<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 27, 1994.
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Commission file number 33-762
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LEVI STRAUSS ASSOCIATES INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2973849
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1155 Battery Street, San Francisco, California 94111
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 544-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
YES X NO
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock April 1, 1994
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Class E Common, $.10 par value 1,264,940 shares
Class L Common, $.10 par value 51,327,001 shares<PAGE>
FORM 10-Q
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Income (Loss). . . . . . . . . . . 3
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . 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 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . 15
SIGNATURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
- ----------------------------------------------------------------------------
The following financial statements have been prepared by Levi Strauss
Associates Inc. (the "Company"), without audit, and reflect all adjustments
which are, in the opinion of the Company, necessary for a fair statement of
the results for the interim periods. The statements omit certain information
and footnote disclosures necessary to present the statements in accordance
with generally accepted accounting principles.
The following financial statements should be read in conjunction with the
financial statements and notes included in the Company's Form 10-K for the
year ended November 28, 1993. The Company believes that along with the
following information, the disclosures are adequate to make the information
presented herein not misleading.
All percentage changes in this report are based on unrounded amounts.<PAGE>
<TABLE>
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<CAPTION>
Three Months Three Months
Ended Ended
February 27, February 28,
1994 1993
------------ --------------
<S> <C> <C>
Net sales $ 1,338,637 $ 1,394,005
Cost of goods sold 810,957 847,395
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Gross profit 527,680 546,610
Marketing, general and administrative expenses 325,739 317,638
Management compensation charge 3,755 --
Other operating (income) expense, net 1,264 (4,512)
------------ --------------
Operating income 196,922 233,484
Interest expense 5,422 9,300
Other (income) expense, net 603 (4,668)
------------ --------------
Income before taxes and cumulative effect of changes
in accounting principles 190,897 228,852
Provision for taxes 80,177 96,118
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Income before cumulative effect of changes in
accounting principles 110,720 132,734
Cumulative effect of changes in accounting principles:
Postretirement benefits other than pensions
(SFAS 106), net of applicable income tax benefits
of $153,885 (248,429) --
Income taxes (SFAS 109) 11,912 --
------------ --------------
Net income (loss) $ (125,797) $ 132,734
============ ==============
Income (loss) per common share:
Income before cumulative effect of changes in
accounting principles $ 2.10 $ 2.53
Postretirement benefits other than pensions
(SFAS 106) (4.72) --
Income taxes (SFAS 109) 0.23 --
------------ --------------
Net income (loss) $ (2.39) $ 2.53
============ ==============
Average common shares outstanding 52,635,132 52,433,148
============ ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<TABLE>
Page 1 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
February 27, November 28,
1994 1993
------------ --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 423,533 $ 252,673
Trade receivables (less allowance for doubtful accounts:
1994 - $30,514; 1993 - $28,551) 751,299 858,117
Inventories:
Raw materials 122,161 109,289
Work-in-process 129,403 135,797
Finished goods 575,203 546,754
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Total inventories 826,767 791,840
Deferred tax assets 102,861 70,979
Other current assets 110,687 116,815
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Total current assets 2,215,147 2,090,424
Property, plant and equipment (less accumulated depreciation:
1994 - $392,260; 1993 - $364,830) 598,237 594,592
Goodwill and other intangibles (less accumulated amortization:
1994 - $180,766; 1993 - $175,538) 356,727 361,936
Noncurrent deferred tax assets 169,490 20,466
Other assets 32,089 41,242
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$ 3,371,690 $ 3,108,660
============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt and capital lease
obligations $ 44,828 $ 42,695
Short-term borrowings 29,319 10,094
Accounts payable 215,104 259,747
Accrued liabilities 375,224 370,094
Salaries, wages and employee benefits 228,340 250,291
Taxes payable 185,474 139,641
Dividends payable 1,584 688
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Total current liabilities 1,079,873 1,073,250
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</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<TABLE>
Page 2 of 2
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
February 27, November 28,
1994 1993
------------ -------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (continued)
Long-term debt and capital lease obligations -
less current maturities 22,155 93,050
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Employee related benefits 723,806 293,147
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Long-term tax liability 346,784 334,627
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Minority interest 33,805 30,047
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Common Stock - Employee Stock Purchase and Award Plan:
Class E common stock - $.10 par value; issued:
1994 - 347,315 shares; 1993 - 300,848 shares
(Redemption value $39,594) 35 30
Additional paid-in capital, common 38,729 33,475
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Total common stock - employee stock purchase
and award plan 38,764 33,505
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Stockholders' Equity:
Class E common stock - $.10 par value; authorized
100,000,000 shares; issued and outstanding:
1994 - 921,317 shares; 1993 - 894,172 shares 92 89
Class L common stock - $.10 par value; authorized
170,000,000 shares; issued: 1994 - 51,826,750
shares; 1993 - 51,910,699 shares 5,183 5,191
Additional paid-in capital, common 249,219 242,572
Retained earnings 854,967 990,130
Translation adjustment 52,543 48,322
Pension liability (16,574) (16,574)
Treasury stock, at cost - Class E: 1994 - 3,692
shares; 1993 - 1,379 shares; Class L: 1994 and
1993 - 499,749 shares (18,927) (18,696)
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Total stockholders' equity 1,126,503 1,251,034
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$ 3,371,690 $ 3,108,660
============ =============
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
<TABLE>
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Three Months
Ended Ended
February 27, February 28,
1994 1993
------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by operating activities $ 232,516 $ 139,037
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment (18,168) (27,077)
Other, net 5,300 1,819
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Net cash used for investing activities (12,868) (25,258)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of long-term debt (68,048) (232,901)
Net increase (decrease) in short-term borrowings 15,258 (35,927)
Proceeds from sale of common stock to employee plans 8,353 9,087
Purchase of management Class L common stock (5,815) --
Dividends paid (739) (81,201)
Proceeds from issuance of long-term debt 16 124,008
Other, net (818) (2,134)
------------ --------------
Net cash used for financing activities (51,793) (219,068)
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Effect of exchange rate changes on cash 3,005 14,126
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Net increase (decrease) in cash and cash equivalents 170,860 (91,163)
Beginning cash and cash equivalents 252,673 237,702
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Ending cash and cash equivalents $ 423,533 $ 146,539
============ ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,029 $ 8,320
Income taxes 39,963 71,569
Non-cash financing activity:
Notes issued for payment of dividends -- 77,116
</TABLE>
The accompanying notes are an integral part of these financial statements.<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
RECLASSIFICATIONS
A new line item, other operating (income) expense, net was created for the
year-end 1993 Consolidated Statements of Income. This new line includes
certain operations-related items that were classified as other (income)
expense, net or marketing, general and administrative expenses prior to
year-end 1993. The other operating (income) expense, net line represents
operating income or expense items that are not related to marketing, general
and administrative expenses. Consolidated Statements of Income for the first
quarter of 1993 have been reclassified to conform to this presentation
format.
The 1994 employee related benefits line item on the Consolidated Balance
Sheets includes postretirement medical benefits of $413.1 million, workers'
compensation liabilities of $171.3 million and other deferred employment
benefits of $139.4 million. The 1993 other liabilities amounts have been
reclassified to conform to this presentation format.
Note 2
POSTRETIREMENT BENEFITS
In December 1990, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 106 "Employers'
Accounting for Postretirement Benefits Other Than Pensions". This statement
requires the Company to accrue postretirement benefits (other than pensions),
including health care and life insurance benefits for retired employees over
the period that an employee becomes fully eligible for benefits. The Company
adopted SFAS No. 106 effective November 29, 1993. Previously, the Company
used a "pay-as-you-go" method whereby expenses were recorded as claims were
incurred.
SFAS No. 106 requires the Company to recognize an expense to establish a
"transition obligation", representing the actuarially determined value at
November 29, 1993 of the postretirement benefit obligation earned by
employees and retirees in prior periods. The weighted average discount rate
used to determine the present value of the transition obligation was
6.5 percent. A 12.4 percent annual rate of increase in the per capita claims
cost reducing to 5.0 percent after 14 years was also used to determine the
present value of the transition obligation.
The transition obligation was recorded as a one-time, non-cash charge against
earnings of $402.3 million before taxes and $248.4 million after taxes. The
transition obligation is shown as a cumulative effect of a change in
accounting principles, net of income tax effects, on the Consolidated
Statements of Income (Loss). The $153.9 million noncurrent deferred tax
benefit related to the adoption of SFAS No. 106 was recorded in accordance
with SFAS No. 109 on the Consolidated Balance Sheets (see Note 3 to
Consolidated Financial Statements relating to the adoption of SFAS No. 109
"Accounting for Income Taxes").
The adoption of SFAS No. 106 also results in additional ongoing expenses for
service and interest costs related to postretirement benefits, which were
$10.8 million for the current quarter. The 1994 full year expense for these
ongoing costs is estimated to be $43.0 million.
Note 3
INCOME TAXES
In February 1992, the FASB issued SFAS No. 109 "Accounting for Income Taxes,"
which requires an asset and liability approach for financial accounting and
reporting of income taxes. Under SFAS No. 109, deferred tax assets and
liabilities are established at the balance sheet date in amounts that are
expected to be recoverable or payable when the difference in the tax bases
and financial statement carrying amounts of assets and liabilities
("temporary differences") reverse. The Company complied with the provisions
of SFAS No. 109 as of November 29, 1993. The adoption resulted in a
$11.9 million credit to income, which was recorded as a cumulative effect of
changes in accounting principles on the Consolidated Statements of Income
(Loss). Upon adoption, deferred tax assets and deferred tax liabilities were
adjusted accordingly.
Temporary differences which gave rise to deferred tax assets and liabilities
at February 27, 1994 were as follows:
<TABLE>
<CAPTION>
Deferred Tax Deferred Tax
Assets Liabilities
-------------- ------------
(000's)
<S> <C> <C>
Employee compensation and benefit plans $ 156,493 $ --
Postretirement benefits 153,885 --
Inventory 27,799 --
Restructuring and special charges 23,404 --
Depreciation and amortization 21,044 33,946
State income tax 20,949 --
Foreign exchange gains/losses 14,106 50,642
Tax on unremitted non-U.S. earnings -- 87,056
Other 48,580 22,265
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$ 466,260 $ 193,909
=========== ==========
</TABLE>
The net deferred tax assets at February 27, 1994 were $272.4 million.
The U.S. consolidated tax returns of the Company for 1983 through 1985 are
under examination by the Internal Revenue Service (IRS). The audit includes
the review of certain transactions relating to the 1985 leveraged buyout.
The Company believes it has made adequate provision for income taxes and
interest, which may become payable upon settlement. The IRS has not yet
concluded its audit and a settlement has not been negotiated.<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Summary
First quarter 1994 sales volume was lower and operating expenses were higher
compared to the 1993 first quarter. Additionally, the Company recorded a net
loss of $125.8 million for the first quarter of 1994 due to the effects of
adopting Statement of Financial Accounting Standards (SFAS) No. 106
"Employers' Accounting for Postretirement Benefits Other Than Pensions". The
net loss was partially offset by a lower provision for taxes, the positive
effect of adopting SFAS No. 109 "Accounting for Income Taxes" and lower
interest expense. As a percentage of sales, first quarter 1994 cost of goods
sold and gross profit were flat compared to first quarter 1993. Without the
effects of adopting SFAS Nos. 106 and 109, net income would have been
17 percent lower than the prior year period mostly due to lower sales volume
and higher operating expenses.
Full year 1994 net income is expected to be significantly lower than 1993
mostly due to the net impact of adopting SFAS Nos. 106 and 109.
Additionally, the Company expects net income to be negatively impacted by
declining 1994 U.S. sales, increased expenses associated with the Company's
initiative to improve customer service and expenses associated with the
Company's stock liquidity program for Class L common stock management holders
(see Management Compensation Charge caption).
Net Sales
Although average unit selling prices increased 5 percent, first quarter 1994
dollar sales decreased 4 percent from the prior year due to an 8 percent
decrease in unit sales. Sales decreases occurred primarily in the U.S.,
Canada and Japan businesses; however, record dollar and unit sales were
reported in Europe.
The Company's U.S. marketing divisions are organized by its Levi's(R),
Dockers(R) and Brittania(R) brands. U.S. dollar sales for the 1994 first
quarter were $756.0 million, 11 percent below the comparable quarter of 1993.
The decrease in U.S. dollar sales was mostly due to a 13 percent decrease in
unit sales, despite a 2 percent increase in average unit selling prices. The
U.S. dollar and unit sales decrease occurred in the Dockers(R) and Levi's(R)
product lines.
In the U.S., unit sales of men's Dockers(R) products decreased primarily due
to increased product competition (primarily wrinkle-resistant products) in a
saturated market. The decrease in Dockers(R) brand unit sales for women was
mostly due to a consumer market shift from women's moderate sportswear
products to jeans products and the repositioning of the Dockers(R) for women
product line. The decrease in U.S. unit sales for Levi's(R) products for men
reflected increased product competition (particularly private label) and
consumer price sensitivity. The overall decrease in Levi's(R) products was
despite an increase in sales for Levi's(R) jeans for women. Also
contributing to the overall decrease in U.S. unit sales was the slow retail
environment and consumer spending for apparel products. (See Trade
Receivables and Inventories caption for additional information.)
Record first quarter 1994 dollar sales outside the U.S. of $582.6 million
increased 7 percent over the comparable prior year period due to record unit
sales and slightly higher average unit selling prices. The record non-U.S.
results were due to the Europe division, which reported record dollar and
unit sales, despite the negative effects of unfavorable translation rates of
certain European currencies to the U.S. dollar, compared to the prior year
period. Partially offsetting the total results outside the U.S. was a
decrease in dollar and unit sales for the Canada and Asia Pacific divisions
due to the weak Canadian and Japanese economies. However, the Company
anticipates that dollar and unit sales outside the U.S. for full year 1994
will be higher than the 1993 levels due to the strong demand for the
Company's products in Europe.
Based on current forecasts, the Company expects full year 1994 total Company
dollar sales to be flat with the dollar sales records of 1993 mostly due to
lower projected U.S. dollar sales that offset higher projected non-U.S.
dollar sales. However, unit sales are expected to decrease overall mostly
due to lower projected sales for the U.S. and Japan businesses. These
forecasts and fiscal 1994 results may be affected by continued low consumer
spending and weak global economic conditions.
Gross Profit
As a percent of sales, gross profit for the first quarter of 1994 was flat
compared to 1993. In dollars, current quarter gross profit decreased
3 percent compared to the prior year period, mostly due to lower U.S. dollar
sales and higher U.S. production costs, partially offset by higher overall
average unit selling prices.
First quarter 1994 U.S. production costs were higher compared to the 1993
first quarter due to an $8.4 million charge for ongoing expenses related to
SFAS 106 (see Postretirement Benefits caption) and excess production capacity
costs at certain U.S. owned and operated facilities. The 1994 excess
capacity was caused by lower planned U.S. sales production requirements
compared to the prior year period. Accordingly, the Company produced a
higher proportion of certain U.S. products at its owned and operated plants,
as opposed to contractor production, to mitigate downtime at these plants.
These trends are expected to continue through the remainder of 1994.
The businesses outside the U.S. continue to record higher gross profit as a
percent of sales than businesses in the U.S., mostly due to higher overall
average unit selling prices. The businesses outside the U.S. represented
70 percent of the Company's 1994 first quarter profit contribution before
corporate expenses and taxes, compared to 58 percent in 1993. The higher
1994 percentage was mostly due to the lower U.S. sales volume in the first
quarter of 1994 compared to first quarter 1993.
Marketing, General and Administrative Expenses
Marketing, general and administrative expenses, as a percentage of sales, for
the current quarter was 24 percent compared to 23 percent for the comparable
period of 1993. Marketing, general and administrative expenses, in dollars,
for the 1994 first quarter increased 3 percent over the prior year period.
The increase was mostly due to higher administrative expenses, partially
offset by lower advertising expense.
First quarter 1994 administrative expense increased 4 percent from the 1993
first quarter primarily due to expenses for new business development in
Europe and Asia Pacific. Advertising expense for the current quarter
decreased 4 percent from the prior period primarily due to planned reductions
in media production expenditures in the U.S.
Information resource expense, which increased slightly compared to the first
quarter of 1993, is expected to increase for full year 1994 due to systems
and software costs related to the Company's strategic initiative to improve
customer service.
Management Compensation Charge
During the 1994 first quarter, the Company purchased 83,949 shares of Class
L common stock, for a total of $9.6 million, held by certain management
stockholders that have left or are leaving the employment of the Company.
The purchase price of $114 per share was the latest appraised value as
determined by a valuation obtained from an independent investment banking
firm for the Company's employee stock plans.
The shares were acquired through exercises of stock options granted to these
management employees to provide incentive compensation, encourage such
employees to remain with the Company and align management's and shareholders'
interests. As a result of the purchase transaction, compensation expense of
$3.8 million was recorded to recognize the difference between the original
compensation amount recorded for the related stock options and the current
appraised value of the stock. Additionally, stockholders' equity decreased
by a total of $5.8 million due to the purchase and retirement of these shares
of stock.
Separately, during the current quarter, the Board of Directors approved a
stock liquidity program (the "Liquidity Program") for Class L common stock
management holders. This program is subject to stockholder approval at the
April 1994 annual meeting of stockholders. The Liquidity Program allows the
Company to enter into contracts with management holders of Class L common
stock relating to in-service, employment separation-related and post-
separation stock purchases. Currently, holders of 1,297,526 shares of
Class L common stock (including outstanding options) are eligible to
participate in this program. This program would allow participating
management stockholders to annually sell a specified amount of their stock to
the Company, subject to certain limitations and conditions.
Upon adoption of the Liquidity Program, shares of participating stock would
be reclassified outside of stockholders' equity due to the liquidity feature.
If all applicable management stockholders participated in the Liquidity
Program, the Company would incur an initial pre-tax compensation expense
increase of approximately $25.0 million (based on the current appraised stock
value of $114 per share), the addition of common stock outside of
stockholders' equity of approximately $146.0 million and a reduction in
stockholders' equity of approximately $121.0 million. Future changes in the
stock valuation would result in periodic adjustments to compensation expense.
Stock related compensation expense would generally result in a permanent tax
difference and will not be deductible for tax purposes. Actual purchases of
stock by the Company under the Liquidity Program would result in cash
outflows.
Other Operating (Income) Expense, Net
Other operating (income) expense, net increased $5.8 million from the 1993
first quarter primarily due to current and future costs associated with
environmental-related soil remediation of a facility previously owned by the
Company. The increase in other operating (income) expense, net was partially
offset by higher licensee income. (See Note 1 to Consolidated Financial
Statements regarding the reclassification of certain 1993 quarterly amounts
to Other Operating (Income) Expense, Net.)
Interest Expense
Interest expense for the first quarter of 1994 decreased 42 percent from the
comparable period of 1993 primarily due to lower average debt balances. Cash
flows from operations were used to reduce debt levels over the last year,
resulting in the lower average debt balances. Debt reductions after the
first quarter of 1993 included repayment and cancellation of the first and
second series of dividend notes payable to Class L stockholders, net
repayments of debt on the Company's working capital facility and termination
of certain interest rate swap agreements.
The Company expects 1994 full year interest expense related to borrowings to
be lower than 1993 due to anticipated lower 1994 average debt levels. The
Company anticipates that it will not need to borrow funds during 1994 for
costs relating to its initiative to improve customer service. These costs
are expected to be funded by cash flows from operations during 1994.
Subsequent to first quarter 1994, the Company renegotiated and amended its
primary credit agreement which, among other items, provides for lower
commitment fees and interest rate basis points (see Liquidity and Capital
Resources caption).
Other (Income) Expense, Net
Other (income) expense, net for the 1994 first quarter increased $5.3 million
from the prior year period. The current quarter increase was mostly due to
higher net foreign currency transaction losses and higher net costs for
foreign currency exchange contracts. These increases were partially offset
by lower minority interest expense and lower amortization of credit agreement
fees. (See Note 1 to Consolidated Financial Statements regarding the
reclassification of certain Other (Income) Expense, Net amounts.)
Provision for Taxes
The decrease in the first quarter 1994 provision for taxes compared to 1993
was primarily due to lower earnings before the cumulative effect of changes
in accounting principles. The effective tax rate for both the current
quarter and prior year period was 42 percent. The 1994 first quarter rate
would have been 1 percent higher due to the 1993 U.S. tax bill that increased
the U.S. statutory tax rate to 35 percent from 34 percent, but was offset by
additional utilization of foreign tax credits. (See Note 3 to Consolidated
Financial Statements for information relating to the adoption of SFAS No. 109
"Accounting for Income Taxes".)
Postretirement Benefits
The Company recorded a one-time, non-cash charge against earnings of
$402.3 million before taxes and $248.4 million after taxes due to the
adoption of SFAS No. 106 "Employers' Accounting for Postretirement Benefits
Other Than Pensions" effective November 29, 1993. This charge was recorded
as a cumulative effect of a change in accounting principles, net of income
tax effects, on the Consolidated Statements of Income (Loss). The adoption
of SFAS No. 106 also results in additional ongoing expenses for service and
interest costs related to postretirement benefits, which were $10.8 million
for the current quarter. The 1994 full year expense for these ongoing costs
is estimated to be $43.0 million (see Note 2 to Consolidated Financial
Statements).
FINANCIAL CONDITION AND LIQUIDITY
Trade Receivables and Inventories
Trade receivables of $751.3 million decreased 12 percent from year-end 1993,
primarily due to lower first quarter 1994 sales volume. As a percent of
sales, trade receivables for the current quarter was slightly higher than the
fourth quarter of 1993. The allowance for doubtful accounts as a percentage
of accounts receivable increased 21 percent from the 1993 year-end percentage
mostly due to concerns related to retail industry bankruptcies in the current
U.S. economic environment.
Inventories at the end of first quarter 1994 were $826.8 million, 4 percent
higher than the level at the end of 1993. The increase in inventories was
primarily due to an 11 percent increase in inventories outside the U.S., with
the largest increase in the Europe division to meet anticipated sales
requirements.
U.S. inventories remained relatively flat with year-end 1993. The Company is
planning to continue its participation in the growing U.S. market for
wrinkle-resistant products by expanding is offerings of wrinkle-resistant
men's Dockers(R) products in the second quarter of 1994. In response to the
growing wrinkle-resistant product market, the Company has planned for lower
inventory of basic cotton-twill men's Dockers(R) products in 1994. However,
lower current quarter sales of men's Dockers(R) products were due in part to
inventory shortages of Dockers(R) twill pants products. The Women's
Dockers(R) product line is currently being repositioned in the market to
carry core products with some seasonal items.
In the U.S., the men's Levi's(R) brand division is focusing its efforts to
create the optimal balance between the cost of maintaining current inventory
levels with customer service. Additionally in 1994, the men's Levi's(R)
brand has planned for some shifts in product mix from certain silverTab(TM)
and Red Tab(TM) products, including 501(R) products, to lower margin Orange
Tab(TM) products in response to consumer demand for lower priced products.
Inventory levels are currently in line with forecasted sales and are expected
to increase in the second quarter for the 1994 Back-to-School selling period.
Property, Plant and Equipment
Property, plant and equipment, net increased 1 percent to $598.2 million from
year-end 1993. The increase in property, plant and equipment was due to the
acquisition and consolidation of an affiliate that was previously a joint
venture, consolidation of an existing joint venture and capital expenditures.
This increase was partially offset by depreciation expense and retirements
during the period. U.S. capital expenditures were primarily for design and
engineering costs related to the Company's initiative on customer service.
Outside the U.S., the Company continued to upgrade and expand several of its
finishing and distribution facilities in Europe.
Actual spending on projects during 1994 is expected to be $150.0 million, not
including spending related to the Company's initiative on customer service.
The Company expects to spend over $300.0 million during the next several
years in connection with this initiative.
Working Capital
Working capital of $1.1 billion at the end of the 1994 first quarter,
increased $118.1 million from year-end 1993. In addition, the current ratio
increased to 2.1 from 1.9. The increase in working capital was mostly due to
higher cash and cash equivalents from operations and lower accounts payable.
The increase in working capital was partially offset by lower accounts
receivable and higher taxes payable.
Liquidity and Capital Resources
The increase of $170.9 million in cash and cash equivalents from year-end
1993 was mostly due to cash provided by operations. Cash provided by
operations was partially used for the net repayment of debt and purchases of
property, plant and equipment, slightly offset by a net increase in
short-term borrowings and proceeds from the sale of common stock to employee
plans. Most of the remaining cash was invested in short-term investments.
The Company is currently exploring fixed-income portfolio investment
possibilities for its cash and cash equivalents balance.
During the current quarter, the Company used cash provided from operations to
repay $50.0 million on its working capital loan and repay the second series
of dividend notes payable to Class L stockholders for an aggregate amount of
$18.0 million, plus accrued interest of $.7 million. At February 27, 1994,
the Company's total outstanding debt balance was $96.3 million, 34 percent
lower than year-end 1993.
Subsequent to the first quarter of 1994, the Company renegotiated and amended
its primary credit agreement to reduce its $500.0 million unsecured working
capital facility to a $200.0 million 364 day revolving line of credit, which
is convertible at the option of the Company into a three-year term loan.
This amendment reflects the current financing needs and cash position of the
Company. Under the new revolving line of credit, commitment fees and
interest rate basis points will be lower than under the working capital
facility.
Total debt at year-end 1994 is expected to be lower than the level at year-
end 1993 due to the continued repayment of debt using cash generated from
operations. The Company does not anticipate that it will need to borrow
funds during 1994 for costs related to the Company's initiative on customer
service and does not expect difficulty in obtaining funding, if needed, for
this project.
Payment of Dividends on Class E Common Stock
In November 1993, the Board of Directors declared a dividend of $.55 per
share (totaling $.7 million), which was paid on December 15, 1993 to Class E
stockholders of record on December 1, 1993. There were no dividends declared
on Class L common stock.
Sale of Class E Common Stock to Employee Investment Plans
In January 1994, the employee investment plans, collectively, purchased
42,048 shares of Class E common stock from the Company at $114 per share as
determined by the valuation of an independent investment banking firm. In
addition, the Company contributed 33,171 matching shares to these plans.<PAGE>
PART II. OTHER INFORMATION
LEVI STRAUSS ASSOCIATES INC. AND SUBSIDIARIES
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
4 Restated Credit Agreement, dated March 17, 1994, among the Company,
Levi Strauss & Co., Bank of America N.T. & S.A. and other financial
institutions named therein.
(b) There were no reports on Form 8-K filed with the Commission during the
first quarter of 1994.<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LEVI STRAUSS ASSOCIATES INC.
----------------------------
(Registrant)
Date: April 11, 1994
By /s/Richard D. Murphy
---------------------------------------
(Richard D. Murphy)
Vice President and Corporate Controller<PAGE>
<PAGE>
EXHIBIT INDEX
4 Restated Credit Agreement, dated March 17, 1994, among the Company,
Levi Strauss & Co., Bank of America N.T. & S.A. and other financial
institutions named therein. 18<PAGE>
<PAGE>
Exhibit 4
---------
CREDIT AGREEMENT
Dated as of Mar 17, 1994
among
LEVI STRAUSS & CO.
and
LEVI STRAUSS ASSOCIATES INC.
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
as Agent for the Banks
and
THE BANKS PARTY HERETO<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS. . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions. . . . . . . . . . . . . . . . . . 10
(a) Defined Terms. . . . . . . . . . . . . . . . . . . . . 10
(b) The Agreement. . . . . . . . . . . . . . . . . . . . . 10
(c) Certain Common Terms . . . . . . . . . . . . . . . . . 10
(d) Performance; Time. . . . . . . . . . . . . . . . . . . 10
(e) Contracts. . . . . . . . . . . . . . . . . . . . . . . 10
(f) Laws . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Captions . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Independence of Provisions . . . . . . . . . . . . . . 11
1.03 Accounting Principles. . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE II
THE CREDITS. . . . . . . . . . . . . . . . . . 11
2.01 Amounts and Terms of Commitments; the Credit . . . . . . . . . . 11
2.02 Notes; Loan Accounts . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Procedure for Borrowing. . . . . . . . . . . . . . . . . . . . . 13
2.04 Conversion and Continuation Elections. . . . . . . . . . . . . . 14
2.05 Voluntary Termination or Reduction of Aggregate Commitment . . . 15
2.06 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . 15
2.07 Repayment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.08 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.09 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Agent's Fees . . . . . . . . . . . . . . . . . . . . . 17
(b) Commitment Fees. . . . . . . . . . . . . . . . . . . . 17
2.10 Computation of Fees and Interest . . . . . . . . . . . . . . . . 18
2.11 Payments by the Companies. . . . . . . . . . . . . . . . . . . . 18
2.12 Payments by the Banks to the Agent . . . . . . . . . . . . . . . 19
2.13 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . . . 19
2.14 Joint and Several Obligation of the Companies. . . . . . . . . . 20
2.15 Notices of Borrowing, Conversion/Continuation; Voluntary
Termination or Reduction of Aggregate Commitment;
Optional Prepayment. . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . 21
3.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.03 Increased Costs and Reduction of Return. . . . . . . . . . . . . 24
3.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . 24
3.06 Reserves on Offshore Rate Loans. . . . . . . . . . . . . . . . . 25
3.07 Certificates of Banks. . . . . . . . . . . . . . . . . . . . . . 25
3.08 Replacement of Banks, Termination of Commitment. . . . . . . . . 25
3.09 Reallocation of Commitments; New Banks . . . . . . . . . . . . . 25
3.10 Nonapplicability of Article III. . . . . . . . . . . . . . . . . 26
3.11 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . 26
4.01 Conditions of Initial Loans. . . . . . . . . . . . . . . . . . . 26
(a) Credit Agreement and Notes . . . . . . . . . . . . . . 26
(b) Resolutions; Incumbency. . . . . . . . . . . . . . . . 26
(c) Payment of Fees. . . . . . . . . . . . . . . . . . . . 26
4.02 Conditions to Each Borrowing . . . . . . . . . . . . . . . . . . 27
(a) Notice of Borrowing. . . . . . . . . . . . . . . . . . 27
(b) Continuation of Representations and Warranties . . . . 27
(c) No Existing Default. . . . . . . . . . . . . . . . . . 27
4.03 Conditions to the Term Loan. . . . . . . . . . . . . . . . . . . 27
(a) Notice of Borrowing. . . . . . . . . . . . . . . . . . 27
(b) Continuation of Representations and Warranties . . . . 27
(c) No Existing Default. . . . . . . . . . . . . . . . . . 27
ARTICLE V
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 27
5.01 Organization, Powers, Good Standing and Business . . . . . . . . 27
(a) Organization and Powers. . . . . . . . . . . . . . . . 27
(b) Good Standing. . . . . . . . . . . . . . . . . . . . . 28
(c) Conduct of Business. . . . . . . . . . . . . . . . . . 28
5.02 Authorization of Borrowing, etc. . . . . . . . . . . . . . . . . 28
(a) Authorization of Borrowing . . . . . . . . . . . . . . 28
(b) No Conflict. . . . . . . . . . . . . . . . . . . . . . 28
(c) Governmental Consents. . . . . . . . . . . . . . . . . 28
(d) Binding Obligation . . . . . . . . . . . . . . . . . . 28
5.03 Financial Condition. . . . . . . . . . . . . . . . . . . . . . . 28
5.04 Title to Properties; Liens . . . . . . . . . . . . . . . . . . . 28
5.05 Litigation; Adverse Facts. . . . . . . . . . . . . . . . . . . . 29
5.06 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 29
5.07 Materially Adverse Agreements; Performance . . . . . . . . . . . 29
(a) Agreements . . . . . . . . . . . . . . . . . . . . . . 29
(b) Performance. . . . . . . . . . . . . . . . . . . . . . 29
5.08 Governmental Regulation. . . . . . . . . . . . . . . . . . . . . 29
5.09 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 29
5.10 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 30
5.11 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 30
5.12 Regulation U . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.14 No Material Adverse Effect . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 31
6.01 Financial Statements and Other Reports . . . . . . . . . . . . . 31
6.02 Corporate Existence, etc.. . . . . . . . . . . . . . . . . . . . 32
6.03 Compliance With Laws, etc. . . . . . . . . . . . . . . . . . . . 33
6.04 Payment of Taxes and Claims. . . . . . . . . . . . . . . . . . . 33
6.05 Maintenance of Properties; Insurance . . . . . . . . . . . . . . 33
6.06 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.07 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 33
6.08 Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VII
NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 33
7.01 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . 34
7.02 Consolidations and Mergers; Sale of Assets . . . . . . . . . . . 35
7.03 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 35
7.04 Consolidated Net Worth . . . . . . . . . . . . . . . . . . . . . 35
7.05 Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.06 Interest Coverage Ratio. . . . . . . . . . . . . . . . . . . . . 35
7.07 Change in Business . . . . . . . . . . . . . . . . . . . . . . . 35
7.08 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 36
8.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 36
(a) Non-Payment. . . . . . . . . . . . . . . . . . . . . . 36
(b) Cross Default. . . . . . . . . . . . . . . . . . . . . 36
(c) Representation or Warranty . . . . . . . . . . . . . . 37
(d) Specific Defaults. . . . . . . . . . . . . . . . . . . 37
(e) Other Defaults . . . . . . . . . . . . . . . . . . . . 37
(f) Involuntary Bankruptcy; Appointment of Receiver,
etc. . . . . . . . . . . . . . . . . . . . . . . . . 37
(g) Voluntary Bankruptcy; Appointment of Receiver,
etc. . . . . . . . . . . . . . . . . . . . . . . . . 37
(h) Judgments and Attachments. . . . . . . . . . . . . . . 37
(i) Unfunded ERISA Liabilities . . . . . . . . . . . . . . 38
(j) Withdrawal Liability Under Multiemployer Plan. . . . . 38
8.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.03 Continuation and Conversion of Loans During the Existence
of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.04 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
THE AGENT . . . . . . . . . . . . . . . . . . 39
9.01 Appointment and Authorization. . . . . . . . . . . . . . . . . . 39
9.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . 39
9.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . 39
9.04 Reliance by Agent. . . . . . . . . . . . . . . . . . . . . . . . 39
9.05 Notice of Default. . . . . . . . . . . . . . . . . . . . . . . . 40
9.06 Credit Decision. . . . . . . . . . . . . . . . . . . . . . . . . 40
9.07 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 40
9.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . 41
9.09 Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . 41
9.10 Amendment and Not a Novation . . . . . . . . . . . . . . . . . . 41
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . 41
10.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 41
10.02 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
10.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . 42
10.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . 43
10.05 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
10.06 Marshalling; Payments Set Aside. . . . . . . . . . . . . . . . . 43
10.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 43
10.08 Assignments, Participations, etc.. . . . . . . . . . . . . . . . 43
10.09 Set-off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.10 Notification of Addresses, Lending Offices, Etc. . . . . . . . . 45
10.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 45
10.13 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . 46
10.14 Change in Accounting Principles. . . . . . . . . . . . . . . . . 46
10.15 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . 46
10.16 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 46
10.17 Representation of Banks. . . . . . . . . . . . . . . . . . . . . 46<PAGE>
List of Exhibits:
A - Note
B - Notice of Borrowing
C - Notice of Conversion/Continuation
D - Borrowing Resolutions
E - Certificates of Incumbency
F - Privity letter
G - Compliance Certificate
H - Assignment and Acceptance
Schedule 2.01 - Commitments of Banks<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
--------------------------------------------
This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
March 17, 1994 among Levi Strauss Associates Inc., a Delaware corporation
("LSAI"), Levi Strauss & Co., a Delaware corporation ("LS&CO.") (LSAI and
LS&CO. are referred to collectively in this Agreement as the "Companies" and
singly as a "Company"), the several financial institutions party to this
Agreement (collectively the "Banks" and individually, a "Bank"), and Bank of
America National Trust and Savings Association ("BofA"), as agent for the
Banks.
WHEREAS, the Companies, the Banks, and BofA as agent for the Banks are
parties to an Amended and Restated Credit Agreement dated as of January 15,
1993 (this credit agreement as in effect as of the date of this Agreement is
referred to as the "Prior Credit Agreement");
WHEREAS, the parties to the Prior Credit Agreement desire to amend and
restate such agreement by reducing the maximum amount of credit available
thereunder, changing the interest rate payable in respect of credit extended
thereunder, providing for a term loan option, and in certain other respects,
all as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree that from and after the
Effective Date, the Prior Credit Agreement is amended and restated in its
entirety to provide as follows:
ARTICLE I
DEFINITIONS
-----------
1.01 Defined Terms. In addition to the terms defined elsewhere in this
Agreement, the following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such Person. A Person shall be deemed to control
another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management
and policies of the other Person, whether through the ownership of
voting securities, by contract or otherwise. In no event shall any Bank
be deemed an "Affiliate" of either Company or of any Subsidiary of
either Company.
"Agent" means Bank of America National Trust and Savings
Association in its capacity as agent for the Banks hereunder, and any
successor agent.
"Agent-Related Persons" means BofA and any successor Agent
arising under Section 9.09, together with their respective Affiliates
(including in the case of BofA, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
Affiliates.
"Agent's Payment Office" means the address for payments set
forth on the signature page hereto in relation to the Agent or such
other address as the Agent may from time to time specify in accordance
with Section 10.02.
"Aggregate Commitment" means the combined Commitments of the
Banks in the initial amount of $200,000,000, as such amount may be
reduced from time to time pursuant to this Agreement.
"Agreement" means this Second Amended and Restated Credit
Agreement, as amended, supplemented or modified from time to time.
"Applicable Margin" means, with respect to Reference Rate
Loans, CD Rate Loans, and Offshore Rate Loans, the Applicable Margin
determined in accordance with the provisions of Section 2.08.
"Arranger" means BA Securities, Inc.
"Assignee" has the meaning specified in Section 10.08.
"Assignment and Acceptance" has the meaning specified in
subsection 10.08(a).
"Availability Period" means the period from the Effective
Date to the opening of business on the date which is 364 days after the
Effective Date, or such later date as may be agreed to among the
Companies, the Banks, and the Agent.
"Bank" has the meaning specified in the introductory clause
hereto.
"Bank Affiliate" means a Person engaged primarily in the
business of commercial banking and that is a Subsidiary of a Bank or of
a Person of which a Bank is a Subsidiary.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of
1978 (11 U.S.C. Section 101, et seq.).
"BofA" means Bank of America National Trust and Savings
Association.
"Borrowing" means a borrowing hereunder consisting of Loans
made to the Companies on the same day by the Banks pursuant to Article
II.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks in New York City or San Francisco,
California are authorized or required by law to close and, if the
applicable Business Day relates to any Offshore Rate Loan, means such a
day on which dealings are carried on in the applicable offshore dollar
interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any
other law, rule or regulation, whether or not having the force of law,
in each case, regarding capital adequacy of any bank or of any
corporation controlling a bank.
"CD Rate" means, for any Interest Period with respect to CD
Rate Loans comprising part of the same Borrowing, the rate of interest
(rounded upward, if necessary, to the nearest 1/100th of 1%) determined
as follows:
CD Rate = Certificate of Deposit Rate + Assessment Rate
---------------------------
1.00 - Reserve Percentage
Where:
"Assessment Rate" means, for any day of such Interest
Period, the rate determined by the Agent as equal to the
annual assessment rate in effect on such day payable to the
FDIC by a member of the Bank Insurance Fund that is classified
as adequately capitalized and within supervisory subgroup "A"
(or a comparable successor assessment risk classification
within the meaning of 12 C.F.R. Section 327.3(d)) for insuring
time deposits at offices of such member in the United States;
or, in the event that the FDIC shall at any time hereafter
cease to assess time deposits based upon such classifications
or successor classifications, equal to the maximum annual
assessment rate in effect on such day that is payable to the
FDIC by commercial banks (whether or not applicable to any
particular Bank) for insuring time deposits at offices of such
banks in the United States.
"Certificate of Deposit Rate" means the rate of interest
per annum determined by the Agent to be the arithmetic mean
(rounded upward, if necessary, to the nearest 1/100th of 1%)
of the rates notified to the Agent as the rates of interest
bid by two or more certificate of deposit dealers of
recognized standing selected by the Agent for the purchase at
face value of dollar certificates of deposit issued by major
United States banks, for a maturity comparable to such
Interest Period and in the approximate amount of the CD Rate
Loans to be made, at the time selected by the Agent on the
first day of such Interest Period.
"Reserve Percentage" means, for any day of such Interest
Period, the maximum reserve percentage (expressed as a
decimal, rounded upward, if necessary, to the nearest 1/100th
of 1%), as determined by the Agent, in effect on such day
(including any ordinary, marginal, emergency, supplemental,
special and other reserve percentages), prescribed by the
Federal Reserve Board for determining the maximum reserves to
be maintained by member banks of the Federal Reserve System
with deposits exceeding $1,000,000,000 for new non-personal
time deposits for a period comparable to such Interest Period
and in an amount of $100,000 or more.
The CD Rate shall be adjusted, as to all CD Rate Loans then
outstanding, automatically as of the effective date of any change in the
Assessment Rate or the Reserve Percentage.
"CD Rate Loan" means a Loan that bears interest based on the CD
Rate.
"Code" means the Internal Revenue Code of 1986 and any regulations
promulgated thereunder.
"Commitment", with respect to each Bank, has the meaning specified
in Section 2.01.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of such Bank's Commitment divided by the Aggregate
Commitment.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument,
document or agreement to which such Person is a party or by which it or
any of its property is bound.
"Conversion Date" means any date on which the Companies convert a
Reference Rate Loan to an Offshore Rate Loan or a CD Rate Loan; a CD
Rate Loan to an Offshore Rate Loan or a Reference Rate Loan; or an
Offshore Rate Loan to a CD Rate Loan or a Reference Rate Loan.
"Default" means any event or circumstance which, with the giving
of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute an Event of Default.
"Dollars", "dollars" and "$" each mean lawful money of the United
States.
"Domestic Lending Office" means, with respect to each Bank, the
office of that Bank designated as such in the signature pages hereto or
such other office of the Bank as it may from time to time specify to the
Companies and the Agent.
"Effective Date" means the date on which all conditions precedent
set forth in Section 4.01 are satisfied or waived by all Banks.
"Eligible Assignee" means (i) a commercial bank organized under
the laws of the United States, or any state thereof, and having a
combined capital and surplus of at least $100,000,000; (ii) a commercial
bank organized under the laws of any other country which is a member of
the Organization for Economic Cooperation and Development (the "OECD"),
or a political subdivision of any such country, and having a combined
capital and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States; and
(iii) any Bank Affiliate.
"Environmental Laws" means any Requirement of Law pertaining to
land use, air, soil, surface water, groundwater (including the protec-
tion, cleanup, removal, remediation or damage thereof), public or
employee health or safety or any other environmental matter; including
without limitation, the following laws as the same may be amended from
time to time:
(a) Clean Air Act (42 U.S.C. Section 7401, et seq.);
(b) Clean Water Act (33 U.S.C. Section 1251, et seq.);
(c) Resource Conservation and Recovery Act (42 U.S.C. Section
6901, et seq.);
(d) Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601, et seq.);
(e) Safe Drinking Water Act (42 U.S.C. Section 300f, et
seq.);
(f) Toxic Substances Control Act (15 U.S.C. Section 2601, et
seq.);
(g) Rivers and Harbors Act (33 U.S.C. Section 401, et seq.);
(h) Endangered Species Act (16 U.S.C. Section 1531, et seq.);
and
(i) Occupational Safety and Health Act (29 U.S.C. Section
651, et seq.);
together with any other foreign or domestic laws (federal, state,
provincial or local) relating to emissions, discharges, releases or
threatened releases of any Hazardous Substance into ambient air, land,
surface water, groundwater, personal property or structures, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, discharge or handling of any
Hazardous Substance.
"ERISA" means the Employee Retirement Income Security Act of 1974
and regulations promulgated thereunder.
"ERISA Affiliate" as applied to any Company, means any trade or
business (whether or not incorporated) which is a member of a group of
which that Company is a member and which is under common control within
the meaning of the regulations promulgated under Section 414 of the
Code.
"Event of Default" means any of the events or circumstances
specified in Section 8.01.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"Extension Request" has the meaning specified in
subsection 2.01(b).
"FDIC" means the Federal Deposit Insurance Corporation and any
Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for
U.S. Government Securities, or any successor publication, published by
the Federal Reserve Bank of New York (including any such successor, the
"Composite 3:30 p.m. Quotation") for such day under the caption "Federal
Funds Effective Rate". If on any relevant day the appropriate rate for
such day is not yet published in either H.15(519) or the Composite 3:30
p.m. Quotations, the rate for such day will be the arithmetic mean of
the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected
by the Agent.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System and any Governmental Authority succeeding to any
of its principal functions.
"Final Maturity Date" means, if the Companies elect to borrow the
Term Loan, the third anniversary of the last day of the Availability
Period.
"Funds Flow Ratio" means, with respect to any period, the ratio of
(i) the sum of net income, depreciation, amortization and non-cash items
(computed on a consolidated basis for the Companies for such period)
over (ii) total consolidated Indebtedness of the Companies for such
period. The numerator of the Funds Flow Ratio shall be calculated on a
four quarter rolling basis; the denominator thereof shall be calculated
on a four quarter rolling average basis.
"GAAP" means generally accepted accounting principles set
forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board (or agencies with similar
functions of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as
may be in general use by significant segments of the U.S.
accounting profession, which are applicable to the circumstances as
of the date of determination.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Hazardous Substance" means any substance, material or waste which
is regulated by any state or local governmental authority or the United
States Government, including any material or substance which is
(i) asbestos, (ii) polychlorinated biphenyls, (iii) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act,
33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (iv) defined as
a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. (42 U.S.C.
Section 6903) or (v) defined as a "hazardous substance" pursuant to
Section 101 of the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 (42 U.S.C. Section 9601), but
excluding materials which are (A) contained solely in office supplies or
cleaning materials or other materials typically used or kept
incidentally to activities conducted in offices, or (B) in
concentrations, locations or uses that are not proscribed by law.
"Indebtedness" of any Person means without duplication:
(a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the deferred
purchase price of property or services which purchase price is:
(i) due more than six months from the date of incurrence of
the obligation in respect thereof, or
(ii) evidenced by a note or similar written instrument;
(c) all reimbursement obligations with respect to surety bonds,
letters of credit, bankers' acceptances and similar instruments (in each
case, to the extent material and non-contingent);
(d) all indebtedness secured by any Lien on any property or asset
owned or held by that Person, which indebtedness, if nonrecourse to the
credit of that Person, shall be considered to be in an amount not
greater than the fair market value of such property or asset;
(e) all obligations evidenced by notes, bonds, debentures or
similar instruments;
(f) that portion of any monetary obligations under any capital
lease or similar arrangement which, in accordance with GAAP, is
classified as a liability on a balance sheet;
(g) notes payable and drafts accepted representing extensions of
credit, whether or not representing obligations for borrowed money; and
(h) all guaranties and other direct or indirect liabilities of
such Person with respect to any indebtedness or obligation of others of
the kinds referred to in clauses (a) through (g) above.
"Indemnified Person" has the meaning specified in subsection
10.05.
"Indemnified Liabilities" has the meaning specified in subsection
10.05.
"Insolvency Law" means any foreign, federal, or state bankruptcy,
insolvency, or other similar law relating to or for the relief of
debtors, now or hereafter in effect.
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution,
winding-up or relief of debtors, or (b) any general assignment for the
benefit of creditors, composition, marshalling of assets for creditors
or other, similar arrangement in respect of its creditors generally or
any substantial portion of its creditors; in each case (a) and (b)
undertaken under U.S. Federal, State or foreign law, including the
Bankruptcy Code.
"Interest Coverage Ratio" means the ratio of (i) consolidated net
income plus interest charges plus taxes, minus gain or plus loss from
extraordinary items in such period to (ii) interest charges for such
period. The numerator and the denominator of the Interest Coverage
Ratio shall be calculated on a four quarter rolling average basis.
"Interest Payment Date" means, with respect to any CD Rate Loan or
Offshore Rate Loan, the last day of each Interest Period applicable to
such Loan and, with respect to Reference Rate Loans, the last Business
Day of each calendar quarter and each date a Reference Rate Loan is
converted into an Offshore Rate Loan or a CD Rate Loan, provided,
however, that if any Interest Period for a CD Rate Loan or Offshore Rate
Loan exceeds 90 days or three months, respectively, interest shall also
be paid on the date which falls ninety (90) days or three (3) months
after the beginning of such Interest Period.
"Interest Period" means, (a) with respect to any Offshore Rate
Loan, the period commencing on the Business Day the Loan is disbursed or
continued or on the Conversion Date on which the Loan is converted to
the Offshore Rate Loan and ending on the date two (2) weeks, or one (1),
two (2), three (3) or six (6) months thereafter, as selected by the
Companies in their Notice of Borrowing or Notice of
Conversion/Continuation; and (b) with respect to any CD Rate Loan, the
period commencing on the Business Day the CD Rate Loan is disbursed or
continued or on the Conversion Date on which a Loan is converted to the
CD Rate Loan and ending thirty (30), sixty (60), ninety (90) or one
hundred eighty (180) days thereafter, as selected by the Companies in
their Notice of Borrowing or Notice of Conversion/Continuation;
provided that:
(i) if any Interest Period pertaining to an Offshore Rate
Loan or CD Rate Loan would otherwise end on a day which is not a
Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, in the case of an Offshore Rate
Loan, the result of such extension would be to carry such Interest
Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period, other than a two week Interest
Period, pertaining to an Offshore Rate Loan 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 end on the last Business Day of
the calendar month at the end of such Interest Period;
(iii) each Interest Period that commences prior to the last
day of the Availability Period must terminate on or before such
last day; and
(iv) if the Companies have elected to borrow the Term Loan,
no Interest Period for Loans comprising the Term Loan shall extend
beyond the Final Maturity Date.
"Lending Office" means, with respect to any Bank, the office or
offices of the Bank specified as its "Lending Office" or "Domestic
Lending Office" or "Offshore Lending Office", as the case may be,
opposite its name on the signature pages hereto, or such other office or
offices of the Bank as it may from time to time specify to the Companies
and the Agent.
"Leverage Ratio" means, with respect to any period, the ratio of
consolidated Indebtedness of the Companies to consolidated Net Worth of
the Companies for that period.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, charge or deposit arrangement, encumbrance, lien (statutory
or other) or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever (including
those created by, arising under or evidenced by any conditional sale or
other title retention agreement, the interest of a lessor under any
leasing or similar arrangement which, in accordance with GAAP, is
classified as a capital lease, any financing lease having substantially
the same economic effect as any of the foregoing, or the filing of any
financing statement naming the owner of the asset to which such lien
relates as debtor, under the Uniform Commercial Code of any jurisdiction
or any comparable law) and any contingent or other agreement to provide
any of the foregoing, but not including the interest of a lessor under
an operating lease.
"Loan" means an extension of credit by a Bank to the Companies
pursuant to Article II (and includes the Loans comprising the Term
Loan), and may be a Reference Rate Loan, CD Rate Loan or Offshore Rate
Loan.
"Loan Documents" means, together with all amendments,
modifications or supplements to any of the following, this Agreement,
the Notes, and any other written agreement between the Companies or
either Company and Agent or Banks which either states that it is a Loan
Document or otherwise expressly provides (without requiring any
particular wording or phrasing) that it is entered into, signed,
delivered or otherwise furnished with respect to or in connection with
or pursuant to this Agreement.
"LOS/DOS Business" means the ownership and operation by LS&CO. or
a Subsidiary of LS&CO., whether directly or through joint ventures with
third parties in partnership, corporate or other form, of retail stores
selling only Levi's jeans and jeans-related products or Dockers products
and related products.
"Majority Banks" means at any time Banks holding at least 66-2/3%
of the then aggregate unpaid principal amount of the Loans, or, if no
such principal amount is then outstanding, Banks having at least 66-2/3%
of the Aggregate Commitment.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U of the Federal Reserve Board.
"Material Adverse Effect" means a material adverse effect (a) on
the business, properties, assets, operations or condition (financial or
otherwise) of LSAI and its Subsidiaries, taken as a whole, or (b) on the
ability of the Companies to repay the Loans and make other payments due
hereunder or any other Loan Document to Agent or any Bank.
"Material Subsidiary" of a Company means a Subsidiary of the
Company whose assets have a total book value of more than $50,000,000.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which either Company or any ERISA
Affiliate of either Company is or was required to contribute within the
three immediately preceding calendar years.
"Net Worth" means stockholders' equity as determined in accordance
with GAAP and "temporary" equity determined according to "Presentation
in Financial Statement of 'Redeemable Preferred Stock'," SEC Accounting
Series No. 268 (July 27, 1979).
"New Bank" has the meaning specified in Section 3.09.
"Note" means a promissory note of the Companies payable to the
order of a Bank in substantially the form of Exhibit A, evidencing the
aggregate indebtedness of the Companies to such Bank resulting from
Loans made by such Bank.
"Notice of Borrowing" means a notice, signed by the Companies, and
given to the Agent pursuant to Section 2.03, in substantially the form
of Exhibits B or B-1, as appropriate.
"Notice of Conversion/Continuation" means a notice, signed by the
Companies, and given to the Agent pursuant to Section 2.04, in
substantially the form of Exhibit C.
"Obligations" of a Company means all Loans, and other
Indebtedness, advances, debts, liabilities, obligations, covenants and
duties, in each case arising under this Agreement or any other Loan
Document, owing by the Company to any Bank, the Agent, or any other
Person required to be indemnified under any Loan Document, of any kind
or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or
to become due, now existing or hereafter arising and however acquired.
"Offshore Lending Office" means with respect to each Bank, the
office of such Bank designated as such in the signature pages hereto or
such other office of such Bank as such Bank may from time to time
specify to the Companies and the Agent.
"Offshore Rate" means, for each Interest Period for Offshore Rate
Loans comprising the same Borrowing, the rate of interest per annum
determined by the Agent to be the arithmetic mean (rounded upward, if
necessary, to the nearest whole multiple of 1/16th of 1%) of the rates
of interest per annum notified to the Agent by each Reference Bank as
the rate at which dollar deposits for such Interest Period and in an
amount approximately equal to the amount of the Offshore Rate Loan of
such Reference Bank during such Interest Period would be offered by its
Offshore Lending Office to major banks in the London eurodollar market
at or about 11:00 a.m. (London time) on the second Business Day before
the first day of such Interest Period.
"Offshore Rate Loan" means a Loan that bears interest based on the
Offshore Rate.
"Originating Bank" has the meaning specified in
subsection 10.08(d).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Participant" has the meaning specified in subsection 10.08(d).
"Pension Plan" means any employee plan which is subject to the
provisions of Title IV of ERISA and which is maintained for employees of
either Company or any ERISA Affiliate of either Company, other than a
Multiemployer Plan.
"Permitted Liens" has the meaning specified in Section 7.01.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.
"Prior Credit Agreement" has the meaning specified in the recitals
of this Agreement.
"Property" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or
intangible.
"Reference Banks" means BofA, Citibank, N.A., and National
Westminster Bank PLC, or such other Banks as may from time to time be
agreed to by the Companies and Agent.
"Reference Rate" means the higher of:
(a) the rate of interest publicly announced from time to
time by BofA in San Francisco, California, as its "reference
rate." It is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate; and
(b) one-half percent per annum above the latest Federal
Funds Rate.
Any change in the reference rate announced by BofA shall take effect at
the opening of business on the day specified in the public announcement
of such change.
"Reference Rate Loan" means a Loan that bears interest based on
the Reference Rate.
"Requirement of Law" means, as to any Person, any law (statutory
or common), treaty, rule or regulation or determination of an arbitrator
or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of
its property is subject.
"Responsible Officer" of a Company means the chief financial
officer or the treasurer of the Company, or any other officer having
substantially the same authority and responsibility.
"SEC" means the Securities and Exchange Commission, or any
successor thereto.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than
50% of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the
Person, or a combination thereof.
"Taxes" has the meaning specified in subsection 3.01(a).
"Term Loan" has the meaning specified in Section 2.01(d).
"Terminated Bank" has the meaning specified in Section 3.09.
"Termination Event" means (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (other than
a "Reportable Event" not subject to the provision for thirty (30) day
notice to the PBGC under such regulations), or (ii) the withdrawal of
LSAI or any of its ERISA Affiliates from a Pension Plan during a plan
year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, or (iii) the filing of a notice of intent
to terminate a Pension Plan or the treatment of a Pension Plan amendment
as a termination under Section 4041 of ERISA, or (iv) the institution of
proceedings to terminate a Pension Plan by the PBGC, or (v) any other
event or condition that would constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to
administer, any Pension Plan.
"Transferee" has the meaning specified in subsection 10.08(e).
"United States" and "U.S." each means the United States of
America.
1.02 Other Definitional Provisions.
(a) Defined Terms. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto. The
meaning of defined terms shall be equally applicable to the singular and
plural forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein and that are defined in the Uniform Commercial Code
of California shall have the meanings therein described.
(b) The Agreement. The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement;
and section and exhibit references are to this Agreement unless otherwise
specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices
and other writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including"; the words "to" and "until"
each mean "to but excluding," and the word "through" means "to and
including". If any provision of this Agreement refers to any action taken or
to be taken by any Person, or which such Person is prohibited from taking,
such provision shall be interpreted to encompass any and all means, direct or
indirect, of taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only
to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document.
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) Captions. The captions and headings of this Agreement are
for convenience of reference only and shall not affect the construction of
this Agreement.
(h) Independence of Provisions. The parties acknowledge that
this Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters,
and that such limitations, tests and measurements are cumulative and must
each be performed, except as expressly stated to the contrary in this
Agreement.
1.03 Accounting Principles.
(a) Except as provided in Section 10.14, unless the context
otherwise clearly requires, all accounting terms not expressly defined herein
shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter"
refer to such fiscal periods of the Companies.
(c) References herein to "consolidated" and "consolidated
basis" with reference to LSAI or the Companies are to LSAI and its
Subsidiaries on a consolidated basis.
ARTICLE II
THE CREDITS
-----------
2.01 Amounts and Terms of Commitments; the Credit.
(a) Each Bank severally agrees, on the terms and conditions
hereinafter set forth, to make Loans to the Companies from time to time on
any Business Day during the Availability Period in an aggregate amount
outstanding at any time not to exceed the amount set forth opposite the
Bank's name in Schedule 2.01 under the heading "Commitment" (such amount as
the same may be reduced or increased pursuant to Section 2.05 or Section
3.09, the Bank's "Commitment"); provided, however, that after giving effect
to any Borrowing of Loans, the aggregate principal amount of all outstanding
Loans shall not exceed the Aggregate Commitment. During the Availability
Period, within the limits of each Bank's Commitment, and subject to the other
terms and conditions hereof, the Companies may borrow under this Section
2.01, prepay pursuant to Section 2.06 and reborrow pursuant to this Section
2.01.
(b) (i) Upon written request from the Companies (an
"Extension Request"), received by the Agent not more than 30 days and not
less than 15 days prior to the last day of the then current Availability
Period, the Availability Period may be extended for an additional 364 day
period commencing on the last day of the then current Availability Period
with respect to any Bank consenting to such Extension Request.
(ii) Each Bank shall use reasonable commercial efforts
to notify the Agent and the Companies by facsimile, telegram, telex or
otherwise in writing within ten days after receipt of an Extension Request as
to whether it consents to the extension requested. If a Bank has not replied
by facsimile, telegram, telex or otherwise in writing to the Agent and to the
Companies by the end of such ten day period, that Bank shall be deemed not to
have consented to the requested extension.
(iii) The Agent shall promptly notify each Bank and the
Companies of any Bank's decision to reject the proposed extension.
(c) (i) If, in accordance with the provisions of subsection
2.01(b), a Bank consents to the extension of the Availability Period with
respect to its commitment to lend under this Agreement and the Agent does not
receive a Notice of Borrowing of the Term Loan pursuant to Subsection
2.03(a)(2), the Availability Period for such Bank shall be extended, without
any further action by the Companies or such Bank.
(ii) If any Bank rejects a request for an extension of
the Availability Period with respect to its commitment to lend under this
Agreement, or is deemed not to have consented to the requested extension, and
the Availability Period has been extended for the other Bank(s):
(A) The Companies may, prior to the end of the
non-extended Availability Period terminate such Bank's commitment to
lend under this Agreement upon payment in full of principal of and
interest on all Loans made by such Bank together with such other sums,
if any, that may be due by reason of such prepayment.
(B) If the Companies have not previously
terminated such Bank's commitment to lend under this Agreement and have
not previously paid principal and interest on the Loans held by such
Bank, then such principal and interest shall be due and payable on the
last day of the non-extended Availability Period.
(C) The Availability Period shall not be extended
insofar as such non-consenting Bank is concerned.
(D) Such Bank shall not participate in the Term
Loan made at the end of the extended Availability Period or any
subsequent extension of the Availability Period.
(iii) If any Bank rejects a request for an extension of
the Availability Period with respect to its commitment to lend under this
Agreement, or if any Bank is deemed not to have consented to the requested
extension, and the Agent receives a Notice of Borrowing of the Term Loan
pursuant to Subsection 2.03(a)(2) not later than 9:00 a.m. San Francisco,
California time three Business Days prior to the end of the non-extended
Availability Period, the Availability Period shall not be extended and the
Term Loan shall be made, in accordance with the provisions of this Agreement.
(d) Each Bank severally agrees and on the terms and
conditions set forth in this Agreement, to make Loans to the Companies (upon
request of the Companies pursuant to this Agreement) on the last day of the
Availability Period in an amount up to the sum of (i) the outstanding
principal amount of the Loans made by such Bank and outstanding as of the
opening of business on the last day of the Availability Period, plus (ii) the
amount available to be borrowed from such Bank as of the opening of business
on the last day of the Availability Period. The aggregate of such Loans is
in this Agreement collectively called the "Term Loan".
2.02 Notes; Loan Accounts.
(a) The Loans made by each Bank requesting a Note shall be
evidenced by a Note payable to the order of that Bank in an amount equal to
its Commitment. Each Bank requesting a Note shall endorse on the schedules
annexed to its Note, the date, amount and maturity of each Loan made by it
and the date and amount of each payment of principal and interest made by the
Companies with respect thereto. Each Bank requesting a Note is irrevocably
authorized by each of the Companies to make such endorsements on its Note.
(b) The Loans made by each Bank not requesting a Note shall
be evidenced by one or more loan accounts maintained by such Bank in the
ordinary course of business.
(c) The Agent shall maintain loan accounts evidencing the
date, amount, and maturity of each Loan made by the Banks to the Companies
and the date and amount of each payment of principal or interest made by the
Companies through the Agent with respect thereto. The Notes and the loan
accounts maintained by the Agent and the Banks not requiring a Note shall be
evidence of the amount of the Loans made by the Banks to the Companies and
the interest and payments thereon. Any failure so to record on any Note or
any loan account or any error in doing so shall not, however, limit,
increase, or otherwise affect the obligation of the Companies hereunder (and
under any Note) to pay any amount owing with respect to the Loans.
2.03 Procedure for Borrowing.
(a) (1) Each Borrowing shall be made upon the irrevocable
written notice (including notice via facsimile confirmed immediately by a
telephone call) of the Companies in the form of a Notice of Borrowing (which
notice must be received by the Agent not later than 9:00 a.m. San Francisco,
California time) (i) three Business Days prior to the requested borrowing
date, in the case of Offshore Rate Loans; (ii) two Business Days prior to the
requested borrowing date, in the case of CD Rate Loans, and (iii) on the
requested borrowing date, in the case of Reference Rate Loans, specifying:
(A) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of Ten Million Dollars
($10,000,000) or any multiple of One Million Dollars ($1,000,000)
in excess thereof;
(B) the requested borrowing date, which shall be a
Business Day;
(C) whether the Borrowing is to be comprised of
Offshore Rate Loans, CD Rate Loans or Reference Rate Loans;
(D) the duration of the Interest Period applicable to
the Loans included in such notice which are CD Rate Loans or
Offshore Rate Loans. If the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any Borrowing
comprised of CD Rate Loans or Offshore Rate Loans, such Interest
Period shall be ninety (90) days or three (3) months,
respectively.
(2) The Term Loan shall be made upon the irrevocable
written notice (including notice via facsimile confirmed immediately by a
telephone call) of the Companies in the form of a Notice of Borrowing (which
notice must be received by the Agent not later than 9:00 a.m. San Francisco,
California time) three Business Days prior to the last day of the
Availability Period, specifying:
(A) the amount of the Term Loan which shall be in a
principal amount not more than the sum of (i) the aggregate
principal amount of the Loans which will be outstanding as of the
opening of business on the last day of the Availability Period,
plus (ii) the amount available to be borrowed from the Banks as of
the opening of business on the last day of the Availability
Period.
(B) whether the Term Loan is to be comprised of
Offshore Rate Loans, CD Rate Loans or Reference Rate Loans, and
the amounts of each such Loan;
(C) the duration of the Interest Period applicable to
the Loans included in such notice which are CD Rate Loans or
Offshore Rate Loans. There shall not be more than ten (10)
Interest Periods in effect at any one time with respect to the
Term Loan. If the Notice of Borrowing shall fail to specify the
duration of the Interest Period for any Borrowing comprised of CD
Rate Loans or Offshore Rate Loans, such Interest Period shall be
ninety (90) days or three (3) months, respectively.
The proceeds of the Term Loan, to the extent required, will be used to pay
the principal amount of the Loans outstanding as of the opening of business
on the last day of the Availability Period.
(b) Upon receipt of the Notice of Borrowing (or telephonic
notice in lieu thereof pursuant to Section 2.15), the Agent will promptly
notify each Bank thereof and of the amount of such Bank's Commitment
Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment
Percentage of the Borrowing available to the Agent, in funds immediately
available to the Agent, for the account of the Companies at the Agent's
Payment Office by (i) 11:00 a.m. San Francisco, California time on the
borrowing date requested by the Companies if the Borrowing requested is to
consist solely of Reference Rate Loans, or (ii) 10:00 a.m. San Francisco,
California time on the borrowing date requested by the Companies if the
Borrowing requested includes Offshore Rate Loans or CD Rate Loans. The
proceeds of all such Loans will then be made available to the Companies by
the Agent at such office by crediting the LS&CO. concentration account
#12335-0225 on the books of BofA (or such other account with BofA as the
Companies may hereafter designate in a written notice to the Agent) with the
aggregate of the amounts made available to the Agent by the Banks not later
than 11:00 a.m. San Francisco, California time on such borrowing date if the
proposed Borrowing consist of CD Rate Loans or Offshore Rate Loans, and not
later than 12:00 noon San Francisco, California time on the borrowing date if
the proposed Borrowing consists of Reference Rate Loans. To the extent that
Loans made by Banks mature on any borrowing date, each Bank shall apply the
proceeds of any Loans made on such borrowing date, to the extent thereof, to
the repayment of such maturing Loans, such Loans and repayments intended to
be a contemporaneous exchange.
2.04 Conversion and Continuation Elections.
(a) The Companies may upon irrevocable notice to the Agent in
accordance with subsection 2.04(b):
(i) elect to convert on any Business Day, any Reference
Rate Loans (or any part thereof in an amount not less than $10,000,000
or that is in an integral multiple of $1,000,000 in excess thereof) into
Offshore Rate Loans or CD Rate Loans or;
(ii) elect to convert on any Interest Payment Date any
Offshore Rate Loans maturing on such Interest Payment Date (or any part
thereof in an amount not less than $10,000,000 or that is in an integral
multiple of $1,000,000 in excess thereof) into CD Rate Loans or
Reference Rate Loans; or
(iii) elect to convert on any Interest Payment Date any
CD Rate Loans maturing on such Interest Payment Date (or any part
thereof in an amount not less than $10,000,000 or that is in an integral
multiple of $1,000,000 in excess thereof) into Offshore Rate Loans or
Reference Rate Loans; or
(iv) elect to renew on any Interest Payment Date any
Offshore Rate Loans or CD Rate Loans maturing on such Interest Payment
Date (or any part thereof in an amount not less than $10,000,000 or that
is in an integral multiple of $1,000,000 in excess thereof);
provided, that if the Aggregate Commitment shall have been reduced to be less
than $10,000,000, on and after such reduction the right of the Companies to
elect to convert or continue Offshore Rate Loans or CD Rate Loans shall
terminate.
(b) The Companies shall deliver by telex, cable or facsimile,
confirmed immediately in writing, a Notice of Conversion/Continuation to be
received by the Agent not later than 9:00 a.m. (San Francisco, California
time) at least (i) three (3) Business Days in advance of the Conversion Date
or continuation date, if the Loans are to be converted into or continued as
Offshore Rate Loans; (ii) two (2) Business Days in advance of the Conversion
Date or continuation date, if the Loans are to be converted into or continued
as CD Rate Loans; and (iii) on the Conversion Date, if the Loans are to be
converted into Reference Rate Loans, specifying:
(A) the proposed Conversion Date or continuation date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the nature of the proposed conversion or
continuation; and
(D) with respect to Offshore Rate Loans and CD Rate
Loans, the duration of the requested Interest Period.
In lieu of delivering the above-described Notice of Conversion/Continuation,
the Companies, pursuant to Section 2.15, may give the Agent telephonic notice
(followed by prompt written confirmation) of such conversion or continuation.
(c) If upon the expiration of any Interest Period applicable
to CD Rate Loans or Offshore Rate Loans, the Companies have failed to select
a new Interest Period to be applicable to such CD Rate Loans or Offshore Rate
Loans, as the case may be, or (subject to subsection (d) below) if any Event
of Default shall then exist, the Companies shall be deemed to have elected to
convert such CD Rate Loans or Offshore Rate Loans into Reference Rate Loans
effective as of the expiration date of such current Interest Period.
(d) The provisions of Section 8.03 shall govern the
Companies' ability to elect to have a Loan converted into or continued as, an
Offshore Rate Loan or a CD Rate Loan during the existence of a Default or
Event of Default.
(e) Upon receipt of a Notice of Conversion/ Continuation (or
telephonic notice in lieu thereof), the Agent will promptly notify each Bank
thereof, or, if no timely notice is provided, the Agent will promptly notify
each Bank of the details of any automatic conversion. All conversions and
continuations shall be made pro rata according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given or
which are subject to automatic conversion held by each Bank.
(f) There shall not be more than ten (10) Interest Periods in
effect at any one time with respect to the Term Loan.
2.05 Voluntary Termination or Reduction of Aggregate Commitment. The
Companies may, upon not less than five Business Days' prior irrevocable
notice to the Agent, terminate the Aggregate Commitment or permanently reduce
the Aggregate Commitment by any whole multiple of $10,000,000; provided that
no such reduction or termination shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date
thereof, the then outstanding principal amount of the Loans would exceed the
amount of the Aggregate Commitment then in effect and, provided, further,
that once reduced in accordance with this Section 2.05, the Aggregate
Commitment may not be increased. Any reduction of the Aggregate Commitment
shall be applied to each Bank's Commitment in accordance with such Bank's
Commitment Percentage. If the Aggregate Commitment is terminated in its
entirety, all accrued commitment fees to, but not including the effective
date of such termination shall be payable on the effective date of such
termination without any premium or penalty.
Notice to the Agent under this Section shall be in writing, signed by the
Companies or may be by telephonic notice promptly confirmed in writing, as
set forth in Section 2.15.
2.06 Optional Prepayments. Subject to Section 3.04, the Companies may,
at any time or from time to time, upon notice to the Agent given (i) at least
five Business Days' prior to the proposed prepayment date for CD Rate Loans
and Offshore Rate Loans and (ii) not later than 9:00 a.m. on the Business Day
of prepayment for Reference Rate Loans, ratably prepay Loans in whole or in
part, in amounts of $10,000,000 or any multiple of $1,000,000 in excess
thereof. Such notice of prepayment shall specify the date and amount of such
prepayment and whether such prepayment is of Reference Rate Loans, CD Rate
Loans or Offshore Rate Loans, or any combination thereof. Such notice shall
not thereafter be revocable by the Companies and the Agent will promptly
notify each Bank thereof and the amount of such Bank's Commitment Percentage
of such prepayment. If such notice is given by the Companies, the Companies
shall make such prepayment and the payment amount specified in such notice
shall be due and payable on the date specified therein, together with accrued
interest to each such date on the amount prepaid and the amounts required
pursuant to Section 3.04.
Notice to the Agent under this Section shall be in writing, signed by the
Companies or may be by telephonic notice promptly confirmed in writing as set
forth in Section 2.15.
Amounts prepaid in respect of the Term Loan may not be reborrowed.
2.07 Repayment. (a) The Companies shall repay the principal amount of
the Loans (except for the Term Loan) on the last day of the Availability
Period.
(b) The Companies shall repay the Term Loan on the Final
Maturity Date.
2.08 Interest.
(a) Subject to subsection 2.08(d), each Loan shall bear
interest on the outstanding principal amount thereof from the date when made
until it becomes due at a rate per annum equal to the CD Rate, the Offshore
Rate or the Reference Rate, as the case may be, plus the Applicable Margin.
The initial Applicable Margins, subject to adjustment as provided below, are
0.500% for CD Rate Loans, 0.375% for Offshore Rate Loans, and 0.000% for
Reference Rate Loans, and thereafter shall be determined as follows:
<TABLE>
<CAPTION>
For each fiscal
quarter following
a fiscal quarter
For CD For Offshore For Reference where the Funds
Rate Loans Rate Loans Rate Loans Flow Ratio was:
---------- ------------ ------------- -----------------
<S> <C> <C> <C>
1.250% 1.125% 0.125% Less than .25
0.800% 0.675% 0.000% Equal to or more
than .25 but less
than .50
0.625% 0.500% 0.000% Equal to or more
than .50 but less
than .75
0.500% 0.375% 0.000% Equal to or more
than .75
</TABLE>
If the compliance certificate required under Section 6.01(a) setting forth
the Funds Flow Ratio for the first fiscal quarter of the 1994 fiscal year
requires a change in the initial Applicable Margins provided above, such
change shall be effective as of the Effective Date. Thereafter, any change
in the Applicable Margins for any period shall take effect as of the first
day of the fiscal quarter in which the Agent receives the compliance
certificate required under Section 6.01(a) setting forth the Funds Flow Ratio
requiring a change in the Applicable Margins.
(b) If the Applicable Margins are increased or reduced with
respect to any period for which the Companies have already paid interest, the
Agent shall recalculate the additional interest due from or to the Companies
and shall, with reasonable promptness, give the Companies and the Banks
notice of such recalculation.
(i) Any additional interest due from the Companies
shall be paid to the Agent for the account of the Banks on the next date
on which an interest payment is due; provided, however, that if there
are no Loans outstanding or if the Loans are due and payable, such
additional interest shall be paid promptly after receipt of written
request for payment from the Agent.
(ii) Any interest refund due to the Companies shall be
credited against payments otherwise due from the appropriate Companies
on the next interest payment due date or, if the Loans have been repaid
and the Banks are no longer committed to lend under this Agreement, the
Banks shall pay the Agent for the account of the Companies such interest
refund not later than five (5) Business Days after written notice from
the Agent to the Banks.
(c) Interest on each Loan shall be payable in arrears on each
Interest Payment Date. Interest shall also be payable on the date of any
prepayment of Loans pursuant to Section 2.06 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during
any period when principal of the Loans is due and payable, interest shall be
payable on request for such payment by the holders of the Loans.
(d) While any Event of Default under subsections 8.01(a),
(f), or (g) exists or after acceleration of the Loans by reason of any Event
of Default, the Companies shall pay interest (after as well as before entry
of judgment thereon to the extent permitted by law) on the principal amount
of all Loans due and unpaid, at a rate per annum which is determined by
adding 2% per annum to the Applicable Margin then in effect for such Loans;
provided, however, that on and after the expiration of any Interest Period
applicable to any outstanding Offshore Rate Loan or outstanding CD Rate Loan
while any Event of Default under subsections 8.01(a), (f), or (g) or
acceleration by reason of any Event of Default exists, the principal amount
of such Loan shall, during the continuation of such Event of Default or after
such acceleration, bear interest at a rate per annum equal to the Reference
Rate plus the Applicable Margin for Reference Rate Loans plus 2%.
(e) Anything herein to the contrary notwithstanding, the
obligations of the Companies hereunder shall be subject to the limitation
that payments of interest shall not be required, for any period for which
interest is computed hereunder, to the extent (but only to the extent) that
contracting for or receiving such payment by the respective Bank would be
contrary to the provisions of any law applicable to such Bank limiting the
highest rate of interest which may be lawfully contracted for, charged or
received by such Bank, and in such event the Companies shall pay such Bank
interest at the lower of (i) the highest rate permitted by applicable law or
(ii) the rates required by this Agreement.
(f) If the Agent designates the credit extended under this
Agreement as a "highly leveraged transaction" or "HLT" in accordance with the
definition adopted on October 30, 1989 by the Office of the Comptroller of
the Currency, the Federal Deposit Insurance Corporation, and the Federal
Reserve Board, or any successor definition, or as a similarly denominated
transaction under other similar applicable regulatory guidelines in effect
from time to time, the Companies and the Agent shall enter into negotiations
for the purpose of agreeing on adjustments to the Applicable Margins so as to
reflect the HLT designation.
2.09 Fees.
(a) Agent's Fees. The Companies shall pay to the Agent for
the Agent's own account the fees in the amounts and at the times set forth in
a letter agreement between the Companies and the Agent dated January 15,
1993.
(b) Commitment Fees.
(i) The Companies shall pay to the Agent during the
Availability Period for the account of each Bank a commitment fee on the
average daily unused portion of such Bank's Commitment, computed on a
quarterly basis in arrears on the last day of each calendar quarter
based upon the daily utilization for that quarter, determined for the
period from the Effective Date through March 31, 1994, at 0.125% per
annum and thereafter as set forth in the table below and computed on the
basis of a 360 day year and actual days elapsed.
(ii) The commitment fee shall be calculated for the
period commencing on the Effective Date through March 31, 1994, each
calendar quarter thereafter and for the period ending on the last day of
the Availability Period and shall be payable on the later of (x) the
fifth Business Day after the end of the period with respect to which
such payment was calculated or (y) the fifth Business Day after receipt
by the Companies of a written notice from the Agent stating the amount
of such commitment fee.
(iii) The commitment fees provided in this subsection
shall accrue at all times during the Availability Period including at
any time during which one or more conditions in Article IV are not met.
<TABLE>
<CAPTION>
Commitment Fee: For each fiscal quarter following the fiscal
quarter where the Funds Flow Ratio is:
<S> <C>
0.375% per annum Less than .25
0.175% per annum Equal to or more than .25 but less than .50
0.150% per annum Equal to or more than .50 but less than .75
0.125% per annum Equal to or more than .75.
</TABLE>
2.10 Computation of Fees and Interest.
(a) All computations of (x) Commitment Fees, (y) interest
based on the Federal Funds Rate, and (z) interest payable in respect of
Offshore Rate Loans, CD Rate Loans, and Reference Rate Loans when interest is
based on the Federal Funds Rate shall be made on the basis of a year of three
hundred sixty (360) days and actual days elapsed. All other computations of
fees and interest under this Agreement shall be made on the basis of a year
of three hundred sixty-five (365) or three hundred sixty-six (366) days, as
the case may be, and actual days elapsed. Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof.
(b) The Agent will, with reasonable promptness, notify the
Companies and the Banks of each determination of an Offshore Rate or of a CD
Rate; provided that any failure to do so shall not relieve the Companies of
any liability hereunder or provide the basis for any claim against the Agent.
Any change in the interest rate on a Loan resulting from a change in the
Applicable Margin, Reserve Percentage, or the Assessment Rate shall become
effective as of the opening of business on the day on which such change in
the Applicable Margin, Reserve Percentage, or the Assessment Rate becomes
effective. The Agent will with reasonable promptness notify the Companies
and the Banks of the effective date and the amount of each such change,
provided that any failure to do so shall not relieve the Companies of any
liability hereunder or provide the basis for any claim against the Agent.
(c) Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Companies and the Banks in the absence of manifest error.
(d) Each Reference Bank shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Banks shall be unable or otherwise fails to supply such rates to
the Agent upon its request, the rate of interest shall be determined on the
basis of the quotations of the remaining Reference Banks or Reference Bank.
2.11 Payments by the Companies.
(a) All payments (including prepayments) to be made by the
Companies on account of principal, interest, fees and other amounts required
hereunder shall be made without set-off or counterclaim and shall, except as
otherwise expressly provided herein, be made to the Agent for the ratable
account of the Banks at the Agent's Payment Office, in dollars and in
immediately available funds, no later than 11:00 a.m. (San Francisco,
California time) on the date specified herein. The Agent will promptly
distribute to each Bank the amount of its Commitment Percentage (or other
applicable share as expressly provided herein) of such principal, interest,
fees or other amounts, in like funds as received. Any payment which is
received by the Agent later than 11:00 a.m. (San Francisco, California time)
shall be deemed to have been received on the immediately succeeding Business
Day and any applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due
on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be; subject
to the provisions set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the
Companies prior to the date on which any payment is due to the Banks
hereunder from such Companies that the Companies will not make such payment
in full, the Agent may assume that the Companies have made such payment in
full to the Agent on such date and the Agent may (but shall not be so
required), in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If
and to the extent the Companies shall not have made such payment in full to
the Agent, each Bank shall repay to the Agent, on request made by the Agent,
such amount distributed to such Bank, together with interest thereon for each
day from the date such amount is distributed to such Bank until the date such
Bank repays such amount to the Agent, at the Federal Funds Rate as in effect
for each such day.
2.12 Payments by the Banks to the Agent.
(a) Unless the Agent shall have received notice from a Bank
on the Effective Date or, with respect to each Borrowing after the Effective
Date, at least one Business Day prior to the date of any proposed Borrowing
(but on the same day with respect to a Borrowing consisting of Reference Rate
Loans) that such Bank will not make available to the Agent for the account of
the Companies the amount of that Bank's Commitment Percentage of the
Borrowing, the Agent may assume that each Bank has made such amount available
to the Agent on the borrowing date and the Agent may (but shall not be so
required), in reliance upon such assumption, make available to the Companies
on such date a corresponding amount. If and to the extent any Bank shall not
have made its full amount available to the Agent and the Agent in such
circumstances has made available to the Companies such amount, that Bank
shall on the next Business Day following the date of such Borrowing make such
amount available to the Agent, together with interest at the Federal Funds
Rate for and determined as of each day during such period. A certificate of
the Agent submitted to any Bank with respect to amounts owing under this
subsection 2.12(a) shall be conclusive, absent manifest error. If such
amount is so made available, such payment to the Agent shall constitute such
Bank's Loan on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to the Agent on the next Business Day
following the date of such Borrowing, the Agent shall notify the Companies of
such failure to fund and, upon request for payment made by the Agent, the
Companies shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date of
Borrowing shall not relieve any other Bank of any obligation hereunder to
make a Loan on the date of such Borrowing, but no Bank shall be responsible
for the failure of any other Bank to make the Loan to be made by such other
Bank on the date of any Borrowing.
2.13 Sharing of Payments, Etc. If, other than as expressly
contemplated elsewhere herein, any Bank shall obtain on account of the Loans
made by it any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) in an amount in excess of its
Commitment Percentage of payments on account of the Loans obtained by all the
Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b)
purchase from the other Banks such participations in the Loans made by them
as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank
shall repay to the purchasing Bank the purchase price paid therefor, together
with an amount equal to such paying Bank's Commitment Percentage (according
to the proportion of (i) the amount of such paying Bank's required repayment
to (ii) the total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing Bank in respect of
the total amount so recovered. Each of the Companies agrees that any Bank so
purchasing a participation from another Bank pursuant to this Section 2.13
may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off but subject to Section 10.09) with
respect to such participation as fully as if such Bank were the direct
creditor of the Company in the amount of such participation. The Agent will
keep records (which shall be conclusive and binding in the absence of
manifest error), of participations purchased pursuant to this Section 2.13
and will in each case notify the Banks following any such purchases.
2.14 Joint and Several Obligation of the Companies. All obligations of
the Companies arising under this Agreement (including but not limited to
payment of principal and interest on the Loans) and any other Loan Document
shall be joint and several. A separate action or actions may be brought and
prosecuted against either Company whether action is brought against the other
Company or whether the other Company is joined in any such action or
actions. Each Company waives the benefit of any statute of limitations
applicable to the other Company but not to it and affecting its liability
hereunder.
(a) Each Company authorizes Agent and Banks, without notice,
demand, or request and without affecting its liability hereunder, from time
to time to:
(1) with the consent of the other Company if required,
renew, compromise, extend, accelerate or otherwise change the time for
payment, or otherwise change the terms, of the indebtedness of the Companies
under this Agreement to Agent or to Banks including increase or decrease of
the rate of interest thereon, or otherwise change the terms of this Agreement
with respect to the Companies;
(2) receive and hold security for the payment of any
indebtedness to Agent and to Banks under this Agreement and exchange,
enforce, waive, release, fail to perfect, sell, or otherwise dispose of any
such security;
(3) apply such security and direct the order or manner
of sale thereof as Agent and Banks in their discretion may determine; and
(4) release or substitute any one or more of any
endorsers or guarantors of the indebtedness under this Agreement.
(b) Each Company waives any right to require Agent and Banks
to:
(1) proceed against the other Company;
(2) proceed against or exhaust any security for any
indebtedness to Agent and Banks under this Agreement; or
(3) pursue any other remedy in Agent's, Banks', or any
Bank's power whatsoever.
(c) Each Company waives any defense arising by reason of any
disability or other defense of the other Company, or the cessation from any
cause whatsoever, other than payment, of the liability of the other Company,
or any claim that such Company's obligations exceed or are more burdensome
than those of the other Company.
(d) Each Company waives any right of subrogation,
reimbursement, indemnification, and contribution (contractual, statutory or
otherwise), including without limitation, any claim or right of subrogation
under the Bankruptcy Code (Title 11 of the U.S. Code) or any successor
statute, against the other Company arising from the existence or performance
of its joint and several liability.
(e) Each Company waives any right to enforce any remedy which
Agent and Banks now have or may hereafter have against the other Company, and
waives any benefit of, and any right to participate in, any security now or
hereafter held by Agent and Banks securing the indebtedness under this
Agreement.
(f) The waivers contained in this Section 2.14 shall not
apply to any right or defense of the Companies which such Companies could
assert against the Banks and the Agent if the right or defense were available
to both Companies based on the same circumstances. For example if both
Companies have the defense of mistake because Agent and Banks mistakenly show
in their records that $10,000,000 has been advanced to the Companies but in
fact no Loans were made and there are no Loans outstanding under this
Agreement, this defense of mistake shall not be waived by this Section 2.14.
2.15 Notices of Borrowing, Conversion/Continuation; Voluntary
Termination or Reduction of Aggregate Commitment; Optional Prepayment.
(a) In lieu of delivering a Notice of Borrowing, a Notice of
Conversion/Continuation, a notice of voluntary termination or reduction of
the Aggregate Commitment, or a notice of an optional prepayment, the
Companies may give the Agent telephonic notice of such action or proposed
action by the required time for delivery of such notice; provided, however,
that such telephonic notice must be promptly confirmed in writing by delivery
of the appropriate written notice on or prior to the requested borrowing,
conversion, continuation, termination or reduction, or optional prepayment
(as appropriate) date.
(b) Each of the Companies authorizes the Agent to accept
telephonic notice given on its behalf by the other Company.
(c) Neither the Agent nor any Bank shall incur any liability
to the Companies for acting upon any telephonic notice which the Agent
believes in good faith to have been given by a duly authorized officer or
other person authorized to act on behalf of one of the Companies, and, upon
the taking of any action by the Agent and the Banks pursuant to telephonic
notice, such action shall be deemed to have been made pursuant hereto.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
--------------------------------------
3.01 Taxes.
(a) Subject to subsection 3.01(f), any and all payments by
either or both Companies to each Bank or the Agent under this Agreement shall
be made free and clear of, and without deduction or withholding for, (i) any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, and (ii) any present
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies which arise from any payment made hereunder or from
the execution, delivery or registration of, or otherwise with respect to,
this Agreement or any other Loan Document, excluding, from both clause (i)
and clause (ii), such taxes as are imposed by reason of a present or former
connection between the jurisdiction imposing such tax and such Bank or the
Agent, other than a connection arising solely from the Agent or such Bank
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement or any other Loan Document (all such non-
excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes").
(b) If either of the Companies fails to pay any Taxes when
due under subsection 3.01(a) or fails to furnish receipts required under
subsection 3.01(d), the Companies shall indemnify and hold harmless each Bank
and the Agent for the full amount of Taxes (including any Taxes imposed by
any jurisdiction on amounts payable under this Section 3.01) paid by the Bank
or the Agent and any liability (including penalties, interest, additions to
tax and expenses) arising therefrom or with respect thereto, whether or not
such Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within thirty (30) days from the date the Bank
or the Agent makes written demand therefor.
(c) If either or both of the Companies shall be required by
law to deduct or withhold any amounts from or in respect of any sum payable
hereunder to any Bank or the Agent, and such amounts are Taxes subject to
payment without deduction or withholding under subsection 3.01(a), then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.01) such Bank
or the Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made;
(ii) the Company or Companies, as appropriate, shall
make such deductions (but without duplications); and
(iii) the Company or Companies, as appropriate, shall
pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(d) Within thirty (30) days after the date of any payment by
the Company or Companies of Taxes, or, if later, the date such documents are
made available to the Company or Companies by the relevant authorities upon
prompt demand therefor, the Company or Companies shall furnish to the Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Agent.
(e) Each Bank which is not incorporated under the laws of the
United States of America or a state thereof agrees that:
(i) it shall, no later than the Effective Date (or, in
the case of a Bank which becomes a party hereto after the Effective
Date, the date upon which the Bank becomes a party hereto) deliver to
the Companies through the Agent two accurate and complete signed
originals of Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"), or two accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case certifying that the Bank is on the date of
delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal
income tax, and one accurate and complete signed original of Internal
Revenue Service Form W-8 or W-9 or successor applicable form, as
appropriate, certifying that it is entitled to an exemption from United
States backup withholding;
(ii) if at any time the Bank makes any changes
necessitating a new Form 4224 or Form 1001, it shall with reasonable
promptness deliver to the Companies through the Agent in replacement
for, or in addition to, the forms previously delivered by it hereunder,
two accurate and complete signed originals of Form 4224, or two accurate
and complete signed originals of Form 1001, as appropriate, in each case
certifying that the Bank is on the date of delivery thereof entitled to
receive payments of principal, interest and fees under this Agreement
free from withholding of United States Federal income tax, and one
accurate and complete signed original of Internal Revenue Form W-8 or
W-9 or successor applicable form as appropriate, certifying that it is
entitled to an exemption from United States backup withholding;
(iii) it shall, before or promptly after the occurrence
of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in or renewal of the most
recent Form 4224 or Form 1001 or Form W-8 or W-9 previously delivered by
such Bank, deliver to the Companies through the Agent two accurate and
complete original signed copies of Form 4224 or Form 1001, and one
accurate and complete original signed copy of Form W-8 or W-9 in
replacement for the forms previously delivered by the Bank; and
(iv) it shall, promptly upon either Company's
reasonable request to that effect, deliver to the Company such other
forms or similar documentation as may be required from time to time by
any applicable law, treaty, rule or regulation in order to establish
such Bank's tax status for withholding purposes.
(f) The Companies will not be required to pay any additional
amounts in respect of subsection 3.01(a) to any Bank or the Agent:
(i) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to comply with its
obligations under subsection 3.01(e);
(ii) if such Bank shall have delivered to the Companies
a Form 4224 pursuant to subsection 3.01(e), and such Bank shall not at
any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by the Companies
hereunder for any reason other than a change in United States law or
regulations or in the official interpretation of such law or regulations
by any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after
the date of delivery of such Form 4224;
(iii) if such Bank shall have delivered to the
Companies a Form 1001 pursuant to subsection 3.01(e), and such Bank
shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments
by the Companies hereunder for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or regulations by
any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after
the date of delivery of such Form 1001; or
(iv) if such Bank shall have delivered to the Companies
a Form W-8 or W-9, and such Bank shall not at any time be entitled to an
exemption from United States backup withholding in respect of payments
by the Companies hereunder for any reason other than a change in United
States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or regulations by
any Governmental Authority charged with the interpretation or
administration thereof (whether or not having the force of law) after
the date of delivery of such Form W-8 or W-9.
(g) If, at any time, either Company requests any Bank to
deliver any forms or other documentation pursuant to subsection 3.01(e)(iv),
then the Companies shall, on demand of such Bank through the Agent, reimburse
such Bank for any costs and expenses (including the fees and expenses of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel) reasonably incurred by
such Bank in the preparation or delivery of such forms or other
documentation.
(h) If either or both Companies are required to pay
additional amounts to any Bank or the Agent pursuant to this Section 3.01,
then such Bank or the Agent, as the case may be, shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its Lending Office or take any other reasonable action so
as to eliminate any such additional payment by such Company or Companies
which may thereafter accrue if such change, in the reasonable judgment of
such Bank, is not otherwise materially disadvantageous to such Bank or the
Agent.
3.02 Illegality.
(a) Except with respect to those tax matters which are
covered by Section 3.01, if any Bank shall determine that the introduction of
any Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is
unlawful, for any Bank or its Lending Office to make Offshore Rate Loans,
then, on notice thereof by the Bank to the Companies through the Agent, the
obligation of that Bank to make Offshore Rate Loans shall be suspended until
the Bank shall have notified the Agent and the Companies that the
circumstances giving rise to such determination no longer exists.
(b) If a Bank shall determine that it is unlawful to maintain
any Offshore Rate Loan, the Companies shall prepay in full all Offshore Rate
Loans of that Bank then outstanding, together with interest accrued thereon,
either on the last day of the Interest Period thereof if the Bank may
lawfully continue to maintain such Offshore Rate Loans to such day, or
immediately, if the Bank may not lawfully continue to maintain such Offshore
Rate Loans, together with any amounts required to be paid in connection
therewith pursuant to Section 3.04.
(c) If the Companies are required to prepay any Offshore Rate
Loan immediately as provided in subsection 3.02(b), then concurrently with
such prepayment, the Companies shall borrow from the affected Bank, in the
amount of such repayment, a Reference Rate Loan.
3.03 Increased Costs and Reduction of Return.
(a) If any Bank shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any law or
regulation after January 1, 1994, or (ii) the compliance with any guideline
or request from any central bank or other Governmental Authority (whether or
not having the force of law) promulgated after January 1, 1994, there shall
be any increase in the cost to such Bank of agreeing to make or making,
funding or maintaining any Offshore Rate Loans or CD Rate Loans, then the
Companies shall be liable for, and shall from time to time, upon request
therefor by such Bank (with a copy of such request to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by the Bank (or its Lending
Office) or any corporation controlling the Bank, with any Capital Adequacy
Regulation; affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies
with respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of
its loans, credits or obligations under this Agreement, then, upon request of
such Bank (with a copy to the Agent), the Companies shall immediately pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
3.04 Funding Losses. The Companies agree to reimburse each Bank and to
hold each Bank harmless from any loss, cost or expense which the Bank may
sustain or incur as a consequence of:
(a) any failure of the Companies to make any payment or
prepayment of principal of any Offshore Rate Loan or CD Rate Loan (including
payments made after any acceleration thereof);
(b) any failure of the Companies to borrow, continue or
convert a Loan after the Companies have given (or are deemed to have given)
a Notice of Borrowing or a Notice of Conversion/Continuation;
(c) any failure of the Companies to make any prepayment after
the Companies have given a notice in accordance with Section 2.06;
(d) any prepayment of an Offshore Rate Loan or a CD Rate Loan
on a day which is not the last day of the Interest Period with respect
thereto; or
(e) any conversion pursuant to subsection 2.04 of any
Offshore Rate Loan or CD Rate Loan to a Reference Rate Loan on a day that is
not the last day of the respective Interest Period;
including any such loss or expense arising from the liquidation or
reemployment of funds obtained by it to maintain its Offshore Rate Loans or
CD Rate Loans hereunder or from fees payable to terminate the deposits from
which such funds were obtained.
3.05 Inability to Determine Rates. If the Majority Banks shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the Offshore Rate or the CD Rate for any requested Interest
Period with respect to a proposed Offshore Rate Loan or CD Rate Loan or that
the Offshore Rate or the CD Rate applicable pursuant to Section 2.08 for any
requested Interest Period with respect to a proposed Offshore Rate Loan or CD
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Agent will forthwith give notice of such determination
to the Companies and each Bank. Thereafter, the obligation of the Banks to
make or maintain CD Rate Loans or Offshore Rate Loans, as the case may be,
hereunder shall be suspended until the Agent upon the instruction of the
Majority Banks revokes such notice in writing. Upon receipt of such notice,
the Companies may revoke any Notice of Borrowing or Notice of Conversion/
Continuation then submitted by them. If the Companies do not revoke such
notice, the Banks shall make, convert or continue the Loans, as proposed by
the Companies, in the amount specified in the applicable notice submitted by
the Companies, but such Loans shall be made, converted or continued as
Reference Rate Loans instead of CD Rate Loans or Offshore Rate Loans, as the
case may be.
3.06 Reserves on Offshore Rate Loans. The Companies shall pay to each
Bank, as long as such Bank shall be required under regulations of the Federal
Reserve Board to maintain reserves with respect to liabilities or assets
consisting of or including Eurocurrency funds or deposits (currently known as
"Eurocurrency liabilities"), additional costs on the unpaid principal amount
of each Offshore Rate Loan equal to actual costs of such reserves allocated
to such Loan by the Bank (as determined by the Bank in good faith, which
determination shall be conclusive), payable on each date on which interest is
payable on such Loan provided the Companies shall have received at least
fifteen (15) days' prior written notice (with a copy to the Agent) of such
additional interest from the Bank. If a Bank fails to give notice fifteen
days prior to the relevant Interest Payment Date, such additional interest
shall be payable fifteen days from receipt of such notice.
3.07 Certificates of Banks. Any Bank claiming reimbursement or
compensation pursuant to this Article III shall deliver to the Companies
(with a copy to the Agent) a certificate setting forth in reasonable detail
the amount payable to the Bank hereunder and such certificate shall be
conclusive and binding on the Companies in the absence of manifest error.
Each certificate submitted under this Section may not claim reimbursement or
compensation for a period earlier than thirty (30) days prior to the date of
such certificate unless interpretation of the law or regulation or the
guideline or request in question is retroactive in effect in which case the
certificate can cover such retroactive period.
3.08 Replacement of Banks, Termination of Commitment. The Companies
may, with respect to any Bank which claims reimbursement or compensation
pursuant to Sections 3.01 or 3.03, or which exercises its right under Section
3.02 to refrain from making Offshore Rate Loans, upon at least thirty (30)
Business Days prior written notice to such Bank through Agent, terminate the
commitment of such Bank to lend under this Agreement. Each such termination
shall be accompanied by payment or prepayment in full, on the effective date
of such termination, of principal and interest on all outstanding Loans made
by such Bank, together with all other sums due such Bank by reason of
prepayment.
3.09 Reallocation of Commitments; New Banks.
(a) If a Bank's commitment to lend under this Agreement
terminates pursuant to subsection 2.01(c) or if the Companies terminate the
Commitments of any Bank (in both instances, a "Terminated Bank") pursuant to
Section 3.08, then the Companies may, but need not, during the Availability
Period, (i) add, with the Agent's consent, which shall not be unreasonably
withheld, one or more commercial banking institutions ("New Banks") which
agree to extend credit under this Agreement in amounts up to the Commitment
of the Terminated Bank, (ii) reallocate all or part of the Terminated Bank's
Commitment among one or more of the remaining Banks with the consent of such
remaining Bank or Banks, or (iii) exercise its rights under both clause (i)
and (ii).
(b) If the Companies add one or more New Banks, the
Companies, the Agent and each New Bank shall execute a counterpart of this
Agreement, whereupon, effective as of such date as may be agreed, such New
Bank shall become a "Bank" for all purposes under this Agreement. The
Companies shall, no later than the effective date of such substitution,
execute and deliver to such New Bank requesting it, a Note evidencing the
Commitment of such New Bank.
(c) In the event of any termination of a Bank Commitment, or
of the addition of a New Bank or reallocation to any of the remaining Banks
of a Terminated Bank's Commitment, calculation adjustments shall be made to
the definition of each Bank's Commitment Percentage and of the Aggregate
Commitment, if applicable, in order to give effect to the termination of the
Commitment of the Terminated Bank, and to the addition of a New Bank or the
reallocation of the Terminated Bank's Commitment to any remaining Bank. On
each date on which a Terminated Bank's Loans are prepaid in connection with
the termination of such Bank's Commitment in accordance with Section 3.08,
the Companies may simultaneously make borrowings from any New Bank or from
any remaining Bank which elected to increase its Commitment as provided
above. Such borrowings will be in amounts so that ratio of (i) the total
outstanding principal amount of Loans owing to each Bank to (ii) such Bank's
Commitment, will be the same for all Banks having Commitments.
3.10 Nonapplicability of Article III. The Companies shall have no
obligation to make any payment pursuant to this Article III to any Bank
Affiliate to which the respective Bank has assigned and delegated all or part
of the Loans, the commitment to make Loans, and the other rights and
obligations of such Bank hereunder if such payment is not required to be made
to such Bank if at the time of such payment such Bank has retained a portion
of the Loans, or if at the time of such payment such Bank has not retained a
portion of the Loans, such payment would not have been required under this
Article III to have been made to such Bank.
3.11 Survival. The agreements and obligations of the Companies in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
4.01 Conditions of Initial Loans. This Agreement shall take effect
when, and the obligation of each Bank to make its first Loan hereunder is
subject to the condition that, the Agent shall have received on or before the
Effective Date all of the following, in form and substance satisfactory to
the Agent, and in sufficient copies for each Bank:
(a) Credit Agreement and Notes. This Agreement executed by
the Companies, the Agent and each of the Banks and the requested Notes
executed by the Companies;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors
of the Companies (or authorized committees thereof) approving and
authorizing the execution, delivery, and performance by the Companies of
this Agreement and the other Loan Documents, and authorizing the
borrowing of the Loans, certified as of the Effective Date by the
Secretary or an Assistant Secretary of the Companies substantially in
the form of Exhibit D;
(ii) A certificate of the Secretary or Assistant
Secretary of each Company certifying, as of the Effective Date, the
names and true signatures of the officers of the Company authorized to
execute and deliver, as applicable, this Agreement, and all other Loan
Documents to be delivered hereunder, substantially in the form of
Exhibit E;
(c) Payment of Fees. The Companies shall have paid the
commitment fee accrued through the Effective Date, which commitment fee is
referred to in Section 2.09(b) of the Prior Credit Agreement and all costs,
accrued and unpaid fees and expenses payable hereunder to the extent then due
and payable on the Effective Date.
4.02 Conditions to Each Borrowing. The obligation of each Bank to make
any Loan to be made by it hereunder (including its initial Loan) is subject
to the satisfaction of the following conditions precedent on the date of such
Borrowing:
(a) Notice of Borrowing. The Agent shall have received a
Notice of Borrowing;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Companies contained in Article V
shall be true and correct in all material respects on and as of such
borrowing date with the same effect as if made on and as of such borrowing
date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct in all
material respects as of such earlier date); and
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from such Borrowing.
Each oral request made by a Company for a Borrowing or a conversion or
continuation of Loans and each Notice of Borrowing submitted by the Companies
hereunder shall constitute a representation and warranty by both Companies
hereunder, as of the date of each such request, notice, and Borrowing, that
the conditions in Section 4.02 are satisfied.
4.03 Conditions to the Term Loan. The right of the Companies to borrow
the Term Loan is subject to the satisfaction of the following conditions
precedent on or as of the last day of the Availability Period:
(a) Notice of Borrowing. The Agent shall have received a
Notice of Borrowing in accordance with Section 2.03;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Companies contained in Article V
shall be true and correct in all material respects on and as of the last day
of the Availability Period with the same effect as if made on and as of such
date (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they shall be true and correct in all
material respects as of such earlier date); and
(c) No Existing Default. No Default or Event of Default
shall exist or shall result from the making of the Term Loan.
The Notice of Borrowing submitted by the Companies hereunder with respect to
the Term Loan shall constitute a representation and warranty by both
Companies hereunder, as of the date thereof, that the conditions in Section
4.03 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
------------------------------
Each Company represents and warrants to the Agent and each Bank that:
5.01 Organization, Powers, Good Standing and Business.
(a) Organization and Powers. Each Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and
proposed to be conducted, to enter into each Loan Document, to issue the
Notes and to carry out the transactions contemplated hereby and thereby.
(b) Good Standing. Each Company is duly qualified to do
business and is in good standing wherever necessary to carry on its
respective present business and operations, except in jurisdictions in which
the failure to be so qualified or to be in good standing has not had and will
not have a Material Adverse Effect.
(c) Conduct of Business. LSAI and its Subsidiaries,
considered together, are engaged only in businesses related or incidental to
the manufacture and sale of clothing.
5.02 Authorization of Borrowing, etc.
(a) Authorization of Borrowing. The execution, delivery and
performance by each of the Companies of each Loan Document to which it is a
party and the issuance, delivery and payment of the Notes by the Companies as
contemplated herein have been duly authorized by all necessary corporate
action by the Companies.
(b) No Conflict. The execution, delivery and performance by
the Companies of each Loan Document to which it is a party and the issuance,
delivery and performance of the Notes by the Companies do not and will not
(i) violate the Companies' Certificates of Incorporation or Bylaws or any
order, judgment or decree of any court or other Governmental Authority
binding on the Companies, (ii) conflict with, result in a breach of,
constitute a default under, or require the termination of, any Contractual
Obligation of the Companies, except where such conflicts, breaches, defaults
and terminations, in the aggregate, would not have a Material Adverse Effect,
(iii) result in or require the creation or imposition of any Lien of any
nature whatsoever upon any of the properties or assets of either of the
Companies, or (iv) require any approval of stockholders or any approval or
consent of any Person under any Contractual Obligation of the Companies
except for such approvals or consents which will be obtained on or before the
Effective Date or where the failure to obtain such approvals and consents
would not, in the aggregate, have a Material Adverse Effect.
(c) Governmental Consents. The execution, delivery and
performance by the Companies of the Loan Documents, the application of the
proceeds of the Loans and the issuance, delivery and performance of the Notes
by the Companies do not and will not require any registration with, consent
or approval of, or notice to, or other action to, with or by, any
Governmental Authority except actions which are required due to a change in
applicable law after the date hereof and which have been or will be duly
taken within the time period prescribed by any such law.
(d) Binding Obligation. Each of the Loan Documents (other
than the Notes) to which the Companies are parties is, and the Notes, when
executed and delivered, will be, the legally valid and binding obligations of
each Company that is a party thereto, enforceable against each Company in
accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors' rights generally or by equitable principles
relating to enforceability, whether enforcement is sought in a proceeding at
law or in equity.
5.03 Financial Condition. LSAI has heretofore delivered to the Agent
the audited consolidated financial statements of LSAI and its Subsidiaries as
and for the period ending November 28, 1993. The foregoing financial
statements were prepared in conformity with GAAP, and fairly present, in all
material respects, the consolidated financial position of LSAI and its
Subsidiaries as of the date thereof and the consolidated results of
operations and cash flows of LSAI and its Subsidiaries for the period covered
thereby. As of the date hereof, LSAI and its Subsidiaries, taken as a whole,
have no material contingent obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term commitment, which is
not reflected in the foregoing financial statements, the notes thereto, or
the most recent financial statements delivered pursuant to Section 6.01 (if
any), and which is required by GAAP to be reflected therein.
5.04 Title to Properties; Liens. Each of LSAI and its Subsidiaries has
good, sufficient and legal title to all of its respective properties and
assets reflected in the balance sheets referred to in Section 5.03 or in the
most recent financial statements delivered pursuant to Section 6.01 (if any),
except for assets acquired or disposed of in the ordinary course of business
since the date of such balance sheet and assets disposed of where such
disposition would not be prohibited by Section 7.02 of this Agreement and
except for those imperfections of title which would not in the aggregate have
a Material Adverse Effect. Except as permitted hereunder, all such
properties and assets are free and clear of Liens.
5.05 Litigation; Adverse Facts. Except as to any confidential
governmental proceeding of which the Companies are unaware, there is no
action, suit, proceeding, claim or dispute (whether or not purportedly on
behalf of the Companies) at law or in equity or before or by any Governmental
Authority, pending or, to the knowledge of the Companies, threatened in
writing against or affecting LSAI or any of its Subsidiaries or any property
of LSAI or any of its Subsidiaries, which the Companies reasonably expect to
(a) result in any Material Adverse Effect, or (b) materially and adversely
affect the ability of the Companies, taken as a whole, to perform the
Obligations or the ability of the Banks to enforce the Obligations. Neither
LSAI nor any of its Subsidiaries is (i) in violation of any applicable
Requirement of Law which (as to all such violations in the aggregate) would
have 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
Governmental Authority, domestic or foreign, which (as to all such matters in
the aggregate) would have a Material Adverse Effect. There is no action,
suit or proceeding pending or, to the knowledge of the Companies, threatened
in writing against or affecting the Companies which challenges the validity
or the enforceability of this Agreement, the Notes or the other Loan
Documents.
5.06 Payment of Taxes. All federal and state tax returns and reports
of LSAI and each of its Subsidiaries required to be filed by such Person,
where the failure to file such returns or reports would have a Material
Adverse Effect, have been timely filed, and all taxes, assessments, fees and
other governmental charges upon such Persons and upon their respective
properties, assets, income and franchises which are due and payable, where
the failure to pay such amounts when due and payable would in the aggregate
have a Material Adverse Effect, have been paid when due and payable. The
Companies know of no proposed tax assessment against LSAI or any of its
Subsidiaries that would have a Material Adverse Effect which is not being
actively contested in good faith by the applicable corporation to the extent
affected thereby (and as to which any provision therefor required pursuant to
Section 6.04 has been made).
5.07 Materially Adverse Agreements; Performance.
(a) Agreements. Neither LSAI nor any of its Subsidiaries is
a party to or subject to any material agreement or instrument or charter or
other internal restriction which (in the aggregate as to all such matters)
would have a Material Adverse Effect.
(b) Performance. Neither LSAI 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 Contractual Obligation
of LSAI or any of its Subsidiaries and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of such default
or defaults, if any, would not have a Material Adverse Effect.
5.08 Governmental Regulation. Neither LSAI 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, the Investment
Company Act of 1940, any state public utilities code or to any federal or
state statute or regulation limiting its ability to incur Indebtedness for
money borrowed.
5.09 Employee Benefit Plans.
(a) The Companies and each of their respective ERISA
Affiliates are in compliance in all material respects with any applicable
provisions of ERISA and the regulations and published interpretations
thereunder with respect to all Pension Plans and Multiemployer Plans, except
for non-compliance which would not have a Material Adverse Effect.
(b) No Termination Event has occurred or is reasonably
expected to occur with respect to any Pension Plan.
(c) There is no amount of unfunded benefit liabilities
(within the meaning of Section 4001(a)(18) of ERISA) with respect to any
Pension Plan, which amount or the payment thereof would have a Material
Adverse Effect.
(d) Neither the Companies nor any of their ERISA Affiliates
has incurred or reasonably expects to incur any withdrawal liability under
Title IV of ERISA to any Multiemployer Plan in excess of $7,000,000.
5.10 Environmental Matters. Except where the failure of any of the
following to be true would not in the aggregate have a Material Adverse
Effect, to the best knowledge of the Companies, (i) the properties and opera-
tions of LSAI and its Subsidiaries comply in all respects with all applicable
Environmental Laws; (ii) none of the properties or operations of LSAI or any
of its Subsidiaries is subject to any judicial or administrative proceeding
alleging the violation of any Environmental Law; (iii) none of the properties
or operations of LSAI or any of its Subsidiaries is the subject of any fed-
eral or state investigation concerning any use or release of any Hazardous
Substance; (iv) none of LSAI, any of LSAI's Subsidiaries, or any predecessor
of any such Person has filed any notice under any federal or state law
indicating past or present treatment, storage or disposal of a hazardous
waste or reporting a spill or release of a Hazardous Substance into the
environment; (v) none of LSAI nor any of its Subsidiaries has any contingent
obligation in connection with any release of any Hazardous Substance into the
environment and no release which could require remediation has occurred;
(vi) none of LSAI's nor any of its Subsidiaries' operations involve the
generation, transportation, treatment, storage or disposal of Hazardous
Substances (other than in the normal course of and incidental to any
manufacturing process); (vii) none of LSAI nor any of its Subsidiaries has
disposed of any material amount of any Hazardous Substance in, on or about
any premises owned, leased or used by LSAI or any of its Subsidiaries nor has
any lessee, prior owner or other Person; (viii) no surface impoundments or
underground storage tanks are located in, on or about any of the premises
owned, leased or used by LSAI or any of its Subsidiaries; and (ix) no lien in
favor of any Governmental Authority for (A) any liability under Environmental
Laws, or (B) damages arising from or costs incurred by such Governmental
Authority in response to a release of any Hazardous Substance into the
environment has been filed or attached to any of the premises owned, leased
or used by LSAI or any of its Subsidiaries.
5.11 Compliance With Laws. Each of LSAI and its Subsidiaries is in
compliance with all Requirements of Law applicable to their properties,
assets and business where the failure to so comply would (as to all such
failures to comply in the aggregate) have a Material Adverse Effect. There
are no proceedings pending or, to the knowledge of the Companies, threatened
in writing, to terminate or modify any license, permit or other approval
issued by a Governmental Authority, the termination or modification of which
(in the aggregate as to all such matters) would have a Material Adverse
Effect.
5.12 Regulation U. None of LSAI nor any of its Subsidiaries is engaged
principally, nor as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any Margin Stock.
No part of the proceeds of the Loans will be used to purchase or carry any
Margin Stock or to extend credit to others for the purpose of purchasing or
carrying any Margin Stock. No part of the proceeds of the Loans will be used
for any purpose which violates, or which is inconsistent with, the provisions
of Regulation G, T, U or X of the Federal Reserve Board.
5.13 Disclosure. No representation or warranty of the Companies
contained in this Agreement or any other document, certificate or written
statement furnished to the Agent or any Bank by the Companies for use in
connection with any transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact or omits to state or
will omit to state a material fact known to the Companies necessary in order
to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading. The projections
and pro forma information, together with any notes relating thereto,
contained in such materials are based upon good faith estimates and
assumptions believed by the Companies to be reasonable at the time made, it
being recognized by the Agent and the Banks that actual results during the
period or periods covered by any such projections may differ from the
projected results.
5.14 No Material Adverse Effect. To the knowledge of the Responsible
Officers of each Company, since November 28, 1993, there has been no event or
occurrence which has had a Material Adverse Effect.
ARTICLE VI
AFFIRMATIVE COVENANTS
---------------------
The Companies jointly and severally covenant and agree that, so long as
any Bank shall have any commitment to lend under this Agreement and until
full and final payment of all Loans and other Obligations, unless the
Majority Banks waive compliance in writing the Companies shall perform and
comply with all covenants in this Article.
6.01 Financial Statements and Other Reports.
(a) Each of the Companies shall maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in conformity with
GAAP. Subject to the second sentence of subsection (b) below, the Companies
shall deliver to the Agent with sufficient copies for each Bank:
(i) as soon as practicable and in any event within
forty-five (45) days after the end of each of the first three
fiscal quarters of the fiscal year of LSAI, a copy of the
consolidated balance sheet of LSAI and its Subsidiaries, as at the
end of such period, and the related consolidated statements of
income and cash flows of LSAI and its Subsidiaries for such fiscal
quarter or for the fiscal year to date, certified by the chief
financial officer, treasurer or controller of LSAI as fairly
presenting the financial condition of LSAI and its Subsidiaries in
all material respects as at the dates indicated and the results of
their operations and changes in cash flows for the periods indi-
cated in accordance with GAAP, except for the absence of footnotes
and subject to changes resulting from audit and normal year-end
adjustment;
(ii) as soon as practicable and in any event
within ninety (90) days after the end of each fiscal year of LSAI,
commencing with fiscal year 1994, a copy of the consolidated
balance sheet of LSAI and its Subsidiaries as at the end of such
year and the related consolidated statements of income, stock-
holders' equity and cash flows of LSAI and its Subsidiaries for
such fiscal year, accompanied by a report thereon of and a letter
from Arthur Andersen & Co. or other independent public accountants
of recognized national standing selected by LSAI and satisfactory
to the Majority Banks substantially in the form of Exhibit F; which
report shall be unqualified as to going concern and scope of audit
and shall state that such consolidated financial statements present
fairly in all material respects the financial position of LSAI and
its Subsidiaries as at the dates indicated and the results of
operations and cash flows for the periods indicated in conformity
with GAAP (except as otherwise stated therein) and that the
examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iii) together with each delivery of any financial
statements pursuant to subsections 6.01(a)(i) or 6.01(a)(ii) a
compliance certificate, substantially in the form of Exhibit G,
from each of the Companies executed by a Responsible Officer,
stating that the signer does not have knowledge of the existence as
at the date of such certificate, of any condition or event which
constitutes a Default or Event of Default, or, if any such
condition or event existed at such date or exists, specifying the
nature and period of existence thereof and what action LSAI or
LS&CO., as the case may be, has taken, is taking and proposes to
take with respect thereto, and demonstrating in reasonable detail
compliance during or at the end of such accounting periods, as
applicable, with Sections 7.04, 7.05 and 7.06 and showing the Funds
Flow Ratio for the period covered; and
(iv) promptly upon any Responsible Officer of
either of the Companies obtaining knowledge of (A) any condition or
event which constitutes a Default or Event of Default, or becoming
aware that any Bank has given any written notice of a claimed
Default or Event of Default, or (B) any condition or event which
would be required to be disclosed in a current report filed by the
Companies with the SEC on Form 8-K pursuant to Items 1, 2, 4 or 5
of Form 8-K as in effect on the date hereof if the Companies were
required to file such reports under the Exchange Act, a certificate
executed by a Responsible Officer of the Company specifying the
nature and period of existence of any such condition or event, or
specifying the notice given or action taken, and the nature of such
claimed Default or Event of Default, event or condition, and what
action either or both Companies have taken, are taking, and propose
to take with respect thereto;
(v) promptly upon any Responsible Officer of
either of the Companies obtaining knowledge of (A) the institution
of, or non-frivolous threat of, any action, suit, proceeding or
arbitration against or affecting LSAI or any of its Subsidiaries or
any property of LSAI or any of its Subsidiaries not previously
disclosed in writing by the Companies to the Agent, or (B) any
material development in any action, suit, proceeding or arbitration
already disclosed, the Companies reasonably expect to result in any
Material Adverse Effect or materially and adversely to affect the
ability of the Companies and their Subsidiaries, taken as a whole,
to perform the Obligations or the ability of the Banks to enforce
the Obligations, the Companies shall promptly give notice thereof
to the Agent and provide such other information (excluding
communications covered by the attorney-client privilege) as may be
reasonably requested by the Agent or a Bank to enable their counsel
to evaluate such matters;
(vi) promptly upon any Responsible Officer of
either of the Companies becoming aware of the occurrence of any
(A) Termination Event, or (B) material "prohibited transaction," as
such term is defined in Section 4975 of the Code, in
connection with any Pension Plan or any trust created thereunder,
a notice specifying the nature thereof, what action LSAI or any
ERISA Affiliate of LSAI, as applicable, has taken, is taking or
proposes to take with respect thereto, and, when known, any action
taken or threatened by the Internal Revenue Service or the PBGC
with respect thereto; and
(vii) with reasonable promptness copies of (A) all
notices received by LSAI or any of its ERISA Affiliates of the
intent of the PBGC to terminate any Pension Plan or to have a
trustee appointed to administer any Pension Plan; (B) upon the
request of any Bank, each Schedule B (Actuarial Information) to the
annual report (Form 5500 Series) filed by LSAI or any of its ERISA
Affiliates with the Internal Revenue Service with respect to each
Pension Plan; and (C) all notices received by LSAI or any of its
ERISA Affiliates from a Multiemployer Plan sponsor concerning the
imposition or amount of withdrawal liability pursuant to
Section 4202 of ERISA.
(b) As soon as possible after the same are available to the
Companies, the Companies will deliver to the Agent with sufficient copies for
distribution to each Bank copies of all financial statements, reports,
notices and proxy statements, if any, sent or made available generally by
each Company to its stockholders, of all regular and periodic reports and
other filings made by either Company with any securities exchange, the SEC or
any other governmental or private regulatory authority, and of all press
releases and other statements made available generally by either Company to
the public concerning material developments in the business of LSAI and its
Subsidiaries taken as a whole. As to any information contained in materials
furnished pursuant to the preceding sentence, the Companies shall not be
separately required to furnish such information under subsection (a) above,
but the foregoing shall not derogate the obligation of the Companies to
furnish the information and materials described in subsection (a) above at
the times specified therein.
6.02 Corporate Existence, etc. The Companies shall at all times
preserve and keep in full force and effect their corporate existence and
rights and franchises material to their business and the business of each of
their Subsidiaries, except where the failure to do so would not in the
aggregate have a Material Adverse Effect.
6.03 Compliance With Laws, etc. The Companies shall exercise all due
diligence in order to comply with the requirements of all applicable
Requirement of Law, except where the failure to do so would not in the
aggregate have a Material Adverse Effect.
6.04 Payment of Taxes and Claims. The Companies shall pay, and cause
each of their Subsidiaries to pay, all taxes, assessments and other
governmental charges (other than taxes, assessments and other governmental
charges not exceeding $5,000,000 in the aggregate) imposed upon them or any
of their properties or assets or in respect of any of their franchises,
business, income or property before any penalty or interest accrues thereon,
and all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums (other than claims not exceeding $5,000,000
in the aggregate) which have become due and payable and which by law have or
may become a Lien upon any of their properties or assets, prior to the time
when any penalty or fine shall be incurred with respect thereto; provided
that no such governmental charge or claim need be paid if it is being
contested in good faith by appropriate proceedings and if such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor.
6.05 Maintenance of Properties; Insurance. The Companies shall
maintain or cause to be maintained in good repair, working order and
condition all properties used or useful in the business of LSAI and its
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof, if the failure to
perform such actions would in the aggregate have a Material Adverse Effect.
The Companies shall maintain or cause to be maintained, through self-
insurance or with financially sound and reputable insurers, insurance with
respect to their properties and business and the properties and business of
their Subsidiaries against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or
similar businesses and similarly situated, of such types and in such amounts
as are customarily carried under similar circumstances by such other
corporations, if the failure to do so would (as to all such failures in the
aggregate) have a Material Adverse Effect.
6.06 Inspection. The Companies shall permit any authorized
representatives designated by a Bank, at the expense of that Bank, to visit
and inspect any of the properties of the Companies or any of their
Subsidiaries, including their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss their affairs, finances
and accounts with their officers and independent public accountants, all upon
reasonable notice and at such reasonable times during normal business hours
and as often as may be reasonably requested.
6.07 Use of Proceeds. The Companies shall use the proceeds of the
Loans solely as follows: (a) to repay sums outstanding under the Prior
Credit Agreement, and (b) for working capital and other general corporate
purposes not in contravention of any applicable Requirement of Law.
6.08 Opinions of Counsel. The Companies shall, within the 90 day
period commencing on the date of this Agreement, deliver to the Agent, in
sufficient number of copies for each Bank:
(a) Legal Opinion of Outside Counsel for the Companies. An
opinion of Heller, Ehrman, White & McAuliffe, counsel to the Companies and
addressed to the Agent and the Banks, dated the date of its delivery, and in
form and substance acceptable to Majority Banks; and
(b) Opinion of General Counsel. An opinion of Thomas J.
Bauch, Esq., Senior Vice President and General Counsel of the Companies,
addressed to the Agent and the Banks, dated the date of its delivery, and in
form and substance acceptable to Majority Banks.
ARTICLE VII
NEGATIVE COVENANTS
------------------
The Companies jointly and severally covenant and agree that, so long as
any Bank shall have any commitment to lend under this Agreement and any Loan
or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing the Companies shall perform and comply with
all covenants in this Article.
7.01 Limitation on Liens. The Companies shall not, and shall not
suffer or permit any Subsidiary of a Company to, directly or indirectly,
make, create, incur, assume or suffer to exist any Lien upon or with respect
to any part of its Property, whether now owned or hereafter acquired, other
than the following ("Permitted Liens"):
(a) any Lien existing on the Property of either Company or
its Subsidiaries on the Effective Date;
(b) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 6.04;
(c) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the ordinary
course of business which are not delinquent or remain payable without penalty
or which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of the
Property subject thereto or if such reserve or other appropriate provision,
if any, required by GAAP shall have been made therefor;
(d) Liens (other than any Lien imposed by ERISA) consisting
of pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(e) Liens securing (i) the performance of tenders, bids,
trade contracts (other than for borrowed money), government contracts,
leases, statutory obligations, and performance and return-of-money bonds,
(ii) contingent obligations on surety and appeal bonds, and (iii) other
obligations of a like nature; in each case, incurred in the ordinary course
of business;
(f) Liens consisting of judgment or judicial attachment
liens, provided that the judgment secured by any such Lien shall, within
forty-five (45) days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall have been discharged within
forty-five (45) days after the expiration of any such stay and such Liens do
not constitute an Event of Default;
(g) easements, rights-of-way, restrictions and other similar
encumbrances which do not interfere with the ordinary conduct of the
businesses of either Company and its Subsidiaries;
(h) Liens on assets of entities which become Subsidiaries
after the date of this Agreement, provided, however, that such Liens existed
at the time the respective entities became Subsidiaries and were not created
in anticipation thereof;
(i) purchase money mortgages (including chattel mortgages) or
other purchase money liens or conditional sale or other title retention or
security agreements incurred in connection with the acquisition or
construction of any real or personal property, or mortgages or liens or
conditional sale or other title retention agreements or security agreements
existing on any such property at the time of acquisition or construction or
placed thereon within one year of the acquisition or completion of
construction thereof; provided that every such mortgage, lien or agreement
shall apply only to the property originally subject thereto and fixed
improvements, if any, then existing or thereafter erected thereon;
(j) any interest or title of a lessor under any capital or
operating lease;
(k) Liens arising solely by virtue of any statutory or common
law provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a creditor
depository institution; provided that (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by the Company, the Companies or the Subsidiary owning the affected
deposit account or other funds maintained with a creditor depository
institution in excess of those set forth by regulations promulgated by the
Federal Reserve Board, and (ii) such deposit account is not intended by the
affected Company or any of its Subsidiaries to provide collateral to the
depository institution;
(l) Leases or subleases granted to others in the ordinary
course of business not interfering with the ordinary conduct of the business
of the grantor thereof;
(m) Liens created pursuant to applications or reimbursement
agreements pertaining to documentary letters of credit which encumber
documents and other property relating to such documentary letters of credit
and the products and proceeds thereof;
(n) the extension, renewal or replacement of any Lien
permitted by this Section 7.01 in respect of all or part of the same property
theretofore subject thereto or the extension, renewal or replacement or all
or part of the Indebtedness secured thereby immediately prior to such
extension, renewal or replacement so long as the aggregate principal amount
of Indebtedness secured by all or any such property immediately prior to such
extension, renewal or replacement is not increased;
(o) Liens attaching to ownership interests in joint ventures
(whether in partnership, corporate or other form) engaged in the LOS/DOS
Business or attaching to intellectual property rights relating to the LOS/DOS
Business; and
(p) Liens which do not fall in any of the foregoing
subsections so long as the aggregate outstanding amount of Indebtedness
secured by such Liens does not exceed $25,000,000.
7.02 Consolidations and Mergers; Sale of Assets. The Companies shall
not:
(a) merge or consolidate with or into any other Person unless
the relevant Company is the surviving corporation and as a result of such
merger or consolidation there does not exist a Default or an Event of
Default;
(b) convey, transfer, lease or otherwise dispose of (whether
in one transaction or in a series of transactions) all or substantially all
of the assets of LSAI and its Subsidiaries taken as a whole (whether now
owned or hereafter acquired) to or in favor of any Person.
7.03 Use of Proceeds. The Companies shall not use any portion of the
Loan proceeds, directly or indirectly, (i) to purchase or carry Margin Stock,
(ii) to repay or otherwise refinance indebtedness of a Company or others
incurred to purchase or carry Margin Stock, (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the
Exchange Act.
7.04 Consolidated Net Worth. The Companies shall not permit the
consolidated Net Worth of LSAI and its Subsidiaries as of the last day of
each fiscal quarter to be less than the sum of $600,000,000 plus 50% of
cumulative consolidated net income (not adjusted for net losses) beginning
with the Companies' first fiscal quarter for fiscal year 1993. The
computation of consolidated Net Worth shall exclude any after-tax adjustment
(up to a maximum of $250,000,000) taken by the Companies for post-retirement
benefits other than pensions as required by Financial Accounting Standards
Board Statement 106.
7.05 Leverage Ratio. The Companies shall not permit the consolidated
Leverage Ratio of LSAI and its Subsidiaries as determined as of the last day
of any fiscal quarter to be greater than 1.25 to 1.00.
7.06 Interest Coverage Ratio. The Companies shall not permit the
Interest Coverage Ratio to be less than 3.00 to 1.00.
7.07 Change in Business. The Companies shall not, and shall not permit
any Subsidiary of a Company to, engage in any business not related or
incidental to the manufacture and sale of clothing. The LOS/DOS Business is
a business that is related or incidental to the manufacture and sale of
clothing within the meaning of the preceding sentence.
7.08 ERISA. Neither LSAI nor any of its Subsidiaries shall, or shall
permit any of its respective ERISA Affiliates to:
(a) engage in any transaction in connection with which LSAI
or any of its Subsidiaries or any of their respective ERISA Affiliates would
be subject to either a civil penalty assessed pursuant to Section 502(i) or
502(l) of ERISA or a tax imposed by Section 4975 of the Code, in either case
in an amount in excess of $5,000,000;
(b) fail to make full payment within five (5) Business Days
after the date when due of all amounts exceeding $2,000,000 which, under the
provisions of any Pension Plan, LSAI or any of its Subsidiaries or any of
their respective ERISA Affiliates is required to pay as contributions
thereto, or (as to any Subsidiary organized under the laws of any of the
United States) permit to exist any accumulated funding deficiency, whether or
not waived, with respect to any Pension Plan in an aggregate amount greater
than $5,000,000;
(c) permit the sum of the amounts of unfunded benefit
liabilities under all Pension Plans (calculated separately for each Pension
Plan) to exceed $20,000,000; or
(d) fail to make any payments in an aggregate amount greater
than $7,000,000 to any Multiemployer Plan that LSAI or any of its
Subsidiaries, or any of their respective ERISA Affiliates may be required to
make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto.
As used in this Section, the term "accumulated funding deficiency" has the
meaning specified in Section 3(23) of ERISA and Section 412 of the Code, the
term "accrued benefit" has the meaning specified in Article 3 of ERISA and
the term "amount of unfunded benefit liabilities" has the meaning specified
in Section 4001(a)(18) of ERISA.
ARTICLE VIII
EVENTS OF DEFAULT
-----------------
8.01 Event of Default. Any of the following shall constitute an "Event
of Default":
(a) Non-Payment. Failure to pay any installment of principal
of any of the Loans when due, whether at stated maturity, by acceleration, by
notice of prepayment or otherwise; or failure to pay any interest on any of
the Loans or any other amount due under this Agreement or any other Loan
Document within three Business Days after the due date; or
(b) Cross Default. Failure of LSAI or any of its
Subsidiaries to pay, or any default in the payment of, any principal or
interest on any Indebtedness beyond any period of grace provided; or breach
or default with respect to any other material term of any evidence of any
Indebtedness, or of any loan agreement, mortgage, indenture or other
agreement relating thereto, if such breach or default continues beyond any
applicable period of grace provided, if and for so long as the effect of such
failure, default or breach is to cause or permit the holder or holders of
that Indebtedness (or a trustee on behalf of such holder or holders) to
cause, with or without the giving of notice, that Indebtedness to become or
be declared due prior to its stated maturity; provided, however that this
subsection shall not apply with respect to Indebtedness that does not exceed
$10,000,000 in the aggregate; or
(c) Representation or Warranty. Any representation or
warranties made by the Companies herein or in any other Loan Document or any
representations or warranties in any statement or certificate at any time
given by the Companies in writing pursuant to any of the Loan Documents or in
connection herewith shall be false in any material respect on the date as of
which made; or
(d) Specific Defaults. Failure to perform or observe any
term, covenant or agreement contained in Sections 6.07, 7.01, 7.02, 7.04,
7.05, 7.06; or
(e) Other Defaults. Failure to perform or observe any term
contained in this Agreement or any other Loan Document and such default shall
not have been remedied or waived within thirty (30) days after receipt of
notice from Agent or any Bank of such default; or
(f) Involuntary Bankruptcy; Appointment of Receiver, etc.
(1) A court having jurisdiction shall enter a decree or
order for relief in respect of LSAI or any of its Material Subsidiaries in an
involuntary case under any applicable Insolvency Law, which decree or order
is not stayed; or any other similar relief shall be granted under any
applicable Insolvency Law; or
(2) A decree or order of a court having jurisdiction
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over LSAI or any of its
Material Subsidiaries or over all or a substantial part of its property,
shall have been entered; or the involuntary appointment of an interim
receiver, trustee or other custodian of LSAI or any of its Material
Subsidiaries for all or a substantial part of its property; or the issuance
of a warrant of attachment, execution or similar process against any
substantial part of the property of LSAI or any of its Material Subsidiaries,
and the continuance of any such events described in this subsection (f)(2)
for sixty (60) days unless stayed, dismissed, bonded or discharged; or
(3) an involuntary case under any applicable Insolvency
Law shall have been commenced against LSAI or any of its Material
Subsidiaries and shall not have been dismissed within one hundred twenty
(120) days after the commencement of such case;
provided, however, that the entry of a decree or order described in this
subsection 8.01(f) shall not constitute an Event of Default where the effect
of such decree or order is the confiscation or expropriation by a country
which is not a member of the OECD (or a Governmental Authority of such a
country) of the equity interests or substantially all of the assets of a
Material Subsidiary; or
(g) Voluntary Bankruptcy; Appointment of Receiver, etc. LSAI
or any of its Material Subsidiaries shall commence a voluntary case under any
applicable Insolvency Law, 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 Insolvency 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; the making by LSAI or any of
its Material Subsidiaries of any assignment for the benefit of creditors; or
the inability or failure of LSAI or any of its Material Subsidiaries or the
admission by LSAI or any of its Material Subsidiaries in writing of its
inability to pay its debts as such debts become due; or the Board of
Directors of LSAI or any of its Material Subsidiaries (or any committee
thereof) adopts any resolution or otherwise authorizes action to approve any
of the foregoing; or
(h) Judgments and Attachments. Any money judgment, writ or
warrant of attachment, or similar process involving in any case an amount in
excess of $10,000,000 shall be entered or filed against LSAI or any of its
Material Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded and unstayed for a period of forty-five
(45) days or in any event later than five days prior to the date of any
proposed sale thereunder; or
(i) Unfunded ERISA Liabilities. Any Pension Plan maintained
by LSAI or any of its ERISA Affiliates shall be terminated within the meaning
of Title IV of ERISA or a trustee shall be appointed by an appropriate United
States district court to administer any Pension Plan, or the PBGC (or any
successor thereto) shall institute proceedings to terminate any Pension Plan
or to appoint a trustee to administer any Pension Plan, in each case, if as
of the date thereof LSAI's or any such ERISA Affiliate's liability (after
giving effect to the tax consequences thereof) to the PBGC (or any successor
thereto) for unfunded guaranteed vested benefits under such Pension Plan
exceeds the then current value of assets accumulated in such Pension Plan by
more than $20,000,000 (or in the case of a termination involving LSAI or any
of its ERISA Affiliates as a "substantial employer" (as defined in
Section 4001(a)(2) of ERISA) the withdrawing employer's proportionate share
of such liability shall exceed such amount); or
(j) Withdrawal Liability Under Multiemployer Plan. LSAI or
any of its ERISA Affiliates as employer under a Multiemployer Plan shall have
made a complete or partial withdrawal from such Multiemployer Plan and the
plan sponsor of such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an amount
exceeding $7,000,000.
8.02 Remedies. If any Event of Default occurs, the Agent shall, at the
request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall forthwith be terminated;
(b) declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing
or payable hereunder or under any other Loan Document to be immediately due
and payable; without presentment, demand, request, protest or other notice of
any kind, all of which are hereby expressly waived by the Companies; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in
subsection 8.01(f) or (g) above (after the expiration of any grace or cure
period provided therein), the obligation of each Bank to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Agent or any Bank.
8.03 Continuation and Conversion of Loans During the Existence of
Default.
(a) If an Event of Default under subsections 8.01(b), (c),
(d), (e), (h), (i), or (j) occurs and is continuing, the Companies may,
during the thirty (30) day period commencing with the date the first such
Event of Default occurs, elect to have a Loan converted into, or continued as
an Offshore Rate Loan or a CD Rate Loan subject to the following:
(i) The thirty (30) day period provided for in this
subsection shall start on the date such event occurs after any required
notice has been given and any specified period of time has elapsed in
order for the event to be an Event of Default;
(ii) There shall be but one thirty (30) day period at
any one time so that the occurrence of another Events of Default in such
period shall not extend such thirty (30) day period; and
(iii) During the thirty (30) day period the Majority
Banks have not instructed the Agent (A) to declare the commitments of
the Banks to make Loans under this Agreement terminated, or (B) to
declare all Loans due and payable.
(b) Notwithstanding the provisions of subsection (a) of this
Section, the Majority Banks may, before, during, and after the thirty (30)
day period described in the foregoing subsection (a) of this Section,
instruct the Agent to declare the commitments of the Banks to make Loans
under this Agreement terminated or declare all Loans to be due and payable if
such action or actions are permitted under Section 8.02, and thereupon the
Companies shall no longer have the ability to ask that a Loan be converted
into, or continued as an Offshore Rate Loan or a CD Rate Loan.
8.04 Rights Not Exclusive. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any
other rights, powers, privileges or remedies provided by law or in equity, or
under any other instrument, document or agreement now existing or hereafter
arising.
ARTICLE IX
THE AGENT
---------
9.01 Appointment and Authorization. Each Bank hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document
and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Loan Document, the Agent shall not have any duties
or responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any Bank, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Agent.
9.02 Delegation of Duties. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
9.03 Liability of Agent. None of the Agent-Related Persons shall (i)
be liable for any action taken or omitted to be taken by any of them under or
in connection with this Agreement or any other Loan Document or the
transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Banks
for any recital, statement, representation or warranty made by each Company
or any Subsidiary or Affiliate of a Company, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document,
or for any failure of either Company or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Bank to ascertain or to inquire as to
the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Properties, books or records of each Company or any of each Company's
Subsidiaries or Affiliates.
9.04 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telecopy, telex or
telephone message, statement or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to the Company or Companies), independent accountants and other
experts selected by the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Banks against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Banks and
such request and any action taken or failure to act pursuant thereto shall be
binding upon all of the Banks.
(b) For purposes of determining compliance with the
conditions specified in Sections 4.01 and 4.02, each Bank that has executed
this Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with each document or other matter either sent by the Agent
to such Bank for consent, approval, acceptance, or satisfaction, required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Bank, unless an officer of the Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from the Bank
prior to the initial Borrowing specifying its objection thereto and either
such objection shall not have been withdrawn by notice to the Agent to that
effect or the Bank shall not have made available to the Agent the Bank's
ratable portion of such Borrowing.
9.05 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and
fees required to be paid to the Agent for the account of the Banks, unless
the Agent shall have received written notice from a Bank or either Company
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Agent receives such a notice, the Agent shall give notice thereof to the
Banks. The Agent shall take such action with respect to such Default or
Event of Default as shall be requested by the Majority Banks in accordance
with Article VIII; provided, however, that unless and until the Agent shall
have received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
9.06 Credit Decision. Each Bank expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of each Company and each Subsidiary of a Company shall be deemed to
constitute any representation or warranty by the Agent and any Agent-Related
Person to any Bank. Each Bank represents to the Agent that it has,
independently and without reliance upon the Agent and Agent-Related Person,
and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of
each Company and each Subsidiary of a Company, and all applicable bank
regulatory laws relating to the transactions contemplated thereby, and made
its own decision to enter into this Agreement and extend credit to the
Companies hereunder. Each Bank also represents that it will, independently
and without reliance upon the Agent and any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan Documents, and
to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of each Company. Except for notices, reports and other
documents expressly herein required to be furnished to the Banks by the
Agent, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or creditworthiness of
each Company which may come into the possession of any of the Agent-Related
Persons.
9.07 Indemnification. Whether or not the transactions contemplated
hereby shall be consummated, the Banks shall indemnify upon request the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Companies and without limiting the obligation of the Companies to do so),
ratably from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses and
disbursements of any kind whatsoever which may at any time (including at any
time following the repayment of the Loans and the termination or resignation
of the related Agent) be imposed on, incurred by or asserted against any such
Person any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such
Person under or in connection with any of the foregoing; provided, however,
that no Bank shall be liable for the payment to the Agent-Related Persons of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Bank shall reimburse the Agent upon request
for its ratable share of any costs or out-of-pocket expenses (including all
fees and disbursements of any law firm or other external counsel, the
allocated cost of internal legal services and all disbursements of internal
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document, or any document contemplated by or referred to herein to the extent
that the Agent is not reimbursed for such expenses by or on behalf of the
Companies. Without limiting the generality of the foregoing, if the Internal
Revenue Service or any other authority of the United States or other
jurisdiction asserts a claim that Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form
was not delivered, was not properly executed, or because such Bank failed to
notify Agent of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Bank shall indemnify the Agent fully for all amounts paid, directly or
indirectly, by the Agent as tax or otherwise, including penalties and
interest, and including any taxes imposed by any jurisdiction on the amounts
payable to the Agent under this Section 9.07, together with all costs,
expenses and attorneys' fees (including allocated costs for inhouse legal
services). The obligation of the Banks in this Section shall survive the
payment of all Obligations hereunder and the resignation or replacement of
the Agent.
9.08 Agent in Individual Capacity. BofA and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory or other business with either Company and
Subsidiary and Affiliate of a Company as though BofA were not the Agent
hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding either or both Companies or any of either
Company's Affiliates (including information that may be subject to
confidentiality obligations in favor of such Company or such Subsidiary) and
acknowledge that the Agent shall be under no obligation to provide such
information to them.With respect to its Loans, BofA shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include BofA in its individual capacity.
9.09 Successor Agent. The Agent may, and at the request of the
Majority Banks shall, resign as Agent upon thirty (30) days' prior notice of
its intention to do so to the Banks and the Companies. If the Agent shall
resign as Agent under this Agreement, the Companies, subject to the approval
of the Majority Banks (which consent shall not be unreasonably withheld)
shall appoint a successor agent for the Banks. If no successor Agent is
appointed prior to the tenth day before the effective date of the resignation
of the Agent, the Agent shall appoint, with the consent of the Companies
(which consent shall not be unreasonably withheld), a successor agent from
among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent, and the retiring Agent's rights, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of Article IX and Sections 10.04 and 10.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor Agent has accepted appointment
as Agent by the date which is thirty (30) days following a retiring Agent's
notice of resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Banks shall perform all of the duties of
the Agent hereunder until such time, if any, as the Majority Banks appoint a
successor Agent.
9.10 Amendment and Not a Novation. This Agreement is an amendment and
a restatement and not a novation.
ARTICLE X
MISCELLANEOUS
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10.01 Amendments and Waivers. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure therefrom, shall be effective unless the same shall be in
writing and signed by the Majority Banks and the Companies and acknowledged
by the Agent, and then such waiver, amendment or consent shall be effective
only in the specific instance and for the specific purpose for which given,
except that written agreement from all of the Banks is required for any
waiver, amendment, or consent which does any of the following:
(a) increases the Commitment of any Bank or subjects any Bank
to any additional obligations (but written consent of all the Banks is not
required for instances subject to Section 3.09);
(b) postpones or delays any date fixed for any payment of
principal, interest, fees or other amounts due to the Banks (or any of them)
hereunder or under any Loan Document;
(c) reduces the principal of, or the rate of interest
specified herein on any Loan, or of any fees or other amounts payable
hereunder or under any Loan Document;
(d) changes the Commitment Percentage or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder; or
(e) amends this Section 10.01 or Section 2.13 or 2.14;
and, provided that no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Majority Banks or all the Banks,
as the case may be, affect the rights or duties of the Agent under this
Agreement or any other Loan Document.
10.02 Notices.
(a) Unless otherwise specifically provided in this Agreement,
all notices, requests and other communications provided for hereunder shall
be in writing (including, unless the context expressly otherwise provides,
telegraphic, telex, facsimile transmission or cable communication, provided
that any matter transmitted by facsimile transmission (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on the applicable signature page hereof, and (ii) shall be followed
promptly by a hard copy original thereof) and mailed, telegraphed, telexed,
sent by facsimile transmission, or delivered, to the address or number
specified for notices on the applicable signature page hereof; or, as to the
Companies or the Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as to each other party,
at such other address as shall be designated by such party in a written
notice to the Companies and the Agent.
(b) All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile,
telexed or cabled, be effective when delivered for overnight delivery or to
the telegraph company, transmitted by telecopier, confirmed by telex
answerback or delivered to the cable company, respectively, or if delivered,
upon delivery, except that notices pursuant to Article II or VIII shall not
be effective until actually received by the Agent.
(c) The Companies acknowledge and agree that any agreement of
the Agent and the Banks at Article II herein to receive certain notices by
telephone and facsimile is solely for the convenience and at the request of
the Companies. The Agent and the Banks shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by either or
both Companies to give such notice and the Agent and the Banks shall not have
any liability to the Companies or other Person on account of any action taken
or not taken by the Agent and the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Companies to repay the Loans shall
not be affected in any way or to any extent by any failure by the Agent and
the Banks to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Agent and the Banks of a confirmation which is
at variance with the terms understood by the Agent and the Banks to be
contained in the telephonic or facsimile notice.
10.03 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Bank, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of
any other right, remedy, power or privilege.
10.04 Costs and Expenses. Whether or not the transactions contemplated
by this Agreement are consummated, the Companies agree to promptly pay (i)
the reasonable fees, expenses and disbursements of counsel (including
allocated costs of internal legal services and all disbursements of internal
counsel) to the Agent and to the Arranger incurred in connection with the
negotiation, preparation and execution of this Agreement, the Notes, and the
Loan Documents, and any amendments, consents and waivers hereto or thereto,
and (ii) after the occurrence and during the continuation of an Event of
Default, all costs and expenses, including attorney's fees (including
allocated costs of internal legal services and all disbursements of internal
counsel), incurred by the Agent or the Banks in enforcing any obligation of,
or in collecting payments due from, the Companies hereunder, under the Notes
or under any of 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
in any Insolvency Proceeding.
10.05 Indemnity. The Companies shall pay, indemnify, and hold each
Bank, the Agent, the Arranger, and each of their respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel) of any kind or nature
whatsoever with respect to the execution, delivery, enforcement, performance
and administration of this Agreement and any other Loan Documents, or the
transactions contemplated hereby and thereby, and with respect to any
investigation, litigation or proceeding related to this Agreement or the
Loans or the use of the proceeds thereof, whether or not any Indemnified
Person is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided, that the Companies shall have no obligation
hereunder to any Indemnified Person with respect to Indemnified Liabilities
arising from the gross negligence or willful misconduct of such Indemnified
Person. The agreements in this Section shall survive payment of all other
Obligations.
10.06 Marshalling; Payments Set Aside. Neither the Agent nor the Banks
shall be under any obligation to marshall any assets in favor of the
Companies or any other Person or against or in payment of any or all of the
Obligations. To the extent that either Company makes a payment or payments
to the Agent or the Banks, or the Agent or the Banks enforce their Liens or
exercise their rights of set-off, and such payment or payments or the
proceeds of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
to be repaid to a trustee, receiver or any other party in connection with any
Insolvency Proceeding, or otherwise, then to the extent of such recovery the
obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not
been made or such enforcement or set-off had not occurred.
10.07 Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective permitted (and those arising by operation of law) successors and
assigns, except that the Companies may not assign or transfer any rights or
obligations under this Agreement without the prior written consent of the
Agent and each Bank and no Bank may assign or transfer any of its rights or
obligations under this Agreement except in accordance with Sections 3.09,
10.08, and by operation of law.
10.08 Assignments, Participations, etc.
(a) Any Bank may, with the written consent of the Companies
at all times other than during the existence of an Event of Default and the
Agent (which consent of the Companies may be withheld for any reason, and
which consent of the Agent shall not be unreasonably withheld) at any time
assign and delegate to one or more Eligible Assignees (provided that no
written consent of the Agent shall be required in connection with any
assignment and delegation by a Bank to a Bank Affiliate of such Bank and the
consent of the Companies in connection with any assignment and delegation by
a Bank to a Bank Affiliate of such Bank shall not be unreasonably withheld)
(each an "Assignee") all, or any ratable part of all, of the Loans, the
commitment to make Loans, and the other rights and obligations of such Bank
hereunder, in a minimum amount of $20,000,000; provided, however, that
(i) the Companies and the Agent may continue to deal solely and directly with
such Bank in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Companies and the Agent by such Bank and the Assignee; and
(B) such Bank and its Assignee shall have delivered to the Companies and the
Agent an Assignment and Acceptance in the form of Exhibit H ("Assignment and
Acceptance") and any Note or Notes subject to such assignment.
(b) From and after the date that the Agent notifies the
assignor Bank that it has received an executed Assignment and Acceptance and
payment of the processing fee of $3,500, (i) the Assignee thereunder shall be
a party hereto and, to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and Acceptance, shall have
the rights and obligations of a Bank under the Loan Documents, and (ii) the
assignor Bank 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 the Loan Documents.
(c) Within five (5) Business Days after its receipt of notice
by the Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee, the Companies shall execute and deliver to the
Agent, new Notes evidencing such Assignee's assigned Loans and commitment to
make Loans and, if the assignor Bank has retained a portion of its Loans and
its commitment to make Loans, replacement Notes in the principal amount of
the Loans retained by the assignor Bank (such Notes to be in exchange for,
but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its payment under the Assignment and Acceptance, this
Agreement, shall be deemed to be amended to the extent, but only to the
extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the commitment to make Loans arising therefrom. The commitment
to make Loans allocated to each Assignee shall reduce such commitment to make
Loans of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial
banks (a "Participant") participating interests in any Loans, the commitment
of that Bank to make Loans and the other interests of that Bank (the
"Originating Bank") hereunder and under the other Loan Documents; provided,
however, that (i) the Originating Bank's obligations under this Agreement
shall remain unchanged, (ii) the Originating Bank shall remain solely
responsible for the performance of such obligations, (iii) the Companies and
the Agent shall continue to deal solely and directly with the Originating
Bank in connection with the Originating Bank's rights and obligations under
this Agreement and the other Loan Documents, and (iv) no Bank shall transfer
or grant any participating interest under which the Participant shall have
rights to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, except to the extent such
amendment, consent or waiver would require unanimous consent as described in
Section 10.01. In the case of any such participation, the Participant shall
not have any rights under this Agreement, or any of the other Loan Documents,
and all amounts payable by the Companies hereunder shall be determined as if
such Bank had not sold such participation; except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event
of Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
No such sale or transfer of participating interests by any
Bank shall, without the consent of the Agent and the Companies, require
either or both Companies (i) to file a registration statement with the SEC or
apply to qualify the Loans or the Notes under the blue sky law of any states
or (ii) to qualify to do business in any state in which the Companies are not
so qualified.
(e) Each Bank agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
non-public information identified as confidential by and provided to it by
either or both of the Companies or any Subsidiary of either Company, or by
the Agent on such Company's or Subsidiary's behalf, in connection with this
Agreement or any other Loan Document, and neither it nor any of its
Affiliates shall use any such information for any purpose or in any manner
other than pursuant to the terms contemplated by this Agreement; except to
the extent such information (i) was or becomes generally available to the
public other than as a result of a disclosure by the Bank, or (ii) was or
becomes available on a non-confidential basis from a source other than either
Company, provided that such source is not bound by a confidentiality
agreement with such Company known to the Bank; provided further, however,
that any Bank may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which the Bank is subject or
in connection with an examination of such Bank by any such Governmental
Authority; (B) pursuant to subpoena or other court process; (C) when required
to do so in accordance with the provisions of any applicable Requirement of
Law; (D) to such Bank's independent auditors and other professional advisors
and (E) to any Bank Affiliate which is controlled by the transferring Bank,
which shall cause such Bank Affiliate to keep confidential the non-public
information identified by and provided to the transferring Bank as
confidential on the same terms and conditions applicable to such transferring
Bank. Notwithstanding the foregoing, each Company authorizes each Bank to
disclose to any Participant or Assignee (each, a "Transferee") and to any
prospective Transferee, such financial and other information in such Bank's
possession concerning such Company or its Subsidiaries which has been
delivered to Agent or the Banks pursuant to this Agreement or which has been
delivered to the Agent or the Banks by such Company in connection with the
Banks' credit evaluation of such Company prior to entering into this
Agreement; provided that, unless otherwise agreed by such Company, such
Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder.
(f) Notwithstanding any other provision in this Agreement,
any Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement [and the Note held
by it] in favor of any Federal Reserve Bank in accordance with Regulation A
of the Federal Reserve Board or U.S. Treasury Regulation 31 CFR Section
203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.
10.09 Set-off. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists, (after the giving of any
required notice and the expiration of any grace period required to make the
relevant event an Event of Default) each Bank is authorized at any time and
from time to time, without prior notice to the Companies, any such notice
being waived by the Companies to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by, and other indebtedness at any time
owed by, such Bank to or for the credit or the account of either Company
against any and all Obligations owing to such Bank, now or hereafter
existing, irrespective of whether or not the Agent or such Bank shall have
made a request for payment under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Companies and the Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and application.
The rights of each Bank under this Section 10.09 are in addition to the other
rights and remedies (including other rights of set-off) which the Bank may
have.
10.10 Notification of Addresses, Lending Offices, Etc. Each Bank shall
notify the Agent and the Companies in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of its Offshore
Lending Office, of payment instructions in respect of all payments to be made
to it hereunder and of such other administrative information as the Agent
shall reasonably request.
10.11 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the
same instrument. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Companies and the Agent.
10.12 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
10.13 No Third Parties Benefited. This Agreement is made and entered
into for the sole protection and legal benefit of the Companies, the Banks
and the Agent, and their permitted successors and assigns, and no other
Person shall be a direct or indirect legal beneficiary of, or have any direct
or indirect cause of action or claim in connection with, this Agreement or
any of the other Loan Documents. Neither the Agent nor any Bank shall have
any obligation to any Person not a party to this Agreement or other Loan
Documents.
10.14 Change in Accounting Principles. If any change in GAAP occurs or
takes effect after the Effective Date which would result in a change in any
quantity reported to the Banks hereunder which provides the basis for any
covenant, performance obligation or standard of measurement used in this
Agreement, the parties hereto agree to enter into negotiations in order to
amend such covenant, performance obligation or standard of performance so as
to reflect such change with the result that the criteria for evaluating
compliance with such covenant, performance obligation or standard of
performance shall be the same after the change as if the change had not been
made. Until the parties hereto agree to such amendment, all covenants,
performance obligations and standards of performance shall be calculated
without giving effect to the change in GAAP. The Banks and the Companies
acknowledge that the financial statements referred to in Section 5.03 were
prepared, and the covenants set forth in Sections 7.04 7.05 and 7.06 were
agreed to, by the Companies and the Banks, without giving effect to FASB 106
or FASB 109.
10.15 Governing Law and Jurisdiction.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE AGENT, THE BANKS, AND THE COMPANIES SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE
UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANIES, THE AGENT AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANIES, THE AGENT AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO.
THE COMPANIES, THE AGENT AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
10.16 Interpretation. This Agreement is the result of negotiations
between and has been reviewed by counsel to the Agent, the Companies and
other parties, and is the product of all parties hereto. Accordingly, this
Agreement and the other Loan Documents shall not be construed against the
Companies, the Banks, or the Agent merely because of their involvement in the
preparation of such documents and agreements.
10.17 Representation of Banks. Each Bank hereby represents that it
will make its Loans for its own account in the ordinary course of its
commercial banking business and not with a view to or for sale in connection
with any distribution of the Notes; provided, however, that the disposition
of the Notes or other evidence of indebtedness held by that Bank shall at all
times be within its exclusive control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California, their proper and
duly authorized officers as of the day and year first above written.
LEVI STRAUSS ASSOCIATES INC.
By: /s/J.M. Maurer
Name:
Title:
Address for Notices:
-------------------
Levi Strauss & Co.
Levi's Plaza
1155 Battery Street
San Francisco, CA 94111
Facsimile: (415) 544-1342
Telephone: (415) 544-6955
Attn: Joseph M. Maurer
Vice President and Treasurer
LEVI STRAUSS & CO.
By: /s/J.M. Maurer
Name:
Title:
Address for Notices:
-------------------
Levi Strauss & Co.
Levi's Plaza
1155 Battery Street
San Francisco, CA 94111
Facsimile: (415) 544-1342
Telephone: (415) 544-6955
Attn: Joseph M. Maurer
Vice President and Treasurer<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent
By: /s/Kevin Leader
Name: Kevin Leader
Title: Vice President
Address for notices:
-------------------
1455 Market Street - 12th floor
San Francisco, CA 94103
Attn: Global Agency #5596 (Kevin Leader)
Facsimile: (415) 622-4894
Telephone: (415) 953-0108
Address for payments to Agent's account:
---------------------------------------
Bank of America National Trust and Savings Association
(ABA) 121-000-358-S.F.
Attn: Global Agency (#5596)
1850 Gateway Blvd.
Concord, CA 94520
For credit to account No. 12334-15291
Ref: Levi Strauss & Co.<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a Bank
By: /s/Stephen J. DeMarti
Name: Stephen J. DeMarti
Title: Vice President
Address for notices:
-------------------
Bank of America National Trust and Savings Association
San Francisco Corporate Office #5133
555 California Street, 41st Floor
San Francisco, CA 94104
Attn: Mr. Stephen J. DeMarti
Vice President
With a copy to:
Bank of America National Trust and Savings Association
Credit Administration
1850 Gateway Boulevard
Concord, CA 94520
Domestic and Offshore Lending Office:
------------------------------------
Bank of America National Trust and Savings Association
1850 Gateway Boulevard
Concord, California 94520<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/Eric M. Knight
Name: Eric M. Knight
Title: Representative
Address for notices:
-------------------
The Bank of Nova Scotia
101 California Street, 48th Floor
San Francisco, CA 94111
Attn: Mr. Eric Knight
with copy to:
The Bank of Nova Scotia
44 King Street West
Toronto M5H1H1
Ontario Canada
Attn: Supervisor
Domestic and Offshore Lending Office:
------------------------------------
The Bank of Nova Scotia
101 California Street, 48th Floor
San Francisco, CA 94111<PAGE>
BANKERS TRUST COMPANY
By: /s/Mary Jo Jolly
Name: Mary Jo Jolly
Title: Assistant Vice President
Address for notices:
-------------------
Bankers Trust Company
1 Bankers Trust Plaza - 23rd floor
New York, New York 10006
Attn: Ms. Mary Jo Jolly
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, CA 90071
Attn: Mr. Keith Bernstein
Domestic and Offshore Lending Office:
------------------------------------
Bankers Trust Company
1 Bankers Trust Plaza - 23rd floor
New York, New York 10006
Attn: Ms. Mary Jo Jolly<PAGE>
CITICORP USA, INC.
By: /s/Barbara A. Cohen
Name: Barbara A. Cohen
Title: Vice President
Address for notices:
-------------------
Citicorp USA, Inc..
One Sansome Street
27th Floor
San Francisco, CA 94104
Attn: Ms. Toni Costantino &
Rosanna Bartolazo
Fax: (415) 433-0307
Telex: 235530 (ref. Route SFOGB)
Answerback: FBCB UR
Domestic Lending Office:
-----------------------
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attn: Ms. Toni Costantino &
Rosanna Bartolazo
Eurodollar Lending Office:
-------------------------
Citicorp USA, Inc.
399 Park Avenue
New York, NY 10043
Attn: Ms. Toni Costantino &
Rosanna Bartolazo<PAGE>
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By: /s/Martin Avidan
Name: Martin Avidan
Title: Authorized Signatory
CREDIT LYONNAIS LOS ANGELES BRANCH
By: /s/Martin Avidan
Name: Martin Avidan
Title: Vice President/Manager
Address for notices:
-------------------
Credit Lyonnais
515 South Flower Street, Suite 2200
Los Angeles, CA 90071
Attn: Mr. Steven Yoon
Vice President
Offshore Lending Office:
-----------------------
Credit Lyonnais Cayman Island Branch
c/o Credit Lyonnais Los Angeles Branch
515 South Flower Street, Suite 2200
Los Angeles, CA 90071
Domestic Lending Office:
-----------------------
Credit Lyonnais Los Angeles Branch
c/o Credit Lyonnais Los Angeles Branch
515 South Flower Street, Suite 2200
Los Angeles, CA 90071<PAGE>
COMMERZBANK AG, LOS ANGELES BRANCH
By: /s/Robert Hochhalter
Name: Robert Hochhalter
Title: SVP and Manager
By: /s/Hans-Joachim Lang
Name: Hans-Joachim Lang
Title: Vice President
Address for notices:
-------------------
Commerzbank AG
Los Angeles Branch
660 S. Figueroa Street, Suite 1450
Los Angeles, CA 90017
Attn: Mr. Hans-Joachim Lang
Domestic Lending Office:
-----------------------
Commerzbank AG
Los Angeles Branch
660 S. Figueroa Street, Suite 1450
Los Angeles, CA 90017<PAGE>
FIRST INTERSTATE BANK OF CALIFORNIA
By: /s/Alfred F. Kenrick
Name: Alfred F. Kenrick
Title: Vice President
By: /s/Richard G. Malone
Name: Richard G. Malone
Title: Senior Vice President
Address for notices:
-------------------
First Interstate Bank of California
345 California Street, 23rd Floor
San Francisco, CA 94104
Attn: Mr. Alfred F. Kenrick, Jr.
Vice President
Domestic and Offshore Lending Office:
------------------------------------
First Interstate Bank of California
1055 Wilshire Boulevard, B10-6
Los Angeles, CA 90017<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By: /s/Ellen H. Allen
Name: Ellen H. Allen
Title: Director
Address for notices:
-------------------
The First National Bank of Boston
100 Federal Street
Boston, MA 02110
Attn: Ms. Kathy Choi
Domestic and Offshore Lending Office:
------------------------------------
The First National Bank of Boston
100 Federal Street
Boston, MA 02110<PAGE>
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/L. Gene Beube
Name: L. Gene Beube
Title: Senior Vice President
Address for notices:
-------------------
The First National Bank of Chicago
777 South Figueroa St. - 4th floor
Los Angeles, CA 90071-2487
Attn: Mr. James Moore
Domestic and Offshore Lending Office:
------------------------------------
The First National Bank of Chicago
One First National Plaza
Suite 0634
Chicago, IL 60670-0362<PAGE>
NATIONAL WESTMINSTER BANK PLC, NASSAU BRANCH
By: /s/Daniel R. Dornblaser
Name: Daniel R. Dornblaser
Title: Vice President
NATIONAL WESTMINSTER BANK PLC, NEW YORK BRANCH
By: /s/Daniel R. Dornblaser
Name: Daniel R. Dornblaser
Title: Vice President
Address for notices:
-------------------
National Westminster Bank PLC,
400 South Hope Street, Suite 1000
Los Angeles, CA 90071-2891
Attn: Mr. Daniel R. Dornblaser
Domestic Lending Office:
-----------------------
National Westminster Bank PLC
New York Branch
175 Water Street, 21st floor
New York, NY 10038-4924
Offshore Lending Office:
-----------------------
National Westminster Bank, PLC
Nassau Branch
c/o New York Branch
175 Water Street, 21st floor
New York, NY 10038<PAGE>
THE SAKURA BANK, LIMITED
San Francisco Agency
By: /s/Ken-ichi Sato
Name: Ken-ichi Sato
Title: General Manager
Address for notices:
-------------------
The Sakura Bank, Limited
345 California Street, Suite 1100
San Francisco, CA 94104
Attn: Mr. Shinichi Matsumura
Domestic and Offshore Lending Office:
------------------------------------
The Sakura Bank, Limited
345 California Street
San Francisco, CA 94104<PAGE>
THE SUMITOMO BANK, LIMITED, SAN FRANCISCO BRANCH
By: /s/Kazuaki Kawakatsu
Name: Kazuaki Kawakatsu
Title: General Manager
Address for notices:
-------------------
The Sumitomo Bank, Limited, San Francisco Branch
555 California Street, Suite 3350
San Francisco, CA 94104
Attn: Ms. Azar Shakeri
Domestic and Offshore Lending Office:
------------------------------------
The Sumitomo Bank, Limited, San Francisco Branch
555 California Street, Suite 3350
San Francisco, CA 94104<PAGE>
SWISS BANK CORPORATION, SAN FRANCISCO AND CAYMAN BRANCHES
By: /s/David Parrot
Name: David L. Parrot
Title: Associate Director
Merchant Banking
By: /s/Jamie Dillon
Name: Jamie Dillon
Title: Director
Merchant Banking
Address for notices:
-------------------
Swiss Bank Corporation
101 California Street, Suite 1700
San Francisco, CA 94111
Attn: Mr. David L. Parrot
Domestic Lending Office:
-----------------------
Swiss Bank Corporation, San Francisco Branch
101 California Street, Suite 1700
San Francisco, CA 94111
Offshore Lending Office:
-----------------------
Swiss Bank Corporation, Cayman Islands Branch
101 California Street, Suite 1700
San Francisco, CA 94111<PAGE>
UNION BANK
By: /s/Nanci Brusati Dias
Name: Nanci Brusati Dias
Title: Vice President & District Manager
By: /s/John W. Hein
Name: John W. Hein
Title: Senior Vice President
Address for notices:
-------------------
Union Bank
350 California St., 11th Floor
San Francisco, CA 94104
Attn: Ms. Nanci Brusati-Dias
Domestic and Offshore Lending Office:
------------------------------------
Union Bank
350 California St., 11th Floor
San Francisco, CA 94104<PAGE>
<TABLE>
Schedule 2.01
-------------
<CAPTION>
Name of Bank Commitment
<S> <C>
Bank of America National Trust and Savings Association $22,000,000
Bankers Trust Company 18,000,000
Citicorp USA, Inc. 18,000,000
First Interstate Bank of California 18,000,000
The Bank of Nova Scotia 18,000,000
The First National Bank of Boston 18,000,000
The First National Bank of Chicago 18,000,000
Union Bank 18,000,000
Credit Lyonnais 9,000,000
Swiss Bank Corporation 9,000,000
The Sakura Bank, Limited San Francisco Agency 9,000,000
The Sumitomo Bank, Limited, San Francisco Branch 9,000,000
Commerzbank AG, Grand Cayman Branch 8,000,000
National Westminster Bank, PLC 8,000,000
Total $200,000,000
============
/TABLE
<PAGE>
