CLOSING DATE'' means the date on or before April 30, 1994, on which the
initial Loans are made.
``CO-AGENTS'' has the meaning assigned that term in the introduction to
this Agreement.
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``COLLATERAL'' shall mean the ``Collateral'' covered by the Pledge and
Security Agreement and Trademark Assignment and the ``Collateral'' covered by
the Intercompany Note Security Agreement and Intercompany Note Trademark
Assignment, and any other property, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Collateral Agent to secure the Obligations or in favor of Borrower to secure the
payment of the Intercompany Notes.
``COLLATERAL ACCESS AGREEMENTS'' means any landlord waivers, landlord
confirmations, mortgagee waivers, bailee letters or any similar acknowledgment
agreements of any warehousemen, or processor in possession of Inventory, in each
case substantially in the form of Exhibit XI annexed hereto with such changes
thereto as are acceptable to Collateral Agent.
``COLLATERAL ACCOUNT'' means the Collateral Account established by Borrower
pursuant to the Pledge and Security Agreement pursuant to which Borrower may
pledge cash to Collateral Agent to secure the obligations of Borrower to
reimburse Issuing Lender for payments made under one or more Letters of Credit
as provided in Section 8.
``COLLATERAL AGENT'' has the meaning assigned to that term in the
introduction to this Agreement.
``COLLATERAL DOCUMENTS'' shall mean the Pledge and Security Agreement, the
Trademark Assignment, the Collateral Access Agreements, the Cash Management
Letters, any other security agreements, pledge agreements, assignments,
financing statements or other agreement, document or certificate pursuant to
which Collateral Agent obtains or perfects a security interest in or Lien on
Collateral and the Intercompany Note Security Agreement and the Intercompany
Note Trademark Assignment.
``COLLECTION ACCOUNT'' means the Collection Account maintained by
Collateral Agent pursuant to the Pledge and Security Agreement, pursuant to
which all funds on deposit in the Deposit Accounts included in the Cash
Management System may be directed by Collateral Agent in accordance with
subsection 6.10.
``COMMERCIAL LETTER OF CREDIT'' means any letter of credit, Existing Letter
of Credit or similar instrument issued in each case for the purpose of providing
the primary payment mechanism in connection with the purchase of any materials,
goods or services by Borrower or any of its Subsidiaries in the ordinary course
of business of Borrower or such Subsidiary.
``COMMERCIAL PAPER RATE'' means, as of any date of determination, (i) the
most recent published annual new yield on 90-day (or the range of days including
the nearest to 90 days) commercial paper (or the average of such yields if more
than one is published) placed directly by GE Capital or (ii) if there is no such
commercial paper placed directly by GE Capital, the most recent annual return on
90 day commercial paper (or the average of such yields if more than one is
published) placed by dealers, as quoted either in the Federal Reserve Rate
Report which customarily appears in the Friday issue of the Wall Street Journal
(Eastern edition) under ``Money Rates'', or, in the event such report shall not
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so appear, in such other nationally recognized publication as Managing Agent
may, from time to time, specify to Borrower.
``COMMITMENT'' means any of the Revolving Loan Commitment or Swing Line
Loan Commitment, and ``COMMITMENTS'' means such commitments of all Lenders and
Swing Line Lender in the aggregate.
``COMMITMENT TERMINATION DATE'' means the date which is the three year
anniversary of the Closing Date.
``COMPLIANCE CERTIFICATE'' means a certificate substantially in the form of
Exhibit V annexed hereto delivered to Managing Agent and Lenders by Borrower
pursuant to subsection 6.1(iv).
``CONSOLIDATED ADJUSTED EBITDA'' means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) Consolidated Cash
Interest Expense and, (iii) to the extent utilized in the calculation of
Consolidated Net Income (a) provisions for taxes based on income, (b) total
depreciation expense, (c) total amortization expense, and (d) other non-cash
items reducing Consolidated Net Income less other non-cash items increasing
Consolidated Net Income (as provided in the definition thereof), all of the
foregoing as determined on a consolidated basis for Borrower and its
Subsidiaries in conformity with GAAP.
``CONSOLIDATED CAPITAL EXPENDITURES'' means, for any period, the aggregate
of all expenditures (whether paid in cash or other consideration or accrued as a
liability and including that portion of Capital Leases which is capitalized on
the consolidated balance sheet of Borrower and its Subsidiaries) by Borrower and
its Subsidiaries during that period that, in conformity with GAAP, are included
in ``additions to property, plant or equipment'' or comparable items reflected
in the consolidated statement of cash flows of Borrower and its Subsidiaries but
excluding, however, any expenditures made from the proceeds of insurance or
condemnation awards.
``CONSOLIDATED CASH INTEREST EXPENSE'' means, for any period, total
interest expense paid in cash (including that portion attributable to Capital
Leases in accordance with GAAP and capitalized interest) of Borrower and its
Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Borrower and its Subsidiaries, but excluding, however, any
amounts referred to in subsection 2.3 payable to any Agent or Lenders on or
before the Closing Date and extraordinary amounts paid in respect of the
Existing Credit Facilities on the Closing Date related to the prepayment and
refinancing of such debt and any amortization of discount and deferred financing
costs related thereto on the Existing EDBs.
``CONSOLIDATED DEBT SERVICE'' means, for any period, the sum, without
duplication, of (i) Consolidated Cash Interest Expense and (ii) principal
payments (constituting amounts which may not be reborrowed) on Consolidated
Total Debt (other than the Obligations), including, without limitation,
mandatory principal payments in respect of Capital Leases, all
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<PAGE>
as determined on a consolidated basis for Borrower and its Subsidiaries in
conformity with GAAP, but excluding, however, any of the foregoing with respect
to the Existing Credit Facilities to the extent paid on the Closing Date.
``CONSOLIDATED DEBT SERVICE COVERAGE RATIO'' means, for any period, the
ratio of (i) the difference for such period between (y) Consolidated Adjusted
EBITDA and (z) Consolidated Capital Expenditures to (ii) Consolidated Debt
Service for such period.
``CONSOLIDATED LEVERAGE RATIO'' means, for any period, the ratio of (i)
Consolidated Total Debt as of the end of such period to (ii) Consolidated
Adjusted EBITDA for such period.
``CONSOLIDATED NET INCOME'' means, for any period, the net income (or loss)
of Borrower and its Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with GAAP; provided that
there shall be excluded (i) the income (or loss) of any Person (other than a
Subsidiary of Borrower) in which any other Person (other than Borrower or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Borrower or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Borrower or is
merged into or consolidated with Borrower or any of its Subsidiaries or that
Person's assets are acquired by Borrower or any of its Subsidiaries, (iii) the
income of any Subsidiary of Borrower to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary of that income
is not at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, (iv) any after-tax gains or losses
attributable to Asset Sales (other than Assets Sales for consideration of
$100,000 or less in any one instance or $500,000 or less in the aggregate for
any Fiscal Year) or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses and any cash losses in an aggregate
amount not to exceed $2,600,000 which may be incurred in connection with the
termination and refinancing of the Existing Credit Facilities.
``CONSOLIDATED NET WORTH'' means, as at any date of determination, the sum
of the capital stock and additional paid-in capital plus retained earnings (or
minus accumulated deficits) of Borrower and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
``CONSOLIDATED RENTAL PAYMENTS'' means, for any period, the aggregate
amount of all rents paid or payable by Borrower and its Subsidiaries on a
consolidated basis during that period under all Operating Leases to which
Borrower or any of its Subsidiaries is a party as lessee.
``CONSOLIDATED TOTAL DEBT'' means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
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``CONSOLIDATED TRADE SUPPORT RATIO'' means, as of any date of
determination, the percentage obtained by dividing (i) the aggregate amount of
trade accounts payable of Borrower and its Subsidiaries (whether or not such
accounts payable are due as of such date of determination) by (ii) the aggregate
dollar amount of all Inventory determined on a first-in, first-out basis in
accordance with GAAP.
``CONTINGENT OBLIGATION'', as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Interest Rate Agreements and Currency Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise) or
(Y) to maintain the solvency or any balance sheet item, level of income or
financial condition of another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or intent thereof is
as described in the preceding sentence; provided that Contingent Obligations
shall not include intercompany contribution and indemnity arrangements among
Borrower and its Subsidiaries to settle joint obligations of such entities which
are solely for the benefit of such entities and not third parties. The term
``Contingent Obligation'' shall also include the liability of a general partner
in respect of the liabilities of a general partnership in which it is a general
partner. The amount of any Contingent Obligation shall be equal to the amount of
the obligation so guaranteed or otherwise supported or, if less, the amount to
which such Contingent Obligation is specifically limited.
``CONTRACTUAL OBLIGATION'', as applied to any Person, means any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
``CREDIT AND COLLECTION POLICY'' means, with respect to Borrower and its
Subsidiaries, those credit, collection, customer relations and service policies,
as they currently exist as set forth in Schedule 5.18 hereto, as such policies
may be amended, modified or supplemented from time to time in accordance with
the terms hereof.
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``CREDIT EXPOSURE'' means, with respect to any Lender as of any date of
determination (i) prior to the termination of the Commitments, that Lender's
Revolving Loan Commitment and (ii) after the termination of the Revolving Loan
Commitments, the sum of (a) the aggregate outstanding principal amount of the
Loans of that Lender plus (b) in the event that Lender is Issuing Lender, the
aggregate amount of all drawings under Letters of Credit honored by that Lender
and not theretofore reimbursed by Borrower (in each case net of any
participations purchased by other Lenders in the applicable Letters of Credit)
plus (c) the aggregate amount of all participations purchased by that Lender in
any drawings under Letters of Credit honored by Issuing Lenders and not
theretofore reimbursed by Borrower plus (d) the aggregate amount of all
participations purchased by that Lender in any outstanding Swing Line Loans plus
(e) in the case of Swing Line Lender, the aggregate outstanding principal amount
of all Swing Line Loans offered by Swing Line Lender for participation by
Lenders hereunder (net of any participations therein purchased by other
Lenders).
``CREDIT PARTY'' means each of Borrower and each Guarantor.
``CURRENCY AGREEMENT'' means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement designed to protect Borrower or any of its Subsidiaries
against fluctuations in currency values.
``DEFAULTED ACCOUNT'' means an Account that is written off Borrower's or
one of its Subsidiary's books as uncollectible in accordance with the Credit and
Collection Policy.
``DEPOSIT ACCOUNT'' means a demand, time, savings, passbook or like account
with a bank, savings and loan association, credit union or like organization,
other than an account evidenced by a negotiable certificate of deposit.
``DOLLARS'' and the sign ``$'' mean the lawful money of the United States
of America.
``EFFECTIVE ADVANCE RATE'' means, as of any date of determination, the
percentage obtained by dividing (i) the aggregate Credit Exposure of all Lenders
by (ii) the aggregate Dollar value of all Accounts and Inventory (determined at
the lower of cost or market on a first-in, first-out basis).
``ELIGIBLE ACCOUNTS'' has the meaning set forth in Schedule 1.1A annexed
hereto.
``ELIGIBLE ASSIGNEE'' means (A) (i) a commercial bank organized under the
laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof; provided that (x) such bank is
acting through a branch or agency located in the United States or (y) such bank
is organized under the laws of a country that is a member of the Organization
for Economic Cooperation and Development or a political subdivision of such
country; and (iv) any other entity which is an ``accredited investor'' (as
defined in Regulation D under
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the Securities Act) which extends credit or buys loans as one of its businesses
including, but not limited to, insurance companies, mutual funds and lease
financing companies, in each case (under clauses (i) through (iv) above) that is
acceptable to Managing Agent and has agreed to make Revolving Loans in
accordance with the terms hereof and (B) any Lender and any Affiliate (subject
to the following proviso) of any Lender; provided that (y) no Affiliate of
Borrower, and (z) without the consent of Borrower, no Person engaged in
factoring or any Affiliate thereof, shall be an Eligible Assignee (it being
understood that this clause (z) shall not prohibit any original Lender with
factoring Affiliates from being a Lender and holding Commitments hereunder
(including, without limitation, holding any increased Commitment hereunder), but
shall prohibit such factoring Affiliates from becoming Lenders hereunder).
``ELIGIBLE INVENTORY'' has the meaning set forth in Schedule 1.1B annexed
hereto.
``EMPLOYEE BENEFIT PLAN'' means any ``employee benefit plan'' as defined in
Section 3(3) of ERISA which is, or was at any time during the past five years,
maintained or contributed to by Borrower or any Persons who are or were, at the
relevant time, its ERISA Affiliates and with respect to which the Borrower could
have any liability.
``ENVIRONMENTAL CLAIM'' means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment,
or for fines, penalties or restrictions, in each case relating to, resulting
from or in connection with Hazardous Materials and relating to Borrower, any of
its Subsidiaries, any of their respective Affiliates or any Facility.
``ENVIRONMENTAL LAWS'' means all statutes, ordinances, orders, rules,
regulations, plans, policies or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or welfare,
in any manner applicable to Borrower or any of its Subsidiaries or any of their
respective properties, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et
seq.), the Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the
Federal Water Pollution Control Act ( 33 U.S.C. (S) 1251 et seq.), the Clean Air
Act (42 U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.
(S) 2601 et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7
U.S.C. (S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S)
651 et seq.) and the Emergency Planning and Community Right-to-Know Act (42
U.S.C. (S) 11001 et seq.), each as amended or
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supplemented, and any analogous future or present local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as of
the date of determination.
``ERISA'' means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
``ERISA AFFILIATE'', as applied to any Person, means (i) any corporation
which is, or was at the relevant time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is, or was at the relevant time, a member; (ii) any trade
or business (whether or not incorporated) which is, or was at the relevant time,
a member of a group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which that Person is,
or was at any time, a member; and (iii) any member of an affiliated service
group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above is, or was at the relevant time, a
member.
``ERISA EVENT'' means (i) a ``reportable event'' within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution (other than
contributions that are being contested in good faith and as to which adequate
reserves have been provided for in accordance with GAAP) to a Multiemployer
Plan; (iii) the provision by the administrator of any Pension Plan pursuant to
Section 4041(a)(2) of ERISA of a notice of intent to terminate such plan in a
distress termination described in Section 4041(c) of ERISA; (iv) the withdrawal
by Borrower or any of its ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension Plan resulting
in liability pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by
the PBGC of proceedings to terminate any Pension Plan, or the occurrence of any
event or condition which would constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan;
(vi) the imposition of liability on Borrower or any of its ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal by Borrower or any of its ERISA
Affiliates in a complete or partial withdrawal (within the meaning of Sections
4203 and 4205 of ERISA) from any Multiemployer Plan if there is any potential
liability therefor, or the receipt by Borrower or any of its ERISA Affiliates of
notice from any Multiemployer Plan that it is in reorganization or insolvency
pursuant to Section 4241 or 4245 of ERISA, or that it intends to terminate or
has terminated under Section 4041A or 4042 of ERISA; (viii) the occurrence of an
act or omission which could reasonably be expected to give rise to the
imposition on Borrower or any of its ERISA Affiliates of fines, penalties, taxes
or related charges under Chapter 43 of the Internal Revenue Code or under
Section 409 or 502(c), (i) or (l) or 4071 of ERISA in respect of any Employee
Benefit Plan; (ix) the
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assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Borrower or any of its ERISA Affiliates in connection with any such
Employee Benefit Plan; (x) receipt from the Internal Revenue Service of notice
of the failure of any Pension Plan (or any other Employee Benefit Plan intended
to be qualified under Section 401(a) of the Internal Revenue Code) to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
``ESOP LOAN DOCUMENTS'' means (i) that certain Term Loan Agreement dated as
of December 1, 1988 between Hartmarx Employee Stock Ownership Plan Trust and
Wachovia Bank and Trust Company, N.A., as amended, (ii) Guaranty of Hartmarx
Corporation dated as of December 1, 1988, in favor of Wachovia Bank and Trust
Company, N.A., as amended, (iii) documents set forth in (i) and (ii) herein, as
modified, amended, revised, financed and/or refinanced pursuant to the Override
Agreement, and (iv) any and all amendments, replacements, refinancings and
modifications, from time to time, of the documents set forth in (i), (ii) and
(iii) herein in accordance with the terms hereof.
``EVENT OF DEFAULT'' means each of the events set forth in Section 8.
``EXCHANGE ACT'' means the Securities Exchange Act of 1934, as amended from
time to time, and any successor statute.
``EXCHANGE RATE'' means, on any date when an amount expressed in a currency
other than Dollars is to be determined with respect to any Letter of Credit, the
nominal rate of exchange of Issuing Lender in the New York foreign exchange
market for the purchase by Issuing Lender (by cable transfer) of such currency
in exchange for Dollars at 12:00 noon (New York time) one Business Day prior to
such date (or otherwise in accordance with the normal practice of Issuing
Lender), expressed as a number of units of such currency per one Dollar.
``EXCLUDED ACCOUNTS'' means the Deposit Accounts described in Schedule 1.1C
annexed hereto.
``EXCLUDED PLANS'' means, collectively, the (i) Glasgow Manufacturing
Company Pension Plan, effective as of June 1, 1985 and (ii) Patterson-Fletcher
Past Service Pension Plan, effective as of January 1, 1976.
``EXISTING CREDIT FACILITIES'' shall mean, collectively, (i) the Override
Agreement, (ii) the Bridge Facility, (iii) all agreements, documents and
instruments pursuant to which any interest in collateral is granted or purported
to be granted, created evidenced or perfected pursuant to any of the Override
Agreement or Bridge Facility, including without limitation, all deeds of trust,
mortgages, security agreements, pledge agreements, assignments, licenses,
landlord consents and releases, financing statements, fixture filings,
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registrations or similar documents and (iv) all ancillary agreements as to which
any holder of any of the obligations evidenced by the Override Agreement or
Bridge Facility is a party or a beneficiary and all other agreements,
instruments, documents and certificates including promissory notes, consents,
assignments, contracts, and notices delivered in connection with any of the
foregoing or the transactions contemplated thereby, in each case as any of the
foregoing may be in effect as of the Closing Date.
``EXISTING EDBS'' means, collectively, (A) those certain loan agreements
each dated as of December 1, 1993 (i) between Borrower and the Indiana
Development Finance Authority relating to $7,500,000 in principal amount of
economic development bonds due July 1, 2014 (Michigan City Issue) and (ii)
between Borrower and the City of Des Plaines, Illinois relating to $8,000,000 in
principal amount of economic development bonds due July 1, 2015 (Des Plaines
issue), each bearing a fixed coupon of 7.25% per annum and issued at a discount
to yield 7.50% per annum; (B) that certain Loan Agreement dated December 1, 1984
between Rector Sportswear Corporation and the City of Rector, Arkansas relating
to $1,000,000 in principal amount of industrial development revenue bonds due
December 1, 1996; (C) that certain Loan Agreement dated September 1, 1987
between Thorngate, Ltd. and the Industrial Development Authority of the County
of Cape Girardeau, Missouri relating to $1,750,000 in principal amount of
industrial development revenue bonds due September 1, 2007; (D) that certain
Loan Agreement dated September 1, 1987 between Walton Manufacturing Company and
the Development Authority of Walton County relating to $2,500,000 in principal
amount of industrial development revenue bonds due September 1, 2007; (E) that
certain Loan Agreement dated March 1, 1981 between Winchester Clothing Company
and the City of Winchester (Kentucky) relating to $1,500,000 in principal amount
of industrial building revenue bonds due March 1, 1996 and (F) that certain
Lease Agreement dated as of March 9, 1966 (or 1967 in the case of some copies of
the same) between Easton Area Industrial Developers Inc. and Handmacher-Vogel
Inc., as the same has been amended, assigned and assumed prior to the date
hereof, and all mortgages, deeds of trust, guarantees and other agreements
executed in connection therewith.
``EXISTING LETTERS OF CREDIT'' means the letters of credit outstanding
prior to, and with an expiration date later than, the Closing Date and issued
under the Override Agreement and listed on Schedule 1.1D annexed hereto.
``FACILITIES'' means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased or operated or used (for manufacturing,
warehousing, sales or other business operations) by Borrower or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
``FASHIONAIRE RELATED ASSETS'' means collectively, (i) those certain
subordinated promissory notes dated June 3, 1993 made by Fashionaire Apparel,
Inc., an Illinois corporation (``FASHIONAIRE''), to the order of Borrower in the
original principal amount of $3,464,440, (ii) any and all shares of capital
stock of Fashionaire that may from time to time be owned by Borrower or any of
its Subsidiaries, (iii) any property or assets owned by Fashionaire and its
Subsidiaries from time to time and (iv) any property or assets received
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from the sale, disposition or other transfer of, in exchange for, in respect of
or with respect to the distributions on any of the foregoing (whether pursuant
to a plan of reorganization or otherwise), in each case as the same has been and
may be in the future be amended, modified, supplemented, restated, replaced,
substituted for or refunded from time to time.
``FILE TAPE'' means, as to each day, the various software created and
maintained or otherwise utilized by the Borrower and its Subsidiaries in
accordance with their usual and customary practice and encoded pursuant to the
programming in use by Borrower and its Subsidiaries as of the Closing Date, as
such software may be modified from time to time, with information that includes,
as to Borrower and each Subsidiary, the name, address, telephone number and
account number of each Account Debtor of such Person and the aggregate
outstanding balance, as of such day, of the Accounts owing from each Account
Debtor.
``FINANCIAL STANDBY LETTER OF CREDIT'' means any Standby Letter of Credit
which is not a Nonfinancial Standby Letter of Credit.
``FISCAL YEAR'' means the fiscal year or fiscal period of Borrower and its
Subsidiaries, as the case may be, ending on or about the last Business Day of
November of each calendar year. For purposes of this Agreement, any particular
Fiscal Year shall be designated by reference to the calendar year in which such
Fiscal Year ends.
``FUNDING DATE'' means the date of the funding of a Loan.
``GAAP'' means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
``GE CAPITAL'' has the meaning assigned to that term in the introduction to
this Agreement.
``GOVERNMENTAL AUTHORIZATION'' means any permit, license, authorization,
directive, consent order or consent decree of or from any federal, state or
local governmental authority, agency or court.
``GUARANTORS'' has the meaning assigned that term in the recitals to this
Agreement.
``GUARANTY'' means the Guaranty to be executed and delivered by each
Guarantor on the Closing Date, substantially in the form of Exhibit IX annexed
hereto.
``HAZARDOUS MATERIALS'' means (i) any chemical, material or substance at
any time defined as or included in the definition of ``hazardous substances'',
``hazardous wastes'',
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``hazardous materials'', ``extremely hazardous waste'', ``restricted hazardous
waste'', ``infectious waste'', ``toxic substances'' or any other formulations
intended to define, list or classify substances by reason of deleterious
properties such as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, ``TCLP toxicity'' or ``EP toxicity'' or words
of similar import under any applicable Environmental Laws or publications
promulgated pursuant thereto; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment which contains any oil
or dielectric fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or regulated by any
governmental authority or which may or could pose a hazard to the health and
safety of the owners, occupants or any Persons in the vicinity of the
Facilities.
``HSSI'' means HSSI, Incorporated, a Delaware corporation, and its
successors.
``HSSI RELATED ASSETS'' means collectively, (i) that certain promissory
note dated September 18, 1992 made by HSSA Group, Ltd., an Illinois corporation
(``HSSA''), to the order of Borrower in the original principal amount of
$43,000,000, (ii) any and all shares of capital stock of HSSI that may from time
to time be owned by Borrower or any of its Subsidiaries, (iii) that certain
promissory noted dated November 23, 1993 made by Caredon Realty, Inc., an
Illinois corporation, to the order of Borrower in the original principal amount
of $35,000,000, (iv) any property or assets owned by HSSA and its Subsidiaries
from time to time and (v) any property or assets received from the sale,
disposition or other transfer of, in exchange for, in respect of or with respect
to the distributions on any of the foregoing (whether pursuant to a plan of
reorganization or otherwise), in each case as the same has been and may be in
the future be amended, modified, supplemented, restated, replaced, substituted
for or refunded from time to time.
``INDEBTEDNESS'', as applied to any Person, means (i) all indebtedness for
borrowed money, (ii) that portion of obligations with respect to Capital Leases
that is properly classified as a liability on a balance sheet in conformity with
GAAP, (iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any obligation
owed for all or any part of the deferred purchase price of property or services
(excluding any such obligations incurred under ERISA), which purchase price is
(a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(v) all indebtedness secured by any Lien on any property or asset owned or held
by that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency Agreements constitute
Contingent Obligations and not Indebtedness.
``INDEMNITEE'' has the meaning assigned to that term in subsection 10.3.
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``INDEX RATE'' means, at any time, the higher of (x) the Prime Rate or (y)
the Commercial Paper Rate.
``INDEX RATE LOANS'' means Loans bearing interest at rates determined by
reference to the Index Rate as provided in subsection 2.2A.
``INITIAL SYNDICATION PERIOD'' means the period commencing January 11, 1994
and ending on the two month anniversary of the Closing Date.
``INTELLECTUAL PROPERTY'' means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Borrower and its Subsidiaries as currently conducted
that are material to the financial condition, business or operations of Borrower
and its Subsidiaries, taken as a whole including, without limitation, any of the
foregoing licensed to Borrower or any of its Subsidiaries by other Persons.
``INTERCOMPANY NOTE SECURITY AGREEMENT'' means that certain Intercompany
Note Security Agreement substantially in the form of Exhibit XV annexed hereto,
entered into between the Guarantors as grantors and Borrower as secured party.
``INTERCOMPANY NOTE TRADEMARK ASSIGNMENT'' means that certain Trademark
Security Agreement in substantially the form of Exhibit XV-A annexed hereto
entered into between the Guarantors as grantors and Borrower as secured party.
``INTERCOMPANY NOTES'' means the promissory notes issued to Borrower by
each Guarantor to evidence intercompany Indebtedness, in the form of Exhibit XIV
annexed hereto.
``INTEREST PAYMENT DATE'' means (i) with respect to any Index Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any LIBOR Rate Loan, the last day of each Interest Period applicable to such
Loan; provided that in the case of each Interest Period of longer than three
months, ``INTEREST PAYMENT DATE'' shall also include the date that is three
months after the commencement of such Interest Period.
``INTEREST PERIOD'' has the meaning assigned to that term in subsection
2.2B.
``INTEREST RATE AGREEMENT'' means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Borrower or any of its Subsidiaries
against fluctuations in interest rates.
``INTEREST RATE DETERMINATION DATE'' means each date for calculating the
Adjusted LIBOR Rate for purposes of determining the interest rate in respect of
an Interest Period. The Interest Rate Determination Date shall be the second
Business Day prior to the first day of the related Interest Period for a LIBOR
Rate Loan.
``INTERIM ADVANCE'' has the meaning set forth in subsection 2.1A(ii).
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``INTERNAL REVENUE CODE'' means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
``INVENTORY'' shall mean any ``inventory,'' as such term is defined in the
UCC, now or hereafter owned or acquired by Borrower or any of its Subsidiaries,
wherever located, and, in any event, including all inventory, merchandise, goods
and other personal property which are held by or on behalf of Borrower or any of
its Subsidiaries for sale or lease or are furnished or are to be furnished under
a contract of service or which constitute raw materials, work in process, or
materials used or consumed or to be used or consumed in Borrower's or such
Subsidiaries', as the case may be, business, or in the processing, packaging,
advertising, promotion, delivery or shipping of the same, and all finished
goods.
``INVESTMENT'' means (i) any direct or indirect purchase or other
acquisition by Borrower or any of its Subsidiaries of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a
Subsidiary of Borrower or such Subsidiary, as the case may be), or (ii) any
direct or indirect loan, advance (other than advances to employees for moving,
entertainment and travel expenses, drawing accounts and similar expenditures in
the ordinary course of business) or capital contribution by Borrower or any of
its Subsidiaries to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets or did not arise
from sales to that other Person in the ordinary course of business. The amount
of any Investment shall be the original cost of such Investment plus the cost of
all additions thereto, without any adjustments for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
``ISSUING LENDER'' means (i) with respect to the Existing Letters of
Credit, The First National Bank of Chicago and (ii) with respect to all other
Letters of Credit (including the reissuance and replacement of Existing Letters
of Credit), The Bank of New York.
``JOINT VENTURE'' means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
``LENDER'' and ``LENDERS'' means the persons identified as ``Lenders'' and
listed on the signature pages of this Agreement (and includes Swing Line Lender
and Issuing Lender), together with their successors and permitted assigns
pursuant to subsection 10.1.
``LETTER OF CREDIT'' or ``LETTERS OF CREDIT'' means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lender
for the account of Borrower pursuant to subsection 3.1. and includes, without
limitation, the Existing Letters of Credit pursuant to subsection 3.7
``LETTER OF CREDIT USAGE'' means, as at any date of determination, the sum
of (i) the maximum aggregate undrawn amount which is or at any time thereafter
may become available for drawing under all Letters of Credit then outstanding
plus (ii) the aggregate
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amount of all drawings under Letters of Credit honored by Issuing Lender and not
theretofore reimbursed by Borrower (whether such reimbursement is out of the
proceeds of Loans pursuant to subsection 3.3B or otherwise). For purposes of
this definition, any amount described in clause (i) or (ii) of the preceding
sentence which is denominated in a currency other than Dollars shall be valued
based on the applicable Exchange Rate for such currency as of the applicable
date of determination.
``LIBOR RATE LOANS'' means Loans bearing interest at rates determined by
reference to the Adjusted LIBOR Rate as provided in subsection 2.2A.
``LICENSE AGREEMENTS'' has the meaning assigned that term in subsection
5.20.
``LIEN'' means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
``LOAN DOCUMENTS'' means (i) this Agreement, (ii) the Notes, (iii) the
Letters of Credit (and any applications for, or reimbursement agreements or
other documents or certificates executed by Borrower in favor of Issuing Lender
relating to, the Letters of Credit), (iv) any Interest Rate Agreement consisting
of an interest rate swap permitted pursuant to subsection 7.4(ii)(a) between
Borrower and any Lender or an Affiliate thereof, (v) the Guaranty and (vi) the
Collateral Documents.
``LOANS'' means one or more of the Revolving Loans or Swing Line Loans or
any combination thereof.
``MANAGING AGENT'' has the meaning assigned to that term in the
introduction to this Agreement.
``MARGIN STOCK'' has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
``MATERIAL ADVERSE EFFECT'' means (i) a material adverse effect upon the
business, operations, properties, assets, financial condition or prospects of
Borrower and its Subsidiaries, taken as a whole, or (ii) the material impairment
of any of the Collateral or the impairment of the ability of any Credit Party to
perform any of their material obligations under the Loan Documents, or of any
Agent or Lenders to enforce, the Obligations.
``MULTIEMPLOYER FUND'' means the Clothing Retirement Fund of the
Amalgamated Insurance Fund and the ILGWU National Retirement Fund, each of which
is a Multiemployer Plan.
``MULTIEMPLOYER PLAN'' means an Employee Benefit Plan that is a
``multiemployer plan'', as defined in Section 3(37) of ERISA.
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``NET CASH PROCEEDS'' means, with respect to any Asset Sale, Cash Proceeds
of such Asset Sale net of bona fide direct costs of sale including, without
limitation, (i) income taxes reasonably estimated to be actually payable as a
result of such Asset Sale within two years of the date of such Asset Sale and
(ii) payment of the outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans) required to be repaid
under the terms thereof as a result of such Asset Sale.
``NON-OPERATING SUBSIDIARY'' means, as of any date of determination, any
Subsidiary of Borrower designated as such on Schedule 5.1 annexed hereto by the
Borrower as of the Closing Date (which designation has not been subsequently
revoked by Borrower by written notice to Managing Agent) and any Subsidiary of
Borrower designated as such after the Closing Date in accordance with subsection
6.11, and with respect to each such Subsidiary (including each such Subsidiary
designated on Schedule 5.1 annexed hereto), each of the following statements is
true: (i) such Subsidiary does not own or hold any interest in any Account
(other than Accounts that are more than 6 months old as of the Closing Date and
rights to payment arising after the Closing Date resulting from the sale or
other disposition of assets (other than Collateral) permitted hereunder) or any
Inventory, (ii) such Subsidiary owns or otherwise holds an interest in less than
1% of the Collateral, (iii) the increase in the outstanding principal amount of
such Subsidiary's Intercompany Note on and after the Closing Date shall not
exceed $1,750,000, (iv) as of the last day of the most recent fiscal quarter of
Borrower, such Subsidiary accounted for less than 1% of the consolidated
revenues or cash flow (calculated for this purpose as earnings before income
taxes, depreciation and amortization, minus capital expenditures) of Borrower
for the twelve month period ending on such date and (v) as of the last day of
the most recent fiscal quarter of Borrower, such Subsidiary (a) was the owner of
less than 1% of the consolidated assets of Borrower and (b) had a net worth of
less than 1% of Consolidated Net Worth; provided that no such Subsidiary shall
constitute a Non-Operating Subsidiary if, when aggregated with all other Non-
Operating Subsidiaries at such time, each of the foregoing statements would not
be true as to Non-Operating Subsidiaries taken as a whole, substituting in each
case for such aggregate test a reference to ``10%'' for each reference to ``1%''
and a reference to "$17,500,000" for the reference to "$1,750,000" in such
statements.
``NONFINANCIAL STANDBY LETTER OF CREDIT'' means any Standby Letter of
Credit issued in support of insurance obligations, workmen's compensation,
judgment bonds, performance bonds and similar non-debt obligations of Borrower
or its Subsidiaries which is classified as a nonfinancial standby letter of
credit by Issuing Lender upon the issuance thereof hereunder; provided that any
such Nonfinancial Standby Letter of Credit shall automatically be deemed to be a
Financial Letter of Credit immediately upon any law, regulation or governmental
official requiring Issuing Lender or any other Lender to designate such
Nonfinancial Standby Letter of Credit (or any credit exposure with respect
thereto) as a financial letter of credit (or exposure with respect to a
financial letter of credit).
``NOTES'' means one or more of the Revolving Notes or Swing Line Notes or
any combination thereof.
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``NOTICE OF BORROWING'' means a notice substantially in the form of Exhibit
I annexed hereto delivered by Borrower to Managing Agent pursuant to subsection
2.1B with respect to a proposed borrowing.
``NOTICE OF CONVERSION/CONTINUATION'' means a notice substantially in the
form of Exhibit II annexed hereto delivered by Borrower to Managing Agent
pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
``NOTICE OF ISSUANCE OF LETTER OF CREDIT'' means a notice substantially in
the form of Exhibit III annexed hereto delivered by Borrower to Issuing Lender
together with any application that Issuing Lender requires in accordance with
its customary practice for the issuance of letters of credit pursuant to
subsection 3.1B(i) with respect to the proposed issuance of a Letter of Credit
of the type requested.
``OBLIGATIONS'' means all obligations of every nature of each Credit Party
from time to time owed to any Agent, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnification or otherwise.
``OFFICER'S CERTIFICATE'' means, as applied to any corporation, a
certificate executed on behalf of such corporation by any of its chairman of the
board (if an officer), president, one of its senior vice presidents or chief
financial officer or its vice president treasurer or assistant treasurer (if in
each case such officer is also a senior officer of Borrower); provided that
every Officer's Certificate with respect to the compliance with a condition
precedent to the making of any Loans hereunder shall include (i) a statement
that the officer making or giving such Officer's Certificate has read such
condition and any definitions or other provisions contained in this Agreement
relating thereto, (ii) a statement that, to the best knowledge of the signer,
such officer has made or has caused to be made such examination or investigation
as is reasonably necessary to enable such officer to express an informed opinion
as to whether or not such condition has been complied with, and (iii) a
statement as to whether, to the best knowledge of the signer, such condition has
been complied with in all material respects.
``OPERATING LEASE'' means, as applied to any Person, any lease (including,
without limitation, leases that may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
``OPERATING SUBSIDIARIES'' means each of the direct or indirect
Subsidiaries of Borrower from time to time in existence, excluding, however, the
Non-Operating Subsidiaries.
``OVERRIDE AGREEMENT'' means the Override Agreement, dated as of December
30, 1992, as amended through the Closing Date, among the Borrower and certain of
the Borrower's Subsidiaries named therein as borrowers, the Hartmarx Employee
Stock
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Ownership Plan Trust, certain financial institutions named therein as lenders
and The First National Bank of Chicago, as MOF agent for certain Lenders and as
collateral agent for all of the lenders.
``PAYMENT OFFICE'' means (i) for funding and payment purposes Account No.
50-232-854 in the name of GE Capital CAF Depository at Bankers Trust Company, 17
Wall Street, New York, New York, ABA no. 021 001 033 and (ii) for notice of
funding and payment purposes, including, without limitation, delivery of Notices
of Borrowing and Notices of Conversion/Continuation, 501 Merritt Seven, 3rd
Floor, Norwalk, Connecticut 06851, Attention: Collateral Analyst - Hartmarx,
or, in each case, such other office as Managing Agent may designate from time to
time in writing to Borrower and each Lender in accordance with subsection 10.8.
``PBGC'' means the Pension Benefit Guaranty Corporation (or any successor
thereto).
``PENSION PLAN'' means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA other than Excluded Plans.
``PERMITTED ENCUMBRANCES'' means the following types of Liens (other than
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics and materialmen and other Liens imposed by law incurred in the
ordinary course of business for sums not yet 60 days past due and with
respect to which no enforcement action has been taken or being contested in
good faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) Liens consisting of deposit arrangements securing obligations in
connection with banking services of the Borrower and its Subsidiaries which
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constitute Cash Equivalents of the type described in clauses (iv), (v) and
(vi) of the definition thereof;
(vi) deposits or pledges for the purpose of securing an appeal, stay
or discharge in the course of legal proceedings; provided that such
deposits or pledges do not secure judgments constituting an Event of
Default under subsection 8.8;
(vii) leases or subleases granted to others not interfering in any
material respect with the ordinary conduct of the business of Borrower or
any of its Subsidiaries;
(viii) easements, rights-of-way, restrictions, minor defects,
encroachments or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of Borrower or any of its Subsidiaries;
(ix) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b);
(x) Liens on Inventory and documents of title securing trade letters
of credit permitted pursuant to subsection 7.4(vi)(B); provided that such
Lien attaches only to the Inventory and documents of title that are the
subject of such trade letters of credit;
(xi) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement; and
(xii) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods.
``PERSON'' means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, Joint Ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
``PLEDGE AND SECURITY AGREEMENT'' shall mean the Pledge and Security
Agreement, in substantially the form of Exhibit X annexed hereto entered into
between Collateral Agent, Borrower and the Guarantors.
``POTENTIAL EVENT OF DEFAULT'' means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
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``PRIME RATE'' means the rate that Reference Bank announces from time to
time as its prime lending rate, as in effect from time to time. The Prime Rate
is a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. Reference Bank, Managing Agent or any other
Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
``PRO RATA SHARE'' means, with respect to each Lender, the percentage
obtained by dividing (x) the Credit Exposure of that Lender by (y) the aggregate
Credit Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share
of each Lender is set forth opposite the name of that Lender in Schedule 2.1
annexed hereto.
``RECEIPTS'' shall mean all cash, Cash Equivalents, checks, notes, drafts
and any items of payment or collection received, by or on behalf of Borrower or
any of its Subsidiaries, or by any officers, employees or agents of Borrower or
any of its Subsidiaries or other Persons acting for or in concert with Borrower
or such Subsidiary to make collections on Borrower's or such Subsidiary's behalf
in connection with or in any way relating to Borrower or such Subsidiary or the
operation of Borrower's or such Subsidiary's business, including, without
limitation, any proceeds received from (i) any sales of, or loans against,
Accounts of Borrower or any of its Subsidiaries (other than the Loans and
Letters of Credit pursuant to this Agreement), (ii) any disposition of assets or
issuance or sale of stock or equity securities by Borrower or any of its
Subsidiaries, (iii) the issuance or sale of Indebtedness by Borrower or any of
its Subsidiaries (other than the Obligations and other Indebtedness permitted by
this Agreement), (iv) insurance policies (other than liability insurance payable
directly or indirectly to a third party) maintained by Borrower or any of its
Subsidiaries, whether or not Collateral Agent is an additional insured or named
as loss payee thereunder and (v) the successful prosecution (including any
settlement) of any claims, actions or other litigation or proceeding by or on
behalf of or against Borrower or any of its Subsidiaries; it being understood
and agreed that nothing contained in this definition shall in any respect be
deemed to permit any transactions by Borrower or any of its Subsidiaries
otherwise restricted or prohibited by this Agreement.
``REFERENCE BANK'' means Bankers Trust Company, 17 Wall Street, New York,
New York.
``REFUNDED SWING LINE LOANS'' has the meaning assigned to that term in
subsection 2.1A(ii).
``REGULATION D'' means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
``REIMBURSEMENT DATE'' has the meaning assigned to that term in subsection
3.3B.
``RELATED DOCUMENTS'' means, collectively, (i) the Senior Subordinated
Notes, (ii) the Subordinated Note Indenture, (iii) the Traco Documents, (iv) the
Existing EDBs and (v) the ESOP Loan Documents.
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``RELEASE'' means any release, spill, emission, leaking, pumping, pouring,
injection, escaping, deposit, disposal, discharge, dispersal, dumping, leaching
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any Facility, including the movement of any Hazardous Material
through the air, soil, surface water, groundwater or property.
``REQUISITE LENDERS'' means either (i) two or more Lenders having or
holding more than 50% of the aggregate Credit Exposure of all Lenders or (ii)
any one Lender having or holding 66-2/3% or more of the aggregate Credit
Exposure of all Lenders; provided that for purposes of any amendment,
modification, termination or waiver of subsection 6.13 in accordance with
subsection 10.6, "Requisite Lenders" shall mean Lenders having or holding at
least 66 2/3% of the aggregate Credit Exposure of all Lenders.
``RESTRICTED JUNIOR PAYMENT'' means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Borrower
now or hereafter outstanding, except a dividend payable solely in shares of
stock to the holders of such shares, (ii) any redemption, retirement, sinking
fund or similar payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of stock of Borrower now or hereafter
outstanding, (iii) any payment made to retire, or to obtain the surrender of,
any outstanding warrants, options or other rights to acquire shares of any class
of stock of Borrower now or hereafter outstanding, (iv) any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Subordinated Indebtedness
and (v) any Investment other than an Investment permitted pursuant to subsection
7.3.
``REVOLVING LOAN COMMITMENT'' means the commitment of a Lender to make
Revolving Loans to Borrower pursuant to subsection 2.1A(i), and ``REVOLVING LOAN
COMMITMENTS'' means such commitments of all Lenders in the aggregate.
``REVOLVING LOANS'' means the Loans made by Lenders to Borrower pursuant to
subsection 2.1A(i) and shall include, without limitation, Revolving Loans which
are Rollover Borrowings.
``REVOLVING NOTES'' means (i) the promissory notes of Borrower issued
pursuant to subsection 2.1D on the Closing Date and (ii) any promissory notes
issued by Borrower pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit IV
annexed hereto.
``ROLLOVER BORROWING'' means a borrowing of Revolving Loans hereunder by
Borrower in accordance with subsection 4.4.
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``ROLLOVER TERMINATION NOTICE'' means any notice (which may be delivered
telephonically provided it is confirmed promptly in writing) by Requisite
Lenders to Managing Agent instructing Managing Agent not to permit any Rollover
Borrowings hereunder.
``SECURITIES'' means any stock, shares, partnership interests, voting trust
certificates, certificates of interest or participation in any profit-sharing
agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as ``securities'' or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
``SECURITIES ACT'' means the Securities Act of 1933, as amended from time
to time, and any successor statute.
``SENIOR SUBORDINATED NOTES'' means those certain 10-7/8% Senior
Subordinated Notes due 2002 in the initial aggregate principal amount of
$100,000,000, issued by Borrower pursuant to the Subordinated Note Indenture.
``SOLVENT'' means, with respect to any Person, that as of the date of
determination (i) the then fair saleable value of the property of such Person is
(y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
``STANDBY LETTER OF CREDIT'' means any Existing Letter of Credit, standby
letter of credit or similar instrument issued in each case for the purpose of
supporting (i) Indebtedness of Borrower or any of its Subsidiaries in respect of
industrial revenue or development bonds or financings, (ii) workers'
compensation liabilities of Borrower or any of its Subsidiaries, (iii) the
obligations of third party insurers of Borrower or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (iv) obligations with respect to Capital Leases or Operating Leases of
Borrower or any of its Subsidiaries, and (v) performance, payment, deposit or
surety obligations of Borrower or any of its Subsidiaries, in any case if
required by law or governmental rule or regulation or in accordance with custom
and practice in the industry; provided that Standby Letters of Credit may not be
issued for the purpose of supporting (a) trade payables or (b) Indebtedness
constituting ``antecedent debt'' (as that term is used in Section 547 of the
Bankruptcy Code).
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``SUBORDINATED INDEBTEDNESS'' means (i) the Indebtedness of Borrower
evidenced by the Senior Subordinated Notes and (ii) any other Indebtedness of
Borrower subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions and other material terms in form
and substance satisfactory to Managing Agent and Requisite Lenders.
``SUBORDINATED NOTE INDENTURE'' means that certain Indenture dated as of
March 15, 1994 between Borrower and Bank One Wisconsin Trust Company, N.A., as
trustee.
``SUBSIDIARY'' means, with respect to any Person, any corporation,
partnership, association, joint venture or other business entity of which more
than 50% of the total voting power of shares of stock or other ownership
interests entitled (without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors, managers, trustees
or other Persons performing similar functions) having the power to direct or
cause the direction of the management and policies thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof; provided, however,
that for the purposes of the representations, covenants, defaults and other
provisions contained in this Agreement and the other Loan Documents, neither
HSSI nor any of its Subsidiaries shall be considered a Subsidiary of Borrower or
any of its Subsidiaries until such time, if any, as HSSI's financial condition
and results of operations shall be required to be consolidated on the
consolidated financial statements of Borrower and its Subsidiaries in accordance
with GAAP.
``SWING LINE LENDER'' means GE Capital, or any Person serving as a
successor Managing Agent hereunder, in its capacity as Swing Line Lender
hereunder.
``SWING LINE LOAN COMMITMENT'' means the commitment of Swing Line Lender to
make Swing Line Loans to Borrower pursuant to subsection 2.1A(ii).
``SWING LINE LOANS'' means the Loans made by Swing Line Lender to Borrower
pursuant to subsection 2.1A(ii).
``SWING LINE NOTE'' means (i) the promissory note of Borrower issued
pursuant to subsection 2.1D on the Closing Date and (ii) any promissory note
issued by Borrower to any successor Agent and Swing Line Lender pursuant to the
last sentence of subsection 9.6B, in each case substantially in the form of
Exhibit IV-A annexed hereto.
``TAX'' or ``TAXES'' means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by any
federal, state or local governmental authority or any political subdivision or
taxing authority thereof, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that ``TAX ON THE OVERALL NET INCOME'' of a
Person shall be construed as a reference to a tax imposed by the jurisdiction in
which that Person's principal office (and/or, in the case of a Lender, its
lending office) is located or by any political subdivision or taxing authority
thereof or in which that Person is deemed to be doing business on all or part of
the net
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income, profits or gains of that Person (whether worldwide, or only insofar as
such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise).
``TOTAL UTILIZATION OF COMMITMENTS'' means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Loans (other than Loans made for the purpose of repaying any Refunded Swing Line
Loans reimbursing the Issuing Lender for any amount drawn under any Letter of
Credit but not yet so applied) plus (ii) the Letter of Credit Usage plus (iii)
the aggregate principal amount of all outstanding Swing Line Loans.
``TRACO DOCUMENTS'' means collectively, (i) that certain Securities
Purchase Agreement dated as of September 20, 1992 between Borrower and Traco
International, N.V., a Netherlands Antilles corporation (``TRACO'') and its
successors and assigns, (ii) that certain Stockholder's Agreement dated as of
September 20, 1992 between Borrower and Traco as amended by that certain
Amendment to Stockholder's Agreement dated September 30, 1992 and (iii) that
certain Warrant to Purchase Common Stock issued by Borrower in favor of Traco
pursuant to and in the form attached to the Securities Purchase Agreement
referred to in clause (i) above.
``TRADEMARK ASSIGNMENT'' means that certain Trademark Security Agreement in
substantially the form of Exhibit X-A annexed hereto entered into between
Collateral Agent, Borrower and the Guarantors.
``UCC'' shall mean the Uniform Commercial Code of the jurisdiction with
respect to which such term is used, as in effect from time to time.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
AGREEMENT.
Except as otherwise expressly provided in this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with GAAP. Financial statements and other information required to be
delivered by Borrower to Lenders pursuant to clauses (i), (ii), (iii) and (xiii)
of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3. If any changes in
accounting principles from those used in the preparation of the financial
statements referred to in subsection 5.3 are hereafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrower with the agreement of its independent certified public accountants and
such changes result in a change of the components of the calculation of any of
the definitions, covenants or other provisions referred to in the immediately
preceding sentence, Borrower, Managing Agent and Lenders agree to enter into
negotiations in order to amend such
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provisions so as to equitably reflect such changes with the desired result that
the criteria for evaluating financial condition of Borrower and its Subsidiaries
shall be the same after such changes as if such changes had not been made;
provided, however, that no change in GAAP that would affect the components of
the calculation of any of such definitions, covenants or other provisions shall
be given effect in such calculations until such provisions are amended, in a
manner satisfactory to Managing Agent and Requisite Lenders, to reflect such
change in accounting principles.
1.3 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
References to ``Sections'' and ``subsections'' shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural, depending on the
reference. Any reference herein or in any other Loan Document to any agreement,
document or instrument, including, without limitation, this Agreement, the
Notes, the other Loan Documents and the Related Documents and any schedules or
exhibits thereto, unless expressly noted otherwise, shall be a reference to each
such agreement, document or instrument as the same may be amended, restated,
supplemented or otherwise modified prior to the date hereof and from time to
time hereafter to the extent permitted hereunder or under the applicable Loan
Document.
SECTION 2.
AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; LOANS; NOTES.
-------------------------
A. COMMITMENTS. Subject to the terms and conditions of this Agreement
and in reliance upon the representations and warranties of Borrower herein set
forth, each Lender hereby severally agrees, subject to the limitations set forth
below with respect to the maximum amount of Loans permitted to be outstanding
from time to time, to make the Revolving Loans described in subsection 2.1A(i)
and Swing Line Lender hereby agrees to make the Swing Line Loans described in
subsection 2.1A(ii).
(i) Revolving Loans. Each Lender severally agrees to lend to Borrower
from time to time during the period from the Closing Date to but excluding
the Commitment Termination Date an aggregate amount not exceeding its Pro
Rata Share of the aggregate amount of the Revolving Loan Commitments to be
used for the purposes identified in subsection 2.5A. The original amount
of each Lender's Revolving Loan Commitment is set forth opposite its name
on Schedule 2.1 annexed hereto and the aggregate original amount of the
Revolving Loan Commitments is $175,000,000; provided that the Revolving
Loan Commitments of Lenders shall be adjusted to give effect to any
assignments of the Revolving Loan Commitments pursuant to subsection 10.1B;
and provided, further that the amount of the Revolving Loan Commitments
shall be reduced from time to time by the amount of any reductions thereto
made pursuant to subsections 2.4A(ii) and 2.4A(iii). Each
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Lender's Revolving Loan Commitment shall expire on the Commitment
Termination Date and all Revolving Loans and all other amounts owed
hereunder with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date; provided that
each Lender's Revolving Loan Commitment shall expire immediately and
without further action on April 30, 1994 if the initial Loans are not made
on or before that date. Amounts borrowed under this subsection 2.1A(i) may
be repaid and reborrowed to but excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Loans and the Revolving Loan Commitments shall be subject to the
following limitations in the amounts and during the periods indicated:
(a) in no event shall the Total Utilization of Commitments at any
time exceed the lesser of (i) Revolving Loan Commitments and (ii) the
Borrowing Base, in each case as then in effect; and
(b) for 30 consecutive days during the period commencing on April
1 and ending on June 30 of each calendar year, the Total Utilization
of Commitments shall not exceed $135,000,000.
(ii) Swing Line Loans. Swing Line Lender hereby agrees, subject to
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Borrower from time to time
during the period from the Closing Date to but excluding the Commitment
Termination Date by making Swing Line Loans to Borrower in an aggregate
amount not exceeding the amount of the Swing Line Loan Commitment to be
used for the purposes identified in subsection 2.5A, notwithstanding the
fact that such Swing Line Loans, when aggregated with Swing Line Lender's
outstanding Revolving Loans and Swing Line Lender's Pro Rata Share of the
Letter of Credit Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the Swing Line Loan
Commitment is $15,000,000; provided that the amount of the Swing Line Loan
Commitment is subject to reduction as provided in clause (c) of the next
paragraph. The Swing Line Loan Commitment shall expire on the Commitment
Termination Date and all Swing Line Loans and all other amounts owed
hereunder with respect to the Swing Line Loans shall be paid in full no
later than that date; provided that the Swing Line Loan Commitment shall
expire immediately and without further action on April 30, 1994 if the
initial Revolving Loans are not made on or before that date. Amounts
borrowed under this subsection 2.1A(ii) may be repaid and reborrowed to but
excluding the Commitment Termination Date. Without limiting any of the
foregoing, Borrower and Lenders acknowledge and agree that Swing Line
Lender may, in its sole discretion and without any obligation to do so,
make Swing Line Loans (i) from time to time in an amount sufficient to pay
to Managing Agent and Lenders any principal, interest, fees and expenses
required hereunder which are not paid when due; provided that Borrower
shall be deemed to
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have submitted an appropriate Notice of Borrowing therefor and the proceeds
of such Swing Line Loan shall not be advanced to Borrower but shall be paid
directly to Managing Agent for application in accordance with the terms
hereof and (ii) at any time upon the request of Borrower and in the sole
discretion of Swing Line Lender (and as long as (i) at least one Business
Day has passed since the occurrence of the most recent Event of Default of
which Lenders have knowledge and (ii) Requisite Lenders have not given
notice to Swing Line Lender not to make Swing Line Loans hereunder), and in
any amount (subject to the limits set forth in the following paragraph)
determined by Swing Line Lender in its sole discretion (an ``INTERIM
ADVANCE'') regardless of whether an Event of Default shall have occurred
and be continuing or Borrower would not be entitled to borrow hereunder
upon submission of an appropriate Notice of Borrowing therefor; provided
further that anything to the contrary in this Agreement and the other Loan
Documents notwithstanding, Swing Line Loans (including, without limitation,
Interim Advances) made pursuant to the preceding sentence shall constitute
Swing Line Loans for all purposes hereunder, including, without limitation,
for purposes of complying with limitations set by the Commitments and the
Borrowing Base, the making of Refunded Swing Line Loans and the purchase of
participations therein by Lenders in accordance with the terms hereof.
Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loans and the Swing Line Loan Commitment shall be subject to
the following limitations in the amounts and during the periods indicated:
(a) in no event shall the Total Utilization of Commitments at any
time exceed the lesser of (i) the Revolving Loan Commitments and (ii)
the Borrowing Base, in each case as then in effect; and
(b) for 30 consecutive days during the period commencing on April
1 and ending on June 30 of each calendar year, the Total Utilization
of the Commitments shall not exceed $135,000,000;
(c) any reduction of the Revolving Loan Commitments made pursuant
to subsections 2.4A(ii) or 2.4A(iii) which reduces the aggregate
Revolving Loan Commitments to an amount less than the then current
amount of the Swing Line Loan Commitment shall result in an automatic
corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any
further action on the part of Borrower, Managing Agent or Swing Line
Lender; and
(d) in no event shall the aggregate amount of Swing Line Loans
exceed the Swing Line Commitment as then in effect.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Borrower pursuant to subsection 2.4A(i), Swing Line Lender may,
at any time in its sole and absolute discretion, and, in any event, shall,
on the fifth Business
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Day after such Swing Line Loan was made, deliver to Managing Agent (with a
copy to Borrower), no later than 12:00 Noon (New York time) at least one
Business Day in advance of the proposed Funding Date, a notice (which shall
be deemed to be a Notice of Borrowing given by Borrower) requesting Lenders
to make Revolving Loans that are Index Rate Loans on such Funding Date in
an amount equal to the amount of such Swing Line Loans (the ``REFUNDED
SWING LINE LOANS'') outstanding on the date such notice is given which
Swing Line Lender requests Lenders to prepay. Anything contained in this
Agreement to the contrary notwithstanding, (i) the proceeds of such
Revolving Loans made by Lenders other than Swing Line Lender shall be
immediately delivered by Managing Agent to Swing Line Lender (and not to
Borrower) and applied to repay a corresponding portion of the Refunded
Swing Line Loans and (ii) on the day such Revolving Loans are made, Swing
Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by Swing Line
Lender, and such portion of the Swing Line Loans deemed to be so paid shall
no longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note of Swing Line Lender but shall instead constitute
part of Swing Line Lender's outstanding Revolving Loans and shall be due
under the Revolving Note of Swing Line Lender. If any portion of any such
amount paid (or deemed to be paid) to Swing Line Lender should be recovered
by or on behalf of Borrower from Swing Line Lender in bankruptcy, by
assignment for the benefit of creditors or otherwise, the loss of the
amount so recovered shall be ratably shared among all Lenders in the manner
contemplated by subsection 10.5.
If, as a result of any bankruptcy or similar proceeding with respect
to Borrower, Revolving Loans are not made pursuant to this subsection
2.1A(ii) in an amount sufficient to repay any amounts owed to Swing Line
Lender in respect of any outstanding Swing Line Loans, each Lender shall be
deemed to, and hereby agrees to, have purchased a participation in such
outstanding Swing Line Loans in an amount equal to its Pro Rata Share of
the unpaid amount together with accrued interest thereon. Upon one
Business Day's notice from Swing Line Lender, each Lender shall deliver to
Swing Line Lender an amount equal to its respective participation in same
day funds at the office of Swing Line Lender located at the Payment Office.
In order to evidence such participation each Lender agrees to enter into a
participation agreement at the request of Swing Line Lender in form and
substance reasonably satisfactory to all parties. In the event any Lender
fails to make available to Swing Line Lender the amount of such Lender's
participation as provided in this paragraph, Swing Line Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Index Rate.
Anything contained herein to the contrary notwithstanding, (i) each
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not
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be affected by any circumstance, including without limitation (a) any set-
off, counterclaim, recoupment, defense or other right which such Lender may
have against Swing Line Lender, Borrower or any other Person for any reason
whatsoever; (b) the occurrence or continuation of an Event of Default or a
Potential Event of Default; (c) any adverse change in the business,
operations, properties, assets, financial condition or prospects of
Borrower or any of its Subsidiaries; (d) any breach of this Agreement or
any other Loan Document by any party thereto; or (e) any other
circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided that such obligations of each Lender, other than
such obligations with respect to Interim Advances, are subject to the
condition that (X) Swing Line Lender believed in good faith that all
conditions under Section 4 to the making of the applicable Refunded Swing
Line Loans or other unpaid Swing Line Loans, as the case may be, were
satisfied at the time such Refunded Swing Line Loans or unpaid Swing Line
Loans were made, (Y) such Lender had actual knowledge, by receipt of any
notices required to be delivered to Lenders pursuant to subsection 6.1(ix)
or otherwise, that any such condition had not been satisfied and such
Lender failed to notify Swing Line Lender and Agent in writing that it had
no obligation to make Revolving Loans until such condition was satisfied
(any such notice to be effective as of the date of receipt thereof by Swing
Line Lender and Managing Agent), or (Z) the satisfaction of any such
condition not satisfied had been waived by Requisite Lenders prior to or at
the time such Refunded Swing Line Loans or other unpaid Swing Line Loans
were made; and (ii) Swing Line Lender shall not be obligated to make any
Swing Line Loans if it has elected not to do so after the occurrence and
during the continuation of a Potential Event of Default or Event of
Default.
B. BORROWING MECHANICS. Loans made on any Funding Date (other than
Revolving Loans made pursuant to a request by Swing Line Lender pursuant to
subsection 2.1A(ii) for the purpose of repaying any Refunded Swing Line Loans or
Loans made pursuant to subsection 3.3B for the purpose of reimbursing Issuing
Lender for the amount of a drawing under a Letter of Credit issued by it and
other than for Revolving Loans which constitute Rollover Borrowings in
accordance with subsection 4.4) shall be in an aggregate minimum amount of
$3,000,000 and integral multiples of $1,000,000 in excess of that amount;
provided that (a) Loans made on any Funding Date as LIBOR Rate Loans with a
particular Interest Period shall be in an aggregate minimum amount of $5,000,000
and integral multiples of $1,000,000 in excess of that amount and (b) Swing Line
Loans made on any Funding Date (other than Swing Line Loans made in accordance
with the final sentence of the first paragraph of subsection 2.1A(ii)) shall be
in an aggregate minimum amount of $500,000 and integral multiples of $1,000 in
excess of that amount. Rollover Borrowings may be in any amount up to the
maximum amount permitted pursuant to subsection 4.4 as of the applicable Funding
Date. Whenever Borrower desires that Swing Line Lender make a Swing Line Loan,
it shall deliver to Managing Agent a Notice of Borrowing no later than 12:00
Noon (New York time) on the proposed Funding Date. Whenever Borrower desires
that Lenders make Revolving Loans it shall deliver a Notice of Borrowing to
Managing Agent no later than 12:00 Noon (New York time) at least three Business
Days in advance of the proposed Funding Date (in the case of a LIBOR Rate Loan),
or at least one Business Day in advance of the proposed Funding Date (in the
case of an Index Rate Loan in excess of $10,000,000 in the aggregate) or no
later than 11:00 A.M. (New York time) on the proposed Funding Date (in the case
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of an Index Rate Loan of $10,000,000 or less in the aggregate and, in such case,
Borrower shall concurrently deliver a copy of such Notice of Borrowing to each
Lender). Whenever Borrower desires that Lenders make Revolving Loans
constituting Rollover Borrowings, it shall deliver to Managing Agent (and shall
deliver to Lenders concurrently, a copy of) a Notice of Borrowing (with
appropriate insertions) no later than 11:00 A.M. (New York time) on the proposed
Funding Date. The Notice of Borrowing shall specify (i) the proposed Funding
Date (which shall be a Business Day), (ii) the amount of Loans requested, (iii)
in the case of Swing Line Loans, Revolving Loans made on the Closing Date and
Revolving Loans which are Rollover Borrowings, that such Loans shall be Index
Rate Loans, (iv) in the case of Revolving Loans not made on the Closing Date or
which are not Rollover Borrowings, whether such Loans shall be Index Rate Loans
or LIBOR Rate Loans, and (v) in the case of any Loans requested to be made as
LIBOR Rate Loans, the initial Interest Period requested therefor. Revolving
Loans (which are not Rollover Borrowings) may be continued as or converted into
Index Rate Loans and LIBOR Rate Loans in the manner provided in subsection 2.2D.
In lieu of delivering the above-described Notice of Borrowing, Borrower may give
Managing Agent telephonic notice by the required time of any proposed borrowing
under this subsection 2.1B; provided that such notice shall be promptly
confirmed in writing by delivery of a Notice of Borrowing to Managing Agent.
Neither Managing Agent nor any Lender shall incur any liability to Borrower
in acting upon any telephonic notice referred to above that Managing Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to borrow on behalf of Borrower or for otherwise acting in
good faith under this subsection 2.1B, and upon funding of Loans by Lenders in
accordance with this Agreement pursuant to any such telephonic notice Borrower
shall have effected Loans hereunder.
Borrower shall notify Managing Agent prior to the funding of any Loans in
the event that any of the matters to which Borrower is required to certify in
the applicable Notice of Borrowing is no longer true and correct in any material
respect as of the applicable Funding Date, and the acceptance by Borrower of the
proceeds of any Loans shall constitute a re-certification by Borrower, as of the
applicable Funding Date, as to the matters to which Borrower is required to
certify in the applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Borrowing for a LIBOR Rate Loan (or telephonic notice in lieu thereof) shall
be irrevocable on and after the related Interest Rate Determination Date, and
Borrower shall be bound to make a borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS. All Revolving Loans under this Agreement shall
be made by Lenders simultaneously and proportionately to their respective Pro
Rata Shares, it being understood that no Lender shall be responsible for any
default by any other Lender in that other Lender's obligation to make a
Revolving Loan requested hereunder nor shall the Revolving Loan Commitment of
any Lender be increased or decreased as a result of a default by any other
Lender in that other Lender's obligation to make a Revolving Loan
34
<PAGE>
requested hereunder. Promptly after receipt by Managing Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Managing Agent shall notify each Lender or Swing Line Lender, as the case may
be, of the proposed borrowing. Each Lender shall make the amount of its
Revolving Loan available to Managing Agent, and Swing Line Lender shall make the
amount of its Swing Line Loan available to Managing Agent not later than 2:00
P.M. (New York time) on the applicable Funding Date, in each case in immediately
available funds, at the Payment Office. Except as provided in subsection
2.1(A)(ii) or subsection 3.3B with respect to Revolving Loans used to repay
Refunded Swing Line Loans or to reimburse Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it, and except as otherwise provided
in subsection 2.1A(ii) with respect to Swing Line Loans, upon satisfaction or
waiver of the applicable conditions precedent specified in subsections 4.1 (in
the case of Loans made on the Closing Date), 4.2 (in the case of Swing Line
Loans and Revolving Loans which are not Rollover Borrowings) and 4.4 in the case
of Revolving Loans which are Rollover Borrowings, Managing Agent shall make the
proceeds of such Loans available to Borrower on the applicable Funding Date by
causing an amount of same day funds equal to the proceeds of all such Loans
received by Managing Agent from Lenders or Swing Line Lender, as the case may
be, to be credited to such account or accounts of Borrower as Borrower shall
designate from time to time in writing, which shall apply to each Notice of
Borrowing thereafter until further written notice.
Unless Managing Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available to
Managing Agent the amount of such Lender's Loan requested on such Funding Date,
Managing Agent may assume that such Lender has made such amount available to
Managing Agent on such Funding Date and Managing Agent may, in its sole
discretion, but shall not be obligated to, make available to Borrower a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Managing Agent by such Lender, Managing Agent shall be
entitled to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from such Funding Date until the
date such amount is paid to Managing Agent, at the Index Rate. If such Lender
does not pay such corresponding amount forthwith upon Managing Agent's demand
therefor, Managing Agent shall promptly notify Borrower and Borrower shall
immediately pay such corresponding amount to Managing Agent together with
interest thereon, for each day from such Funding Date until the date such amount
is paid to Managing Agent, at the rate payable under this Agreement for Index
Rate Loans. Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitment hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any default
by such Lender hereunder.
D. NOTES. Borrower shall execute and deliver on the Closing Date (i) to
each Lender (or to Managing Agent for that Lender) a Revolving Note
substantially in the form of Exhibit IV annexed hereto to evidence that Lender's
Revolving Loans, in the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions, and (ii) to Swing Line Lender
(or to Managing Agent for Swing Line Lender) a Swing Line Note substantially in
the form of Exhibit IV-A annexed hereto to evidence Swing Line
35
<PAGE>
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
---------------------
A. RATE OF INTEREST. Subject to the provisions of subsections 2.2E and
2.6, each Revolving Loan shall bear interest on the unpaid principal amount
thereof from the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Index Rate or the Adjusted
LIBOR Rate, as the case may be. Subject to the provisions of subsection 2.7,
each Swing Line Loan shall bear interest on the unpaid principal amount thereof
from the date made through maturity (whether by acceleration or otherwise) at a
rate determined by reference to the Index Rate. The applicable basis for
determining the rate of interest with respect to any Revolving Loan shall be
selected by Borrower initially at the time a Notice of Borrowing is given with
respect to such Revolving Loan pursuant to subsection 2.1B. The basis for
determining the interest rate with respect to any Revolving Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day a Revolving Loan is
outstanding with respect to which notice has not been delivered to Managing
Agent in accordance with the terms of this Agreement specifying the applicable
basis for determining the rate of interest, then for that day that Loan shall
bear interest determined by reference to the Index Rate.
Subject to the provisions of subsections 2.2E and 2.6, the Loans shall bear
interest through maturity as follows:
(i) if an Index Rate Loan, then at the sum of the Index Rate plus the
Applicable Margin per annum; or
(ii) if a LIBOR Rate Loan, then at the sum of the Adjusted LIBOR Rate
plus the Applicable Margin per annum.
The ``APPLICABLE MARGIN'' for each Index Rate Loan and LIBOR Rate Loan
shall be the percentage set forth below for that type of Loan based upon both
(i) the Consolidated Debt Service Coverage Ratio and (ii) the Consolidated
Leverage Ratio, each as calculated in accordance with subsection 7.6 for the
applicable period (it being understood that in the event Borrower is in
compliance with one ratio and not the other, the Applicable Margin shall be
determined by reference to the ratio resulting in the highest Applicable
Margin):
<TABLE>
<CAPTION>
APPLICABLE MARGIN
---------------------
CONSOLIDATED
DEBT SERVICE CONSOLIDATED INDEX LIBOR
COVERAGE RATIO LEVERAGE RATIO RATE LOAN RATE LOAN
- ---------------------- ---------------- --------- ---------
==================================================================
<S> <C> <C> <C>
Less than 2.00:1.00 Greater than
4.50:1.00 1.50% 2.50%
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
APPLICABLE MARGIN
---------------------
CONSOLIDATED
DEBT SERVICE CONSOLIDATED INDEX LIBOR
COVERAGE RATIO LEVERAGE RATIO RATE LOAN RATE LOAN
- --------------------- ---------------- --------- ---------
==================================================================
<S> <C> <C> <C>
Greater than or equal Less than or
to 2.00:1.00 equal
to 4.50:1.00 1.25% 2.25%
- ------------------------------------------------------------------
Greater than or equal Less than or
to 2.25:1.00 equal
to 4.00:1.00 1.00% 2.00%
- ------------------------------------------------------------------
Greater than or equal Less than or
to 2.50:1.00 equal
to 3.50:1.00 0.75% 1.75%
- ------------------------------------------------------------------
Greater than or equal Less than or
to 3.00:1.00 equal
to 3.00:1.00 0.50% 1.50%
==================================================================
</TABLE>
The Applicable Margin shall be adjusted, to the extent required, on the
date of delivery of each Compliance Certificate delivered pursuant to subsection
6.1(iv) such adjustment to remain in effect until the next date of delivery of a
Compliance Certificate (and related financial information required at such time
pursuant to subsection 6.1) pursuant to subsection 6.1(iv); provided that with
respect to the period from the Closing Date through the first anniversary of the
Closing Date, the Applicable Margin shall be 1.50% for Index Rate Loans and
2.50% for LIBOR Rate Loans; provided further that without limiting any Event of
Default or Potential Event of Default that may result therefrom, in the event
Borrower does not deliver any Compliance Certificate required pursuant to
subsection 6.1(iv) by the date specified therefor, then the Applicable Margin
shall automatically be adjusted to the highest rate set forth above during the
period commencing on the date such Compliance Certificate was required to be
delivered and expiring on the actual date of delivery thereof.
B. INTEREST PERIODS. In connection with each LIBOR Rate Loan, Borrower
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
``INTEREST PERIOD'') to be applicable to such LIBOR Rate Loan, which Interest
Period shall be, at Borrower's option, a one, two, three or six month period;
provided that:
(i) the initial Interest Period for any LIBOR Rate Loan shall commence
on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a LIBOR Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a LIBOR Rate Loan;
37
<PAGE>
(ii) in the case of immediately successive Interest Periods applicable
to a LIBOR Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Loans shall
extend beyond the Commitment Termination Date;
(vi) there shall be no more than 8 Interest Periods relating to LIBOR
Rate Loans outstanding at any time; and
(vii) in the event Borrower fails to specify an Interest Period for
any LIBOR Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Borrower shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Borrower shall have the option (i) to convert at any time all or any part
of its outstanding Loans equal to $5,000,000 and integral multiples of
$1,000,000 in excess of that amount from Loans bearing interest at a rate
determined by reference to one basis to Loans bearing interest at a rate
determined by reference to an alternative basis or (ii) upon the expiration of
any Interest Period applicable to a LIBOR Rate Loan, to continue all or any
portion of such Loan equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount as a LIBOR Rate Loan; provided, however, that a LIBOR Rate
Loan may only be converted on the expiration date of an Interest Period
applicable thereto; and provided, further that no Loan may be made as or
converted into a Index Rate Loan during the period from December 24 of any year
to and including January 7 of the immediately succeeding year for the purpose of
investing in securities bearing interest at a rate determined by reference to
any other basis for the purpose of arbitrage or speculation.
38
<PAGE>
Borrower shall deliver a Notice of Conversion/Continuation to Managing
Agent no later than 3:00 P.M. (New York time) at least one Business Day in
advance of the proposed conversion date (in the case of a conversion to a Index
Rate Loan), and at least three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a continuation
of, a LIBOR Rate Loan). A Notice of Conversion/Continuation shall specify (i)
the proposed conversion/continuation date (which shall be a Business Day), (ii)
the amount and type of the Loan to be converted/continued, (iii) the nature of
the proposed conversion/continuation, (iv) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, the requested Interest Period, and (v) in
the case of a conversion to, or a continuation of a LIBOR Rate Loan, that no
Potential Event of Default or Event of Default has occurred and is continuing.
In lieu of delivering the above-described Notice of Conversion/Continuation,
Borrower may give Managing Agent telephonic notice by the required time of any
proposed conversion/continuation under this subsection 2.2D; provided that such
notice shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Managing Agent on or before the proposed
conversion/continuation date. Promptly upon receipt by Managing Agent of any
Notice of Conversion/Continuation pursuant to this subsection 2.2D (or
telephonic notice in lieu thereof), Managing Agent shall notify each Lender of
the proposed conversion or continuation.
Neither Managing Agent nor any Lender shall incur any liability to Borrower
in acting upon any telephonic notice referred to above that Managing Agent
believes in good faith to have been given by a duly authorized officer or other
person authorized to act on behalf of Borrower or for otherwise acting in good
faith under this subsection 2.2D, and upon conversion or continuation of the
applicable basis for determining the interest rate with respect to any Loans in
accordance with this Agreement pursuant to any such telephonic notice Borrower
shall have effected a conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a Notice
of Conversion/Continuation for conversion to, or continuation of, a LIBOR Rate
Loan (or telephonic notice in lieu thereof) shall be irrevocable on and after
the related Interest Rate Determination Date, and Borrower shall be bound to
effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of (i)
any Event of Default under subsection 8.1, 8.6 or 8.7 or (ii) any other Event of
Default and upon notice to Borrower from Managing Agent or Requisite Lenders,
the outstanding principal amount of all Loans and, to the extent permitted by
applicable law, any interest payments thereon not paid when due and any fees and
other amounts then due and payable hereunder, shall thereafter bear interest
(including post-petition interest in any proceeding under the Bankruptcy Code or
other applicable bankruptcy laws) payable upon demand at a rate that is 2% per
annum in excess of the interest rate otherwise payable under this Agreement with
respect to the applicable Loans (or, in the case of any such fees and other
amounts, at a rate which is 2% per annum in excess of the interest rate
otherwise payable under this Agreement for Index Rate Loans); provided that,
in the case of LIBOR Rate
39
<PAGE>
Loans, upon the expiration of the Interest Period in effect at the time any such
increase in interest rate is effective such LIBOR Rate Loans, as the case may
be, shall thereupon become Index Rate Loans and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess of the interest
rate otherwise payable under this Agreement for Index Rate Loans. Payment or
acceptance of the increased rates of interest provided for in this subsection
2.2E is not a permitted alternative to timely payment and shall not constitute a
waiver of any Event of Default or otherwise prejudice or limit any rights or
remedies of Managing Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed on
the basis of a 360-day year, in each case for the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan, the
date of the making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Index Rate Loan being converted
from a LIBOR Rate Loan, the date of conversion of such LIBOR Rate Loan to such
Index Rate Loan, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Index Rate Loan being converted to a LIBOR Rate Loan, the date of
conversion of such Index Rate Loan to such LIBOR Rate Loan shall be excluded;
provided that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 FEES.
----
A. COMMITMENT FEES. Borrower agrees to pay to Managing Agent, for
distribution to each Lender in proportion to that Lender's Pro Rata Share,
commitment fees for the period from and including the Closing Date to and
excluding the Commitment Termination Date equal to the average of the daily
excess of the Revolving Loan Commitments over the sum of (i) the aggregate
principal amount of Revolving Loans outstanding (but not any Swing Line Loans
outstanding) plus (ii) the Letter of Credit Usage multiplied by 1/2 of 1% per
annum, such commitment fees to be calculated on the basis of a 360-day year and
the actual number of days elapsed and to be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing on the
first such date to occur after the Closing Date, and on the Commitment
Termination Date.
B. ANNUAL ADMINISTRATIVE FEE. Borrower agrees to pay to Managing Agent
an annual administrative fee in the amount of $75,000, payable quarterly in
advance on the Closing Date and on each three month anniversary thereof.
C. COLLATERAL AGENT FEE. Borrower agrees to pay to Collateral Agent an
annual collateral agent's fee equal to $100,000 per year, payable quarterly in
advance on the Closing Date and each three month anniversary thereof.
D. OTHER FEES. Borrower agrees to pay to each Agent such other fees in
the amounts and at the times separately agreed upon between Borrower and such
Agent.
40
<PAGE>
2.4 PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL PROVISIONS REGARDING
-----------------------------------------------------------------------
PAYMENTS.
--------
A. PREPAYMENTS AND REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. Borrower may, upon written or telephonic
notice to Agent on or prior to 12:00 Noon (New York time) on the date of
prepayment, which notice, if telephonic, shall be promptly confirmed in
writing, at any time and from time to time prepay any Swing Line Loan on
any Business Day in whole or in part in an aggregate minimum amount of
$500,000 and integral multiples of $1,000 in excess of that amount.
Borrower may, upon not less than one Business Day's prior written or
telephonic notice, in the case of Index Rate Loans, and three Business
Days' prior written or telephonic notice, in the case of LIBOR Rate Loans,
in each case confirmed in writing to Managing Agent (which notice Managing
Agent will promptly transmit by telegram, telex or telephone to each
Lender), at any time and from time to time prepay any Loans on any Business
Day in whole or in part in an aggregate minimum amount of $3,000,000 and
integral multiples of $1,000,000 in excess of that amount; provided,
however, that a LIBOR Rate Loan may only be prepaid in whole or in part in
an aggregate minimum amount of $5,000,000 and $1,000,000 in excess of that
amount and may only be prepaid on the expiration of the Interest Period
applicable thereto. Notice of prepayment having been given as aforesaid,
the principal amount of the Loans specified in such notice shall become due
and payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Commitments. Borrower may, upon not less
than three Business Days' prior written or telephonic notice confirmed in
writing to Managing Agent (which notice Managing Agent will promptly
transmit by telegram, telex or telephone to each Lender), at any time and
from time to time terminate in whole or permanently reduce in part, without
premium or penalty, the Commitments in an amount up to the amount by which
the Commitments would otherwise exceed the Total Utilization of Commitments
at the time of such proposed termination or reduction; provided that any
such partial reduction of the Commitments shall be in an aggregate minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount. Borrower's notice to Managing Agent shall designate the date
(which shall be a Business Day) of such termination or reduction and the
amount of any partial reduction, and such termination or reduction of the
Commitments shall be effective on the date specified in Borrower's notice
and shall reduce the Commitment of each Lender proportionately to its Pro
Rata Share.
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
-------------------------------------------------------------
(a) Prepayments and Reductions from Asset Sales. No later than
the second Business Day following the date of receipt by Borrower or
any of its Subsidiaries of Cash Proceeds of any Asset Sale, Borrower
shall prepay the Loans, and the Revolving Loan Commitments shall be
permanently reduced
41
<PAGE>
to the extent required by the proviso set forth below, in an amount
equal to the Net Cash Proceeds of such Asset Sale. Concurrently with
any prepayment of the Loans and/or reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4A(iii)(a), Borrower shall
deliver to Managing Agent an Officer's Certificate demonstrating the
derivation of the Net Cash Proceeds of the correlative Asset Sale from
the gross sales price thereof. In the event that Borrower shall, at
any time after receipt of Cash Proceeds of any Asset Sale requiring a
prepayment of Loans and/or a reduction of the Revolving Loan
Commitments pursuant to this subsection 2.4A(iii)(a), determine that
the prepayments and/or reductions of the Loans and/or the Revolving
Loan Commitments previously made in respect of such Asset Sale were in
an aggregate amount less than that required by the terms of this
subsection 2.4A(iii)(a), Borrower shall promptly make an additional
prepayment of the Loans, and the Revolving Loan Commitments shall be
permanently reduced, in the manner described above in an amount equal
to the amount of any such deficit, and Borrower shall concurrently
therewith deliver to Managing Agent an Officer's Certificate
demonstrating the derivation of the additional Net Cash Proceeds
resulting in such deficit. Any mandatory prepayments or reductions of
the Loans and/or the Revolving Loan Commitments pursuant to this
subsection 2.4A(iii)(a) shall be applied as specified in subsection
2.4A(iv); provided however that the Revolving Loan Commitments shall
only be reduced in an amount equal to the Net Cash Proceeds of such
Asset Sale only to the extent that such amount (or portion thereof)
would otherwise be required to be applied to payment, redemption or
repurchase in respect of the Senior Subordinated Notes.
(b) Prepayments Due to Reductions or Restrictions of Commitments.
Borrower shall from time to time prepay the Loans to the extent
necessary (1) so that the Total Utilization of Commitments shall not
at any time exceed the lesser of (i) the Revolving Loans Commitments
and (ii) the Borrowing Base, in each case then in effect and (2) to
give effect to the limitations set forth in clause (b) of the second
paragraph of each of subsections 2.1A(i) and (ii). Any such mandatory
prepayments shall be applied as specified in subsection 2.4A(iv).
(iv) Application of Prepayments. Any prepayment of the Loans shall be
applied first to repay any Swing Line Loans to the full extent thereof and
second to Revolving Loans which are Index Rate Loans to the full extent
thereof before application to LIBOR Rate Loans, in each case in a manner
which minimizes the amount of any payments required to be made by Borrower
pursuant to subsection 2.6D.
B. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Borrower of
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made
42
<PAGE>
in same day funds and without defense, setoff or counterclaim, free of any
restriction or condition, and delivered to Managing Agent not later than
3:00 P.M. (New York time) on the date due at its office located at the
Payment Office for the account of Lenders; funds received by Managing Agent
after that time on such due date shall be deemed to have been paid by
Borrower on the next succeeding Business Day. Managing Agent shall disburse
to each Lender and Issuing Lender, as the case may be, the amount of any
such payment made on behalf of such Lender or Issuing Lender, when and as
received.
(ii) Application of Payments to Principal and Interest. All payments
in respect of the principal amount of any Loan shall include payment of
accrued interest on the principal amount being repaid or prepaid, and all
such payments shall be applied to the payment of interest before
application to principal.
(iii) Apportionment of Payments. Aggregate principal and interest
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Managing Agent shall promptly distribute to each Lender, at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request, its Pro
Rata Share of all such payments received by Managing Agent and the
commitment fees of such Lender when received by Managing Agent pursuant to
subsection 2.3. Notwithstanding the foregoing provisions of this
subsection 2.4B(iii), if, pursuant to the provisions of subsection 2.6C,
any Notice of Conversion/Continuation is withdrawn as to any Affected
Lender or if any Affected Lender makes Index Rate Loans in lieu of its Pro
Rata Share of any LIBOR Rate Loans, Managing Agent shall give effect
thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
the Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Borrower hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
43
<PAGE>
2.5 USE OF PROCEEDS.
---------------
A. LOANS. The proceeds of the initial Revolving Loans in an amount not
to exceed $160,000,000 in total Credit Exposure (including Letters of Credit
outstanding on such date) , together with other funds available to Borrower,
shall be applied by Borrower to repay all obligations and terminate all
commitments in respect of the Existing Credit Facilities. Any excess proceeds
of the initial Revolving Loans and the proceeds of any subsequent Revolving
Loans or Swing Line Loans shall be applied by Borrower for working capital and
general corporate purposes, which may include the making of intercompany loans
to any Guarantor pursuant to its Intercompany Note for its own working capital
and general corporate purposes.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by Borrower or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
---------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary, but
subject to subsection 6.10B(iii), the following provisions shall govern with
respect to LIBOR Rate Loans as to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (New York time) on each Interest Rate Determination Date,
Managing Agent shall determine (which determination shall, absent manifest
error, be final, conclusive and binding upon all parties) the interest rate that
shall apply to the LIBOR Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Borrower and each
Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Managing Agent shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto), on any Interest Rate
Determination Date with respect to any LIBOR Rate Loans, that by reason of
circumstances affecting the interbank LIBOR market adequate and fair means do
not exist for ascertaining the interest rate applicable to such Loans on the
basis provided for in the definition of Adjusted LIBOR Rate, Managing Agent
shall on such date give notice (by telecopy or by telephone confirmed in
writing) to Borrower and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted, to LIBOR Rate Loans until such time as
Managing Agent notifies Borrower and Lenders that the circumstances giving rise
to such notice no longer exist and (ii) any Notice of Borrowing or Notice of
Conversion/Continuation given by Borrower with respect to the Loans in respect
of which such determination was made shall be deemed to be rescinded by
Borrower.
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C. ILLEGALITY OR IMPRACTICABILITY OF LIBOR RATE LOANS. In the event that
on any date any Lender shall have determined (which determination, absent
manifest error, shall be final and conclusive and binding upon all parties
hereto but shall be made only after consultation with Borrower and Managing
Agent) that the making, maintaining or continuation of its LIBOR Rate Loans (i)
has become unlawful as a result of compliance by such Lender in good faith with
any law, treaty, governmental rule, regulation, guideline or order (or would
conflict with any such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply therewith would
not be unlawful) or (ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank LIBOR market, or
the position of such Lender in that market, then, and in any such event, such
Lender shall be an ``AFFECTED LENDER'' and it shall on that day give notice (by
telecopy or by telephone confirmed in writing) to Borrower and Managing Agent of
such determination (which notice Managing Agent shall promptly transmit to each
other Lender). Thereafter (a) the obligation of the Affected Lender to make
Loans as, or to convert Loans to, LIBOR Rate Loans shall be suspended until such
notice shall be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a LIBOR Rate Loan then being
requested by Borrower pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, the Affected Lender shall make such Loan as (or convert
such Loan to, as the case may be) an Index Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding LIBOR Rate Loans (the ``AFFECTED
LOANS''), shall be terminated at the earlier to occur of the expiration of the
Interest Period then in effect with respect to the Affected Loans or when
required by law, and (d) the Affected Loans shall automatically convert into
Index Rate Loans on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described above relates
to a LIBOR Rate Loan then being requested by Borrower pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, Borrower shall have the
option, subject to the provisions of subsection 2.6D, to rescind such Notice of
Borrowing or Notice of Conversion/Continuation as to all Lenders by giving
notice (by telecopy or by telephone confirmed in writing) to Managing Agent of
such rescission on the date on which the Affected Lender gives notice of its
determination as described above (which notice of rescission Managing Agent
shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this subsection 2.6C shall affect the
obligation of any Lender other than an Affected Lender to make or maintain Loans
as, or to convert Loans to LIBOR Rate Loans in accordance with the terms of this
Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Borrower shall compensate each Lender, upon written request by that Lender
(which request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it to make or carry
its LIBOR Rate Loans (after accounting for any income received by the Lender in
connection with its redeployment of such funds) and any loss, expense or
liability sustained by that Lender in connection with the liquidation or re-
employment of such funds) which that Lender may sustain: (i) if for any reason
(other than a default by that Lender) a borrowing of any LIBOR Rate Loan does
not occur on a
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date specified therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any LIBOR Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any prepayment or
conversion of any of its LIBOR Rate Loans occurs on a date that is not the last
day of an Interest Period applicable to that Loan, (iii) if any prepayment of
any of its LIBOR Rate Loans is not made on any date specified in a notice of
prepayment given by Borrower, or (iv) as a consequence of any other default by
Borrower in the repayment of its LIBOR Rate Loans when required by the terms of
this Agreement.
E. BOOKING OF LIBOR RATE LOANS. Any Lender may make, carry or transfer
LIBOR Rate Loans at, to, or for the account of any of its branch offices or the
office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF LIBOR RATE LOANS. Calculation of
all amounts payable to a Lender under this subsection 2.6 and under subsection
2.7A shall be made as though that Lender had actually funded each of its
relevant LIBOR Rate Loans through the purchase of a LIBOR deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted LIBOR Rate in an amount equal to the amount of such LIBOR Rate Loan and
having a maturity comparable to the relevant Interest Period and through the
transfer of such LIBOR deposit from an offshore office of that Lender to a
domestic office of that Lender in the United States of America; provided,
however, that each Lender may fund each of its LIBOR Rate Loans in any manner it
sees fit and the foregoing assumptions shall be utilized only for the purposes
of calculating amounts payable under this subsection 2.6 and under subsection
2.7A.
G. LIBOR RATE LOANS AFTER DEFAULT. After the occurrence of and during
the continuation of a Potential Event of Default or an Event of Default, (i)
Borrower may not elect to have a Loan be made or continued (beyond the
applicable Interest Period therefor) as, or converted to, a LIBOR Rate Loan
after the expiration of any Interest Period then in effect for that Loan and
(ii) subject to the provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation given by Borrower with respect to a requested
borrowing or conversion/continuation that has not yet occurred shall be deemed
to be rescinded by Borrower.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of subsection 2.7B, in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any change after the date hereof in any law,
treaty or governmental rule, regulation or order, or in the interpretation,
administration or application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes effective after the
date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not having the force of
law):
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(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of its obligations hereunder
or any payments to such Lender (or its applicable lending office) of
principal, interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by,
or any other acquisition of funds by, the applicable lending office of
such Lender (other than any such reserve or other requirements with respect
to LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR
Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the interbank LIBOR market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Borrower shall promptly pay to such
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder. Such Lender shall deliver to Borrower (with a copy to Managing
Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all parties hereto
absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. Provided that all documentation,
if any, then required to be delivered by any Lender or Agent pursuant to
subsection 2.7B(iii) has been delivered, all sums payable by Borrower under
this Agreement and the other Loan Documents shall be paid free and clear of
and (except to the extent required by law) without any deduction or
withholding on account of any Tax (other than a Tax on the overall net
income of any Lender (for which payment need not be free and clear but no
deduction or withholding shall be made unless required under applicable
law)) imposed, levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in or of the United
States of America or any other jurisdiction from or to which a payment is
made by or on behalf of Borrower or by any federation or organization of
which the United States of America or any such jurisdiction is a member at
the time of payment.
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(ii) Grossing-up of Payments. If Borrower or any other Person is
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Borrower to Managing Agent or any
Lender under any of the Loan Documents:
(a) Borrower shall notify Managing Agent of any such requirement
or any change in any such requirement as soon as Borrower becomes
aware of it;
(b) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Borrower) for its own account or (if that liability
is imposed on Managing Agent or such Lender, as the case may be) on
behalf of and in the name of Managing Agent or such Lender;
(c) the sum payable by Borrower to Managing Agent or a Lender in
respect of which the relevant deduction, withholding or payment is
required shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment, Managing
Agent or such Lender, as the case may be, receives on the due date a
net sum equal to what it would have received had no such deduction,
withholding or payment been required or made; and
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, Borrower shall deliver to Managing Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
Lender under clause (c) above except to the extent that any change after
the date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment and Acceptance pursuant to
which such Lender became a Lender (in the case of each other Lender) in any
such requirement for a deduction, withholding or payment as is mentioned
therein shall result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date of this Agreement or
at the date of such Assignment and Acceptance, as the case may be, in
respect of payments to such Lender.
(iii) U.S. Tax Certificates. Each Lender that is organized under the
laws of any jurisdiction other than the United States or any state or other
political subdivision thereof shall deliver to Managing Agent for
transmission to Borrower, on or prior to the Closing Date (in the case of
each Lender listed on the signature pages hereof) or on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as
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may be necessary in the determination of Borrower or Managing Agent (each
in the reasonable exercise of its discretion), such certificates, documents
or other evidence, properly completed and duly executed by such Lender
(including, without limitation, Internal Revenue Service Form 1001 or Form
4224 or any other certificate or statement of exemption required by
Treasury Regulations Section 1.1441-4(a) or Section 1.1441-6(c) or any
successor thereto) to establish that such Lender is not subject to
deduction or withholding of United States federal income tax under Section
1441 or 1442 of the Internal Revenue Code or otherwise (or under any
comparable provisions of any successor statute) with respect to any
payments to such Lender of principal, interest, fees or other amounts
payable under any of the Loan Documents. Borrower shall not be required to
pay any additional amount to any such Lender under clause (c) of subsection
2.7B(ii) if such Lender shall have failed to satisfy the requirements of
the immediately preceding sentence; provided that if such Lender shall have
satisfied such requirements on the Closing Date (in the case of each Lender
listed on the signature pages hereof) or on the date of the Assignment and
Acceptance pursuant to which it became a Lender (in the case of each other
Lender), nothing in this subsection 2.7B(iii) shall relieve Borrower of its
obligation to pay any additional amounts pursuant to clause (c) of
subsection 2.7B(ii) in the event that, as a result of any change in
applicable law, such Lender is no longer properly entitled to deliver
certificates, documents or other evidence at a subsequent date establishing
the fact that such Lender is not subject to withholding as described in the
immediately preceding sentence.
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability of any law, rule or
regulation (or any provision thereof) regarding capital adequacy, or any change
therein or in the interpretation or administration thereof, in each case after
the date hereof, by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of, or with reference
to, such Lender's Loans or Commitment or Letters of Credit or participations
therein or other obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such controlling
corporation could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance, then from time to time, within five
Business Days after receipt by Borrower from such Lender of the statement
referred to in the next sentence, Borrower shall pay to such Lender such
additional amount or amounts as will compensate such Lender or such controlling
corporation on an after-tax basis for such reduction. Such Lender shall deliver
to Borrower (with a copy to Managing Agent) a written statement, setting forth
in reasonable detail the basis of the calculation of such additional amounts,
which statement shall be conclusive and binding upon all parties hereto absent
manifest error.
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2.8 OBLIGATION OF LENDERS AND ISSUING LENDER TO MITIGATE.
----------------------------------------------------
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with any applicable
legal or regulatory restrictions, use reasonable efforts (i) to make, issue,
fund or maintain the Commitment of such Lender or the affected Loans or Letters
of Credit of such Lender or Issuing Lender through another lending or letter of
credit office of such Lender or Issuing Lender, or (ii) take such other measures
as such Lender or Issuing Lender may deem reasonable, if as a result thereof the
circumstances which would cause such Lender to be an Affected Lender would cease
to exist or the additional amounts which would otherwise be required to be paid
to such Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6
would be materially reduced and if, as determined by such Lender or Issuing
Lender in its sole discretion, the making, issuing, funding or maintaining of
such Commitment or Loans or Letters of Credit through such other lending or
letter of credit office or in accordance with such other measures, as the case
may be, would not otherwise materially adversely affect such Commitment or Loans
or Letters of Credit or the interests of such Lender or Issuing Lender; provided
that such Lender or Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection 2.8 unless
Borrower agrees to pay all incremental expenses incurred by such Lender or
Issuing Lender as a result of utilizing such other lending or letter of credit
office as described in clause (i) above; provided further that such Lender or
Issuing Lender shall not be obligated to utilize such lending or letter of
credit office if it determines in its sole discretion that it is economically
disadvantageous to do so. A certificate as to the amount of any such expenses
payable by Borrower pursuant to this subsection 2.8 (setting forth in reasonable
detail the basis for requesting such amount) submitted by such Lender or Issuing
Lender to Borrower (with a copy to Managing Agent) shall be conclusive absent
manifest error.
2.9 AFFECTED LENDERS.
----------------
If the Borrower is obligated to pay to any Lender any additional amount
under subsections 2.6 or 2.7 hereof (other than subsection 2.6D), and such
Lender is unable or unwilling to mitigate such amounts in accordance with
subsection 2.8, the Borrower may, if no Event of Default or Potential Event of
Default then exists, replace such Lender with an Eligible Assignee acceptable to
the Managing Agent, and such Lender hereby agrees to be so replaced subject to
the following:
(a) The obligations of the Borrower hereunder to the Lender to be
replaced (including such increased or additional costs incurred by such
Lender through the date such Lender is replaced hereunder) shall be paid in
full to such Lender concurrently with such replacement;
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(b) The replacement Lender shall be a bank or other financial
institution that is not subject to such increased costs which caused the
Borrower's election to replace any Lender hereunder, and each such
replacement Lender shall execute and deliver to the Managing Agent an
Assignment and Acceptance and such other documentation satisfactory to the
Managing Agent pursuant to which such replacement Lender is to become a
party hereto, with a Commitment equal to that of the Lender being replaced
and shall make Loans in the aggregate principal amount equal to the
aggregate outstanding principal amount of the Loans of the Lender being
replaced;
(c) Upon such execution of such documents referred to in clause (b)
and repayment of the amount referred to in clause (a), the replacement
Lender shall be a ``Lender'' with a Commitment as specified hereinabove and
the Lender being replaced shall cease to be a ``Lender'' hereunder, except
with respect to such provisions under this Credit Agreement, which
expressly survive the termination of this Agreement as to such replaced
Lender;
(d) The Managing Agent shall reasonably cooperate in effectuating the
replacement of any Lender under this subsection 2.9, but at no time shall
the Managing Agent be obligated to initiate any such replacement;
(e) Any Lender replaced under this subsection 2.9 shall be replaced at
the Borrower's sole cost and expense and at no cost or expense to any Agent
or any of the Lenders; and
(f) If Borrower proposes to replace any Lender pursuant to this
subsection 2.9 because the Lender seeks reimbursement under either
subsection 2.6 or 2.7, then it must also replace any other Lender who seeks
similar levels or reimbursement (as a percentage of such Lender's
Commitment) under such subsections; provided however that if the amount of
the Commitment any replacement Lender is willing to commit to does not
exceed the aggregate of the Commitments of each such Lender seeking such
reimbursement, the Commitment of each such Lender seeking reimbursement
shall be reduced pro rata to the extent of the Commitment of such
replacement Lender.
SECTION 3.
LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
---------------------------------------------------------------------
THEREIN.
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A. LETTERS OF CREDIT. In addition to Borrower requesting that Lenders
make Revolving Loans pursuant to subsection 2.1A(i) and Swing Line Lender making
Swing Line Loans pursuant to subsection 2.1A(ii), Borrower may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Commitment Termination
Date, that Issuing Lender issue Letters of
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Credit for the account of Borrower (and on behalf of the Borrower or any
Operating Subsidiary) for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the representations and
warranties of Borrower herein set forth, Issuing Lender shall issue such Letters
of Credit in accordance with the provisions of this subsection 3.1; provided
that Borrower shall not request that Issuing Lender issue (and Issuing Lender
shall not issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Commitments would exceed the lesser of (a) the
Revolving Loan Commitments or (b) the Borrowing Base, in each case as then
in effect; provided that Issuing Lender may assume the foregoing conditions
are met to the extent Managing Agent has not notified Issuing Lender
otherwise;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $25,000,000;
(iii) any Letter of Credit, if after giving effect to such issuance
the Total Utilization of Commitments would exceed $135,000,000 during the
30-day period required for compliance with subsections 2.1A(i)(b) and
2.1A(ii)(b); provided that Issuing Lender may assume the foregoing
conditions are met to the extent Managing Agent has not notified Issuing
Lender otherwise;
(iv) any Standby Letter of Credit having an expiration date later than
the earlier of (a) the Commitment Termination Date and (b) the date which
is one year from the date of issuance of such Standby Letter of Credit;
provided that the immediately preceding clause (b) shall not prevent
Issuing Lender from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive periods not to exceed
one year each unless Issuing Lender elects not to extend for any such
additional period; provided, further that Issuing Lender shall deliver a
written notice to Managing Agent setting forth the last day on which
Issuing Lender may give notice that it will not extend such Standby Letter
of Credit (the ``NOTIFICATION DATE'' with respect to such Standby Letter of
Credit) at least ten Business Days prior to such Notification Date; and
provided, further that, unless Requisite Lenders otherwise consent, Issuing
Lender shall give notice that it will not extend such Standby Letter of
Credit if it has knowledge that an Event of Default has occurred and is
continuing on such Notification Date;
(v) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (X) 30 days prior to the Commitment Termination
Date and (Y) the date which is 180 days from the date of issuance of such
Commercial Letter of Credit or (b) that is otherwise unacceptable to
Issuing Lender in its reasonable discretion; or
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(vi) any Letter of Credit denominated in a currency other than Dollars
if the aggregate Credit Exposure with respect to all such denominated
Letters of Credit would exceed $10,000,000 at such time.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Borrower desires the issuance of a
Letter of Credit, it shall deliver to Issuing Lender a Notice of Issuance
of Letter of Credit no later than 12:00 Noon (New York time) at least one
Business Day, or such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Notice of Issuance of Letter of Credit shall specify (a) the
proposed date of issuance (which shall be a Business Day), (b) the face
amount of the Letter of Credit, in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other
than Dollars, shall be calculated by reference to the applicable Exchange
Rate as quoted by the Issuing Lender to Borrower in connection with such
Letter of Credit), (c) the expiration date of the Letter of Credit, (d) the
name and address of the beneficiary, and (e) the verbatim text of the
proposed Letter of Credit or the proposed terms and conditions thereof,
including a precise description of any documents and the verbatim text of
any certificates to be presented by the beneficiary which, if presented by
the beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its sole discretion, may require
changes in the text of the proposed Letter of Credit or any such documents
or certificates; and provided, further that no Letter of Credit shall
require payment against a conforming draft to be made thereunder on the
same business day (under the laws of the jurisdiction in which the office
of the Issuing Lender to which such draft is required to be presented is
located) that such draft is presented if such presentation is made after
10:00 A.M. (in the time zone of such office of the Issuing Lender) on such
business day; provided still further that Issuing Lender shall not be
obligated to issue any Letter of Credit denominated in a foreign currency
which in the judgment of Issuing Lender is not readily and freely
available; provided further that anything to the contrary in this Agreement
notwithstanding, Borrower may, with Issuing Lender's consent, deliver a
Notice of Issuance of Letter of Credit electronically to Issuing Lender, in
which such event Borrower shall be deemed for all purposes hereunder and
the other Loan Documents to have delivered a written Notice of Issuance of
Letter of Credit hereunder.
Borrower shall notify the Issuing Lender and Managing Agent prior to
the issuance of any Letter of Credit in the event that any of the matters
to which Borrower is required to certify in the applicable Notice of
Issuance of Letter of Credit is no longer materially true and correct as of
the proposed date of issuance of such Letter of Credit, and upon the
issuance of any Letter of Credit Borrower shall be deemed to have re-
certified, as of the date of such issuance, as to the matters to which
Borrower is required to certify in the applicable Notice of Issuance of
Letter of Credit.
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(ii) Notification to Lenders. Promptly after receipt of a Notice of
Issuance of Letter of Credit, (a) Managing Agent shall notify each Lender
of the proposed issuance of such Letter of Credit, and the amount of such
Lender's respective participation therein, determined in accordance with
subsection 3.1C, and (b) Managing Agent shall deliver to each other Lender
a copy of such Notice of Issuance of Letter of Credit.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures, and
upon its issuance of such Letter of Credit the Issuing Lender shall
promptly notify Managing Agent of such issuance, which notice shall be
accompanied by a copy of such Letter of Credit (and Managing Agent shall
notify each other Lender of such issuance).
(iv) Reports to Lenders. Within 15 days after the end of each month
ending after the Closing Date, so long as any Letter of Credit shall have
been outstanding during such month, Issuing Lender shall deliver to
Managing Agent (and Managing Agent shall deliver to each other Lender) a
report setting forth the average for such month of the daily maximum amount
available to be drawn under the Letters of Credit issued by Issuing Lender
that were outstanding during such month and a copy of the same shall be
delivered to Borrower.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby severally agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and drawings thereunder in an amount
equal to such Lender's Pro Rata Share of the maximum amount which is or at any
time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
---------------------
Borrower agrees to pay the following amounts to Managing Agent on behalf of
Issuing Lender and Lenders with respect to Letters of Credit issued by it:
(i) with respect to each Financial Standby Letter of Credit, (a) a
fronting fee equal to 0.25% of the aggregate maximum amount available to be
drawn under such Financial Standby Letter of Credit and (b) a letter of
credit fee equal to the Applicable Margin that would be applicable to LIBOR
Rate Loans made during such period (regardless of whether LIBOR Rate Loans
are in fact made during such period), changing as and when such Applicable
Margin changes, multiplied by the average daily maximum amount available to
be drawn under such Financial Standby Letter of Credit, in each case
payable in arrears on and through each March 31, June 30, September 30 and
December 31 of each year and computed on the basis of a 360-day year for
the actual number of days elapsed;
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(ii) with respect to each Nonfinancial Standby Letter of Credit, (a) a
fronting fee equal to 0.25% of the aggregate maximum amount available to be
drawn under such Nonfinancial Standby Letter of Credit and (b) a letter of
credit fee equal to the Applicable Margin that would be applicable to LIBOR
Rate Loans made during such period (regardless of whether LIBOR Rate Loans
are in fact made during such period), changing as and when such Applicable
Margin changes, less 0.50% per annum multiplied by the average daily
maximum amount available to be drawn under such Nonfinancial Standby Letter
of Credit, in each case payable in arrears on and through each March 31,
June 30, September 30 and December 31 of each year and computed on the
basis of a 360-day year for the actual number of days elapsed;
(iii) with respect to Commercial Letters of Credit, (a) a fronting
fee equal to 0.25% of the aggregate maximum amount available to be drawn
under such Commercial Letter of Credit and (b) a letter of credit fee equal
to 0.75% per annum of the aggregate maximum amount outstanding for all such
Commercial Letters of Credit, in each case payable monthly in arrears on
the tenth Business Day of the immediately following month; and
(iv) with respect to the issuance, amendment or transfer of each
Letter of Credit and each drawing made thereunder (without duplication of
the fees payable under clauses (i) and (ii) above), documentary and
processing charges in accordance with Issuing Lender's standard schedule
for such charges in effect at the time of such issuance, amendment,
transfer or drawing, as the case may be.
Promptly upon receipt by Managing Agent of any amount described in clause
(i)(b), (ii)(b) or (iii)(b) of this subsection 3.2, Managing Agent shall
distribute to each other Lender its Pro Rata Share of such amount and promptly
upon receipt by Managing Agent of any other amount described in clauses (i)-(iv)
above, Managing Agent shall distribute such amount to Issuing Lender.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
-------------------------------------------------------------------
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO REQUESTS FOR
DRAWINGS. In determining whether to honor any request for drawing under any
Letter of Credit by the beneficiary thereof, the Issuing Lender shall be
responsible only to determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and that they comply
on their face with the requirements of such Letter of Credit.
B. REIMBURSEMENT BY BORROWER OF AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
In the event Issuing Lender has determined to honor a request for drawing under
a Letter of Credit issued by it, Issuing Lender shall immediately notify
Borrower and Managing Agent, and Borrower shall reimburse Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the ``REIMBURSEMENT DATE'') in an amount in Dollars (which amount, in
the case of a drawing under a Letter of Credit which is denominated in a
currency other than Dollars, shall be calculated by reference to the
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applicable Exchange Rate on the date of such drawing) in same day funds equal to
the amount of such drawing; provided that, anything contained in this Agreement
to the contrary notwithstanding, (i) unless Borrower shall have notified
Managing Agent and Issuing Lender prior to 3:00 P.M. (New York time) on the date
of such drawing that Borrower intends to reimburse Issuing Lender for the amount
of such drawing with funds other than the proceeds of Loans, Borrower shall be
deemed to have given a timely Notice of Borrowing to Managing Agent requesting
Lenders to make Loans that are Index Rate Loans on the Reimbursement Date in an
amount equal to the amount of such drawing and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.2B, Lenders shall, on the
Reimbursement Date, make Loans that are Index Rate Loans in the amount of such
drawing, the proceeds of which shall be applied directly by Managing Agent to
reimburse Issuing Lender for the amount of such drawing; and provided, further
that if for any reason proceeds of Loans are not received by Issuing Lender on
the Reimbursement Date in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate on the
date of such drawing) equal to the amount of such drawing, Borrower shall
reimburse Issuing Lender, on demand, in an amount in same day funds equal to
the excess of the amount of such drawing over the aggregate amount of such
Loans, if any, which are so received. Nothing in this subsection 3.3B shall be
deemed to relieve any Lender from its obligation to make Loans on the terms and
conditions set forth in this Agreement, and Borrower shall retain any and all
rights it may have against any Lender resulting from the failure of such Lender
to make such Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED DRAWINGS UNDER LETTERS OF CREDIT.
(i) Payment by Lenders. In the event that Borrower shall fail for any
reason to reimburse Issuing Lender as provided in subsection 3.3B by the
close of business of Issuing Lender on the Reimbursement Date in an amount
(calculated, in the case of a drawing under a Letter of Credit denominated
in a currency other than Dollars, by reference to the applicable Exchange
Rate on the date of such drawing) equal to the amount of any drawing
honored by Issuing Lender under a Letter of Credit issued by it, Issuing
Lender shall promptly notify Managing Agent and Managing Agent shall
promptly notify each other Lender of the unreimbursed amount of such
drawing and of such other Lender's respective participation therein based
on such Lender's Pro Rata Share. Each Lender shall make available to
Issuing Lender an amount equal to its respective participation; in Dollars
and in same day funds, at the office of Issuing Lender specified in such
notice, not later than 12:00 Noon (New York time) on the first business day
(under the laws of the jurisdiction in which such office of Issuing Lender
is located) after the date notified by Issuing Lender. In the event that
any Lender fails to make available to Issuing Lender on such business day
the amount of such Lender's participation in such Letter of Credit as
provided in this subsection 3.3C, Issuing Lender shall be entitled to
recover such amount on demand from such Lender together with interest
thereon at the rate customarily used by Issuing Lender for the correction
of errors among banks for three Business Days and thereafter at the Index
Rate. Nothing in this
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subsection 3.3C shall be deemed to prejudice the right of any Lender to
recover from Issuing Lender any amounts made available by such Lender to
Issuing Lender pursuant to this subsection 3.3C in the event that it is
determined by the final judgment of a court of competent jurisdiction that
the payment with respect to a Letter of Credit by Issuing Lender in respect
of which payment was made by such Lender constituted gross negligence or
willful misconduct on the part of Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Borrower.
In the event Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing
honored by Issuing Lender under a Letter of Credit issued by it, Issuing
Lender shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such drawing such
other Lender's Pro Rata Share of all payments subsequently received by
Issuing Lender from Borrower in reimbursement of such drawing when such
payments are received. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
D. INTEREST ON AMOUNTS DRAWN UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Borrower. Borrower agrees to pay to
Issuing Lender, with respect to drawings made under any Letters of Credit
issued by it, interest on the amount paid by Issuing Lender in respect of
each such drawing from the date of such drawing to but excluding the date
such amount is reimbursed by Borrower (including any such reimbursement out
of the proceeds of Loans pursuant to subsection 3.3B) at a rate equal to
(a) for the period from the date of such drawing to but excluding the
Reimbursement Date, the rate then in effect under this Agreement with
respect to Loans that are Index Rate Loans or, if higher, LIBOR Rate Loans
and (b) thereafter, a rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with respect to Loans that
are Index Rate Loans or, if higher, LIBOR Rate Loans. Interest payable
pursuant to this subsection 3.3D(i) shall be computed on the basis of a
360-day year for the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if no demand is made,
on the date on which the related drawing under a Letter of Credit is
reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
upon receipt by Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i), (a) Issuing Lender shall distribute to each other
Lender, out of the interest received by Issuing Lender in respect of the
period from the date of the applicable drawing under a Letter of Credit
issued by Issuing Lender to but excluding the date on which Issuing Lender
is reimbursed for the amount of such drawing (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B),
the amount that such other Lender would have been entitled to receive in
respect of the letter of credit fee that would have been payable in respect
of such Letter of Credit
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for such period pursuant to subsection 3.2 if no drawing had been made
under such Letter of Credit, and (b) in the event Issuing Lender shall have
been reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or
any portion of such drawing, Issuing Lender shall distribute to each other
Lender which has paid all amounts payable by it under subsection 3.3C(i)
with respect to such drawing such other Lender's Pro Rata Share of any
interest received by Issuing Lender in respect of that portion of such
drawing so reimbursed by other Lenders for the period from the date on
which Issuing Lender was so reimbursed by other Lenders to and including
the date on which such portion of such drawing is reimbursed by Borrower.
Any such distribution shall be made to a Lender at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
The obligation of Borrower to reimburse Issuing Lender for drawings made
under the Letters of Credit issued by it and to repay any Loans made by Lenders
pursuant to subsection 3.3B and the obligations of Lenders under subsection
3.3C(i) shall be unconditional and irrevocable and shall be paid strictly in
accordance with the terms of this Agreement under all circumstances including,
without limitation, the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Borrower or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Borrower, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Borrower or one
of its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft, demand, certificate 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;
(iv) payment by Issuing Lender under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does
not comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Borrower or any
of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
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(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
provided, in each case, that payment by Issuing Lender under the applicable
Letter of Credit shall not have constituted gross negligence or willful
misconduct of Issuing Lender or its officers, employees or agents under the
circumstances in question (as determined by a final judgment of a court of
competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Borrower hereby agrees to protect, indemnify, pay and save
harmless Issuing Lender and its officers, employees or agents from and against
any and all claims, demands, liabilities, damages, losses, and reasonable costs,
charges and expenses (including reasonable fees, expenses and disbursements of
counsel) which Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of Issuing Lender or its officers, employees or agents as determined by a final
judgment of a court of competent jurisdiction or (b) subject to the following
clause (ii), the wrongful dishonor by Issuing Lender of a proper demand for
payment made under any Letter of Credit issued by it or (ii) the failure of
Issuing Lender to honor a drawing under any such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present or future de
jure or de facto government or governmental authority (all such acts or
omissions herein called ``GOVERNMENTAL ACTS'').
B. NATURE OF ISSUING LENDERS' DUTIES. As between Borrower and Issuing
Lender, Borrower assumes all risks of the acts and omissions of, or misuse of
the Letters of Credit issued by Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, Issuing Lender shall not be responsible for: (i) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any party in connection with the application for and issuance of any such Letter
of Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective for
any reason; (iii) failure of the beneficiary of any such Letter of Credit to
comply fully with any conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (v) errors in interpretation of technical terms; (vi)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any
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consequences arising from causes beyond the control of Issuing Lender, including
without limitation any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of Issuing Lender's rights or powers
hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by Issuing Lender under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered thereunder, if
taken or omitted in good faith, shall not put Issuing Lender under any resulting
liability to Borrower.
Notwithstanding anything to the contrary contained in this subsection 3.5,
Borrower shall retain any and all rights it may have against Issuing Lender and
its officers, employees or agents for any liability arising solely out of the
gross negligence or willful misconduct of Issuing Lender or its officers,
employees or agents, as determined by a final judgment of a court of competent
jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Without limiting the provision of subsection 2.7, in the event that Issuing
Lender or any Lender shall determine (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto) that any
change after the date hereof in any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by Issuing Lender or any Lender with any guideline,
request or directive issued or made after the date hereof by any central bank or
other governmental or quasi-governmental authority (whether or not having the
force of law):
(i) subjects Issuing Lender or such Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on
the overall net income of Issuing Lender or such Lender) with respect to
the issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by Issuing Lender or
participations therein purchased by any Lender; or
(iii) imposes any other condition on or affecting Issuing Lender or
such Lender (or its applicable lending or letter of credit office)
regarding this Section 3 or any Letter of Credit or any participation
therein;
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and the result of any of the foregoing is to increase the cost to Issuing Lender
or such Lender of agreeing to issue, issuing or maintaining any Letter of Credit
or agreeing to purchase, purchasing or maintaining any participation therein or
to reduce any amount received or receivable by Issuing Lender or such Lender (or
its applicable lending or letter of credit office) with respect thereto; then,
in any case, Borrower shall promptly pay to Issuing Lender or such Lender, upon
receipt of the statement referred to in the next sentence, such additional
amount or amounts as may be necessary to compensate Issuing Lender or such
Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Issuing Lender or such Lender shall deliver to Borrower a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to Issuing Lender or such Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
3.7 EXISTING LETTERS OF CREDIT.
--------------------------
Anything to the contrary herein notwithstanding, as of the Closing Date,
all of the Existing Letters of Credit shall be deemed to be Letters of Credit
issued hereunder and shall be subject to all of the terms and provisions of this
Agreement, including all terms and provisions applicable to Letters of Credit
under this Agreement and each Person liable as account parties thereunder shall
be automatically released and Borrower shall be deemed to be the account party
for all purposes thereunder and hereunder. Each Lender agrees that its
obligations with respect to Letters of Credit pursuant to this Section 3 shall
include the Existing Letters of Credit. With respect to each Existing Letter of
Credit, for the period commencing on the Effective Date to and including the
expiration date of any such Existing Letter of Credit, Borrower shall pay all
fees and commissions set forth in subsection 3.2 at the times and in the manner
set forth therein. Anything to the contrary herein notwithstanding, The First
National Bank of Chicago, as Issuing Lender for the Existing Letters of Credit
shall not have any obligation to extend or renew any Existing Letter of Credit.
SECTION 4.
CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL LOANS.
---------------------------
The obligations of Lenders to make any Loans to be made on the Closing Date
are, in addition to the conditions precedent specified in subsection 4.2,
subject to prior or concurrent satisfaction of the following conditions:
A. BORROWER AND GUARANTOR DOCUMENTS. On or before the Closing Date,
Borrower and each Guarantor shall deliver or cause to be delivered to Lenders
(or to Managing Agent for Lenders with sufficient originally executed copies,
where appropriate,
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for each Lender and its counsel) the following, each, unless otherwise noted,
dated the Closing Date:
(i) Certified copies of its Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of
the State of its incorporation and each other state in which it is
qualified as a foreign corporation to do business, each dated a recent date
prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other
Loan Documents to which it is a party, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement, the Notes (duly executed in
accordance with subsection 2.1D, drawn to the order of each Lender and
Swing Line Lender and with appropriate insertions) and the other Loan
Documents; and
(vi) Such other documents as any Agent, Issuing Lender or Swing Line
Lender may reasonably request.
B. SECURITY INTERESTS. Each Credit Party shall have taken or caused to
be taken (and Collateral Agent shall have received satisfactory evidence
thereof) such actions in such a manner so that Collateral Agent has (or shall
have upon the filing of the financing statements and trademark assignments
delivered to Collateral Agent on the Closing Date) a valid and perfected first
priority security interest (subject to the Liens permitted hereunder) as of such
date in the entire Collateral located in the United States (to the extent
required by the Pledge and Security Agreement and Collateral Documents related
thereto) and Borrower shall have (or shall have upon the filing of the financing
statements and trademark assignments delivered to Collateral Agent on the
Closing Date) a valid and perfected second priority security interest (subject
to the Liens permitted hereunder) in the entire Collateral located in the United
States (to the extent required by the Intercompany Note Security Agreement and
the Collateral Documents related thereto). Such actions shall include, without
limitation, (i) delivery of appropriate Lien, judgment and tax searches as
Managing Agent shall request in all applicable jurisdictions for the Credit
Parties in form and substance satisfactory to Collateral Agent, (ii) delivery to
Collateral Agent of the Intercompany Notes duly endorsed in blank, all in form
and substance satisfactory to Collateral Agent and delivery to Collateral Agent
of all other instruments (duly endorsed where appropriate) evidencing the
Collateral, (iii) filing of Uniform Commercial Code financing statements and the
Trademark Assignment, as to the Collateral for all jurisdictions
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as Managing Agent shall request as may be necessary or desirable to perfect
Lenders' security interests in the Collateral, (iv) delivery to Collateral Agent
of Collateral Access Agreements for all Inventory locations (other than to the
extent Collateral Agent shall have otherwise consented in its sole discretion)
and (v) delivery of all other evidence reasonably satisfactory to Collateral
Agent that all other filings, recordings and other actions Collateral Agent
deems necessary or advisable to establish, preserve and perfect the first
priority Liens granted to Collateral Agent on behalf of Lenders and the Liens
granted to Borrower shall have been made or provided for.
C. CASH MANAGEMENT SYSTEM. The Cash Management System shall be in place
in form and substance satisfactory to Managing Agent, and (other than to the
extent Collateral Agent shall have otherwise consented in its sole discretion)
Collateral Agent shall have received Cash Management Letters from each financial
institution at which a Deposit Account (other than an Excluded Account) is
located (which shall, in any event, include all Cash Management Letters for all
such Deposit Accounts located at any Lender or its Affiliates) pursuant to the
Cash Management System, all in form and substance satisfactory to Collateral
Agent.
D. DELIVERY OF COMPLIANCE CERTIFICATE. Borrower shall have delivered to
Managing Agent a Compliance Certificate substantially in the form of Exhibit V
annexed hereto, dated as of the Closing Date and calculated to give effect to
the initial funding under this Agreement and the other transactions on the
Closing Date, demonstrating compliance with the covenants set forth in this
Agreement as of the Closing Date.
E. EVIDENCE OF INSURANCE. Collateral Agent shall have received an
Officer's Certificate of Borrower setting forth a schedule of insurance with
respect to each of the insurance policies required to be maintained hereunder,
and Collateral Agent shall be satisfied that the nature and scope of these
insurance policies meet the requirements of subsection 6.4 each such insurance
policy shall name Collateral Agent on behalf of Lenders as loss payee and/or
additional insured, as appropriate, and Collateral Agent shall have received an
original certificate of insurance from or on behalf of the issuer of each such
policy.
F. SENIOR SUBORDINATED NOTES. On or before the Closing Date, Borrower
shall have issued the Senior Subordinated Notes resulting in net proceeds of not
less than $96,572,000, and shall deliver to Managing Agent on the Closing Date
an Officer's Certificate to that effect, all in form and substance satisfactory
to Managing Agent.
G. RELATED DOCUMENTS; LICENSE AGREEMENTS. On the Closing Date, (i)
Managing Agent shall have received copies of executed or conformed copies of the
Related Documents (including, without limitation, the assignment to and
assumption by Borrower of the ESOP Loan Documents by and from Wachovia Bank and
Trust Company, N.A., which shall be satisfactory in form and substance to
Managing Agent) and License Agreements and any amendments, modifications or
waivers thereto on or prior to the Closing Date the terms and conditions of
which shall be reasonably satisfactory to Managing Agent, (ii) the Related
Documents and material License Agreements shall be in full force
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and effect, (iii) no Credit Party shall be in default in any material respect
thereunder, and (iv) Managing Agent shall have received an Officer's Certificate
in form and substance satisfactory to Managing Agent from Borrower to the effect
set forth in clauses (i), (ii) and (iii) above.
H. TERMINATION OF EXISTING CREDIT FACILITIES. Prior to or concurrently
with the funding of the initial Loans under this Agreement, Borrower shall repay
all principal and interest on outstanding loans and other obligations owed under
or related to the Existing Credit Facilities, including without limitation all
fees, expenses and other costs arising thereunder, and shall terminate the
obligation to lend or make other extensions of credit under the provisions of
the Existing Credit Facilities; provided that the Existing Letters of Credit may
continue to remain outstanding as provided in this Agreement. Concurrently with
such repayment, any Liens granted to secure any obligations under or with
respect to the Existing Credit Facilities (including, without limitation, the
Existing Letters of Credit but excluding Permitted Encumbrances permitted
pursuant to clause (x) of the definition thereof) or the documents delivered
thereunder, shall be released. All lenders (or an authorized agent on their
behalf) under the Existing Credit Facilities shall have delivered written
acknowledgements of such terminations and releases in form and substance
satisfactory to Collateral Agent. All of the foregoing shall be accomplished in
form and substance satisfactory to Collateral Agent.
I. DELIVERY OF EXISTING LETTERS OF CREDIT. On or before the Closing
Date, Borrower shall deliver to Issuing Lender, copies of all Existing Letters
of Credit certified as true, correct and complete pursuant to an Officer's
Certificate of Borrower.
J. EXISTING INDEBTEDNESS. As of the Closing Date and after giving effect
to the repayment and termination of the Existing Credit Facilities in accordance
with the terms hereof, the aggregate Indebtedness of Borrower and its
Subsidiaries (other than Indebtedness in respect of the Obligations, the Senior
Subordinated Notes and the ESOP Loan Documents) shall not exceed $23,000,000 and
all such Indebtedness (other than Indebtedness securing the Existing EDBs
described in clauses (E) and (F) of the definition thereof and other than as set
forth in Schedule 7.2 annexed hereto) shall be unsecured.
K. PROJECTIONS. On or before the Closing Date, Managing Agent shall have
received, in form and substance satisfactory to Managing Agent, the financial
plans described in subsection 6.1(xiii).
L. COLLATERAL REVIEW; BORROWING BASE. On or before the Closing Date,
Collateral Agent shall have received an updated review and analysis of all
Collateral and verification of the Borrowing Base, all in form and substance
satisfactory to Collateral Agent.
M. CREDIT AVAILABILITY. As of the Closing Date, and after giving effect
to all transactions on the Closing Date, Managing Agent shall be satisfied that
Borrower has a minimum of at least $15,000,000 available to be drawn under the
Revolving Loan Commitments as of such date.
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N. DELIVERY OF FINANCIAL CONDITION CERTIFICATE. On or before the making
of the initial Loans, each Credit Party shall have delivered a financial
condition certificate, in form and substance satisfactory to Managing Agent
demonstrating that, after giving effect to the consummation of the transactions
on the Closing Date (including incurrence of the Obligations) each Operating
Subsidiary is Solvent.
O. OPINIONS OF CREDIT PARTY'S COUNSEL. Lenders and their respective
counsel shall have received (i) originally executed copies of one or more
favorable written opinions of Skadden, Arps, Slate, Meagher & Flom, counsel for
the Credit Parties, in form and substance satisfactory to Managing Agent and its
counsel, dated as of the Closing Date and setting forth substantially the
matters in the opinions designated in Exhibit VI annexed hereto and as to such
other matters as Managing Agent acting on behalf of Lenders may reasonably
request, (ii) special counsel for the Credit Parties qualified in such
jurisdictions, as requested by Managing Agent, (other than the jurisdictions
covered in the opinion of Skadden, Arps, Slate, Meagher & Flom) in which a
Credit Party is incorporated or where Collateral Documents for the Credit
Parties are being filed or recorded, setting forth substantially the matters in
the opinions designated in Exhibit VI annexed hereto with respect to such Credit
Parties and Collateral Documents and as to such other matters as Managing Agent,
acting on behalf of Lenders, may reasonably request and (iii) evidence
satisfactory to Managing Agent that each Credit Party has requested each such
counsel to deliver such opinions to Lenders.
P. OPINIONS OF MANAGING AGENT'S COUNSEL. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers, counsel to Managing Agent, dated as of the Closing Date,
substantially in the form of Exhibit VII annexed hereto and as to such other
matters as Managing Agent acting on behalf of Lenders may reasonably request.
Q. DELIVERY OF SUBORDINATED NOTE INDENTURE OPINIONS OF COUNSEL. On or
before the Closing Date, Lenders and their counsel shall have received
originally executed copies of the favorable written opinion of Skadden, Arps,
Slate, Meagher & Flom, dated as of the Closing Date, as to the matters specified
in the Subordinated Note Indenture, and such opinion of counsel shall be
accompanied by a reliance letter or shall state that Lenders are entitled to
rely thereon.
R. ACCEPTANCE BY PROCESS MANAGING AGENT. Managing Agent shall have
received a letter in form and substance satisfactory to it, from the initial
agent for service of process designated by the Credit Parties in subsection
10.17 and the corresponding provisions of the Loan Documents, as applicable.
S. FINANCING FEES. All fees (excluding fees of counsel, accountants and
other professionals other than underwriters and investment advisors) paid in
connection with the issuance of Senior Subordinated Notes and the repayment and
termination of the Existing Credit Facilities shall not exceed $6,500,000 and,
on or before the Closing Date, Borrower shall have delivered to Managing Agent
an Officer's Certificate to such effect.
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T. EXPENSES. Borrower shall have paid to Managing Agent for distribution
as appropriate, all reimbursable costs and expenses incurred through the Closing
Date in accordance with subsection 10.2.
U. FEES. Borrower shall have paid to Managing Agent, for distribution
(as appropriate) to Managing Agent and Lenders, the fees payable on the Closing
Date referred to in subsection 2.3.
V. NO MATERIAL ADVERSE EFFECT. Since November 30, 1993, no Material
Adverse Effect (in the sole opinion of Managing Agent) shall have occurred.
W. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Borrower
shall have delivered to Managing Agent an Officer's Certificate, in form and
substance satisfactory to Managing Agent, to the effect that the representations
and warranties in Section 5 hereof are true, correct and complete in all
material respects on and as of the Closing Date to the same extent as though
made on and as of that date and that Borrower shall have performed in all
material respects all agreements and satisfied all conditions which this
Agreement provides shall be performed or satisfied by it on or before the
Closing Date except as otherwise disclosed to and agreed to in writing by
Managing Agent and Requisite Lenders.
X. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Managing Agent,
acting on behalf of Lenders, and its counsel in accordance with this subsection
4.1 shall be satisfactory in form and substance to Managing Agent and such
counsel, and Managing Agent and such counsel shall have received all such
counterpart originals or certified copies of such documents as Managing Agent
may reasonably request.
4.2 CONDITIONS TO ALL LOANS.
-----------------------
Subject to subsection 4.4 with respect to Rollover Borrowings and
subsection 2.1A(ii) with respect to Swing Line Loans, the obligations of each
Lender to make Loans on each Funding Date are subject to the following further
conditions precedent (other than with respect to the conversions of outstanding
LIBOR Rate Loans to Index Rate Loans which shall be subject to the conditions
precedent set forth in subsection 4.2B(iii) and (iv) below):
A. Managing Agent shall have received on or before that Funding Date, in
accordance with the provisions of subsection 2.1B, a copy of an originally
executed Notice of Borrowing, in each case signed by the chairman, chief
executive officer, president, executive vice president, senior vice president,
chief financial officer, chief accounting officer or the treasurer of Borrower
or by any executive officer of Borrower designated by any of the above-described
officers on behalf of Borrower in a writing delivered to Managing Agent.
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B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made
on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete
in all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
(iii) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain such Lender from
making the Loans to be made by it on that Funding Date;
(iv) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System; and
(v) There shall not be pending or, to the knowledge of Borrower,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Borrower or any of its Subsidiaries or any
property of Borrower or any of its Subsidiaries that has not been disclosed
by Borrower in writing pursuant to subsection 5.6 or 6.1(x) prior to the
making of the last preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there shall have occurred no
development not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, that, in either
event, in the opinion of Agent or of Requisite Lenders, would be expected
to have a Material Adverse Effect; and no injunction or other restraining
order shall have been issued and no hearing to cause an injunction or other
restraining order to be issued shall be pending or noticed with respect to
any action, suit or proceeding seeking to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain relief as a result of,
the transactions contemplated by this Agreement or the making of Loans
hereunder.
4.3 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder is subject to the following
conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
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B. On or before the date of issuance of such Letter of Credit, Issuing
Lender and Managing Agent shall have received, in accordance with the provisions
of subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer or the treasurer of Borrower or by any executive officer of Borrower
designated by any of the above-described officers on behalf of Borrower in
a writing delivered to Issuing Lender and Managing Agent, together with all
other information specified in subsection 3.1B(i) and such other documents or
information as Issuing Lender may reasonably require in connection with the
issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
4.4 ROLLOVER BORROWINGS.
-------------------
The obligations of each Lender to make Revolving Loans constituting
Rollover Borrowings on each Funding Date are subject only to the following
conditions precedent:
A. Managing Agent shall have received on or before that Funding Date in
accordance with subsection 2.1B a copy of an originally executed Notice of
Borrowing therefor, in each case signed by the chairman, chief executive
officer, president, executive vice president, senior vice president, chief
financial officer, chief accounting officer, or the treasurer of Borrower or by
any executive office of Borrower designated by any of the above-described
officers on behalf of Borrower in a writing delivered to Managing Agent.
B. Collateral Agent shall have received such information as it shall
request in order to confirm the Borrowing Base as of such Funding Date and the
Effective Advance Rate as of such Funding Date.
C. As of that Funding Date, each of the following conditions shall be
satisfied:
(i) The Managing Agent shall not have received a Rollover Termination
Notice (either telephonically or in writing) as of that Funding Date;
(ii) The Funding Date shall be during a Cash Sweep Period and at a
time that Borrower is unable to otherwise borrow Loans hereunder in
accordance with subsection 4.2;
(iii) The Revolving Loans requested by such Notice of Borrowing shall
be Index Rate Loans only;
(iv) The amount of the Revolving Loans requested shall not exceed the
lesser of (a) the sum of (y) aggregate amount of Receipts applied to repay
outstanding Revolving Loans on that Funding Date in accordance with
subsec-
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tion 6.10 and (z) the amount of Receipts so applied since the earlier of
the last Funding Date of a Rollover Borrowing hereunder and the date that
is 5 Business Days prior to the current Funding Date or (b) such other
amount that will not cause the Total Utilization of Commitments at any time
to exceed the lesser of (y) the Revolving Loan Commitments and (z) the
Borrowing Base, in each as then in effect; provided that in no event shall
the amount of such Revolving Loans requested be an amount that would cause
the Effective Advance Rate to increase as of such Funding Date over the
amount of the Effective Advance Rate as in effect at the close of business
for Collateral Agent on the last Business Day of the week preceding such
Funding Date;
(v) No event shall have occurred and be continuing or result from the
consummation of the Rollover Borrowing contemplated by such Notice of
Borrowing, that would constitute a (a) Potential Event of Default under
subsections 8.1 or (or other than with respect to a Non-Operating
Subsidiary) 8.6 or (b) an Event of Default;
(vi) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain such Lender from
making the Revolving Loans to be made it on that Funding Date;
(vii) The making of the Revolving Loans requested on such Funding
Date shall not violate any law including, without limitation, Regulation G,
Regulation T, Regulation U, Regulation X and the Board of Governors of the
Federal Reserve System; and
(viii) The representations and warranties contained in subsection
5.15 shall be true, correct and complete in all material respects on and as
of that Funding Date to the same extent as if made on and as of that date.
SECTION 5.
BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lender to issue Letters of Credit (or continue the
Existing Letters of Credit hereunder, as the case may be) and to induce other
Lenders to purchase participations therein, Borrower represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Each Credit Party is a corporation duly
organized, validly existing and in good standing under the laws of the State of
its incorporation except for Subsidiaries of Borrower, which after the Closing
Date, may not be in good standing if
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such failure has not had and will not have a Material Adverse Effect or result
in any Lien not permitted hereunder. Each Credit Party has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to enter into the
Loan Documents and Related Documents to which it is a party, to carry out the
transactions contemplated thereby and, in the case of Borrower, to issue and pay
the Notes.
B. QUALIFICATION AND GOOD STANDING. Each Credit Party is qualified to do
business and is in good standing in every jurisdiction necessary to carry out
its business and operations, except in jurisdictions where the failure to be so
qualified or in good standing has not had and will not have a Material Adverse
Effect or result in any Lien not permitted hereunder.
C. CONDUCT OF BUSINESS. Borrower and its Subsidiaries are engaged only
in the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Borrower as of the Closing
Date and the Non-Operating Subsidiaries as of the Closing Date are identified in
Part One of Schedule 5.1 annexed hereto. The capital stock of each of the
Subsidiaries of Borrower identified in Part One of Schedule 5.1 annexed hereto
is duly authorized, validly issued, fully paid and nonassessable and none of
such capital stock constitutes Margin Stock. Part One of Schedule 5.1 annexed
hereto correctly sets forth the ownership interest of Borrower in each of its
Subsidiaries identified therein as of the Closing Date. Each of the statements
contained in the definition of Non-Operating Subsidiary are true with respect to
each Non-Operating Subsidiary and with respect to Non-Operating Subsidiaries
taken as a whole.
E. COLLATERAL MATTERS. Other than as may be supplemented by written
notices delivered to Collateral Agent pursuant to the Pledge and Security
Agreement:
(i) the chief executive office and principal place of business of each
Credit Party is as set forth in Part Two of Schedule 5.1 annexed hereto;
(ii) the office where each Credit Party keeps its records concerning
Accounts and all originals of all chattel paper which evidence any Accounts
are located at the addresses specified for such Credit Party in Part Three
of Schedule 5.1 annexed hereto;
(iii) all Inventory of each Credit Party is located on the premises
specified for such Credit Party on Part Four of Schedule 5.1 annexed hereto
(or is in transit thereto) and except as specified in Part Four of Schedule
5.1 annexed hereto, no such Inventory is stored with a bailee, warehouseman
or similar party;
(iv) other than as set forth in Part Five of Schedule 5.1 annexed
hereto, no Credit Party does any business under any fictitious business
names or tradenames or has done business under any fictitious business
names or tradenames during the five years preceding the Closing Date.
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5.2 AUTHORIZATION OF BORROWING, ETC.
-------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance
of the Loan Documents and Related Documents and the issuance, delivery and
payment of the Notes have been duly authorized by all necessary corporate action
on the part of each applicable Credit Party.
B. NO CONFLICT. The execution, delivery and performance by each Credit
Party of the Loan Documents and the Related Documents, the issuance, delivery
and payment of the Notes (in the case of Borrower) and the consummation of the
transactions contemplated by the Loan Documents and Related Documents do not and
will not (i) violate any provision of any law or any governmental rule or
regulation applicable to Borrower or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Borrower or any of its Subsidiaries or
any order, judgment or decree of any court or other agency of government binding
on Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach
of (excluding, however, Accounts of Borrower or its Subsidiaries which by their
terms purport to prohibit the assignment thereof without the consent of the
Account Debtor in respect thereof, except as the same may be rendered
ineffective by applicable law) or constitute (with due notice or lapse of time
or both) a default under any material Contractual Obligation of Borrower or any
of its Subsidiaries, (iii) result in or require the creation or imposition of
any Lien upon any of the properties or assets of Borrower or any of its
Subsidiaries (other than any Liens created under any of the Loan Documents in
favor of Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Borrower or any of its Subsidiaries, except for such approvals or
consents which will be obtained on or before the Closing Date and disclosed in
writing to Lenders.
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by
each Credit Party of the Loan Documents and Related Documents, the issuance,
delivery and payment of the Notes and the consummation of the transactions
contemplated by the Loan Documents and Related Documents do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body (other than any of the foregoing to the extent required under
applicable securities laws in connection with the Senior Subordinated Notes, all
of which have been received or made, as the case may be, and as may be required
in connection with the Traco Documents) and other than filings expressly
contemplated by the Loan Documents.
D. BINDING OBLIGATION. Each of the Loan Documents and Related Documents
has been duly executed and delivered by each Credit Party party thereto and is
the legally valid and binding obligation of such Credit Party, enforceable
against such Credit Party in accordance with its respective terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or by general equitable
principles whether enforcement is sought in equity or at law.
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E. VALID ISSUANCE OF SENIOR SUBORDINATED NOTES. Borrower has the
corporate power and authority to issue the Senior Subordinated Notes. The
Senior Subordinated Notes, when issued and paid for, will be the legally valid
and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by general equitable principles whether enforcement is
sought in equity or at law. The Loans, Letters of Credit and all other
Obligations hereunder are and will be within the definition of ``Senior Debt''
included in such provisions and are the only liabilities that constitute
``DESIGNATED SENIOR DEBT'' (as defined in the Subordinated Note Indenture). The
Senior Subordinated Notes, when issued and sold, will either (a) have been
registered or qualified under applicable federal and state securities laws or
(b) be exempt from registration thereunder.
5.3 FINANCIAL CONDITION.
-------------------
Borrower has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Borrower and its Subsidiaries as at November 30, 1993 and the
related consolidated statements of income, stockholders' equity and cash flows
of Borrower and its Subsidiaries for the Fiscal Year then ended and (ii) the
unaudited consolidated and consolidating balance sheets of Borrower and its
Subsidiaries as at January 31, 1994 and the related unaudited consolidated and
consolidating statements of income and consolidated cash flows of Borrower and
its Subsidiaries for the two months then ended. All such statements were
prepared in conformity with GAAP and fairly present the financial position (on a
consolidated and, where applicable, consolidating basis) of the entities
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such unaudited financial
statements, to changes resulting from audit and normal year-end adjustments.
Borrower does not (and will not following the funding of the initial Loans) have
any Contingent Obligation, contingent liability or liability for taxes, long-
term lease or unusual forward or long-term commitment that is not reflected in
the foregoing financial statements or the notes thereto and which in any such
case is material in relation to the business, operations, properties, assets,
financial condition or prospects of Borrower or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since November 30, 1993, no event or change has occurred that has caused or
evidences, either in any case or in the aggregate, a Material Adverse Effect.
Neither Borrower nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
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5.5 TITLE TO PROPERTIES; LIENS.
--------------------------
Borrower and its Subsidiaries have good, sufficient and legal title to all
of their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, except for assets disposed of since the
date of such financial statements in the ordinary course of business or as
otherwise permitted prior to the Closing Date under the Existing Credit
Facilities or, after the Closing Date, as otherwise permitted under subsection
7.7 and except for imperfections of title which individually or in the aggregate
would not have a Material Adverse Effect. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
-------------------------
Except as set forth in Schedule 5.6 annexed hereto, there is no action,
suit, proceeding, arbitration or governmental investigation (whether or not
purportedly on behalf of Borrower or any of its Subsidiaries) at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or any of its Subsidiaries or any property of Borrower or any
of its Subsidiaries that has had, or could reasonably be expected to result in,
a Material Adverse Effect. Neither Borrower nor any of its Subsidiaries is (i)
in violation of any applicable law that has had, or could reasonably be expected
to result in, a Material Adverse Effect or (ii) subject to or in default with
respect to any final judgment, writ, injunction, decree, rule or regulation of
any court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, that
has had, or could reasonably be expected to result in, a Material Adverse
Effect. There are no labor controversies pending, or to the knowledge of
Borrower threatened, which has had, or could reasonably be expected to result
in, a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Borrower and its Subsidiaries required to be filed by any of them
have been timely filed, and all taxes, assessments, fees and other governmental
charges upon Borrower and its Subsidiaries and upon their respective properties,
assets, income, businesses and franchises which are due and payable have been
paid when due and payable except for nonmaterial state and local tax returns
which Borrower reasonably believes are not required to be filed because of
jurisdictional or other limitations and the nonfiling of which would not result
in a Material Adverse Effect or a Lien on any Collateral not permitted by
subsection 7.2. Borrower knows of no proposed tax assessment against Borrower
or any of its Subsidiaries which is not being actively contested by Borrower or
such Subsidiary in good faith and by appropriate proceedings; provided that such
reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor.
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5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS.
--------------------------------------------------------
A. Neither Borrower nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its material Contractual Obligations, and no
condition exists that, with the giving of notice or the lapse of time or both,
would constitute such a default, except in any case where the consequences,
direct or indirect, of such default or defaults, if any, would not have a
Material Adverse Effect.
B. Neither Borrower nor any of its Subsidiaries is a party to or is
otherwise subject to any agreement or instrument or any charter or other
internal restriction which has had, or could reasonably be expected to result
in, individually or in the aggregate, a Material Adverse Effect.
5.9 GOVERNMENTAL REGULATION.
-----------------------
Neither Borrower nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act (to the extent applicable to the transactions
contemplated hereby) or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which in any case may limit its ability
to incur Indebtedness or which may otherwise render all or any portion of the
Obligations unenforceable.
5.10 SECURITIES ACTIVITIES.
---------------------
Neither Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
A. Borrower and each of its ERISA Affiliates are in substantial
compliance with all applicable provisions and requirements of ERISA and the
regulations and published interpretations thereunder with respect to each
Employee Benefit Plan.
B. No ERISA Event has occurred with respect to which Borrower has any
outstanding liability and no such ERISA Event is reasonably expected to occur.
C. As of the most recent valuation date for any Pension Plan, the amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), does not exceed $1,000,000.
D. As of the date hereof, the Multiemployer Plans that are defined
benefit plans subject to Subtitle E of Title IV of ERISA are (i) the Clothing
Retirement Fund of the
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Amalgamated Insurance Fund, (ii) the Cotton Garment Fund of the Amalgamated
Insurance Fund, and (iii) the ILGWU National Retirement Fund.
5.12 CERTAIN FEES.
------------
No broker's or finder's fee or commission will be payable with respect to
this Agreement or any of the transactions contemplated hereby, and Borrower
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees claiming by, through or under any Credit Party alleged to have been
incurred in connection herewith or therewith and any expenses (including
reasonable fees, expenses and disbursements of counsel) arising in connection
with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
------------------------
Except as set forth in Schedule 5.13 annexed hereto:
(i) the operations of Borrower and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in the
Facilities (to the best knowledge of Borrower to the extent of Facilities
not currently owned, operated or used by Borrower or its Subsidiaries))
comply in all material respects with all Environmental Laws except where
the failure to comply could not reasonably be expected to have a Material
Adverse Effect;
(ii) Borrower and each of its Subsidiaries have obtained all
Governmental Authorizations under Environmental Laws necessary to their
respective operations, and Borrower and each of its Subsidiaries are in
compliance with all material terms and conditions of such Governmental
Authorizations except where the failure to so obtain or comply, as the case
may be, could not reasonably be expected to have a Material Adverse Effect;
(iii) to the best of Borrower's knowledge, none of the operations of
Borrower or any of its Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any Hazardous Materials at
any Facility or at any other location which could reasonably be expected to
have a Material Adverse Effect;
(iv) none of the operations of Borrower or any of its Subsidiaries is
subject to any judicial or administrative proceeding alleging the violation
of or liability under any Environmental Laws which could reasonably be
expected to have a Material Adverse Effect;
(v) neither Borrower nor any of its Subsidiaries has received any
notice that it is or may be liable as the result of any Release of any
Hazardous Materials by Borrower or any of its Subsidiaries if the same
could reasonably be expected to have a Material Adverse Effect;
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(vi) no underground storage tanks or surface impoundments are on or at
any Facility; and
(vii) as of the Closing Date any information that would be required
to be disclosed hereunder at such time pursuant to subsection 6.7 if such
provisions were in effect prior to such date has been set forth on Schedule
5.13 annexed hereto.
5.14 EMPLOYEE MATTERS.
----------------
There is no strike or work stoppage in existence or threatened involving
Borrower or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect.
5.15 SOLVENCY.
--------
Borrower and each Operating Subsidiary is and, upon the incurrence of any
Obligations by Borrower on any date on which this representation is made, will
be, Solvent.
5.16 INVENTORY.
---------
Except as disclosed in the information provided to Collateral Agent by
Borrower under subsection 6.8 or otherwise disclosed to Collateral Agent in
writing, with respect to all Inventory:
(a) Collateral Agent may rely upon all statements, warranties, or
representations made in any Borrowing Base Certificate or other written
report regarding Inventory delivered hereunder by Borrower in determining
which items of Inventory are to be deemed Eligible Inventory;
(b) No such Inventory is subject to any Lien whatsoever, except for
Liens of Collateral Agent hereunder and Permitted Encumbrances; and
(c) No such Inventory has been consigned to any Person (other than
consignment by a Credit Party to another Credit Party).
5.17 GENUINENESS OF ACCOUNTS.
-----------------------
Except as disclosed to Collateral Agent in the information provided to
Managing Agent under subsection 6.8 or otherwise disclosed to Collateral Agent
in writing, with respect to Accounts of Borrower and each Operating Subsidiary
as of the date of such information and as disclosed therein (either specifically
or by their exclusion from Eligible Accounts):
(a) Collateral Agent may rely upon all statements, warranties or
representations made in any Borrowing Base Certificate or other report
regarding Accounts
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delivered hereunder by Borrower in determining which Accounts are to be
deemed Eligible Accounts;
(b) All such Accounts are genuine, are in all material respects what
they purport to be, are not evidenced by a judgment, and are not evidenced
by more than one, if any, executed original instrument, which original has
been delivered or made available to Collateral Agent and Borrower has no
knowledge of any fact or circumstance that would impair the validity or
collectibility thereof including, without limitation, any setoffs,
counterclaims or disputes (except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditor's rights generally or by general equitable
principles whether enforcement is sought in equity or at law).
(c) All such Accounts arise from bona fide transactions completed
substantially in accordance with the terms and provisions contained in any
documents related thereto and no such Account has been assigned (other than
delinquent Accounts assigned for collection or as otherwise permitted by
subsection 7.11) or pledged to any other Person other than Collateral
Agent;
(d) The amounts of the face values shown on any Borrowing Base
Certificate or other report regarding Accounts delivered hereunder and all
invoices and statements delivered to Collateral Agent with respect to any
such Account are actually and absolutely owing to Borrower or such
Operating Subsidiaries, as the case may be (except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or limiting creditor's rights generally or by general
equitable principles whether enforcement is sought in equity or at law),
and are not contingent for any reason, other than discounts or allowances
allowed by such Borrower in the ordinary course of business for prompt
payment or volume purchases, all of which discounts or allowances have been
made in conformity with the applicable Credit and Collection Policy or
otherwise disclosed to Collateral Agent;
(e) Borrower has no knowledge that any Account Debtor did not have the
capacity to contract at the time any contract or other document giving rise
to such Account was executed;
(f) The goods giving rise to any such Account are not, and were not at
the time of the sale thereof, subject to any Lien, claim, encumbrance or
security interest, except for Permitted Encumbrances, Liens in favor of
carriers of the goods in the ordinary course of Borrower's or such
Operating Subsidiaries' business and Liens in favor of Collateral Agent;
and
(g) None of the Accounts is or, prior to becoming a Defaulted Account,
will be, evidenced by (i) an ``instrument'' (as defined in the UCC) or (ii)
``chattel paper'' (as defined in the UCC).
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5.18 REPRESENTATIONS CONCERNING CREDIT AND COLLECTION POLICY.
-------------------------------------------------------
The summary of the Credit and Collection Policy attached hereto as Schedule
5.18 is accurate and complete in all material respects as of the Closing Date
and does not omit to state any material fact necessary to make the statements
set forth therein not misleading. There has been no change to the Credit and
Collection Policy since November 30, 1993 except such changes as have been
disclosed to Managing Agent in writing and approved by Managing Agent.
5.19 REPRESENTATIONS CONCERNING CASH MANAGEMENT SYSTEM.
-------------------------------------------------
The summary of the Cash Management System attached hereto as Schedule 5.19
is accurate and complete in all material respects as of the Closing Date and
does not omit to state any material fact necessary to make the statements set
forth therein not misleading. Neither Borrower nor any of its Subsidiaries owns
any Deposit Account which is not described in Schedule 5.19 or otherwise
permitted pursuant to subsections 6.10 or 7.3 or as otherwise permitted pursuant
to this Agreement. There has been no change to the Cash Management System
(other than as permitted by subsection 6.10) since the Closing Date except such
changes as have been disclosed to Managing Agent in writing and approved by
Managing Agent. Subject to subsection 6.12, a Cash Management Letter covering
each Deposit Account (other than Excluded Accounts) included in the Cash
Management System has been delivered to Collateral Agent.
5.20 INTELLECTUAL PROPERTY
---------------------
A. The Credit Parties own, or are licensed to use or otherwise have the
lawful right to use, the Intellectual Property and all such registered
Intellectual Property is fully protected and duly and properly registered, filed
or issued in the appropriate office and jurisdictions for such registrations,
filing or issuances. All registered Intellectual Property and the Credit Party
holding rights therein is described in Schedule 5.20 annexed hereto. Each of
the license agreements (together with any such agreements entered into after the
Closing Date, the ``LICENSE AGREEMENTS'') pursuant to which any Credit Party has
rights to use material Intellectual Property as of the Closing Date is set forth
in Schedule 5.20 annexed hereto. Each Credit Party is in compliance with the
material terms of each License Agreement to which it is a party and each such
License Agreement is in full force and effect the failure of which would result
in a Material Adverse Effect or an Event of Default hereunder.
B. No material claim has been asserted by any Person with respect to the
use of any such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such Intellectual Property which could
reasonably be expected to result in a Material Adverse Effect. To Borrower's
knowledge, the use of such Intellectual Property by each Credit Party does not
infringe on the rights of any Person, subject to such claims and infringements
as do not, in the aggregate, give rise to any liabilities on the part of any
Credit Party that could reasonably be expected to result in a Material Adverse
Effect. The consummation of the transactions contemplated by this Agreement
will not in any material
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manner or to any material extent impair the ownership of (or the license to use,
as the case may be) any of such Intellectual Property by any Credit Party.
5.21 DISCLOSURE.
----------
No representation or warranty of Borrower or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Borrower or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Borrower, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Borrower to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such projections may differ
from the projected results. There is no fact known (or which should upon the
reasonable exercise of diligence be known) to Borrower (other than matters of a
general economic nature) that has had, or could reasonably be expected to result
in, a Material Adverse Effect and that has not been disclosed herein or in such
other documents, certificates and statements furnished to Lenders for use in
connection with the transactions contemplated hereby.
SECTION 6.
BORROWER'S AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation, expiration or cash collateralization in
accordance with the terms hereof of all Letters of Credit, unless Requisite
Lenders shall otherwise give prior written consent, Borrower shall perform,
and shall cause each of its Subsidiaries to perform, all covenants in this
Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Borrower will maintain, and cause each of its Subsidiaries to maintain, a
system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Borrower will deliver to Managing Agent and Lenders:
(i) Monthly Financials: as soon as available and in any event within
30 days after the end of each month ending after the Closing Date, (a) for
each month other than the last month of each fiscal quarter and each Fiscal
Year, the consolidated and consolidating balance sheets and consolidated
statement of income of Borrower and its Subsidiaries as at the end of such
month and consolidated and
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consolidating statements of income and consolidated statement of cash flows
of Borrower and its Subsidiaries for the period from the beginning of the
then current Fiscal Year to the end of such month, setting forth in
comparative form the corresponding figures for the corresponding periods of
the previous Fiscal Year and the corresponding figures from the
consolidated plan and financial forecast for the current Fiscal Year
delivered pursuant to subsection 6.1(xiii), to the extent prepared on a
monthly basis, all in reasonable detail and certified by the chief
financial officer, chief accounting officer, controller or treasurer of
Borrower that they fairly present the financial condition of Borrower and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (b) a
report on all Intercompany Note transactions for each day in such month as
customarily prepared by Borrower.
(ii) Quarterly Financials: as soon as available and in any event
within 45 days after the end of each of the first three fiscal quarters of
each Fiscal Year, the consolidated and consolidating balance sheets and
consolidated statement of income of Borrower and its Subsidiaries as at the
end of such fiscal quarter and the consolidating statements of income and
consolidated statement of cash flows of Borrower and its Subsidiaries for
the period from the beginning of the then current Fiscal Year to the end of
such fiscal quarter, setting forth in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the consolidated plan and financial forecast for
the current Fiscal Year delivered pursuant to subsection 6.1(xiii), all in
reasonable detail and certified by the chief financial officer, chief
accounting officer, controller or treasurer of Borrower that they fairly
present the financial condition of Borrower and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting from audit and
normal year-end adjustments;
(iii) Year-End Financials: as soon as available and in any event (y)
within 45 days after the end of each Fiscal Year (but, in any event, not
sooner than the same is released by Borrower to the public) a preliminary
statement of income for such Fiscal Year and (z) within 90 days after the
end of each Fiscal Year, (a) the consolidated and consolidating balance
sheets of Borrower and its Subsidiaries as at the end of such Fiscal Year
and the related consolidated and consolidating statements of income, and
consolidated statement of stockholders' equity and cash flows of Borrower
and its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the consolidated plan and financial forecast
delivered pursuant to subsection 6.1(xiii) for the Fiscal Year covered by
such financial statements, all in reasonable detail and certified by the
chief financial officer, chief accounting officer, controller or treasurer
of Borrower that they fairly present the financial condition of Borrower
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated and (b) in the
case of such consolidated financial statements, a report thereon of Price
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Waterhouse or other independent certified public accountants of recognized
national standing selected by Borrower and reasonably satisfactory to
Managing Agent, which report shall be unqualified, shall express no doubts
about the ability of Borrower and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial statements fairly
present the consolidated financial position of Borrower and its
Subsidiaries as at the dates indicated and the results of their operations
and their cash flows for the periods indicated in conformity with GAAP
(except as otherwise disclosed in such financial statements) and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(iv) Officer's and Compliance Certificates: together with each
delivery of financial statements of Borrower and its Subsidiaries pursuant
to subdivisions (ii) and (iii) above, (a) an Officer's Certificate of
Borrower (y) stating that the signer has reviewed the terms of this
Agreement and has made, or caused to be made under such officer's
supervision, a review in reasonable detail of the transactions and
condition of Borrower and its Subsidiaries during the accounting period
covered by such financial statements and that such review has not disclosed
the existence during or at the end of such accounting period, and that the
signer does not have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event that constitutes an Event
of Default or Potential Event of Default, or, if any such condition or
event existed or exists, specifying the nature and period of existence
thereof and what action Borrower has taken, is taking and proposes to take
with respect thereto and (z) confirming in reasonable detail to the extent
of information available, that the Non-Operating Subsidiaries at such time
and for such period, both individually and in the aggregate, qualify as
Non-Operating Subsidiaries pursuant to each element of the definition
thereof; and (b) a Compliance Certificate demonstrating in reasonable
detail compliance for such applicable accounting periods with the
restrictions contained in Section 7;
(v) Reconciliation Statements: if, as a result of any change in
accounting principles and policies from those used in the preparation of
the audited financial statements referred to in subsection 5.3, the
consolidated financial statements of Borrower and its Subsidiaries
delivered pursuant to subdivisions (ii) or (iii) of this subsection 6.1
will differ in any material respect from the consolidated financial
statements that would have been delivered pursuant to such subdivisions had
no such change in accounting principles and policies been made, then (a)
together with the first delivery of financial statements pursuant to
subdivision (ii) or (iii) of this subsection 6.1 following such change,
consolidated financial statements of Borrower and its Subsidiaries for (y)
the current Fiscal Year to the effective date of such change and (z) the
two full Fiscal Years immediately preceding the Fiscal Year in which such
change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (b) together with each
delivery of financial statements pursuant to subdivision (ii) or (iii) of
this subsection 6.1 following such change, a written statement of the chief
accounting officer or chief financial officer of Borrower setting forth the
differences which would have resulted
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in the calculation of the covenants set forth in Section 7 if such
financial statements had been prepared without giving effect to such
change.
(vi) Accountants' Certification: together with each delivery of
consolidated financial statements of Borrower and its Subsidiaries pursuant
to subdivision (iii) above, a written statement by the independent
certified public accountants giving the report thereon (a) stating that
their audit examination has included a review of the terms of this
Agreement and the other Loan Documents as they relate to accounting matters
and (b) stating whether, in connection with their audit examination, any
condition or event that constitutes an Event of Default or Potential Event
of Default has come to their attention and, if such a condition or event
has come to their attention, specifying the nature and period of existence
thereof; provided that such accountants shall not be liable by reason of
any failure to obtain knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the course of their audit
examination;
(vii) Accountants' Reports: copies of all reports submitted to
Borrower by independent certified public accountants in connection with
each annual, interim or special audit of the financial statements of
Borrower and its Subsidiaries made by such accountants, including, without
limitation, any comment letter submitted by such accountants to management
in connection with their annual audit shall be made available for review by
Managing Agent promptly after its request therefor;
(viii) SEC Filings and Press Releases: promptly upon their becoming
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Borrower to its
security holders or by any Subsidiary of Borrower generally to its security
holders other than Borrower or another Subsidiary of Borrower, (b) all
regular and periodic reports and all effective registration statements
(other than on Form S-8 or a similar form) and effective prospectuses, if
any, filed by Borrower or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission or any governmental
or private regulatory authority, and (c) all press releases and other
statements made available generally by Borrower or any of its Subsidiaries
to the public concerning material developments in the business of Borrower
or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon any executive or senior
officer of Borrower obtaining knowledge (a) of any condition or event that
constitutes an Event of Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than to Agent) or taken
any other action with respect to a claimed Event of Default or Potential
Event of Default, (b) that any Person has given any notice to Borrower or
any of its Subsidiaries or taken any other action with respect to a claimed
default or event or condition of the type referred to in subsection 8.2,
(c) of any condition or event required to be disclosed in a current report
filed by Borrower with the Securities and Exchange Commission on Form 8-K
(Items 1, 2, 4, 5 and 6 of such Form as in effect on the date hereof)
concurrently with the filing of such Form 8-K by Borrower or (d) of the
occurrence of any event
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or change that has caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officer's Certificate specifying
the nature and period of existence of such condition, event or change, or
specifying the notice given or action taken by any such Person and the
nature of such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Borrower has taken, is taking
and proposes to take with respect thereto;
(x) Litigation or Other Proceedings: promptly upon any executive or
senior officer of Borrower obtaining knowledge of (X) the institution of,
or non-frivolous threat of, any action, suit, proceeding (whether
administrative, judicial or otherwise), governmental investigation or
arbitration against or affecting Borrower or any of its Subsidiaries or any
property of Borrower or any of its Subsidiaries (collectively,
``PROCEEDINGS'') not previously disclosed in writing by Borrower to Lenders
or (Y) any material development in any Proceeding that, in any case:
(1) has a reasonable possibility of giving rise to an Event of
Default or a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Borrower to enable Lenders and their counsel to
evaluate such matters;
(xi) ERISA Events: promptly upon an executive or senior officer of
Borrower becoming aware (a) of the occurrence of or notice of a forthcoming
occurrence of any ERISA Event, a written notice specifying the nature
thereof, what action Borrower or any of its ERISA Affiliates has taken, is
taking or proposes to take with respect thereto and, when known, any action
taken or threatened by the Internal Revenue Service, the Department of
Labor or the PBGC with respect thereto and (b) of the complete or partial
withdrawal by any employer (within the meaning of Section 4203 or 4205 of
ERISA) from the Clothing Retirement Fund of the Amalgamated Insurance Fund,
a written notice containing such information concerning the identity of the
employer and the magnitude of the withdrawal liability of which any officer
of Borrower is aware;
(xii) ERISA Notices: with reasonable promptness, copies of (a) each
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Borrower or any of its Subsidiaries with the Internal Revenue
Service with respect to each Pension Plan; (b) all notices received by
Borrower or any of its Subsidiaries from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit Plan as Agent shall
reasonably request; provided that upon Managing Agent's request, Borrower
shall submit promptly to each Multiemployer Plan identified by Managing
Agent a request (together with payment of any reasonable charges therefor)
for an
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estimate of the withdrawal liability Borrower or any of its ERISA
Affiliates would incur upon a complete withdrawal (within the meaning of
Section 4203 of ERISA) from such Multiemployer Plan and for a copy of the
actuarial valuation and review and a report on employer withdrawal
liability regularly prepared for such Multiemployer Plan, and shall provide
copies of the information and materials supplied by each such Multiemployer
Plan in response to such submission;
(xiii) Financial Plans: on or before the Closing Date, and
thereafter as soon as practicable and in any event no later than 30 days
prior to the beginning of each Fiscal Year preliminary copies of, and as
soon as available and, in any event, by February 15 of the following Fiscal
Year, final copies of, a consolidated and consolidating plan and financial
forecast for the next succeeding Fiscal Years on a month by month basis
through the Commitment Termination Date, including without limitation (a)
forecasted consolidated and consolidating balance sheets and forecasted
consolidated and consolidating statements of income and consolidated cash
flows of Borrower and its Subsidiaries for each such Fiscal Year, together
(with delivery of the final copies of such plan and forecast) with pro
forma Compliance Certificates with respect to the covenants set forth in
subsection 7.6 for each such Fiscal Year and an explanation of the material
assumptions on which such forecasts are based, (b) forecasted consolidated
and consolidating statements of income and consolidated cash flows of
Borrower and its Subsidiaries for each month of the first such Fiscal Year,
together with an explanation of the material assumptions on which such
forecasts are based and (c) such other information and projections as any
Lender may reasonably request;
(xiv) Insurance: as soon as practicable and in any event by the last
day of each Fiscal Year, a report in form and substance satisfactory to
Collateral Agent outlining all material insurance coverage maintained as of
the date of such report by Borrower and its Subsidiaries and all material
insurance coverage planned to be maintained by Borrower and its
Subsidiaries in the immediately succeeding Fiscal Year;
(xv) Environmental Audits and Reports: as soon as practicable
following receipt thereof, copies of all environmental audits and reports,
whether prepared by personnel of Borrower or any of its Subsidiaries or by
independent consultants, with respect to environmental matters at any
Facility or an Environmental Claim which could result in a Material Adverse
Effect;
(xvi) Board of Directors: with reasonable promptness (but in any
event no earlier than such information is generally made public), written
notice of any change in the Board of Directors of Borrower; and
(xvii) Other Information: with reasonable promptness, such other
information and data with respect to Borrower or any of its Subsidiaries as
from time to time may be reasonably requested by any Agent or any Lender.
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6.2 CORPORATE EXISTENCE, ETC.
------------------------
Except as permitted under subsection 7.7, Borrower will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business, except where the failure to maintain the same could not reasonably be
expected to have a Material Adverse Effect.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Borrower will, and will cause each of its Subsidiaries to, pay all
taxes (except for nonmaterial state and local taxes which Borrower reasonably
believes are not required to be paid because of jurisdictional or other
limitations and the non-payment of which would not result in a Material Adverse
Effect or a Lien on any Collateral other than Liens permitted under subsection
7.2), assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
need be paid if being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor.
B. Borrower will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
(other than Borrower or any of its Subsidiaries).
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
------------------------------------
Borrower will, and will cause each of its Subsidiaries to, take all
reasonable action to maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Borrower and its Subsidiaries (including,
without limitation, Intellectual Property) and from time to time will make or
cause to be made all reasonably necessary repairs, renewals and replacements
thereof. Borrower will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its properties and
business and the properties and businesses of its Subsidiaries against loss or
damage consistent with the policies and programs in effect as of the Closing
Date and of the kinds customarily carried or maintained under similar
circumstances by corporations of established reputation engaged in similar
businesses; provided that Borrower and its Subsidiaries may maintain workers
compensation self insurance programs and such other additional self insurance
programs as are customary for their size and industry and as are established and
administered in accordance with prudent business practices. Each such policy of
insurance shall name Collateral Agent for the benefit of Lenders as an
additional insured and/or as the loss
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payee thereunder as appropriate and shall provide for at least 10 days prior
written notice to Collateral Agent of any modification or cancellation of such
policy.
6.5 INSPECTION; LENDER MEETING.
--------------------------
Borrower shall, and shall cause each of its Subsidiaries to, permit any
authorized representatives designated by any Lender to visit and inspect any of
the properties of Borrower or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants (provided that Borrower
may, if it so chooses, be present at or participate in any such discussion), all
upon reasonable notice and at such reasonable times during normal business hours
and as often as Borrower and such Lender may reasonably agree. Without in any
way limiting the foregoing, Borrower will, upon the request of Agent or
Requisite Lenders, participate in a meeting of Managing Agent and Lenders once
during each Fiscal Year to be held at Borrower's corporate offices (or such
other location as may be agreed to by Borrower and Managing Agent) at such time
as may be agreed to by Borrower and Managing Agent, but in any case, as long as
no Event of Default or Potential Event of Default shall have occurred and be
continuing, no sooner that 15 days after Borrower's annual meeting of
stockholders.
6.6 COMPLIANCE WITH LAWS, ETC.
-------------------------
Borrower shall, and shall cause each of its Subsidiaries to, comply with
the requirements of all applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which could reasonably be expected to
cause a Material Adverse Effect.
6.7 ENVIRONMENTAL MATTERS.
---------------------
A. Borrower shall, and shall cause each of its Subsidiaries to comply
with all Environmental Laws and Governmental Authorizations in all material
respects including, without limitation, with respect to the presence, storage,
use, disposal, transportation or Release of any Hazardous Materials on, under or
about any Facility, noncompliance with which could reasonably be expected to
result in a Material Adverse Effect.
B. Borrower agrees that Managing Agent may, from time to time upon its
determination in its reasonable discretion that events or conditions exist that
could reasonably be expected to result in material environmental related
liability for any Lender in respect of this Agreement or Borrower or any of its
Subsidiaries, retain, at Borrower's expense, an independent professional
consultant to review any report relating to Hazardous Materials prepared by or
for Borrower and to conduct its own investigation of any Facility then owned,
leased, operated or used by Borrower or any of its Subsidiaries, and Borrower
agrees to use reasonable commercial efforts to obtain permission for Managing
Agent's professional consultant to conduct its own investigation of any Facility
then owned, leased, operated or used by Borrower or any of its Subsidiaries, all
upon reasonable notice, during
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normal business hours and as often as may be reasonably requested. Borrower
hereby grants to Managing Agent and its agents, employees, consultants and
contractors the right to enter into or on to the Facilities currently owned,
leased, operated or used by Borrower or any of its Subsidiaries to perform such
tests on such property as are reasonably necessary to conduct such a review
and/or investigation. Any such investigation of any Facility shall be conducted,
to the extent reasonably practicable, so as not to interfere with the ongoing
operations at any such Facility or to cause any damage or loss to any property
at such Facility. Agents and Lenders shall have no duty to disclose or discuss
any information produced by such reviews or investigations with Borrower or any
of its Subsidiaries.
C. Borrower shall, promptly upon any senior or executive officer
obtaining knowledge thereof, advise Lenders in writing and in reasonable detail
of any:
(i) Release of any Hazardous Materials required to be reported to any
governmental agency under applicable Environmental Laws;
(ii) any Environmental Claim that could reasonably be expected to
result in a Material Adverse Effect;
(iii) notice to Borrower or any Subsidiary of any material violation
of any Environmental Laws or any letter or request for information under
Section 104 of the Comprehensive Environmental Response, Compensation or
Liability Act (42 U.S.C. (S) 9604);
(iv) material outstanding written order or agreement with any
governmental authority or private party relating to (a) any Environmental
Laws or (b) any Environmental Claims;
(v) commencement of any judicial or administrative proceeding
alleging, or any request for information that indicates that any
governmental agency is investigating, a violation by Borrower or any
Subsidiary of any Environmental Laws that could reasonably be expected to
result in a Material Adverse Effect; or
(vi) any action by Borrower or any of its Subsidiaries, including the
acquisition of any assets or the commencement of any business, that could
reasonably be expected to result in any Environmental Claims that could
have a Material Adverse Effect.
D. Borrower shall, at its own expense, provide copies of such documents
or information in the possession of Borrower or its Subsidiaries as Managing
Agent may reasonably request in relation to any matters disclosed pursuant to
this subsection 6.7.
6.8 BORROWING BASE CERTIFICATES; OPERATING REPORTS.
----------------------------------------------
(i) Borrowing Base Certificates. Borrower shall deliver to Collateral
Agent (with a copy to Lenders promptly thereafter), a Borrowing Base
Certificate
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(i) with respect to the Accounts component of the Borrowing Base, by 11:00
A.M. (New York time) on the tenth day of each month and (ii) with respect
to the Inventory components of the Borrowing Base, by 11:00 A.M. (New York
time) on the fifteenth day of each month.
(ii) Operating Reports. Borrower shall deliver to Collateral Agent,
in form and detail satisfactory to Collateral Agent, each operating report
listed on Schedule 6.8, in the manner described on such Schedule, and each
other operating report reasonably requested by Collateral Agent;
(iii) Collection Reports. Upon request of Collateral Agent, Borrower
shall make available to Collateral Agent copies of deposit slips for each
deposit, reasonably detailed information regarding the application of
proceeds and such other information regarding receipts, expenditures and
deposit account balances as Collateral Agent may reasonably request and as
Borrower and its Subsidiaries maintain from time to time in accordance with
its customary practice;
(iv) Inventory Reports.
-----------------
(a) At least two times in each Fiscal Year, Borrower shall, at
its expense, conduct, and permit Collateral Agent to monitor, a
comprehensive detailed count of and evaluation of at least 80% of all
Inventory in accordance with Borrower's usual and customary practices
for such count and evaluation; provided that at least once per year
Borrower shall, at its expense, have its independent certified public
accountants oversee such count and evaluation in accordance with
standard audit procedures.
(b) Collateral Agent, in its reasonable discretion (and not more
frequently than twice each 12 month period, at Borrower's expense and
if more frequently, at Collateral Agent's expense), may review or have
an outside consultant selected by Collateral Agent review, upon
reasonable notice and at reasonable times, the quality and amount of
Inventory.
6.9 RECEIVABLES REPORTING; OTHER REQUIREMENTS.
-----------------------------------------
Borrower shall and shall cause each of its Subsidiaries (as applicable) to:
A. CONVERSION OF FILE TAPES. Upon notice from Collateral Agent at any
time, in its reasonable discretion, cooperate with the Collateral Agent in
connection with the writing and development of a conversion program (such
program to be held by Collateral Agent) in respect of the File Tapes.
B. SERVICING PROGRAMS. Upon notice from Collateral Agent at any time
upon and during the continuance of an Event of Default, deliver to
Collateral Agent all computer software, programs and related materials
necessary or advisable to permit the collection of the Accounts by a
servicer other than Borrower or such
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Subsidiary, through the use of computer hardware and systems software
compatible with that used by Borrower and its Subsidiaries, and from time
to time thereafter, promptly upon the development thereof, any amended or
newly instituted programs or related materials, in each case to the extent
that such delivery would not violate the terms thereof; provided Borrower
shall use its best efforts to obtain any required consents for such
delivery.
C. FILE TAPES. Create File Tapes consistent with Borrower's usual
and customary practices, but, in any event, at least on a weekly basis,
reflecting all transactions with respect to Accounts on such day and, upon
notice from Collateral Agent at any time, in its reasonable discretion,
deliver to a storage facility to which Collateral Agent shall have access,
as soon as available and in any event within one day after the date on
which a File Tape is created, an original or a duplicate copy of such File
Tape. Maintain satisfactory disaster recovery procedures with respect to
File Tapes and all software and hardware necessary for the servicing and
collection of the Accounts consistent with Borrower's usual and customary
practices.
D. EXISTING SERVICING CONTRACTS. Maintain any existing arrangements
between Borrower and its Subsidiaries and any other Person relating to the
servicing and collection of the Accounts, such arrangements, with such
modifications, changes and replacements as Borrower may make from time to
time upon notice to Collateral Agent and consistent with the Credit and
Collection Policy, and in all cases subject to Collateral Agent's rights
under the Loan Documents, to remain in effect until the earlier of (i) the
satisfaction in full of the Obligations and (ii) the collection of all
Accounts to the satisfaction of Collateral Agent.
E. SUCCESSOR SERVICER. In the event that the existing servicing
arrangements for the Accounts are not at any time reasonably satisfactory
to Collateral Agent, Borrower or its applicable Subsidiary shall terminate
such servicing arrangements and obtain a nationally recognized successor
servicer approved by Collateral Agent to continue servicing the Accounts
(upon such terms and for such fee as shall be approved in writing by
Collateral Agent) in accordance with the Credit and Collection Policy.
6.10 CASH MANAGEMENT SYSTEM.
----------------------
A. CASH MANAGEMENT SYSTEM. Borrower and its Subsidiaries shall continue
to maintain the Cash Management System as in effect on the Closing Date;
provided that Borrower and its Subsidiaries may open and close Deposit Accounts
and make other changes to the Cash Management System in the ordinary course of
business upon notice to Collateral Agent and as long as (i) no Event of Default
or Potential Event of Default has occurred and is continuing or would result
therefrom, (ii) such changes, either individually or in the aggregate are not
adverse to any Agent or any Lender (in its capacity as a Lender) or impair any
rights of Collateral Agent under the Collateral Documents and (iii) all Receipts
of Borrower and its Subsidiaries continue to be collected and distributed
pursuant to procedures subject to Cash Management Letters at all times.
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B. COLLATERAL AGENT RIGHTS. Managing Agent may (and shall upon Requisite
Lender's direction), at any time in its reasonable discretion and regardless of
whether any Event of Default shall have occurred and be continuing, deliver
notice under the Cash Management Letter to each of the financial institutions
party thereto, requiring that all funds on deposit in the Deposit Accounts of
Borrower and its Subsidiaries (other than Excluded Accounts) be transferred on a
daily basis to the Collection Account (it being understood that funds may be
transferred through intermediary accounts in the Cash Management System subject
to Cash Management Letters prior to ultimate transfer to the Collection
Account), and upon such notice and thereafter, without limiting any other
provision of this Agreement or the other Loan Documents, Borrower agrees to
perform and comply and to cause each of its Subsidiaries to perform and comply
with the following covenants and agreements:
(i) Receipts shall be received and held by Borrower and each of its
Subsidiaries and any of their respective officers, employees, agents or
other Persons acting for or in concert with any Credit Party to make
collections for or on behalf of any Credit Party (``COLLECTING AGENTS''),
in trust for Collateral Agent as Collateral. Notwithstanding any other
provision of this Agreement or any other Loan Document, all Receipts shall
be paid by the obligor thereon into the Deposit Accounts subject to the
Cash Management System. On a daily basis, each Credit Party, or any
Collecting Agent, shall deposit or shall cause to be deposited, all
Receipts into Deposit Accounts included in the Cash Management System and
subject to Cash Management Letters on or before the first Business Day
following receipt thereof after receipt in the applicable lockbox or
accounting office of such Credit Party, and as soon as practical in the
case of Receipts received in any other manner (it being understood that the
foregoing does not limit each Credit Party's obligation to instruct all
obligors to make payments into lockboxes).
(ii) Except to the extent otherwise provided herein, upon deposit in
the Collection Account, any Receipts consisting of cash or wire or
electronic transfers in immediately available funds shall be applied by
Collateral Agent to the Loans and other Obligations as set forth in
Subsection 6.10B(iii); provided that upon and during the continuance of an
Event of Default (other than an Event of Default under subsections 8.1, 8.6
or 8.7) or upon any other event or condition (including, without
limitation, delivery of a Rollover Termination Notice) which prohibits
Rollover Borrowings hereunder, the first $1,000,000 of such Receipts
received in the Collection Account after such Event of Default or other
such event or condition shall not be applied to the Loans and other
Obligations but shall be returned to Borrower by Collateral Agent and
thereafter all Receipts shall be applied as set forth in subsection
6.10B(iii).
(iii) Any payments received by Collateral Agent under this subsection
6.10 shall be applied in the following order unless Collateral Agent
otherwise elects: (i) any due and payable fees, expenses or other charges
in respect of the Obligations; (ii) any due and payable interest payments
on the Loans (with application to Swing Line Loans first and Revolving
Loans second); (iii) principal payments on the Loans
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(whether or not due and payable (with application to Swing Line Loans first
and Revolving Loans second)); and (iv) other due and payable Obligations or
to collateralize Letters of Credit to the extent required hereunder;
provided, however, that principal and interest on any LIBOR Rate Loans
shall not be required to be paid to the extent that any such payment will
result in the incurrence of any increased costs pursuant to subsection 2.6,
as long as at such time, no Event of Default or Potential Event of Default
shall have occurred or be continuing and Borrower would be entitled to
borrow LIBOR Rate Loans hereunder upon submission of an appropriate Notice
of Borrowing therefor; provided further that to the extent that Borrower is
not able to borrower LIBOR Rate Loans at such time as set forth above, any
such amounts shall be applied to pay outstanding LIBOR Rate Loans in
accordance with this subsection 6.10 but, unless an Acceleration shall have
occurred, Borrower shall not be required to pay any increased costs
pursuant to subsection 2.6 which may result therefrom.
(iv) Each Credit Party irrevocably makes, constitutes and appoints
Collateral Agent, and all Persons designated by Collateral Agent for that
purpose, at any time, as such Credit Party's true and lawful attorney and
agent-in-fact to endorse Borrower's name on any checks, notes, drafts or
any other form of payment relating to Collateral or Receipts or proceeds of
Collateral or Receipts that come into Collateral Agent's possession or
under Collateral Agent's control; provided, however, that such appointment
by such Credit Party of Collateral Agent as such Credit Party's attorney-
in-fact shall in no case impose upon Collateral Agent any obligation or
duty to take any actions on behalf of such Credit Party or any fiduciary
obligations with respect to such Credit Party.
(v) At all times, each Credit Party shall continue to deposit all
Receipts in the Collection Account and, after application of such amounts
against the Obligations in the order set forth in clause (iii) above,
Collateral Agent shall remit to Borrower the net amount of such Receipts;
it being understood and agreed that if an Event of Default shall have
occurred and be continuing and there shall be outstanding any Letters of
Credit, Collateral Agent shall only remit that amount to Borrower as
exceeds the amounts of immediately available funds in the Collection
Account equal to the aggregate outstanding Letter of Credit Usage as of the
date of determination, with such remaining amounts equal to the aggregate
outstanding Letter of Credit Usage in immediately available funds to be
deposited into the Collateral Account to be administered as provided in the
Pledge and Security Agreement.
6.11 SUBSIDIARIES.
------------
A. ADDITIONAL SUBSIDIARIES. If Borrower acquires or creates any direct
or indirect interest in any Person constituting an additional direct or indirect
Subsidiary of Borrower after the Closing Date (excluding, however, HSSI and its
Subsidiaries), Borrower shall, concurrently with acquiring or creating such
interest, cause such Subsidiary to (i) issue an Intercompany Note to Borrower
(and Borrower shall endorse and deliver such Intercompany
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Note to Collateral Agent in accordance with the Pledge and Security Agreement),
(ii) guaranty the Obligations and secure such Guaranty and its obligations under
its Intercompany Note by executing and delivering a counterpart to the Guaranty,
Pledge and Security Agreement, Trademark Assignment, Intercompany Note Security
Agreement, Intercompany Note Trademark Assignment and each other Loan Document
to which all Guarantors are a party at such time, (iii) execute and deliver, to
the extent applicable, Cash Management Letters and Collateral Access Agreements
and (iv) execute and deliver such other Collateral Documents, and take such
other actions, as may be necessary or desirable or as Collateral Agent may
request, to grant valid and perfected security interests in the property of such
Subsidiary constituting Collateral under the Pledge and Security Agreement and
the Intercompany Note Security Agreement; provided, however, that nothing in
this subsection 6.11A shall be construed to permit Borrower or any of its
Subsidiaries to acquire or create any interest in any Person that is not
otherwise permitted pursuant to the terms of this Agreement. If requested by
Collateral Agent or Requisite Lenders, Borrower shall cause an opinion or
opinions of counsel to be delivered to Agents and Lenders covering the matters
set forth in this subsection 6.11A and otherwise in form and substance
reasonably satisfactory to Collateral Agent or Requisite Lenders, as the case
may be.
B. NON-OPERATING SUBSIDIARIES. Borrower acknowledges and agrees that (i) no
Subsidiary of Borrower (other than those designated as a Non-Operating
Subsidiary as of the Closing Date on Schedule 5.1 annexed hereto), including,
without limitation, any Subsidiary acquired or created after the Closing Date,
shall constitute, or be designated as, a Non-Operating Subsidiary without the
prior written consent of Collateral Agent and Requisite Lenders and (ii) any
Non-Operating Subsidiary, whether existing as of the Closing Date or designated
as such thereafter in accordance with the preceding clause (i), shall continue
as a Non-Operating Subsidiary only for as long as it qualifies as such in
accordance with the definition of Non-Operating Subsidiary (both individually
and in the aggregate with all other Non-Operating Subsidiaries) and any such
Non-Operating Subsidiary shall immediately and without any notice or other
action constitute an Operating Subsidiary for all purposes hereunder and the
other Loan Documents upon any failure to so qualify; provided that without
limiting any of the foregoing, Borrower shall promptly notify Collateral Agent
in the event any Non-Operating Subsidiary no longer qualifies as such under the
definition thereof. Without limiting the foregoing, Borrower may, by written
notice to Collateral Agent, designate any Non-Operating Subsidiary to be an
Operating Subsidiary, and thereafter such Subsidiary shall be an Operating
Subsidiary for all purposes hereunder, and shall not later be designated a Non-
Operating Subsidiary hereunder (even if it would otherwise qualify under the
definition of Non-Operating Subsidiary) without the prior written consent of
Collateral Agent and Requisite Lenders; provided, further, that anything in this
Agreement to the contrary notwithstanding, upon and during a Potential Event of
Default under subsection 8.6 with respect to any Non-Operating Subsidiary,
neither Borrower nor any of its Subsidiaries shall in any manner advance,
transfer, contribute, invest or otherwise convey any funds to or on behalf of
such Non-Operating Subsidiary at any time that Rollover Borrowings are permitted
hereunder.
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6.12 COLLATERAL ACCESS AGREEMENTS; CASH MANAGEMENT LETTERS.
-----------------------------------------------------
In the event that any conditions to the funding of the initial Loans
hereunder set forth in subsections 4.1B(iv) or 4.1C are not satisfied as of the
Closing Date with the consent of Collateral Agent (which consent shall be deemed
given by the funding of the initial Loans hereunder with such conditions
remaining unsatisfied), Borrower agrees to use its best efforts to satisfy, and
to cause each of its Subsidiaries, as applicable, to use its best efforts to
satisfy, all such remaining conditions as set forth below:
(i) in the case of the conditions remaining to be satisfied under
subsection 4.1B(iv), on or before the 60th day following the Closing Date,
all such remaining conditions shall be satisfied by delivery to Collateral
Agent of Collateral Access Agreements for all Inventory locations for which
Collateral Access Agreements were not delivered as of the Closing Date (the
"REMAINING LOCATIONS"); provided that (x) as of the Closing Date the
Inventory at such Remaining Locations shall be included in the Borrowing
Base to the extent that it would not otherwise be included solely because
of non-delivery of a Collateral Access Agreement with respect thereto, (y)
on the Closing Date to the 60th day following the Closing Date, Collateral
Agent shall reserve from availability under the Borrowing Base an amount
equal to the aggregate of three months' rent for all such Remaining
Locations and (z) on the 60th day following the Closing Date, all Inventory
at any Remaining Locations for which Collateral Access Agreements shall not
have been delivered as of such date shall be excluded from the Borrowing
Base until such time as such Inventory qualifies for inclusion in the
Borrowing Base pursuant to the definition of Eligible Inventory (through
delivery of a Collateral Access Agreement for such location or transfer of
such Inventory to another location subject to a Collateral Access
Agreement); and
(ii) in the case of the conditions remaining to be satisfied under
subsection 4.1C, on or before the 45th day following the Closing Date, all
such remaining conditions shall be satisfied by either (y) delivery to
Collateral Agent of Cash Management Letters for all Deposit Accounts (other
than Excluded Accounts) for which Cash Management Letters have not been
delivered as of the Closing Date (the "REMAINING ACCOUNTS") or (z) closing
such Remaining Accounts (and the related lockboxes) to the extent
alternative deposit arrangements are available and transferring (and
forwarding, in the case of lockboxes) all funds therein into other existing
or newly opened Deposit Accounts within the Cash Management System which
are subject to Cash Management Letters (the "REPLACEMENT ACCOUNTS") and
instructing all applicable Account Debtors to make payments to the
appropriate lockbox for each such Replacement Account; provided that on the
45th day following the Closing Date, to the extent Cash Management Letters
have not been delivered with respect to any Remaining Accounts that are
still open as of such date, Collateral Agent shall reserve from
availability under the Borrowing Base an amount determined in its sole
discretion to be appropriate to reflect the fact that Receipts deposited in
such Remaining Accounts are not subject to Cash Management Letters, such
reserve, which may be adjusted from time to time in the sole discretion of
Collateral Agent, to remain in effect as long as any such Remaining
Accounts not
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subject to Cash Management Letters remain open; provided further that
nothing in this subsection 6.12, including the taking of such reserve by
Collateral Agent, shall limit the obligation of each Credit Party, which
obligation is hereby ratified and confirmed, to instruct all financial
institutions holding Remaining Accounts to transfer all funds therein on a
daily basis to Deposit Accounts within the Cash Management System which are
subject to Cash Management Letters, to the same extent and in the same
manner as if each such financial institution holding such Remaining
Accounts had in fact executed and delivered an appropriate Cash Management
Letter to Collateral Agent.
6.13 HSSI.
----
Anything in this Agreement or the other Loan Documents to the contrary
notwithstanding, if at any time HSSI or any of its Subsidiaries becomes a
Subsidiary of Borrower and without limiting any Event of Default or Potential
Event of Default that may exist or arise as a result of such event, Borrower
agrees that it shall not, and it shall not permit any of its Subsidiaries to, in
any manner, advance, transfer, contribute, invest or otherwise convey any assets
(including Cash and Cash Equivalents) to or on behalf of, or make any Investment
in or on behalf of, or assume or support any liability in respect or on behalf
of, HSSI or any of its Subsidiaries at any time.
SECTION 7.
BORROWER'S NEGATIVE COVENANTS
Borrower covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation, expiration or cash collateralization in
accordance with the terms hereof of all Letters of Credit, unless Requisite
Lenders shall otherwise give prior written consent, Borrower shall perform, and
shall cause each of its Subsidiaries to perform, all covenants in this Section
7.
7.1 INDEBTEDNESS.
------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Borrower may become and remain liable with respect to the
Obligations;
(ii) Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
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(iii) Borrower and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases; provided that such
Capital Leases are permitted under the terms of subsection 7.9;
(iv) (A) Guarantors may become and remain liable with respect to
Indebtedness to Borrower; provided that (a) all such intercompany
Indebtedness shall be evidenced by the Intercompany Notes and secured by a
second-priority security interest in the Collateral pursuant to the
Collateral Documents, (b) all such intercompany Indebtedness shall be
subordinated in right of payment to the payment in full of the Obligations,
and (c) any payment by any Guarantor under the Guaranty shall result in a
pro tanto reduction of the amount of any intercompany Indebtedness owed by
such Guarantor to Borrower and (B) Borrower may become and remain liable
with respect to Indebtedness to Guarantors;
(v) Borrower and its Subsidiaries, as applicable, may remain liable
with respect to the Existing EDBs;
(vi) Borrower and its Subsidiaries may become and remain liable with
respect to other unsecured Indebtedness in an aggregate principal amount
not to exceed $32,000,000 at any time outstanding;
(vii) Borrower and its Subsidiaries may become and remain liable with
respect to purchase money Indebtedness in aggregate principal amount not to
exceed $10,000,000 at any time outstanding; provided that the assets
securing such Indebtedness are not included in the Collateral and are
limited solely to the assets purchased with the proceeds of such
Indebtedness;
(viii) in the event that HSSI shall become a Subsidiary of Borrower,
Indebtedness of HSSI and its Subsidiaries at the time HSSI so becomes a
Subsidiary;
(ix) Indebtedness of one Operating Subsidiary (the ``TRANSFEREE
SUBSIDIARY'') to another Operating Subsidiary (the ``TRANSFEROR
SUBSIDIARY'') representing the unpaid purchase price of non-cash assets
transferred by the Transferor Subsidiary to the Transferee Subsidiary that
is not prohibited under subsection 7.7;
(x) Borrower may become and remain liable in respect of the ESOP Loan
Documents; and
(xi) Borrower may become and remain liable in respect of the
Subordinated Indebtedness.
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. PROHIBITION ON LIENS. Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument
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in respect of goods or accounts receivable) of Borrower or any of its
Subsidiaries, whether now owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to remain in effect, any
financing statement or other similar notice of any Lien with respect to any such
property, asset, income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute (other than for
precautionary notice filings in connection with transactions permitted hereunder
such as leases, consignments and the sale of accounts which do not evidence
Liens securing Indebtedness or other obligations and other than filings or
recordings in respect of the Existing Credit Facilities for which appropriate
termination documents have been delivered to Collateral Agent), except:
(i) Permitted Encumbrances;
(ii) Liens created pursuant to the Collateral Documents;
(iii) Other Liens securing Indebtedness permitted pursuant to
subsection 7.1(vii);
(iv) Liens in existence as of the Closing Date as set forth in
Schedule 7.2 annexed hereto;
(v) Liens arising in connection with the deposit of Cash or securities
with the trustee for the holders of the Senior Subordinated Notes in
connection with any redemption or repurchase by Borrower of Senior
Subordinated Notes permitted by subsection 7.5; provided that any such Lien
only attaches to the cash or securities so deposited; and
(vi) Liens existing on the property of a Person immediately prior to
such Person becoming a Subsidiary or being consolidated with or merged into
Borrower or any of its Subsidiaries or its becoming a Subsidiary of
Borrower, or Liens existing on any property acquired by Borrower or any of
its Subsidiaries at the time such is so acquired; provided that (i) no such
Lien was created or assumed in contemplation of such consolidation, merger
or acquisition or such Person becoming a Subsidiary of Borrower, whether as
security of the payment of any consideration due in connection with such
transaction or otherwise, (ii) each such Lien shall only cover the acquired
property and, if required by the terms of the instrument originally
creating such Lien, property which is an improvement to or is required for
specific use in connection with such acquired property, and (iii) no such
Lien shall encumber property constituting Collateral.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Borrower or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
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this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Other than as provided herein and the
other Loan Documents, (i) with respect to specific property encumbered to secure
payment of particular Indebtedness or other obligations or to be sold pursuant
to an executed agreement with respect to an Asset Sale, (ii) restrictions with
respect to a Subsidiary and its Subsidiaries pursuant to an agreement relating
to any Indebtedness issued by such Subsidiary on or prior to the date on which
such Subsidiary became a Subsidiary or was acquired by the Company or any of its
Subsidiaries (other than Indebtedness issued as consideration in, or to provide
any funds utilized to consummate, the transactions pursuant to which such
Subsidiary became a Subsidiary or was acquired by the Borrower) and (iii)
customary non-assignment provisions contained in licenses, leases and other
agreements, neither Borrower nor any of its Subsidiaries shall enter into any
agreement prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO BORROWER OR OTHER
SUBSIDIARIES. Except as provided herein and the other Loan Documents, Borrower
will not, and will not permit any of its Subsidiaries to, create or otherwise
cause or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such Subsidiary's capital
stock owned by Borrower or any other Subsidiary of Borrower, (ii) repay or
prepay any Indebtedness owed by such Subsidiary to Borrower or any other
Subsidiary of Borrower, (iii) make loans or advances to Borrower or any other
Subsidiary of Borrower, or (iv) transfer any of its property or assets to
Borrower or any other Subsidiary of Borrower except as otherwise provided in
subsection 7.2C, in each case other than restrictions with respect to a
Subsidiary pursuant to an agreement relating to any Indebtedness issued by such
Subsidiary on or prior to the date which such Subsidiary became a Subsidiary or
was acquired by Borrower or any of its Subsidiaries (other than Indebtedness
issued in contemplation of such event or as consideration in, or to provide any
funds utilized to consummate, the transactions pursuant to which such Subsidiary
became a Subsidiary or was acquired by the Borrower).
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Borrower and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Borrower may make intercompany loans to the extent permitted
under subsection 7.1(iv) and Subsidiaries of Borrower may make intercompany
loans to the extent permitted by subsection 7.1(ix);
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(iii) Borrower and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(iv) Investments existing as of the Closing Date as set forth in
Schedule 7.3 annexed hereto;
(v) Borrower and its Subsidiaries may make and own Investments in
notes and other instruments, as the same may be amended, restated, replaced
or otherwise modified, held by Borrower or any of its Subsidiaries in
connection with (A) the sale or other disposition of any assets prior to
the date of this Agreement and Asset Sales permitted pursuant to the terms
of this Agreement, and (B) with any trade debt due to Borrower or any of
its Subsidiaries or the settlement of any delinquent or defaulted accounts
or notes receivable;
(vi) Borrower and its Subsidiaries may maintain deposit accounts as
cash collateral with any Person providing cash management services to
Borrower and its Subsidiaries;
(vii) in the event that HSSI shall become a Subsidiary of Borrower,
the investment of the Borrower in HSSI and investments of HSSI and its
Subsidiaries at the time HSSI becomes such a Subsidiary;
(viii) Borrower and its Subsidiaries may make investments in Joint
Ventures; provided that, the aggregate of such Investments does not exceed
$5,000,000 at any time (whether in the form of cash or fair market value of
property contributed to such ventures);
(ix) Borrower and its Subsidiaries may make and own deposits
maintained as cash collateral by any Person providing processing services
with respect to credit card transactions;
(x) Borrower and its Subsidiaries may make and own Investments
permitted by subsection 7.5 and Investments in any Persons acquired
pursuant thereto; and
(xi) Borrower may make (A) equity Investments in Operating
Subsidiaries for purpose of maintaining the Solvency of any such Subsidiary
and (B) other equity Investments in its Subsidiaries in an aggregate amount
not to exceed $3,500,000 for all such Subsidiaries.
7.4 CONTINGENT OBLIGATIONS.
----------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
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(i) Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of the Obligations, including
the Guaranty and the Letters of Credit;
(ii) Borrower may become and remain liable with respect to
Contingent Obligations under (a) one or more Interest Rate Agreements
consisting of interest rate swaps with respect to Indebtedness, in an
aggregate notional principal amount of not more than $75,000,000, which
Interest Rate Agreements shall have the effect of establishing a maximum
interest rate of not more than the then existing three-year yield on United
States Treasury obligations plus 3.50% per annum with respect to such
notional principal amount and (b) other Interest Rate Agreements (including
interest rate cap agreements and interest rate collar agreements) and (c)
forward Currency Agreements in an aggregate notional principal amount not
to exceed at any time $15,000,000;
(iii) Borrower and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(iv) Borrower may become and remain liable with respect to the ESOP
Loan Documents;
(v) guaranties of Existing EDBs by Borrower or Subsidiaries of
Borrower in existence on the Closing Date;
(vi) Borrower and its Subsidiaries may become and remain liable for
reimbursement obligations in connection with (A) surety, appeal, tender,
performance and other bonds procured by the Borrower and its Subsidiaries
in the ordinary course of business and (B) trade letters of credit procured
by Borrower and its Subsidiaries in the ordinary course of business on or
after August 23, 1997 when Commercial Letters of Credit cannot be issued
hereunder in accordance with subsection 3.1A(v); and
(vii) Contingent Obligations of a Person existing immediately prior
to such Person becoming a Subsidiary of Borrower or any of its
Subsidiaries; provided that no such Contingent Obligation shall have been
created or assumed in contemplation of such Person becoming a Subsidiary.
7.5 RESTRICTED JUNIOR PAYMENTS.
--------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that as long as no Event of Default or
Potential Event of Default has occurred and is continuing, or would result
therefrom, Borrower may (i) make Restricted Junior Payments of a type described
in clauses (i), (ii), (iii) or (v) of the definition thereof (provided that in
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the case of Investments included in clause (v) of the definition of Restricted
Junior Payments, all liability, risk or other exposure with respect to any such
Investment is limited solely to the loss of the amount so invested) in (A) an
aggregate amount for any Fiscal Year not to exceed the lesser of (1) the sum of
(a) $10,000,000 plus (b) 25% of Consolidated Net Income (or less 100% of net
losses, as the case may be) and (2) 50% of the Consolidated Net Income for such
Fiscal Year, and (B) in any event, in an aggregate cumulative amount from the
Closing Date through the Commitment Termination Date not to exceed $30,000,000,
(ii) make regularly scheduled interest payments on the Senior Subordinated
Notes; (iii) redeem or repurchase the Senior Subordinated Notes in an aggregate
principal amount not to exceed $25,000,000 with the proceeds of equity or equity
rights having terms no more favorable to the holder thereof (including, without
limitation, terms concerning default, payment and redemption) than the terms of
the Senior Subordinated Notes or as may otherwise be approved by Requisite
Lenders; (iv) redeem any rights to purchase capital stock of Borrower which
rights were issued pursuant to the Rights Agreement, dated as of January 17,
1986, as amended, between Borrower and First National Bank of Chicago, as rights
agent, for an amount not to exceed on a per right basis the redemption price of
such right as of the Closing Date, as adjusted for stock dividends and similar
transactions; and (v) purchase, redeem, acquire, cancel or otherwise retire for
value shares of capital stock of Borrower, options on any such shares or related
stock appreciation rights or similar securities held by officers or employees or
former officers or employees (or their estates or beneficiaries under their
estates) or by any employee benefit plan, upon death, disability, retirement or
termination of employment or pursuant to the terms of any employee benefit plan
approved by the Board of Directors of Borrower or a committee thereof or under
any other agreement approved by such Board of Directors or a committee thereof
under which such shares of stock or related rights were issued; provided,
however, that the aggregate cash consideration paid for such purchase,
redemption, acquisition, cancellation or other retirement of such shares of
capital stock or related rights after the Closing Date does not exceed
$2,500,000 in the aggregate for any Fiscal Year or $1,000,000 in the aggregate
payable to any individual in any Fiscal Year.
7.6 FINANCIAL COVENANTS.
-------------------
A. MINIMUM CONSOLIDATED DEBT SERVICE COVERAGE RATIO. Borrower shall not
permit the Consolidated Debt Service Coverage Ratio for any four-fiscal quarter
period ending as of the last day of any fiscal quarter of Borrower set forth
below to be less than the correlative ratio indicated:
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
DEBT SERVICE
FISCAL QUARTER COVERAGE RATIO
====================================================================================================================================
<S> <C>
Second Quarter 1994 1.10:1.00
Third Quarter 1994 1.10:1.00
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
MINIMUM
CONSOLIDATED
DEBT SERVICE
FISCAL QUARTER COVERAGE RATIO
===============================================================
<S> <C>
Fourth Quarter 1994 1.10:1.00
---------------------------------------------------------------
First Quarter 1995 1.30:1.00
---------------------------------------------------------------
Second Quarter 1995 1.30:1.00
---------------------------------------------------------------
Third Quarter 1995 1.40:1.00
---------------------------------------------------------------
Fourth Quarter 1995 1.40:1.00
---------------------------------------------------------------
First Quarter 1996 1.50:1.00
---------------------------------------------------------------
Second Quarter 1996 1.50:1.00
---------------------------------------------------------------
Third Quarter 1996 1.50:1.00
---------------------------------------------------------------
Fourth Quarter 1996 1.50:1.00
===============================================================
</TABLE>
B. MAXIMUM CONSOLIDATED LEVERAGE RATIO. Borrower shall not permit the
Consolidated Leverage Ratio for any four-fiscal quarter period ending as of the
last day of any fiscal quarter of Borrower set forth below to exceed the
correlative ratio indicated:
<TABLE>
<CAPTION>
MAXIMUM
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
===============================================================
<S> <C>
Second Quarter 1994 6.25:1.00
---------------------------------------------------------------
Third Quarter 1994 6.25:1.00
---------------------------------------------------------------
Fourth Quarter 1994 6.25:1.00
---------------------------------------------------------------
First Quarter 1995 6.00:1.00
---------------------------------------------------------------
Second Quarter 1995 6.00:1.00
---------------------------------------------------------------
Third Quarter 1995 5.50:1.00
---------------------------------------------------------------
Fourth Quarter 1995 5.50:1.00
---------------------------------------------------------------
First Quarter 1996 5.50:1.00
---------------------------------------------------------------
Second Quarter 1996 5.50:1.00
---------------------------------------------------------------
Third Quarter 1996 5.50:1.00
---------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
===============================================================
MAXIMUM
CONSOLIDATED
FISCAL QUARTER LEVERAGE RATIO
===============================================================
<S> <C>
Fourth Quarter 1996 5.50:1.00
===============================================================
</TABLE>
C. MINIMUM CONSOLIDATED NET WORTH. Borrower shall not permit
Consolidated Net Worth at any time as of the last day of any fiscal quarter set
forth below to be less than the correlative amount indicated:
<TABLE>
<CAPTION>
===============================================================
MINIMUM
CONSOLIDATED
FISCAL QUARTER NET WORTH
===============================================================
<S> <C>
Second Quarter 1994 $95,000,000
---------------------------------------------------------------
Third Quarter 1994 $95,000,000
---------------------------------------------------------------
Fourth Quarter 1994 $95,000,000
---------------------------------------------------------------
First Quarter 1995 $105,000,000
---------------------------------------------------------------
Second Quarter 1995 $105,000,000
---------------------------------------------------------------
Third Quarter 1995 $105,000,000
---------------------------------------------------------------
Fourth Quarter 1995 $105,000,000
---------------------------------------------------------------
First Quarter 1996 $115,000,000
---------------------------------------------------------------
Second Quarter 1996 $115,000,000
---------------------------------------------------------------
Third Quarter 1996 $115,000,000
---------------------------------------------------------------
Fourth Quarter 1996 $115,000,000
===============================================================
</TABLE>
D. MINIMUM CONSOLIDATED TRADE SUPPORT RATIO. Borrower shall not permit the
Consolidated Trade Support Ratio as of the last day of any fiscal quarter set
forth below to be less than the correlative amount indicated:
<TABLE>
<CAPTION>
===============================================================
MINIMUM
CONSOLIDATED
TRADE SUPPORT
FISCAL QUARTER RATIO
===============================================================
<S> <C>
Second Quarter 1994 10.0%
---------------------------------------------------------------
</TABLE>
102
<PAGE>
<TABLE>
<CAPTION>
===============================================================
MINIMUM
CONSOLIDATED
TRADE SUPPORT
FISCAL QUARTER RATIO
===============================================================
<S> <C>
Third Quarter 1994 8.0%
---------------------------------------------------------------
Fourth Quarter 1994 10.0%
---------------------------------------------------------------
First Quarter 1995 10.0%
---------------------------------------------------------------
Second Quarter 1995 10.0%
---------------------------------------------------------------
Third Quarter 1995 8.0%
---------------------------------------------------------------
Fourth Quarter 1995 10.0%
---------------------------------------------------------------
First Quarter 1996 10.0%
---------------------------------------------------------------
Second Quarter 1996 10.0%
---------------------------------------------------------------
Third Quarter 1996 8.0%
---------------------------------------------------------------
Fourth Quarter 1996 10.0%
===============================================================
</TABLE>
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES.
-----------------------------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to, change
its legal form, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), make any Asset Sale or otherwise convey, sell, lease, sub-lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of, or
stock or other evidence of beneficial ownership of, any Person, except:
(i) any Subsidiary of Borrower may be merged with or into Borrower or
any other Subsidiary of Borrower, or be liquidated, wound up or dissolved,
or all or any substantial part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Borrower or any other
Subsidiary of Borrower; provided that, in the case of such a merger with
Borrower, Borrower shall be the continuing or surviving corporation;
(ii) Borrower and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) subject to subsection 7.13, Borrower and its Subsidiaries may
sell or otherwise dispose of assets in transactions that do not constitute
Asset Sales;
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provided that the consideration received for such assets shall be in an
amount at least equal to the fair market value thereof;
(iv) Borrower and its Subsidiaries may make Asset Sales of (A) assets
having a fair market value not in excess of $5,000,000 in the aggregate
during any Fiscal Year; provided that (x) the consideration received for
such assets shall be in an amount at least equal to the fair market value
thereof and (y) at least 75% of the total consideration received shall be
Cash or Cash Equivalents or the assumption of Indebtedness of the Borrower
or such Subsidiary or other obligations relating to such assets and release
from all liability on the Indebtedness or other obligations assumed and (B)
for the fair market value thereof, all or substantially all of the assets
or stock of any Subsidiary of the Borrower which is or has been a
Subsidiary of the Borrower prior to the date hereof, the revenues of which
are derived primarily from the direct retail sale of apparel; provided
further that the proceeds of all such Asset Sales shall be applied as
required by subsection 2.4A(iii)(a);
(v) Kuppenheimer Manufacturing Company, Inc. and its Subsidiaries and
Direct Route Marketing Corporation may (a) sell the aggregate of Accounts
arising under the Kuppenheimer private label credit card program and the
Barrie Pace private label credit card program existing as of the Closing
Date for no less than 97% of the face value thereof and (b) establish a
private label credit card program for the purchase of all Accounts arising
thereunder pursuant to true sale transactions the cash consideration for
which is not less than 97% (subject to customary adjustments) of the face
value thereof; and
(vi) Borrower and its Subsidiaries may sell or otherwise dispose of
the HSSI Related Assets and Fashionaire Related Assets or any interest that
it may have therein from time to time.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
---------------------------------
Borrower shall not, and shall not permit its Subsidiaries to, make or incur
Consolidated Capital Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount (the ``MAXIMUM CAPITAL
EXPENDITURES AMOUNT'') set forth below opposite such Fiscal Year; provided that
the Maximum Consolidated Capital Expenditures Amount for any Fiscal Year shall
be increased by an amount equal to the excess, if any (but in no event more than
50%) of the Maximum Consolidated Capital Expenditures Amount for the previous
Fiscal Year (without adjustment for any carryover) over the actual amount of
Consolidated Capital Expenditures for such previous Fiscal Year:
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<PAGE>
<TABLE>
<CAPTION>
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
===================================
<S> <C>
1994 $15,000,000
1995 $16,000,000
1996 $17,000,000
===================================
</TABLE>
7.9 RESTRICTION ON LEASES.
---------------------
Borrower shall not, and shall not permit any of its Subsidiaries to, become
liable in any way, whether directly or by assignment or as a guarantor or other
surety, for the obligations of the lessee under any lease, whether an Operating
Lease or a Capital Lease (other than intercompany leases between Borrower and
its wholly-owned Subsidiaries), unless, immediately after giving effect to the
incurrence of liability with respect to such lease, (i) the Consolidated Rental
Payments at the time in effect during the then current Fiscal Year shall not
exceed the lesser of (a) $33,000,000 and (b) the actual aggregate of
Consolidated Rental Payments paid during Borrower's 1993 Fiscal Year plus
$5,000,000 and (ii) the aggregate payments applicable to principal with respect
to Capital Leases at the time in effect during the then current Fiscal Year
shall not exceed $5,000,000.
7.10 SALES AND LEASE-BACKS.
---------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Borrower or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Borrower
or any of its Subsidiaries) or (ii) which Borrower or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Borrower or any of its Subsidiaries
to any Person (other than Borrower or any of its Subsidiaries) in connection
with such lease; unless, in each case, such sale and leaseback transaction would
otherwise be permitted hereunder as both an Asset Sale and an Operating Lease.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
Other than as may be permitted pursuant to subsection 7.7, Borrower shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly,
sell with recourse, or discount or otherwise sell for less than the face value
thereof, any of its notes or accounts receivable except for purposes of
collection in accordance with the Credit and Collection Policy.
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7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any holder of 5% or more of any
class of equity Securities of Borrower or with any Affiliate of Borrower or of
any such holder unless (i) the terms of such business, transaction or series of
transactions are (a) set forth in writing and (b) as favorable to the Borrower
or such Subsidiary as terms that would be obtainable at the time for a
comparable transaction or series of similar transactions in arm's-length
dealings with an unrelated third person and (ii) the Board of Directors of
Borrower or such Subsidiary has, by resolution, determined in good faith that
such business or transaction or series of transactions meets the criteria set
forth in (i)(b) above; provided that the foregoing restriction shall not apply
to (i) any transaction between Borrower and any of its Operating Subsidiaries or
between any of its Operating Subsidiaries, (ii) reasonable and customary fees,
advances and other payments paid to members of the Boards of Directors of
Borrower and its Subsidiaries or (iii) Restricted Junior Payments permitted
pursuant to subsection 7.5.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Other than as permitted by subsections 7.2 and 7.7, Borrower shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Borrower, another Subsidiary of Borrower, or to
qualify directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
-------------------
From and after the Closing Date, Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than (i) the businesses
engaged in by Borrower and its Subsidiaries on the Closing Date and similar or
related businesses and in substantially in the same fields of enterprise and
lines of business as are presently conducted, including businesses related
thereto; provided that all such business and transactions of Borrower and its
Subsidiaries with non-Affiliates shall be conducted on an arms length basis
consistent with prevailing market conditions and (ii) such other lines of
business as may be consented to by Requisite Lenders;
7.15 AMENDMENTS OF RELATED DOCUMENTS; LICENSE AGREEMENTS.
---------------------------------------------------
A. SUBORDINATED INDEBTEDNESS; ESOP LOAN DOCUMENTS. Borrower shall not,
and shall not permit any of its Subsidiaries to, amend or otherwise change the
terms of any
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<PAGE>
Subordinated Indebtedness or the ESOP Loan Documents, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness or the Indebtedness under the ESOP Loan Documents (to an amount
greater than that disclosed to the Managing Agent prior to the Closing Date),
change (to earlier dates) any dates upon which payments of principal or interest
are due thereon, change any event of default or condition to an event of default
with respect thereto (other than to eliminate, cure or reduce the effect on
Borrower of any such event of default), change the redemption, prepayment or
defeasance provisions thereof, change, in the case of the Subordinated
Indebtedness, the subordination provisions thereof (or of any guaranty thereof),
or change any collateral therefor (other than to release such collateral), or if
the effect of such amendment or change, together with all other amendments or
changes made is to increase materially the obligations of the obligor thereunder
or to confer any additional rights on the holders of such Subordinated
Indebtedness or Indebtedness under the ESOP Loan Documents (or a trustee or
other representative on their behalf) which would be adverse to Borrower or
Lenders (and other than, in the case of the ESOP Loan Documents, changes to
events of default and conditions thereto that would be more adverse to Borrower
or Lenders than those contained in the Subordinated Note Indenture (exclusive of
the subordination provisions contained in such indenture)).
B. OTHER RELATED DOCUMENTS. No Credit Party will agree to any material
amendment to, or waive any of its material rights under, any of the Related
Documents other than those referred to in subsection 7.15A (other than
amendments or waivers which individually, or together with all other amendments,
waivers or changes made, would not be adverse to any Credit Party or any Agent
or any Lender) without, in each case, obtaining the written consent of Requisite
Lenders to such amendment or waiver.
C. LICENSE AGREEMENTS; INTELLECTUAL PROPERTY RIGHTS. No Credit Party
shall license or grant any right to use any Intellectual Property to any Person
or agree to any material amendment to, or waive any of its material rights
under, any License Agreement if such license, grant, amendment or waiver
(individually or in the aggregate) would limit or impair any of the rights of
Collateral Agent to use, or realize its interest in, any Intellectual Property
or other Collateral in accordance with the terms of the Collateral Documents;
provided that Borrower may terminate, sell or otherwise dispose of any License
Agreement upon notice to Collateral Agent provided that such termination will
not result in an Event of Default or Potential Event of Default hereunder and
all Inventory which can no longer be sold bearing the mark of the Intellectual
Property thereunder is excluded from the Borrowing Base or the Borrowing Base is
adjusted to reflect the extent to which such Inventory can still be sold without
bearing such mark. Borrower shall deliver to Collateral Agent a copy of any
such license or grant within 30 days of the date of the underlying agreement in
respect thereof. Borrower shall deliver to Collateral Agent a copy of any
modification to existing License Agreements, and a copy of each new License
Agreement entered into promptly upon the execution thereof.
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7.16 FISCAL YEAR
-----------
Borrower shall not change its Fiscal Year-end from on or about November 30.
7.17 DESIGNATED SENIOR DEBT.
----------------------
Anything in the Loan Documents or the Related Documents to the contrary
notwithstanding, in no event shall Borrower permit any Indebtedness or
Contingent Obligations other than the Obligations to constitute or be designated
as Designated Senior Debt (as that term is defined in the Subordinated Note
Indenture).
SECTION 8.
EVENTS OF DEFAULT
If any of the following conditions or events (``EVENTS OF DEFAULT'') shall
occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure to pay any installment of principal of or interest on any Loan when
due, whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; failure to pay when due any amount payable to Issuing Lender in
reimbursement of any drawing under a Letter of Credit; or failure to pay within
three days of the date due any other amount due under this Agreement; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
(i) Failure of Borrower or any of its Subsidiaries to pay when due (a) any
principal of or interest on any Indebtedness (other than Indebtedness referred
to in subsection 8.1) in an individual principal amount of $3,000,000 or more or
any items of Indebtedness with an aggregate principal amount of $3,000,000 or
more or (b) any Contingent Obligation in an individual principal amount of
$3,000,000 or more or any Contingent Obligations with an aggregate principal
amount of $3,000,000 or more, in each case beyond the end of any grace period
provided therefor; or (ii) breach or default by Borrower or any of its
Subsidiaries with respect to any other material term of (a) any evidence of any
Indebtedness in an individual principal amount of $3,000,000 or more or any
items of Indebtedness with an aggregate principal amount of $3,000,000 or more
or any Contingent Obligation in an individual principal amount of $3,000,000 or
more or any Contingent Obligations with an aggregate principal amount of
$3,000,000 or more or (b) any loan agreement, mortgage, indenture or other
agreement relating to such Indebtedness or Contingent Obligation(s), if the
effect of such breach or default is to cause, or to permit the holder or holders
of that Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such
holder or holders) to cause, that Indebtedness or Contingent Obligation(s) to
become or be declared due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be; or (iii) breach or
default by Borrower or any of its Subsidiaries under the Senior Subordinated
Notes or the Subordinated Note Indenture; or
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<PAGE>
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of Borrower to perform or comply with any term or condition
contained in subsections 2.4A(iii), 2.5, 6.2 (with respect to the maintenance of
corporate existence of Borrower or any Subsidiary), 6.8(i), 6.10, 6.12 or 6.13
or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made by
Borrower or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Borrower or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Borrower shall default in the performance of or compliance with any term
contained in this Agreement or any of the other Loan Documents, other than any
such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an executive or senior officer of Borrower becoming aware of such default
or (ii) receipt by Borrower of notice from any Agent or any Lender of such
default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree or
order for relief in respect of Borrower or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Borrower or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Borrower or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Borrower or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Borrower or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
--------------------------------------------------
(i) Borrower or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other
109
<PAGE>
applicable bankruptcy, insolvency or similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee or other custodian for all or a substantial part of its property; or
Borrower or any of its Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) Borrower or any of its Subsidiaries shall be unable, or shall
fail generally, or shall admit in writing its inability, to pay its debts as
such debts become due; or the Board of Directors of Borrower or any of its
Subsidiaries (or any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to in clause (i)
above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $3,000,000 or (ii)
in the aggregate at any time an amount in excess of $3,000,000 (in either case
not adequately covered by insurance by a solvent and unaffiliated insurance
company which has not disputed or denied coverage) shall be entered or filed
against Borrower or any of its Subsidiaries or any of their respective assets
and shall remain undischarged, unvacated, unbonded or unstayed for a period of
60 days (or in any event later than five days prior to the date of any proposed
sale thereunder); or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against Borrower or any of
its Subsidiaries decreeing the dissolution or split up of Borrower or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Borrower or any of its ERISA Affiliates in excess of $3,000,000 in any Fiscal
Year during the term of this Agreement; or there shall exist an amount of
unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for purposes
of such computation any Pension Plans with respect to which assets exceed
benefit liabilities), which exceeds $5,000,000; or
8.11 IMPAIRMENT OF COLLATERAL; FAILURE OF SECURITY.
---------------------------------------------
(a) A judgment creditor of any Credit Party or of any other Person shall
obtain possession of any substantial portion of the Collateral by any means,
including, without limitation, levy, distraint, replevin or self-help, (b) any
of the Collateral Documents shall cease for any reason to be in full force and
effect, or any party thereto shall purport to disavow its respective obligations
thereunder or shall declare that it does not have any further obligations
thereunder or shall contest the validity or enforceability thereof or
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Collateral Agent shall cease to have a valid and perfected first priority
security interest in any Collateral therein (to the extent required by the
Collateral Documents), or (d) Collateral Agent's security interests or Liens on
the Collateral under the Collateral Documents shall become otherwise impaired or
unenforceable or; or
8.12 MATERIAL ADVERSE EFFECT.
-----------------------
Any event or change shall occur that has caused or evidences, either in any
case or in the aggregate, a Material Adverse Effect; or
8.13 CHANGE OF CONTROL.
-----------------
Any Change of Control shall occur;
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower, and the obligation of each Lender to make any Loan, the
obligation of Issuing Lender to issue any Letter of Credit and the right of
Issuing Lender to issue any Letter of Credit hereunder shall thereupon
terminate, and (ii) upon the occurrence and during the continuation of any other
Event of Default, Agent shall, upon the written request of Requisite Lenders, by
written notice to Borrower, declare all or any portion of the amounts described
in clauses (a) through (c) above to be, and the same shall forthwith become,
immediately due and payable, and the obligation of each Lender to make any Loan,
the obligation of Issuing Lender to issue any Letter of Credit and the right of
Issuing Lender to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any way the
obligations of Lenders under subsection 3.3C(i) to purchase participations in
any unreimbursed Letters of Credit or the obligations of Lenders to purchase
participations in any unpaid Swing Line Loans as provided in subsection
2.1A(ii).
Any amounts described in clause (b) above, when received by Agent, shall be
held by Agent pursuant to the terms of the Collateral Account Agreement and
shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph, if at
any time within 60 days after an Acceleration pursuant to such paragraph
Borrower shall pay all arrears of interest and all payments on account of
principal which shall have become due otherwise than as a result of such
Acceleration (with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events of
Default and Potential Events of Default (other than non-payment of the principal
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of and accrued interest on the Loans, in each case which is due and payable
solely by virtue of Acceleration) shall be remedied or waived pursuant to
subsection 10.6, then Requisite Lenders, by written notice to Borrower, may at
their option rescind and annul such Acceleration and its consequences; but such
action shall not affect any subsequent Event of Default or Potential Event of
Default or impair any right consequent thereon. The provisions of this paragraph
are intended merely to bind Lenders to a decision which may be made at the
election of Requisite Lenders and are not intended to benefit Borrower and do
not grant Borrower the right to require Lenders to rescind or annul any
Acceleration hereunder, even if the conditions set forth herein are met.
SECTION 9.
AGENT
9.1 APPOINTMENT.
-----------
GE Capital is hereby appointed Managing Agent and Collateral Agent, and The
Bank of New York and Continental Bank N.A., are each hereby appointed Co-Agent,
hereunder and under the other Loan Documents and each Lender hereby authorizes
each such Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Each Agent agrees to act upon the
express conditions contained in this Agreement and the other Loan Documents, as
applicable. The provisions of this Section 9 are solely for the benefit of
Agents and Lenders and Borrower shall have no rights as a third party
beneficiary of any of the provisions thereof. In performing its functions and
duties under this Agreement, each Agent shall act solely as an agent of Lenders
and does not assume and shall not be deemed to have assumed any obligation
towards or relationship of agency or trust with or for Borrower or any of its
Subsidiaries.
9.2 POWERS; GENERAL IMMUNITY.
------------------------
A. DUTIES SPECIFIED. Each Lender irrevocably authorizes each Agent to
take such action on such Lender's behalf and to exercise such powers hereunder
and under the other Loan Documents as are specifically delegated to such Agent
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto. Each Agent shall have only those duties and
responsibilities that are expressly specified in this Agreement and the other
Loan Documents and it may perform such duties by or through its agents or
employees. No Agent shall have, by reason of this Agreement or any of the other
Loan Documents, a fiduciary relationship in respect of any Lender; and nothing
in this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon any Agent any obligations
in respect of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein. Anything in this Agreement or the other
Loan Documents to the contrary notwithstanding, no Co-Agent shall have any
duties or responsibilities hereunder or under the other Loan Documents other
than its duties and responsibilities as a Lender hereunder and thereunder.
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B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statement or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by any Agent to Lenders or by or on behalf of
Borrower or any of its Subsidiaries to any Agent or any Lender in connection
with the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Borrower or any of its Subsidiaries
or any other Person liable for the payment of any Obligations, nor shall any
Agent be required to ascertain or inquire as to the performance or observance of
any of the terms, conditions, provisions, covenants or agreements contained in
any of the Loan Documents or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or as to the existence or possible existence of any
Event of Default or Potential Event of Default. Anything contained in this
Agreement to the contrary notwithstanding, no Agent shall have any liability
arising from confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither any Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by such Agent under or in connection with any of the Loan Documents
except to the extent caused by such Agent's gross negligence or willful
misconduct. If any Agent shall request instructions from Lenders with respect
to any act or action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents, such Agent shall be
entitled to refrain from such act or taking such action unless and until such
Agent shall have received instructions from Requisite Lenders. Without
prejudice to the generality of the foregoing, (i) each Agent shall be entitled
to rely, and shall be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and shall be entitled to rely
and shall be protected in relying on opinions and judgments of attorneys (who
may be attorneys for Borrower and its Subsidiaries), accountants, experts and
other professional advisors selected by it; and (ii) no Lender shall have any
right of action whatsoever against any Agent as a result of any Agent acting or
(where so instructed) refraining from acting under this Agreement or any of the
other Loan Documents in accordance with the instructions of Requisite Lenders.
Each Agent shall be entitled to refrain from exercising any power, discretion or
authority vested in it under this Agreement or any of the other Loan Documents
unless and until it has obtained the instructions of Requisite Lenders.
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not performing the duties and functions
delegated to it hereunder, and the term ``Lender'' or ``Lenders'' or any similar
term shall, unless the context clearly otherwise indicates, include Agent in its
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individual capacity. Each Agent and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of banking, trust, financial
advisory or other business with Borrower or any of its Affiliates as if it were
not performing the duties specified herein, and may accept fees and other
consideration from Borrower for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
------------------------------------------------------------------
CREDITWORTHINESS.
----------------
Each Lender represents and warrants that it has made its own independent
investigation of the financial condition and affairs of Borrower and its
Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Borrower. No Agent shall have any duty
or responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and no Agent shall have any responsibility with respect to the
accuracy of or the completeness of any information provided to Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Borrower, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in performing its duties hereunder or under the
other Loan Documents or otherwise in its capacity as Agent in any way relating
to or arising out of this Agreement or the other Loan Documents; provided that
no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from such Agent's gross negligence or willful
misconduct. If any indemnity furnished to any Agent for any purpose shall, in
the opinion of such Agent, be insufficient or become impaired, Agent may call
for additional indemnity and cease, or not commence, to do the acts indemnified
against until such additional indemnity is furnished.
9.5 PAYEE OF NOTE TREATED AS OWNER.
------------------------------
Each Agent may deem and treat the payee of any Note as the owner thereof
for all purposes hereof unless and until an Assignment and Acceptance effecting
the assignment or transfer thereof shall have been accepted by Managing Agent as
provided in subsection 10.1B(iii). Any request, authority or consent of any
person or entity who, at the time of making such request or giving such
authority or consent, is the holder of any Note shall be conclusive and binding
on any subsequent holder, transferee or assignee of that Note or of any Note or
Notes issued in exchange therefor.
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9.6 SUCCESSOR AGENT AND SWING LINE LENDER.
-------------------------------------
A. SUCCESSOR AGENT. Any Agent may resign at any time by giving 30 days'
prior written notice thereof to Lenders and Borrower, and any Agent may be
removed at any time with or without cause by an instrument or concurrent
instruments in writing delivered to Borrower and such Agent and signed by
Requisite Lenders. Upon any such notice of resignation or any such removal,
Requisite Lenders shall have the right, upon five Business Days' notice to
Borrower, to appoint a successor Agent. Upon the acceptance of any appointment
as Agent hereunder by a successor Agent, that successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring or removed Agent and the retiring or removed Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring or removed Agent's resignation or removal hereunder as Agent, the
provisions of this Section 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or removal of Managing
Agent pursuant to subsection 9.6A shall also constitute the resignation or
removal of GE Capital or its successor as Swing Line Lender and any successor
Managing Agent appointed pursuant to subsection 9.6A shall, upon its acceptance
of such appointment, become the successor Swing Line Lender for all purposes
hereunder. In such event (i) Borrower shall prepay any outstanding Swing Line
Loans made by the retiring or removed Managing Agent in its capacity as Swing
Line Lender, (ii) upon such prepayment, the retiring or removed Managing Agent
and Swing Line Lender shall surrender the Swing Line Note held by it to Borrower
for cancellation, and (iii) Borrower shall issue a new Swing Line Note to the
successor Managing Agent and Swing Line Lender substantially in the form of
Exhibit IV-A annexed hereto, in the principal amount of the Swing Line
Commitment then in effect and with other appropriate insertions.
9.7 COLLATERAL DOCUMENTS.
--------------------
A. COLLATERAL AGENT. Each Lender hereby further authorizes Collateral
Agent to enter into the Collateral Documents as secured party on behalf of and
for the benefit of Lenders and agrees to be bound by the terms of the Collateral
Documents; provided that Collateral Agent shall not enter into or consent to any
amendment, modification, termination or waiver of any provision contained in the
Collateral Documents without the prior consent of Requisite Lenders; provided
further, that anything in this Agreement or the other Loan Documents to the
contrary notwithstanding:
(i) The Collateral Agent is authorized on behalf of all Lenders,
without the necessity of any notice to or further consent from the Lenders,
from time to time to take any action with respect to any Collateral or the
Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
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(ii) The Lenders irrevocably authorize the Collateral Agent, at its
option and in its discretion, to release any Lien granted to or held by the
Collateral Agent upon any Collateral (a) upon termination of the
Commitments and payment in full of the Loans and all other Obligations
payable under this Agreement and under any other Loan Document; (b)
constituting property sold or to be sold or disposed of as part of or in
connection with any disposition permitted hereunder; (c) constituting
property in which Borrower or any Subsidiary of Borrower owned no interest
at the time the Lien was granted or at any time thereafter; (d) consisting
of an instrument evidencing Indebtedness if the Indebtedness evidenced
thereby has been paid in full; or (e) if otherwise approved, authorized or
ratified in writing by Requisite Lenders, subject to Subsection 10.6. Upon
request by the Collateral Agent at any time, Lenders will confirm in
writing the Collateral Agent's authority to release particular types or
items of Collateral pursuant to this subsection 9.7.
B. LENDER ACTION. Anything contained in any of the Loan Documents to the
contrary notwithstanding, each Lender agrees that no Lender shall have any right
individually to realize upon any of the Collateral under the Collateral
Documents (including without limitation through the exercise of a right of set-
off against call deposits of such Lender in which any funds on deposit in the
Collateral Documents may from time to time be invested), it being understood and
agreed that all rights and remedies under the Collateral Documents may be
exercised solely by Collateral Agent for the benefit of Lenders in accordance
with the terms thereof.
SECTION 10.
MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to the provisions of this subsection 10.1, each
Lender shall have the right at any time to (i) sell, assign, transfer or
negotiate to any Eligible Assignee, or (ii) sell participations to any Person
in, all or any part of its Commitment or any Loan or Loans made by it or its
Letters of Credit or participations therein or any other interest herein or in
any other Obligations owed to it; provided that no such assignment or
participation shall, without the consent of Borrower, require Borrower to file a
registration statement with the Securities and Exchange Commission or apply to
qualify such assignment or participation under the securities laws of any state.
Except as otherwise provided in this subsection 10.1, no Lender shall, as
between Borrower and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
any granting of participations in, all or any part of its Commitment or the
Loans, the Letters of Credit or participations therein or the other Obligations
owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. During the Initial Syndication
Period, Managing Agent shall have the exclusive right to make assignments
of
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Commitments, Loans, Letters of Credit, participations therein or any other
Obligation in any amount (of a constant and not a varying percentage) to
any Eligible Assignee, and no other Lender shall have any such right.
Following the expiration of the Initial Syndication Period, each Lender's
Commitment, Loan, Letter of Credit or participation therein or other
Obligation may (a) be assigned in any amount (of a constant and not a
varying percentage) to another Lender, or to an Affiliate of the assigning
Lender or another Lender, with the giving of notice to Borrower and
Managing Agent or (b) be assigned in an aggregate amount (of a constant and
not a varying percentage) of not less than $5,000,000 (or such lesser
amount as shall constitute the aggregate amount of the Commitment, Loans,
Letters of Credit and participations therein and other Obligations of the
assigning Lender) to any other Eligible Assignee with the giving of notice
to Borrower and Managing Agent and with the consent of Managing Agent (such
consent not to be unreasonably withheld). To the extent of any such
assignment in accordance with either clause (a) or (b) above and upon
execution and delivery of an Assignment and Acceptance with respect thereto
as provided below, the assigning Lender shall be relieved of its
obligations with respect to its Commitment, Loans, Letters of Credit or
participations therein or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Managing Agent, for its acceptance, an Assignment and Acceptance, together
with a processing fee of $2,500 and such certificates, documents or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such Assignment and Acceptance
may be required to deliver to Managing Agent pursuant to subsection
2.7B(iii). Upon such execution, delivery and acceptance, from and after the
effective date specified in such Assignment and Acceptance, (y) 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
Lender hereunder and (z) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto). The Commitments hereunder shall be
modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of the Notes hereunder, new Notes shall, upon surrender
of the assigning Lender's Note, be issued to the assignee and to the
assigning Lender, substantially in the form of Exhibit IV annexed hereto
with appropriate insertions, to reflect the new Commitments of the assignee
and the assigning Lender.
(ii) Acceptance by Managing Agent. Upon its receipt of an Assignment
and Acceptance executed by an assigning Lender and an assignee representing
that it is an Eligible Assignee, together with the processing fee referred
to in subsection 10.1B(i) and any certificates, documents or other evidence
with respect to United States federal income tax withholding matters that
such assignee may be
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required to deliver to Managing Agent pursuant to subsection 2.7B(iii),
Managing Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit VIII hereto and if Managing
Agent has consented to the assignment evidenced thereby, to the extent such
consent is required pursuant to subsection 10B(i), (a) accept such
Assignment and Acceptance by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required consent of Managing
Agent to such assignment) and (b) give prompt notice thereof to Borrower
(with a copy of such Assignment and Acceptance) and each other Agent.
Managing Agent shall maintain a copy of each Assignment and Acceptance
delivered to and accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. Following the expiration of the Initial Syndication
Period, each Lender may sell participations as permitted pursuant to subsection
10.1A. The holder of any participation, other than an Affiliate of the Lender
granting such participation, shall not be entitled to require such Lender to
take or omit to take any action hereunder except action directly affecting (i)
the extension of the regularly scheduled maturity of any portion of the
principal amount of or interest on any Loan allocated to such participation,
(ii) a reduction of the principal amount of or the rate of interest payable on
any Loan allocated to such participation or (iii) the release of all or any
substantial portion of the Collateral, and all amounts payable by Borrower
hereunder (including without limitation amounts payable to such Lender pursuant
to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not
sold such participation. Borrower and each Lender hereby acknowledge and agree
that, solely for purposes of subsections 10.4 and 10.5, (a) any participation
will give rise to a direct obligation of Borrower to the participant and (b) the
participant shall be considered to be a ``Lender''; provided that no Person
shall be eligible to be a participant hereunder if such Person would not be an
Eligible Assignee pursuant to the terms of the final proviso of the definition
of Eligible Assignee.
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank. No Lender shall, as between Borrower and such Lender, be relieved of any
of its obligations hereunder as a result of any such assignment and pledge.
E. INFORMATION. Each Lender may furnish any information concerning
Borrower and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be consummated,
Borrower agrees to pay promptly upon Borrower's receipt of reasonably detailed
invoices and statements therefor (i) all the actual and reasonable costs and
expenses of preparation
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of the Loan Documents; (ii) all the costs of furnishing all opinions by counsel
for Borrower (including without limitation any opinions requested by Lenders as
to any legal matters arising hereunder) and of Borrower's performance of and
compliance with all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents including,
without limitation, with respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses and disbursements of
counsel to Managing Agent and Collateral Agent in connection with the
negotiation, preparation, execution and administration of the Loan Documents and
the Loans and any consents, amendments, waivers or other modifications hereto or
thereto and any other documents or matters requested by Borrower; (iv) all other
actual and reasonable costs and expenses incurred by Managing Agent in
connection with the negotiation, preparation and execution of the Loan Documents
and the transactions contemplated hereby and thereby; and (v) after the
occurrence of an Event of Default, all costs and expenses, including reasonable
attorneys' fees and costs of settlement, incurred by any Agent and Lenders in
enforcing any Obligations of or in collecting any payments due from Borrower
hereunder or under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a ``work-out'' or
pursuant to any insolvency or bankruptcy proceedings; provided that all
reimbursable costs and expenses described in the foregoing clauses (i), (ii),
(iii) and (iv) shall not exceed $400,000 through the Closing Date.
10.3 INDEMNITY.
---------
In addition (but without duplication) to the payment of expenses pursuant
to subsection 10.2, whether or not the transactions contemplated hereby shall be
consummated, Borrower agrees to defend, indemnify, pay and hold harmless Agents
and Lenders, and the officers, directors, employees, agents and affiliates of,
Agents and Lenders (collectively called the ``INDEMNITEES'') from and against
any and all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including without limitation the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes, rules or
regulations (including without limitation securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby (including without limitation Lenders' agreement
to make the Loans hereunder or the use or intended use of the proceeds of any of
the Loans or the issuance of Letters of Credit hereunder or the use or intended
use of any of the Letters of Credit) or the statements contained in the
commitment letter delivered by any Lender to Borrower with respect thereto, but
excluding, however any of the foregoing arising from disputes solely between or
among Lenders and Agents (collectively called the ``INDEMNIFIED LIABILITIES'');
provided that Borrower shall not have any obligation to any Indemnitee hereunder
with respect to any Indemnified Liabilities to
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the extent such Indemnified Liabilities arise solely from the gross negligence
or willful misconduct of that Indemnitee (or its officers, agents or employees)
as determined by a final judgment of a court of competent jurisdiction. To the
extent that the undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because it is violative of
any law or public policy, Borrower shall contribute the maximum portion that it
is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any
of them.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable law and
not by way of limitation of any such rights, upon the occurrence of any Event of
Default each Lender is hereby authorized by Borrower at any time or from time to
time, without notice to Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and to apply any and all
deposits (general or special, including, but not limited to, Indebtedness
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time held or owing
by that Lender to or for the credit or the account of Borrower against and on
account of the obligations and liabilities of Borrower to that Lender under this
Agreement, the Notes, the Letters of Credit and participations therein,
including, but not limited to, all claims of any nature or description arising
out of or connected with this Agreement, the Notes, the Letters of Credit and
participations therein or any other Loan Document, irrespective of whether or
not (i) that Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become due and payable
pursuant to Section 8 and although said obligations and liabilities, or any of
them, may be contingent or unmatured. Borrower hereby further grants to each
Agent and each Lender a security interest in all deposits and accounts
maintained with such Agent or such Lender as security for the Obligations.
10.5 RATABLE SHARING.
---------------
Lenders hereby agree among themselves that if any of them shall, whether by
voluntary payment, by realization upon security, through the exercise of any
right of set-off or banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise, or as adequate
protection of a deposit treated as cash collateral under the Bankruptcy Code,
receive payment or reduction of a proportion of the aggregate amount of
principal, interest, amounts payable in respect of Letters of Credit, fees and
other amounts then due and owing to that Lender hereunder or under the other
Loan Documents (collectively, the ``AGGREGATE AMOUNTS DUE'' to such Lender)
which is greater than the proportion received by any other Lender in respect of
the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (i) notify each Agent and each other
Lender of the receipt of such payment and (ii) apply a portion of such payment
to purchase participations without recourse except as provided below (which it
shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the
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Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Borrower or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Borrower expressly consents to
the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Borrower to that holder
with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
----------------------
No amendment, modification, termination or waiver of any provision of this
Agreement or of the Notes, or consent to any departure by Borrower therefrom,
shall in any event be effective without the written concurrence of Requisite
Lenders; provided that any such amendment, modification, termination, waiver or
consent which: (i) increases the amount of any of the Commitments or reduces the
principal amount of any of the Loans; (ii) increases the maximum amount of
Letters of Credit; (iii) changes any Lender's Pro Rata Share; (iv) changes in
any manner the percentage constituting ``Requisite Lenders''; (v) provides for
the release of all or any substantial portion of the Collateral; (vi) changes in
any manner any provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of all Lenders; (vii) postpones the
scheduled final maturity date of any of the Loans; (viii) postpones the date on
which any interest or any fees are payable; (ix) decreases the interest rate
borne by any of the Loans (other than any waiver of any increase in the interest
rate applicable to any of the Loans pursuant to subsection 2.2E) or the amount
of any fees payable hereunder; (x) increases the maximum duration of Interest
Periods permitted hereunder; (xi) reduces the amount or postpones the due date
of any amount payable in respect of, or extends the required expiration date of,
any Letter of Credit; (xii) changes in any manner the obligations of Lenders
relating to the purchase of participations in Letters of Credit; (xiii) changes
in any manner the provisions contained in subsection 7.17, 8.1 or this
subsection 10.6; or (xiv) increases the stated advance rates for Accounts or
Inventory set forth in the definition of Borrowing Base, shall be effective only
if evidenced by a writing signed by or on behalf of all Lenders. In addition,
(i) any amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Managing Agent and Requisite Lenders, (ii) no amendment,
modification, termination or waiver of any provision of Section 9 or of any
other provision of this Agreement which, by its terms, expressly requires the
approval or concurrence of an Agent shall be effective without the written
concurrence of such Agent and any other Agent affected thereby, (iii) no
amendment, modification, termination or waiver of any provision of subsection
2.1A(ii) or any other provision of this Agreement relating to the Swing Line
Loan Commitment or the Swing Line Loans shall be effective without the written
concurrence of Swing Line Lender and (iv) no amendment, modification,
termination or waiver of any provision of Section 3 (other than with respect to
the Existing Letters of Credit) or any provision of this
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Agreement related to Letters of Credit (other than Existing Letters of Credit)
shall be effective without the written concurrence of Issuing Lender (excluding,
for this purpose, The First National Bank of Chicago) and no such amendment,
modification, termination or waiver of the foregoing referenced provisions with
respect to the Existing Letters of Credit shall be effective without the written
concurrence of The First National Bank of Chicago. Managing Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given. No notice to or demand on Borrower in any case
shall entitle Borrower to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this subsection 10.6 shall be binding upon each
Lender at the time outstanding, each future Lender and, if signed by Borrower,
on Borrower.
10.7 INDEPENDENCE OF COVENANTS.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service, upon receipt of telecopy or telex, or four Business Days
after depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed; provided that notices to any Agent shall
not be effective until received. For the purposes hereof, the address of each
party hereto shall be as set forth under such party's name on the signature
pages hereof or (i) as to Borrower and Agent, such other address as shall be
designated by such Person in a written notice delivered to the other parties
hereto and (ii) as to each other party, such other address as shall be
designated by such party in a written notice delivered to Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Borrower set forth in subsections 2.6D, 2.7, 10.2
and 10.3 and the agreements of Lenders set forth in subsections 9.2C, 9.4, 10.3,
10.5 and 10.19 shall survive
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the payment of the Loans, the cancellation or expiration of the Letters of
Credit and the reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of any Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
Neither any Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Borrower or any other party or against or in payment of
any or all of the Obligations. To the extent that Borrower makes a payment or
payments to any Agent or Lenders (or to an Agent for the benefit of Lenders), or
any Agent or Lenders enforce any security interests or exercise their rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, any other state or federal
law, common law or any equitable cause, then, to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and all
Liens, rights and remedies therefor or related thereto, shall be revived and
continued in full force and effect as if such payment or payments had not been
made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the Notes
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitment of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
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10.14 HEADINGS.
--------
Section and subsection 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 or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
COMMON LAW CONFLICTS OF LAWS PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Borrower's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Borrower without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST BORROWER ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT BORROWER ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH
OBLIGATION. Borrower designates and appoints Prentice Hall Corporation System,
Inc., 15 Columbus Circle, New York, New York 10023, and such other Persons as
may hereafter be selected by Borrower irrevocably agreeing in writing to so
serve, as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by
Borrower to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to Borrower at its
address provided in subsection 10.8; provided that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by Borrower refuses to accept
service, Borrower hereby agrees that service of process sufficient for personal
jurisdiction in any action against Borrower in the State of New York may be made
by registered or certified mail, return receipt requested, to Borrower at its
address provided in subsection 10.8, and Borrower hereby acknowledges that such
service
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shall be effective and binding in every respect. Nothing herein shall affect the
right to serve process in any other manner permitted by law or shall limit the
right of any Lender to bring proceedings against Borrower in the courts of any
other jurisdiction.
10.18 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN
THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty claims
and all other common law and statutory claims. Each party hereto acknowledges
that this waiver is a material inducement to enter into a business relationship,
that each has already relied on this waiver in entering into this Agreement, and
that each will continue to rely on this waiver in their related future dealings.
Each party hereto further warrants and represents that it has reviewed this
waiver with its legal counsel and that it knowingly and voluntarily waives its
jury trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event
of litigation, this Agreement may be filed as a written consent to a trial by
the court.
10.19 CONFIDENTIALITY.
---------------
Each Agent and each Lender agrees that it will hold and keep confidential
any non-public information from time to time supplied by Borrower or any of its
Subsidiaries, which has been identified as confidential, pursuant to the terms
of this Agreement or the Loan Documents in accordance with such Agent's and such
Lender's customary procedures for handling confidential information of this
nature and in accordance with safe and sound banking practices, and in all
cases, in a manner consistent with which such Agent and such Lender protects its
own non-public confidential information, it being understood and agreed by
Borrower that Agents and Lenders may make disclosures to: (i) the extent
required by law, to any governmental agency or representative thereof or
pursuant to legal process; provided that, unless specifically prohibited by
applicable law or court order, each Agent and each Lender shall notify Borrower
of any request by any governmental agency or representative for disclosure of
any such non-public information prior to the disclosure of such information;
(ii) counsel to any Agent or any Lender or to any such respective parties'
accountants or other advisors; (iii) bank examiners and auditors; (iv) any other
Lender; (v) an Eligible Assignee of any Lender, that agrees in writing to be
bound by the terms and provisions of this subsection 10.19; or (vi) the extent
that such information becomes public
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other than as a result of a breach of this subsection 10.19. It is understood
and agreed that in no event shall any Agent or any Lender be obligated or
required to return any materials furnished by Borrower or any Subsidiary, and it
is further understood and agreed that this subsection 10.19 supersedes any prior
confidentiality arrangements between Borrower and any Agent and any Lender
regarding the transactions contemplated hereby. Each Agent and each Lender agree
that the terms and provisions of this subsection 10.19 shall survive the payment
of the Loans, the cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the termination of this
Agreement and the Loan Documents.
10.20 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements hereto
or in connection herewith may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Borrower and
Managing Agent of written or telephonic notification of such execution and
authorization of delivery thereof.
10.21 INTERCOMPANY NOTE COLLATERAL.
----------------------------
A. PRIORITY OF LIENS AND ENFORCEMENT. Borrower hereby acknowledges and
agrees that all of its rights and interests as a secured party under the
Intercompany Note Security Agreement, the Intercompany Trademark Assignment and
the Collateral Documents related thereto have been assigned as Collateral to
Collateral Agent pursuant to the Pledge and Security Agreement and hereby
further acknowledges and agrees that Collateral Agent shall not have any duty or
obligation to follow any instructions or requests of Borrower as a secured party
thereunder and Borrower's sole rights under the Intercompany Note Security
Agreement, the Intercompany Trademark Assignment and the Collateral Documents
related thereto shall be to receive the proceeds of any Collateral received
thereunder after payment in full in cash of all Obligations in accordance with
the terms of the Loan Documents; provided further, that anything in this
Agreement or the other Loan Documents to the contrary notwithstanding:
(i) Collateral Agent is authorized on behalf of Borrower, without the
necessity of any notice to or further consent from Borrower, from time to
time to take any action permitted by the Collateral Documents with respect
to any Collateral (as defined in the Intercompany Note Security Agreement,
the ``JUNIOR COLLATERAL'') or the Collateral Documents related thereto in
its sole discretion.
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(ii) Borrower irrevocably authorize the Collateral Agent, at its
option and in its sole discretion, to release any Lien granted to or held
by the Collateral Agent upon any Junior Collateral.
(iii) Borrower agrees that Borrower shall not, until the Obligations
are paid in full in cash in accordance with the terms of the Loan
Documents, have any right individually to realize upon any of the Junior
Collateral under the Collateral Documents (including without limitation
through the exercise of a right of set-off), it being understood and agreed
that all rights and remedies under the Collateral Documents may be
exercised solely by Collateral Agent for the benefit of Lenders in
accordance with the terms hereof and thereof.
(iv) Notwithstanding the date, manner or order of perfection or
recording of the security interests and Liens granted pursuant to the
Collateral Documents, and notwithstanding any provisions of the UCC, of any
applicable law or decision, or of the Loan Documents, or whether Borrower
or Collateral Agent holds possession of all or any part of the Collateral,
all right, title and interest of Borrower as a secured party in and to any
Collateral (collectively, the ``JUNIOR LIEN'') is junior and subordinate to
all rights and interests of Agents and Lenders therein, and that the
priorities, subordinations and distribution arrangements specified in this
Section 10.21 and the other provisions of this Section 10.21 with respect
to any Collateral are expressly intended to be effective regardless of the
avoidability or non-perfection of the security interests and Liens held by
Collateral Agent in such Collateral, and in the event the security
interests or Liens held by Collateral Agent in any Collateral is judicially
determined to be unperfected or is avoided for any reason, then the
priorities, subordinations and distribution arrangements provided for in
this Section 10.21, shall as to the parties to this Agreement, remain
effective as to such Collateral. Borrower agrees that it will not challenge
the legality, validity, enforceability or priority of the Obligations or
the legality, validity, enforceability, perfection or priority of the Liens
granted pursuant to the Collateral Documents as set forth herein or the
rights of any secured party thereunder.
(v) Until the indefeasible cash payment in full of all Obligations in
accordance with the terms of the Loan Documents:
(a) No payment of, or other distribution in respect of, all or
any part of the Junior Lien or any claim secured thereby may be made
to Borrower other than payments permitted pursuant to subsection
10.21B.
(b) Borrower shall not seek to collect or enforce, by litigation,
set-off or otherwise, or make any demand for payment of, any claim
secured by the Junior Lien, all such rights being assigned to the
Collateral Agent pursuant to the Loan Documents.
(c) Borrower shall not exercise any remedy or commence,
prosecute, or participate in any action, whether private, judicial,
equitable,
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administrative, or otherwise, including without limitation the
commencement or initiation of any bankruptcy proceeding, against any
Credit Party or any of its assets to enforce any rights under or in
respect of the Junior Lien, including, without limitation, any right
to foreclose upon any Collateral, all such rights being assigned to
the Collateral Agent pursuant to the Loan Documents.
(d) In order to enable Collateral Agent to enforce its rights
hereunder in any bankruptcy proceeding, Collateral Agent is hereby
irrevocably authorized and empowered in its sole and absolute
discretion to make and present for and on behalf of Borrower such
proofs of claim against any Credit Party on account of the Junior Lien
as Collateral Agent may deem expedient or proper and to vote such
proofs of claim and to receive and collect any and all payments or
disbursements made thereon in whatever form the same may be paid or
issued and to apply the same on account of any Obligations in
accordance with the provisions of the Loan Documents.
(e) In the event of any bankruptcy proceeding against any Credit
Party, Borrower may not exercise any right or remedy with respect to
the Junior Lien that otherwise might be available to Borrower,
including, without limitation:
(1) any right to adequate protection under (S)(S) 361, 362,
363 or (S) 364 (including without limitation (S) 364(d)) of the
Bankruptcy Code;
(2) any right to relief from the automatic stay under (S)
362(d) of the Bankruptcy Code;
(3) any right to object to the treatment provided under (S)
1129(b) of the Bankruptcy Code to any claim secured by such
Collateral (other than in respect of a plan of reorganization
that (x) is acceptable to Collateral Agent in its sole discretion
or (y) provides for the indefeasible cash payment in full, upon
the effective date of such plan, of all Obligations in accordance
with the terms of the Loan Documents); and
(4) any right to file any motion, complaint, objection,
response or answer or other pleading seeking to assert, protect,
enforce or value any interest in any Collateral or any right to
be heard on any matter with respect to the Collateral (including,
without limitation, any sale, transfer or disposition thereof).
(f) Borrower hereby collaterally assigns the Junior Lien to
Collateral Agent and appoints Collateral Agent as attorney-in-fact for
Borrower to take any such steps hereinabove mentioned with full power
of
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substitution in the premises, and further agrees to execute and
deliver any further assignments or other instruments which may be
necessary or expedient in order to enable Collateral Agent to enforce
any and all such claims, and to collect any and all payments or
disbursements which may be made at any time on account of all or any
of the Junior Lien.
If Borrower, in violation of the provisions herein set forth shall commence,
prosecute or participate in any suit, action, case or proceeding against any
Credit Party, such Credit Party may interpose as a defense or plea the
applicable provisions of this Agreement, and Collateral Agent may intervene and
interpose such defense or plea in its own name or in the name of the Credit
Party, and shall, in any event, have standing to restrain the enforcement of the
obligations of such Credit Party in its own name or in the name of the Credit
Party in the same suit, action, case or proceeding or in any independent suit,
action, case or proceeding. Borrower waives presentment, protest, notice,
demand or action or delinquency in respect of the Collateral or any part
thereof, including, without limitation, any right to require Collateral Agent or
any other Person with respect to any Collateral or any part thereof, or
otherwise to enforce payment thereof or recovery thereunder and waives any right
it may have at law or otherwise to require Collateral Agent to act in a
commercially reasonable manner or to marshall any assets or Collateral in favor
of Borrower, any Credit Party, or any other Person or against or in payment of
any of all of the Obligations. With respect to any subrogation claims, Borrower
hereby waives, releases and discharges any and all rights, claims, causes of
action, liabilities, claims and demands, in law or equity, which Borrower has
had, now has, or may in the future have, arising out of or relating directly or
indirectly to the taking or not taking of any act, or proceeding or not
proceeding with any action which Collateral Agent may take pursuant to the terms
of the Loan Documents or any other documents or with respect to any effort to
collect in respect of the Obligations. To the extent that any Credit Party
makes any payment on the Obligations which is subsequently invalidated, declared
to be fraudulent or preferential, set aside or is required to be repaid to a
trustee, receiver or any other party under any bankruptcy proceeding or
otherwise (such payment being hereinafter referred to as a ``VOIDED PAYMENT'')
then, to the extent of such Voided Payment, that portion of the Obligations
which had previously been satisfied by such Voided Payment shall be revived and
continue in full force and effect as if such Voided Payment had never been made
and, until the full amount of such Voided Payment is fully and finally restored
to Lenders the provisions of this Section 10.21 shall be in full force and
effect with respect to the Junior Lien and the Collateral. In the event that,
notwithstanding the foregoing provisions prohibiting such payment or
distribution, Borrower shall receive any payment under or in respect of the
Junior Lien or Collateral or any claim secured thereby at a time when such
payment or distribution is prohibited by this Section 10.21 and before the
principal, interest and all other amounts constituting Obligations are
indefeasibly paid in full in cash in accordance with the terms of the Loan
Documents, then and in such event such payment or distribution shall be received
and held in trust for Collateral Agent on behalf of Lenders and shall be paid
over or delivered to Collateral Agent on behalf of Lenders, to the extent
necessary to pay in full in cash, in accordance with the terms of the Loan
Documents the principal, interest and all other amounts of such Obligations
after giving effect to any
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concurrent payment or distribution to Collateral Agent on behalf of Lenders in
respect of the Obligations.
B. PAYMENT UNDER INTERCOMPANY NOTES. Anything in this Agreement to the
contrary notwithstanding, but subject to Section 15 of the Pledge and Security
Agreement, as long as Collateral Agent has not elected to exercise its rights
pursuant to Section 15(b) of the Pledge and Security Agreement, Borrower may
receive payments in respect of the Intercompany Notes from time to time in the
ordinary course of its business consistent with past practice.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
BORROWER:
HARTMARX CORPORATION
/s/ Wallace L. Rueckel
By: ______________________________________
Name: Wallace L. Rueckel
Title: Executive Vice President and Chief
Financial Officer
Notice Address:
101 North Wacker Drive
Chicago, Illinois 60606
Attention: Executive Vice President and
Chief Financial Officer
With a copy to: General Counsel
S-1
<PAGE>
LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION,
individually, as Managing Agent and as Collateral Agent
By: _______________________________________________
Title: _______________________________________________
Notice Address:
Suite 1200
190 South LaSalle Street
Chicago, Illinois 60603
Attention: Cindy Vanina
S-2
<PAGE>
THE BANK OF NEW YORK,
Individually, as Co-Agent and as Issuing Lender for the
Letters of Credit (other than the Existing Letters of
Credit)
By: _______________________________________________
Title: _______________________________________________
Notice Address:
19th Floor
One Wall Street
New York, New York 10286
Attention: Bruce C. Miller
Vice President
S-3
<PAGE>
CONTINENTAL BANK N.A.
Individually and as Co-Agent
By: _____________________________________
Title: _____________________________________
Notice Address:
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Steven K. Kessler
S-4
<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO,
Individually and as Issuing Lender for Existing Letters
of Credit
By: ____________________________________________
Title: ____________________________________________
Notice Address:
Suite 0324
One First National Plaza
Chicago, Illinois 60670
Attention: Martha F. McGuire
S-5
<PAGE>
MANUFACTURERS AND TRADERS TRUST COMPANY
By: _______________________________________
Title: _______________________________________
Notice Address:
One Fountain Plaza
Buffalo, New York 14203
Attention: Geoffrey Fenn
S-6
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: __________________________________________
Title: __________________________________________
Notice Address:
Floor 2 West
111 West Monroe
Chicago, Illinois 60603
Attention: Sharon Dickey
S-7
<PAGE>
THE NORTHERN TRUST COMPANY
By: _________________________________________
Title: _________________________________________
Notice Address:
B-11
50 South LaSalle
Chicago, Illinois 60675
Attention: Jeffrey Douglas
S-8
<PAGE>
CHEMICAL BANK
By: _________________________________________
Title: _________________________________________
Notice Address:
23rd Floor
10 South LaSalle
Chicago, Illinois 60603
Attention: Debbie Wells
S-9
<PAGE>
SANWA BUSINESS CREDIT CORPORATION
By: ______________________________________
Title: ______________________________________
Notice Address:
28th Floor
One South Wacker Drive
Chicago, Illinois 60606
Attention: Roger Tauchman
S-10
<PAGE>
SCHEDULE 1.1A
ELIGIBLE ACCOUNTS
``ELIGIBLE ACCOUNTS'' means, as determined by Collateral Agent, based upon
the most recent information delivered by Borrower pursuant to this Agreement or
other information available to Collateral Agent, that portion of Accounts of
Borrower and its Operating Subsidiaries that shall be deemed to be ``ELIGIBLE
ACCOUNTS'' for purposes of determining the amounts to be advanced, if any,
pursuant to this Agreement. In determining that portion of Accounts that
constitutes Eligible Accounts, Collateral Agent shall apply the following
requirements and shall exclude any Account that fails to satisfy any of the
following requirements:
(a) The Account arises from a sale or services performed in the
ordinary course of business of a Credit Party (and not, for example, in
connection with any going out of business sale or other liquidation); and
is not subject to any setoff, counterclaim or similar rights by the Account
Debtor or, if such is the case, such Account Debtor has entered into an
agreement acceptable to Collateral Agent with respect to waiver of rights
of set off, unresolved dispute, defense, counterclaim or similar rights, as
the case may be; provided that if any such setoff, unresolved dispute,
defense counterclaim or similar right is expressly asserted only to a
portion of such Account, then the remaining unaffected portion of such
Account shall not be excluded solely by operation of this clause (a);
(b) The Account, together with the contract related thereto, does not
contravene in any material respect any laws, rules or regulations
applicable thereto (including, without limitation, laws, rules and
regulations relating to usury, consumer protection, retail installment
sales, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and with
respect to which no party to the contract related thereto is in violation
of any such law, rule or regulation in any material respect;
(c) The Account is one in respect of which Collateral Agent has a
perfected, first priority security interest;
(d) The Account (i) is not in respect of an installment or deferred
payment program unless the first required payment under such program has
been requested or received or (ii) is not in excess of 60 days past due or
(iii) is not due within 120 days of the date of determination for
eligibility under the Borrowing Base or (iv) has not been assigned to a
collection agency;
(e) The Account is denominated and payable only in Dollars in the
United States by an Account Debtor located in the United States and
satisfies the applicable Credit and Collection Policy and is not a
Defaulted Account;
Sched1.1A-1
<PAGE>
(f) The Account arises under a contract, the performance of which has
been completed by the applicable Credit Party and by all parties other than
the Account Debtor and is enforceable against the Account Debtor, and which
Account has been invoiced and all goods or services in connection therewith
have been delivered to (including, without limitation, by delivery F.O.B.
at a location other than that of the Account Debtor) or performed for the
Account Debtor;
(g) The Account Debtor (i) is not a known ``skip'' or ``fraud'', (ii)
satisfies all requirements of the applicable Credit and Collection Policy,
(iii) is not an Affiliate, agent, employee, officer or director of the
Borrower or any of its Subsidiaries and (iv) in the case of an individual,
is a competent living person who is not a minor;
(h) The Account Debtor is neither the United States of America nor any
subdivision, department or agency thereof nor any subdivision, department
or agency of any State or municipality;
(i) The Account Debtor for such Account is not insolvent or the
subject of any bankruptcy or insolvency proceeding of any kind (unless such
Account constitutes a valid administrative expense of such Account Debtor
payable in accordance with its terms under Section 503(b) of the Bankruptcy
Code) or a Person whose credit standing is unacceptable to Lender for this
purpose;
(j) If the Account Debtor is located in the States of New Jersey,
Minnesota, or any other State requiring the filing of a Business Activity
Report or similar document in order to bring suit or otherwise enforce its
remedies against such Account Debtor in the courts or through any judicial
process of such State, the Credit Party generating such Account has filed a
Notice of Business Activities Report with the New Jersey Division of
Taxation, the Minnesota Department of Revenue, or with such other States,
as appropriate, for the current year;
(k) None of the representations, warranties or covenants contained in
this Agreement and the other Loan Documents in respect of such Account has
been breached by Borrower or its applicable Subsidiary; and
(l) The Account is determined by Collateral Agent in its reasonable
business discretion to be unacceptable for inclusion in the Borrowing Base.
Notwithstanding the foregoing, all Accounts from an Account Debtor will be
ineligible if fifty percent (50%) or more of the total face value of such
Accounts are ineligible under clause (d) above.
Sched1.1A-2
<PAGE>
SCHEDULE 1.1B
ELIGIBLE INVENTORY
``ELIGIBLE INVENTORY'' means, as determined by Collateral Agent, based upon
the most recent information delivered to Collateral Agent pursuant to this
Agreement or other information available to Collateral Agent, that portion of
Inventory owned by Borrower or an Operating Subsidiary that shall be deemed to
be ``ELIGIBLE INVENTORY'' for purposes of determining the amounts to be
advanced, if any, pursuant to this Agreement. In determining that portion of
Inventory that constitutes Eligible Inventory, Collateral Agent shall apply the
following requirements:
(a) The Inventory is subject to a first priority security interest in
favor of Collateral Agent and is not subject to any other adverse claim,
interest or right;
(b) The Inventory consists of (i) finished goods purchased or
manufactured by Borrower or an Operating Subsidiary in the ordinary course
of its business, (ii) raw materials or piece goods or (iii) identifiable
finished goods carried as work-in-progress by Borrower or an Operating
Subsidiary in the ordinary course of business prior to the matching of the
jackets and slacks;
(c) The Inventory is in good condition and meets all standards imposed
by any Person having regulatory authority over such goods, its use and/or
sale, is not obsolete or damaged, and is currently saleable in the normal
course of Borrower's or such Operating Subsidiary's business;
(d) None of the representations, warranties or covenants contained in
this Agreement and the other Loan Documents in respect of such Inventory
has been breached by Borrower or the applicable Operating Subsidiary;
(e) The Inventory is located at one of the manufacturing facilities,
warehouses or retail locations operated by a Credit Party or at a location
as to which Collateral Agent shall have received a Collateral Access
Agreement which is in full force and effect;
(f) The Inventory has not been consigned to or by any Person (other
than consignment by a Credit Party to another Credit Party) and is not in-
transit or on lease;
(g) The Inventory has not been returned to Borrower or an Operating
Subsidiary from customers or Account Debtors and not yet returned to
regular stock at one of the locations permitted pursuant to clause (e)
above; and
(h) The Inventory is not determined by Collateral Agent, in its
reasonable business discretion to be unacceptable for inclusion in the
Borrower Base.
Sched1.1B-1
<PAGE>
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
<TABLE>
<CAPTION>
REVOLVING
LOAN PRO RATA
LENDER COMMITMENT SHARE
- ----------------------------------------- ------------ ------------
<S> <C> <C>
General Electric Capital Corporation $ 82,500,000 47.1428571%
Continental Bank N.A. 17,500,000 10.0000000%
The Bank of New York 12,500,000 7.1428572%
Manufacturers and Traders Trust Company 12,500,000 7.1428572%
Chemical Bank 10,000,000 5.7142857%
The First National Bank of Chicago 10,000,000 5.7142857%
Harris Trust and Savings Bank 10,000,000 5.7142857%
The Northern Trust Company 10,000,000 5.7142857%
Sanwa Business Credit Corporation 10,000,000 5.7142857%
TOTAL ____________ ____________
$175,000,000 100.0000000%
</TABLE>
<TABLE>
<CAPTION>
SWING LINE PRO RATA
LENDER COMMITMENT SHARE
- -------------------------------------- ----------- ---------
<S> <C> <C>
General Electric Capital Corporation $15,000,000 100%
</TABLE>
Sched2.1-1
