<PAGE>
<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 OCTOBER 4, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______________ TO _______________
COMMISSION FILE NUMBER 1-10857
------------------------
THE WARNACO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-4032739
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
</TABLE>
90 PARK AVENUE
NEW YORK, NEW YORK 10016
(ADDRESS OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
(212) 661-1300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
COPIES OF ALL COMMUNICATIONS TO:
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NEW YORK 10016
ATTENTION: VICE PRESIDENT AND GENERAL COUNSEL
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
934 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 _______
The number of shares outstanding of the registrant's Class A Common Stock
as of November 12, 1997 is as follows: 57,369,721.
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 4, JANUARY 4,
1997 1997
---------- ----------
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash............................................................................. $ 11,685 $ 11,840
Accounts receivable -- net....................................................... 271,964 211,038
Inventories:
Finished goods.............................................................. 310,793 227,929
Work in process............................................................. 112,524 76,445
Raw materials............................................................... 107,434 82,944
---------- ----------
Total inventories...................................................... 530,751 387,318
Other current assets.................................................................. 41,495 40,313
---------- ----------
Total current assets................................................... 855,895 650,509
Property, plant and equipment (net of accumulated depreciation of $100,069 and
$85,244, respectively).............................................................. 135,050 121,537
Other assets:
Intangibles and other assets -- net.............................................. 392,544 370,898
---------- ----------
$1,383,489 $1,142,944
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowing under revolving credit facility........................................ $ -- $ 146,960
Borrowing under foreign credit facilities........................................ 19,547 19,185
Current portion of long-term debt................................................ 11,881 49,281
Accounts payable and accrued liabilities......................................... 252,784 224,272
Accrued income taxes............................................................. 3,771 195
---------- ----------
Total current liabilities.............................................. 287,983 439,893
---------- ----------
Long-term debt........................................................................ 561,172 215,805
Other long-term liabilities........................................................... 11,362 11,532
Stockholders' equity
Preferred Stock; $.01 par value.................................................. -- --
Common Stock; $.01 par value..................................................... 580 524
Capital in excess of par value................................................... 583,326 575,691
Cumulative translation adjustment................................................ (8,607) (3,307)
Accumulated deficit.............................................................. (14,878) (69,667)
Treasury stock, at cost.......................................................... (20,935) (12,030)
Notes receivable for common stock issued and unearned stock compensation......... (16,514) (15,497)
---------- ----------
Total stockholders' equity............................................. 522,972 475,714
---------- ----------
$1,383,489 $1,142,944
---------- ----------
---------- ----------
</TABLE>
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
OCTOBER 4, OCTOBER 5, OCTOBER 4, OCTOBER 5,
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS OF DOLLARS EXCEPT SHARE DATA)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues.................................................... $333,413 $292,010 $875,143 $721,295
Cost of goods sold(a)........................................... 209,410 201,636 559,093 510,742
---------- ---------- ---------- ----------
Gross profit.................................................... 124,003 90,374 316,050 210,553
Selling, administrative and general expenses(b)................. 61,707 71,909 175,401 236,186
---------- ---------- ---------- ----------
Income (loss) before interest and income taxes.................. 62,296 18,465 140,649 (25,633)
Interest expense................................................ 11,484 8,936 31,999 23,852
---------- ---------- ---------- ----------
Income (loss) before provision (benefit) for income taxes....... 50,812 9,529 108,650 (49,485)
Provision (benefit) for income taxes............................ 18,731 3,718 41,288 (15,031)
---------- ---------- ---------- ----------
Net income (loss)............................................... $ 32,081 $ 5,811 $ 67,362 $(34,454)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income (loss) per share..................................... $ 0.59 $ 0.11 $ 1.24 $ (0.64)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average number of shares of common stock outstanding... 54,630 53,357 54,311 53,489
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ------------
(a) Includes approximately $11,748,000 and $37,969,000 of non-recurring items
in the three and nine month periods ended October 5, 1996. See Note 4 of
Notes to Consolidated Condensed Financial Statements.
(b) Includes approximately $19,413,000 and $100,621,000 of non-recurring and
special items in the three and nine month periods ended October 5, 1996.
See Note 4 to Consolidated Condensed Financial Statements.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
3
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------------------
OCTOBER 4, OCTOBER 5,
1997 1996
---- ----
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<S> <C> <C>
Cash flow from operations:
Net income (loss)...................................................................... $ 67,362 $ (34,454)
Non cash items included in net income (loss):
Depreciation and amortization..................................................... 22,492 20,107
Amortization of unearned stock compensation....................................... 2,486 1,813
Increase in deferred tax assets -- net............................................ -- (15,031)
Non cash portion of non-recurring items........................................... -- 95,688
Income taxes paid................................................................. (5,573) (2,335)
Other changes in operating accounts............................................... (165,602) (132,520)
------------ ------------
Net cash used in operations before non-recurring items................................. (78,835) (66,732)
Payment of accruals related to exiting the Hathaway business, consolidating and
realigning the intimate apparel division and other items............................. (3,994) --
------------ ------------
Net cash used in operations............................................................ (82,829) (66,732)
Cash flow from investing activities:
Net proceeds from sale of fixed assets............................................ 610 69
Purchase of property, plant & equipment........................................... (32,086) (20,572)
Payment for purchase of acquired assets........................................... (15,027) (87,000)
Increase in intangible and other assets........................................... (15,400) (14,168)
------------ ------------
Net cash used in investing activities.................................................. (61,903) (121,671)
------------ ------------
Cash flow from financing activities:
Borrowing under revolving credit facilities....................................... 351,197 144,121
Net proceeds from the exercise of options and payment of notes receivable from
employees........................................................................ 4,188 1,026
Proceeds from other financing..................................................... -- 71,000
Repayments of debt................................................................ (189,828) (5,860)
Purchase of Treasury Stock........................................................ (8,120) --
Dividends paid.................................................................... (12,074) (10,888)
Increase in deferred financing costs.............................................. (786) (330)
------------ ------------
Net cash provided from financing activities............................................ 144,577 199,069
------------ ------------
Increase (decrease) in cash............................................................ (155) 10,666
Cash at beginning of period............................................................ 11,840 6,162
------------ ------------
Cash at end of period.................................................................. $ 11,685 $ 16,828
------------ ------------
------------ ------------
Other changes in operating accounts:
Accounts receivable............................................................... $ (60,926) $ (64,146)
Inventories....................................................................... (143,433) (19,268)
Other current assets.............................................................. (1,182) (2,570)
Accounts payable and accrued liabilities.......................................... 37,306 (48,258)
Accrued income taxes.............................................................. 6,447 1,482
Other............................................................................. (3,814) 240
------------ ------------
$ (165,602) $ (132,520)
------------ ------------
------------ ------------
</TABLE>
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
4
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PRESENTATION
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles and
Securities and Exchange Commission rules and regulations for interim financial
information. Accordingly, they do not contain all of the information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all the adjustments (all of which were of
a normal recurring nature, except as discussed in Note 4 below) necessary to
present fairly the financial position of the Company as of October 4, 1997 as
well as its results of operations and cash flows for the periods ended October
4, 1997 and October 5, 1996. Operating results for interim periods may not be
indicative of results for the full fiscal year. For further information, refer
to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended January 4, 1997.
Certain amounts for prior periods have been reclassified to be comparable with
the current period presentation.
NOTE 2 -- ACQUISITION OF DESIGNER HOLDINGS LTD.
On September 24, 1997 the Board of Directors of the Company approved a
merger of a wholly owned subsidiary of the Company with and into Designer
Holdings Ltd. ('Designer Holdings'). Designer Holdings develops, manufactures
and markets designer jeanswear and sportswear for men, women, juniors and
petites, and has a 40-year extendable license from Calvin Klein, Inc. to
develop, manufacture and market designer jeanswear and sportswear collections in
North, South and Central America under the Calvin Klein Jeans'r', CK/Calvin
Klein Jeans'r' and CK/Calvin Klein/Khakis'r' labels.
Pursuant to a merger agreement dated September 25, 1997, each stockholder
of Designer Holdings will receive 0.324 shares of the Company's common stock for
each share owned. On October 14, 1997, pursuant to a stock exchange agreement,
the Company acquired from New Rio LLC and a former member of New Rio LLC 51.3%
of the outstanding common stock of Designer Holdings in exchange for 5,340,773
newly issued shares of the Company's common stock, which equates to ownership of
approximately 9% of the Company's shares. The number of shares of the Company's
common stock to be issued was determined using the same exchange ratio used in
the merger agreement.
The completion of the merger is subject to the approval by the stockholders
of the Company and Designer Holdings. Meetings of the stockholders of both the
Company and Designer Holdings have been scheduled for December 12, 1997 to
approve the merger and the issuance of shares by the Company. Upon approval of
both company's stockholders, the Company will acquire the remaining outstanding
common stock of Designer Holdings.
The merger will be accounted for using the purchase method of accounting.
It is estimated that the Company will issue a total of 10,413,144 shares of its
common stock, resulting in a total purchase price of $353.4 million. The
preliminary estimated allocation of the total purchase price to the fair value
of the net assets acquired is summarized as follows (in millions):
<TABLE>
<S> <C>
Cash...................................................................... $ 55.8
Accounts receivable....................................................... 107.6
Inventories............................................................... 92.3
Prepaid and other current assets.......................................... 25.0
Property and equipment.................................................... 15.8
Intangible and other assets............................................... 237.7
Accounts payable and accrued liabilities.................................. (79.8)
Other liabilities......................................................... (0.5)
Redeemable Preferred Securities........................................... (100.5)
-------
Purchase Price....................................................... $ 353.4
-------
-------
</TABLE>
5
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
The allocation of purchase price is subject to revision when additional
information concerning the asset and liability valuations becomes available.
Accordingly, the final purchase price allocation could be different from the
amounts previously shown.
The following summarizes the unaudited pro forma combined financial
information of Warnaco's results for nine months ended October 4, 1997 and
October 5, 1996 with Designer Holdings' results for its nine months ended
September 30, 1997 and 1996, giving effect to the merger as if it had occurred
as of January 7, 1996 and assuming the acquisition of the remaining stock of
Designer Holdings by the end of fiscal 1997. The unaudited pro forma information
does not reflect any cost savings or other benefits anticipated by the Company's
management as a result of the merger.
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 4, 1997 OCTOBER 5, 1996
----------------- -----------------
<S> <C> <C>
Statement of Income Data:
Net Revenues............................................. $ 1,240.2 $ 1,077.8
Income (loss) before extraordinary item.................. 65.1 (14.3)
Net income (loss)........................................ 64.2 (16.6)
Income (loss) per common share before extraordinary
item................................................... 1.01 (0.22)
Net income (loss) per share.............................. 0.99 (0.26)
</TABLE>
The unaudited pro forma combined information is not necessarily indicative
of the results of operations of the combined company had the acquisition
occurred on the dates specified above, nor is it necessarily indicative of
future results or financial position.
NOTE 3 -- FOURTH QUARTER MERGER RELATED AND RESTRUCTURING CHARGE
Following the announcement of the Designer Holdings acquisition, the
Company immediately instituted an internal study to plan for the optimization of
both companies' operating strategies and administration. Planned consolidations
of facilities and staff, strategic redirection of marketing strategies and other
cost savings actions are expected to result in some restructuring of the Warnaco
operations, as well as those of Designer Holdings. As a result of these actions,
it is anticipated that the Company will incur charges in the fourth quarter
currently estimated to be between $35 - 45 million, net of tax. This includes
the anticipated conclusion of the consolidation and restructuring actions
announced last year.
NOTE 4 -- STRATEGIC ACTIONS IN 1996
The acquisition of the GJM businesses in February, 1996 enhanced the
Company's low cost manufacturing capacity and expanded the Company's product
lines. The Company subsequently undertook a strategic review of its businesses
and manufacturing facilities. The acquisitions of Bodyslimmers and Lejaby, later
in 1996, were also considered. As a result, the Company took the following steps
which resulted in total non-recurring charges in the second and third quarters
of fiscal 1996 as summarized below (in millions):
<TABLE>
<CAPTION>
THIRD
QUARTER TOTAL
------- ------
<S> <C> <C>
Loss related to the sale of the Hathaway business.................................... $ 7.3 $ 46.0
Charge for the consolidation and realignment of the intimate apparel division........ 17.1 72.1
Other items:......................................................................... 6.8 20.4
------- ------
31.2 138.5
Less: Income tax benefits............................................................ 12.2 49.7
------- ------
$19.0 $ 88.8
------- ------
------- ------
</TABLE>
6
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
The losses reported in the third quarter of fiscal 1996 above include
inventory markdowns directly attributable to the decision to exit the Hathaway
business and consolidation and realignment of the intimate apparel division.
Accordingly, inventory markdowns, operating losses of Hathaway for the third
quarter of 1996 (resulting from inventory liquidations at markdown prices) and
settlement of insurance claims related to the 1994 California earthquake and
other claims together aggregating $11.7 million are reflected in the
Consolidated Condensed Statement of Operations within cost of goods sold. The
remaining $19.4 million, consisting mainly of the write-down of assets to fair
value, severance costs and other employee costs, is included in selling,
administrative and general expenses (SA&G). For the nine months ended October 4,
1996, the cost of goods sold charge relative to inventory markdowns and other
charges indicated above was $38.0 million, whereas the SA&G charge was $100.6
million. A complete description of the 1996 non-recurring items is contained in
Note 4 to the Consolidated Financial Statements contained in the Company's
Annual Report on Form 10-K for the fiscal year ended January 4, 1997.
NOTE 5 -- STOCK REPURCHASE PROGRAM
During the first nine months of fiscal 1997, the Company repurchased
271,363 shares of its common stock at a cost of $8.9 million under its
repurchase program. On May 14, 1997, the Company's Board of Directors authorized
the repurchase of an additional 420,000 shares to supplement its previously
announced 2 million share repurchase program. Also in 1997, the Company entered
into equity option arrangements to purchase approximately 1.1 million shares of
stock at an average price of $33.00. These option arrangements expire between
November 1997 and June 1998. At expiration, the Company has the choice of
settling these arrangements in stock, cash, or net shares.
NOTE 6 -- RESTRICTED STOCK
In May 1997, the Company's Board of Directors authorized the issuance of
122,210 shares of restricted stock to certain employees, including certain
officers and directors of the Company. The restricted shares vest ratably over
four years and will be fully vested in May 2001. The fair market value of the
restricted shares was approximately $3.6 million at the date of grant. The
Company will recognize compensation expense equal to the fair value of the
restricted shares over the vesting period.
NOTE 7 -- AMENDED BANK CREDIT AGREEMENT
On August 12, 1997 the Company entered into an amended bank credit
agreement which extends through the year 2002. Under the terms of the amended
agreement, the Company will have available up to $900 million in a revolving
credit facility and lines of credit which replace the Company's previous $750
million in availability. This agreement has improved terms and conditions which
includes a lower borrowing rate and an extension of maturities.
NOTE 8 -- NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, 'Earnings per
Share,' which requires the dual presentation of Basic and Diluted Earnings per
share. Pro-forma Basic and Diluted Earnings Per Share calculated in accordance
with the standard would have resulted in income of $1.31 and $1.24 respectively,
for the nine months ended October 4, 1997 and a (loss) of $(0.67) and $(0.64),
respectively, for the nine months ended October 5, 1996. The Company will adopt
this standard as of January 3, 1998 as required. Early adoption is not
permitted.
In June 1997, FASB also issued SFAS No. 130, 'Reporting Comprehensive
Income' and SFAS No. 131, 'Disclosure about Segments of an Enterprise and
Related Information'. SFAS No. 130 establishes standards for reporting and
display of comprehensive income and its components and SFAS No. 131 establishes
standards for the way public businesses report financial information about
operating
7
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)
segments. The Company will adopt both in fiscal 1998, as required. These
statements will affect disclosure and presentation in the financial statements
but will not have a material impact on the Company's consolidated financial
position, liquidity, cash flows or results of operations.
NOTE 9 -- CERTAIN STOCKHOLDER LITIGATION
Shortly after the announcement of a proposed transaction between Designer
Holdings and the Company, three stockholders of Designer Holdings, Jacob J.
Spinner, Yaskov Glatter and Sherry Berman, as custodian for Jordan Berman, filed
lawsuits in the Delaware Court of Chancery challenging the transaction. The
named plantiff in each of the actions purports to maintain each individual
action as a class action on behalf of Designer Holdings stockholders. On
October 30, 1997 the Court of Chancery signed an order which consolidated the
three actions. Now captioned as In re Designer Holdings Ltd. Shareholders
Litigation, Consolidated Civil Action 15942, the consolidated complaint
alleges that the directors of Designer Holdings breached their fiduciary
duties to Designer Holdings' stockholders in approving the transaction. The
complaint further alleges that the directors have a conflict of interest based
on the price at which Designer Holdings shares were sold to the public in
May 1996 relative to the transaction price. The plaintiffs also claim that
the Company aided and abetted the directors of Designer Holdings in breaching
their fiduciary duties. The plaintiffs seek injunctive relief to prohibit
Designer Holdings from completing the merger, or in the alternative, monetary
damages of an unspecified amount.
On November 13, 1997, the parties to this litigation reached an agreement
in principle to settle this litigation on the following terms, subject to court
approval:
1. the defendants permitted the plaintiffs' attorneys to review drafts
of the Joint Proxy Statement/Prospectus relating to the transaction
prior to mailing and have revised the disclosure therein in response
to their comments;
2. the defendants agreed that they would reduce the termination fee
payable to the Company in certain circumstances from $12.5 million to
$6.25 million; and
3. Charterhouse Equity Partners II, L.P., which beneficially owns
approximately 2.6 million shares of the Company as a result of the
exchange of shares with New Rio, L.L.C., has agreed that during the
14-day period following the date on which Designer Holdings
stockholders can sell the shares of the Company issued in the
merger, but in no event extending past December 31, 1997, it will
not sell, transfer or otherwise dispose of any shares of the Company,
notwithstanding the existence of an effective registration statement
for the resale of any such shares, unless the closing price for shares
of the Company on the NYSE Composite Transactions Tape on any day
within such 14-day period was more than 15% above or below such
closing price on the trading day immediately preceding the effective
time of the merger.
Upon final approval of the settlement by the court, plaintiffs' counsel
will petition the court for an award of attorney's fees and expenses, which will
be paid by Designer Holdings. Plaintiffs' counsel has agreed to submit a request
for, and the defendants have agreed not to oppose, a request for court approval
of not more than $350,000 in attorney's fees and expenses.
8
<PAGE>
<PAGE>
THE WARNACO GROUP, INC.
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS
RESULTS OF OPERATIONS
STATEMENTS OF OPERATIONS (SELECTED DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
OCTOBER 4, OCTOBER 5, OCTOBER 4, OCTOBER 5,
1997 1996 1997 1996
----------- ----------- ----------- -----------
(AMOUNTS IN MILLIONS OF DOLLARS)
(UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues................................................ $ 333.4 $ 292.0 $ 875.1 $ 721.3
Cost of goods sold(1)....................................... 209.4 201.6 559.1 510.7
----------- ----------- ----------- -----------
Gross profit................................................ 124.0 90.4 316.0 210.6
% of net revenues...................................... 37.2% 30.9% 36.1% 29.2%
Selling, administrative and general expenses(2)............. 61.7 71.9 175.4 236.2
----------- ----------- ----------- -----------
Income (loss) before interest and income taxes.............. 62.3 18.5 140.6 (25.6)
% to net revenues...................................... 18.7% 6.3% 16.1% (3.6%)
Interest expense............................................ 11.5 9.0 32.0 23.9
----------- ----------- ----------- -----------
Income (loss) before Provision (benefit) for income taxes... 50.8 9.5 108.6 (49.5)
Provision (benefit) for income taxes(3)..................... 18.7 3.7 41.2 (15.0)
----------- ----------- ----------- -----------
Net income (loss)(4)........................................ $ 32.1 $ 5.8 $ 67.4 $ (34.5)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
- ------------
(1) Cost of goods sold includes approximately $11.7 and $38.0 for the three and
nine month periods ended October 5, 1996 in connection with inventory
markdowns and other charges related to the 1996 Strategic Actions discussed
below. Accordingly, these actions decreased Gross Profit percentage by 4.1
and 5.3 for the respective 1996 periods.
(2) Selling, administrative and general expenses includes approximately $19.4
million and $100.6 million for the three and nine month periods ended
October 5, 1996 for the write-down of assets to the fair value, severance
costs and employee costs related to the Strategic Actions discussed below.
(3) Provision (benefit) for income taxes includes a benefit of approximately
$12.2 million and $49.7 million for the three and nine month periods ended
October 5, 1996. See the 1996 Strategic Actions discussed below.
(4) Net income was $0.59 per share and $1.24 per share for the three months and
nine months ended October 4, 1997, compared to $0.47 per share and $1.02 per
share, respectively, for the comparable 1996 periods before non-recurring
items resulting from the 1996 Strategic Actions.
1996 STRATEGIC ACTIONS (See Note 4 to Consolidated Condensed Financial
Statements)
Following the acquisition of the GJM business in February, 1996 which
significantly added to the Company's low cost manufacturing capacity, in
addition to an immediate expansion of product lines, the Company undertook a
strategic review of its businesses and manufacturing facilities. The
acquisitions of Bodyslimmers and Lejaby later in 1996, were also considered. As
a result of this review, the Company
9
<PAGE>
<PAGE>
took the following steps which resulted in non-recurring charges in the third
quarter of fiscal 1996 as summarized below (in millions):
<TABLE>
<CAPTION>
THIRD
QUARTER TOTAL
------- ------
<S> <C> <C>
Loss related to the Hathaway business................................................ $ 7.3 $ 46.0
Charge for the consolidation and realignment of the intimate apparel division........ 17.1 72.1
Other items.......................................................................... 6.8 20.4
------- ------
Total charges........................................................................ 31.2 138.5
Less: Income tax benefits............................................................ 12.2 49.7
------- ------
$19.0 $ 88.8
------- ------
------- ------
</TABLE>
In the accompanying consolidated condensed statement of operations, the
total charge of $31.2 million for the third quarter of 1996 has been included in
both costs of goods sold and selling, administrative and general expenses at
$11.7 million and $19.4 million, respectively. The charges for the first three
quarters of fiscal 1996 to cost of goods sold and selling, administrative and
general expenses are approximately $38.0 million and $100.6 million,
respectively. These amounts have been separately reflected in the above table.
In summary, the 1996 non-recurring charges for exiting the Hathaway
business and the Intimate Apparel Division consolidation and realignment and
other items totaled approximately $88.8 million, after income tax benefits of
$49.7 million, or $1.66 per share for first nine months of fiscal 1996.
RESULTS OF OPERATIONS
Net revenues in the third quarter of fiscal 1997 were $333.4 million, 14.2%
higher than the $292.0 million recorded in the third quarter of fiscal 1996. Net
revenues for the nine months ended October 4, 1997 were $875.1 million, an
increase of 21.3% over the $721.3 million recorded in the first nine months of
fiscal 1996.
Intimate apparel division net revenues increased 9.2% to $235.7 million
from $215.8 million in the third quarter of fiscal 1996. The increase in net
revenues in the third quarter of fiscal 1997 compared to fiscal 1996 was
generated by a nearly 30.0% increase in Calvin Klein worldwide revenues, and a
strong 18.0% increase in our Warner's/Olga U.S. business, partially offset by
$6.0 million unfavorable foreign exchange impact on revenues resulting from a
stronger dollar to European currencies. For the first nine months, net revenues
increased 19.8% to $644.5 million from $538.0 million in the first nine months
of fiscal 1996. The increase in net revenues in the first nine months of fiscal
1997 compared to fiscal 1996 was generated by a 24.0% increase in Calvin Klein
worldwide revenues, and a 10.0% increase in our Warner's/Olga U.S. business.
International shipments in the first nine months of fiscal 1997, including
Calvin Klein and Lejaby increased 41.1% to $201.2 million or 31.2% of total
intimate apparel sales from $142.6 million or 26.5% of total intimate apparel
sales last year reflecting continuing expansion outside the United States.
Menswear division net revenues increased 39.1% to $84.6 million in the
third quarter of fiscal 1997. The increase is attributable to a 66.0% increase
in Chaps by Ralph Lauren partially offset by the discontinuance of the Hathway
shirts brand in 1996. Net revenues for the nine months ended October 4, 1997
increased 30.6% to $194.5 million from $148.9 million in the first nine months
of fiscal 1996. The increase for the nine months primarily reflects an increase
of 58.5% in Chaps by Ralph Lauren net revenues and 51.9% for Calvin Klein
accessories net revenues partially offset by the discontinuance of the Hathway
shirts brand in 1996.
Gross profit increased 37.2% to $124.0 million in the third quarter of
fiscal 1997 from $90.4 million in the third quarter of fiscal 1996. Gross profit
for the first nine months of fiscal 1997 increased 50.0% to $316.0 million from
$210.6 million in the first nine months of fiscal 1996. The increase in gross
profit was attributable to a better mix of regular price sales and higher Calvin
Klein sales in fiscal year 1997, and the non-recurring charge recorded in fiscal
1996 (see discussion above).
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Selling, administrative and general expenses decreased to $61.7 million
(18.5% of net revenues) in the third quarter of fiscal 1997 from the $71.9
million (24.6% of net revenues) recorded in the third quarter of fiscal 1996.
Excluding the fiscal 1996 non-recurring charge, selling, administrative and
general expenses increased slightly resulting from higher marketing costs to
support the Calvin Klein line. Selling, administrative and general expenses, for
the first nine months of fiscal 1997 decreased to $175.4 million (20.0% of net
revenues) from $236.2 million (32.7% of net revenues) in fiscal 1996 mainly as a
result of the 1996 non-recurring charges previously discussed.
Interest expense increased $2.5 million in the third quarter of fiscal 1997
to $11.5 million. Interest expense for the nine months ended October 4, 1997
increased $8.1 million to $32.0 million from $23.9 million in the first nine
months of fiscal 1996. The increase in 1997 interest expense for both the
quarter and nine months is due mainly to interest costs attributable to the
three acquisitions completed in 1996.
The provision for income taxes for the third quarter of fiscal 1996 and for
the first nine months of fiscal 1996 reflects income tax benefits of $12.2
million and $49.7 million, respectively, related to the exit from the Hathaway
business and consolidation and realignment of the intimate apparel division. The
Company's effective tax rate for 1996, before the tax benefits discussed above,
was 39% compared to 38% in 1997.
Net income for the third quarter of fiscal 1997 was $32.1 million, an
increase of $26.3 million from the third quarter of fiscal 1996. Net income for
the first nine months of fiscal 1997 was $67.4 million as opposed to a net loss
of $34.5 million in the first nine months of fiscal 1996. The increase for both
the quarter and nine months reflects the higher net revenues and operating
income in 1997, and the non-recurring charge recorded in fiscal 1996, as
previously discussed.
CAPITAL RESOURCES AND LIQUIDITY
On May 11, 1995, consistent with the Company's goal of providing increased
shareholder value, the Company declared a quarterly cash dividend of $0.07 per
share. The Company has since declared eleven successive quarterly cash
dividends. In fiscal 1997, the Company increased its quarterly cash dividend
from $0.07 per share to $0.08 per share.
The Company's liquidity requirements arise primarily from its debt service
requirements and funding of the Company's working capital needs, primarily
inventory and accounts receivable. The Company's borrowing requirements are
seasonal, with needs peaking at the end of the second quarter and during the
third quarter each year. The Company generates nearly all of its operating cash
flow in the fourth quarter of the fiscal year due to increased shipments in the
third and fourth quarters and the sale of inventory built during the first half
of the fiscal year.
Cash used in operations before the $4.0 million payment of accruals related
to exiting the Hathaway business, the consolidation and realignment of the
intimate apparel division and other items was $78.8 million in the first nine
months of fiscal 1997 compared to $66.7 million in the first nine months of
fiscal 1996. The negative cash flow in operating activities reflects higher
working capital requirements primarily due to higher sales and seasonal
increases in working capital, primarily inventory.
Cash used in investing activities was $61.9 million for the first nine
months of fiscal 1997 compared to $121.7 million in the first nine months of
fiscal 1996. Capital expenditures were $32.1 million in the first nine months of
fiscal 1997, compared to $20.6 million in the first nine months of fiscal 1996.
Payment for the purchase of acquired assets includes $15.0 million related to
the payment of acquisition accruals, primarily Lejaby, GJM and Bodyslimmers in
fiscal 1997 and $87.0 million related to the purchase of Lejaby, GJM and
Bodyslimmers in fiscal 1996.
Cash provided from financing activities was $144.6 for the first nine
months of fiscal 1997 compared to $199.1 million for the first nine months of
fiscal 1996. Borrowings under the Company's revolving credit agreements, which
increase during the first nine months of the fiscal year, were $351.2 million in
the first nine months of fiscal 1997 compared to $144.1 million in the first
nine months of fiscal 1996. The Company repurchased 271,363 shares of its common
stock in the first nine months of fiscal 1997 for approximately $8.9 million.
The Company has purchased 521,363 shares of its common stock for
11
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approximately $15.9 million under the current share repurchase program, for an
average cost of approximately $30.50 per share.
On August 12, 1997, the Company refinanced existing credit facilities of
$750 million, consisting of the remaining outstanding balance of a $200 million
term loan, a $250 million revolving credit facility, both maturing in 2000, a
$100 million, 364-day revolving credit facility and a $200 million trade credit
facility (the 'Predecessor Facilities') with amended credit facilities totaling
$900 million and consisting of a $600 million revolving credit facility maturing
in 2002 and a $300 million trade credit facility (the 'Facilities'). The
Facilities provide the Company with additional financing to support the
continued strong growth of its business and flexibility for acquisitions and
further share repurchases. The Amended Facilities have improved terms and
conditions compared to the Predecessor Facilities reflecting the Company's
continuing strong operating performance and credit profile, including lower
pricing, fewer restrictive covenants, no debt amortization and increased
flexibility.
The Company believes that funds available under the Amended Facilities and
cash flow to be generated from future operations will be sufficient to meet
working capital and capital expenditure needs of the Company, including
dividends and interest and principal payments on outstanding debt obligations
for the next twelve months and for the next several years.
YEAR 2000 COMPLIANCE
Following a comprehensive study of current systems and future requirements
to support international growth, the Company will initiate a program to replace
existing capabilities with enhanced hardware and software applications. The
objectives of the new program are to achieve competitive benefits for the
Company, as well as assuring that all information systems will meet 'year 2000'
and Economic and Monetary Union compliance. Full implementation of this program
is expected to require expenditures, primarily capital, of approximately $50
million over the next three years. Funding requirements have been incorporated
in the Company's capital expenditure planning and are not expected to have a
material adverse impact on financial condition, results of operations or
liquidity.
12
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Shortly after the announcement of a proposed transaction between Designer
Holdings and the Company, three stockholders of Designer Holdings, Jacob J.
Spinner, Yaskov Glatter and Sherry Berman, as custodian for Jordan Berman, filed
lawsuits in the Delaware Court of Chancery challenging the transaction. The
named plantiff in each of the actions purports to maintain each individual
action as a class action on behalf of Designer Holdings stockholders. On
October 30, 1997 the Court of Chancery signed an order which consolidated the
three actions. Now captioned as In re Designer Holdings Ltd. Shareholders
Litigation, Consolidated Civil Action 15942, the consolidated complaint
alleges that the directors of Designer Holdings breached their fiduciary
duties to Designer Holdings' stockholders in approving the transaction. The
complaint further alleges that the directors have a conflict of interest based
on the price at which Designer Holdings shares were sold to the public in
May 1996 relative to the transaction price. The plaintiffs also claim that
the Company aided and abetted the directors of Designer Holdings in breaching
their fiduciary duties. The plaintiffs seek injunctive relief to prohibit
Designer Holdings from completing the merger, or in the alternative, monetary
damages of an unspecified amount.
On November 13, 1997, the parties to this litigation reached an agreement
in principle to settle this litigation on the following terms, subject to court
approval:
1. the defendants permitted the plaintiffs' attorneys to review drafts
of the Joint Proxy Statement/Prospectus relating to the transaction
prior to mailing and have revised the disclosure therein in response
to their comments;
2. the defendants agreed that they would reduce the termination fee
payable to the Company in certain circumstances from $12.5 million to
$6.25 million; and
3. Charterhouse Equity Partners II, L.P., which beneficially owns
approximately 2.6 million shares of the Company as a result of the
exchange of shares with New Rio, L.L.C., has agreed that during the
14-day period following the date on which Designer Holdings
stockholders can sell the shares of the Company issued in the
merger, but in no event extending past December 31, 1997, it will
not sell, transfer or otherwise dispose of any shares of the Company,
notwithstanding the existence of an effective registration statement
for the resale of any such shares, unless the closing price for shares
of the Company on the NYSE Composite Transactions Tape on any day
within such 14-day period was more than 15% above or below such
closing price on the trading day immediately preceding the effective
time of the merger.
Upon final approval of the settlement by the court, plaintiffs' counsel
will petition the court for an award of attorney's fees and expenses, which will
be paid by Designer Holdings. Plaintiffs' counsel has agreed to submit a request
for, and the defendants have agreed not to oppose, a request for court approval
of not more than $350,000 in attorney's fees and expenses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
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4.1 -- Amended and Restated Declaration of Trust of Designer Finance Trust, dated as of November 6, 1996, among
Designer Holdings, as Sponsor, IBJ Schroder Bank & Trust Company, as Property Trustee, Delaware Trust
Capital Management, Inc., as Delaware Trustee and Merril M. Halpern and Arnold H. Simon, as Trustees.
4.2 -- Indenture dated as of November 6, 1996, between Designer Holdings and IBJ Schroder Bank & Trust Company, as
Trustee.
4.3 -- Preferred Securities Guarantee Agreement dated as of November 6, 1996, between Designer Holdings, as
Guarantor and IBJ Schroder Bank & Trust Company, as Preferred Guarantee Trustee, with respect to the
Preferred Securities of Designer Finance Trust.
10.1 -- Credit Agreement, dated as of August 12, 1997 (the 'U.S. $600,000,000 Credit Agreement'), among Warnaco
Inc., as Borrower, and Warnaco and The Bank of Nova Scotia and Citibank, N.A. as Managing Agents, Citibank,
N.A. as Documentation Agent, The Bank of Nova Scotia as Administrative Agent, Competitive Bid Agent, Swing
Line Bank and an Issuing Bank and certain other lenders named therein.
10.2 -- Second Amended and Restated Credit Agreement, dated as of August 12, 1997 (the 'U.S. $300,000,000 Credit
Agreement'), among Warnaco Inc., as the U.S. Borrower, Warnaco (HK) Ltd., as the Foreign Borrower, Warnaco,
as a Guarantor, Citibank, N.A., as the Documentation Agent, The Bank of Nova Scotia, as the Administrative
Agent, and certain other lenders named therein.
10.3 -- First Amendment to the U.S. $300,000,000 Credit Agreement, dated as of October 14, 1997 among Warnaco Inc.,
as the U.S. Borrower, Warnaco (HK) Ltd. as the Foreign Borrower, Warnaco, Citibank, N.A., as the
Documentation Agent, The Bank of Nova Scotia, as Administrative Agent, and certain other lenders party
thereto.
10.4 -- Amended and Restated License Agreement dated as of January 1, 1996, between Polo Ralph Lauren, L.P. and
Warnaco Inc.
10.5 -- Amended and Restated Design Services Agreement dated as of January 1, 1996, between Polo Ralph Lauren
Enterprises, L.P. and Warnaco Inc.
11.1 -- Earnings per share.
27.1 -- Financial Data Schedule
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(b) Reports on Form 8-K.
The Company filed one report on Form 8-K on October 3, 1997 during the
third quarter of 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 12, 1997 By: /S/ WILLIAM S. FINKELSTEIN
...................................
WILLIAM S. FINKELSTEIN
DIRECTOR, SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER
Date: November 12, 1997 By: /S/ STANLEY P. SILVERSTEIN
...................................
STANLEY P. SILVERSTEIN
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
14
STATEMENT OF DIFFERENCES
The registered trademark symbol shall be expressed as........................'r'
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================================================================================
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
DESIGNER FINANCE TRUST
Dated as of November 6, 1996
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TABLE OF CONTENTS
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions ............................................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ....................... 9
SECTION 2.2 Lists of Holders of Securities ......................... 10
SECTION 2.3 Reports by the Property Trustee ........................ 11
SECTION 2.4 Periodic Reports to Property
Trustee .............................................. 11
SECTION 2.5 Evidence of Compliance with
Conditions Precedent ................................. 12
SECTION 2.6 Events of Default; Waiver .............................. 12
SECTION 2.7 Event of Default; Notice ............................... 14
ARTICLE III
ORGANIZATION
SECTION 3.1 Name ................................................... 15
SECTION 3.2 Office ................................................. 15
SECTION 3.3 Purpose ................................................ 15
SECTION 3.4 Prohibition of Actions by the Trust
and the Trustees ..................................... 16
SECTION 3.5 General Authority of the Trustees ...................... 17
SECTION 3.6 Title to Property of the Trust ......................... 17
SECTION 3.7 Not Responsible for Recitals or
Issuance of Securities ............................... 17
SECTION 3.8 Duration of Trust ...................................... 17
SECTION 3.9 Mergers ................................................ 17
SECTION 3.10 Termination of Trust ................................... 20
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common
Securities ........................................... 21
SECTION 4.2 Responsibilities of the Sponsor ........................ 21
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees ..................................... 22
SECTION 5.2 Delaware Trustee; Eligibility .......................... 23
SECTIOn 5.3 Property Trustee; Eligibility .......................... 23
SECTION 5.4 Qualifications of Regular Trustees
and Delaware Trustee Generally ........................ 24
SECTION 5.5 Initial Trustees ....................................... 25
SECTION 5.6 Appointment, Removal and
Resignation of Trustees ............................... 25
SECTION 5.7 Vacancies among Trustees ............................... 27
SECTION 5.8 Merger, Conversion, Consolidation
or Succession to Business of a
Trustee ............................................... 28
SECTION 5.9 Authority, Powers and Duties of the
Regular Trustees ...................................... 28
SECTION 5.10 Delegation of Powers and Duties of
the Regular Trustees .................................. 33
SECTION 5.11 Powers and Duties of the Property
Trustee ............................................... 33
SECTION 5.12 Certain Duties and Responsibilities
of the Property Trustee ............................... 35
SECTION 5.13 Certain Rights of Property Trustee ..................... 37
SECTION 5.14 Delaware Trustee ....................................... 40
SECTION 5.15 Meetings ............................................... 40
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions .......................................... 41
ARTICLE VII
THE SECURITIES
SECTION 7.1 Title and Terms ........................................ 41
SECTION 7.2 General Provisions Regarding the Securities ............ 42
SECTION 7.3 General Form of Certificates ........................... 42
SECTION 7.4 Form of Preferred Securities
Certificates; Global Certificates ..................... 43
SECTION 7.5 Execution and Dating of
Certificates .......................................... 44
SECTION 7.6 Authentication of Preferred
Security Certificates ................................. 45
SECTION 7.7 Definitive Preferred Security Certificates ............. 45
SECTION 7.8 Temporary Certificates ................................. 46
SECTION 7.9 Registrar, Paying Agent and
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Conversion Agent ..................................... 46
SECTION 7.10 Paying Agent to Hold Money in Trust .................... 47
SECTION 7.11 Outstanding Preferred Securities ....................... 47
SECTION 7.12 Preferred Securities in Treasury ....................... 48
SECTION 7.13 Notices to Clearing Agency ............................. 48
SECTION 7.14 Appointment of Successor Clearing Agency ............... 48
SECTION 7.15 Deemed Security Holders ................................ 48
ARTICLE VIII
TRANSFERS, EXCHANGES AND CANCELLATIONS
OF SECURITIES
SECTION 8.1 General ................................................ 49
SECTION 8.2 Transfer Procedures and
Restrictions for Global
Certificates .......................................... 50
SECTION 8.3 Mutilated, Destroyed, Lost or
Stolen Certificates; Replacement
Securities ............................................ 51
SECTION 8.4 Cancellation of Preferred Security
Certificates .......................................... 52
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES AND OTHERS
SECTION 9.1 Liability .............................................. 52
SECTION 9.2 Exculpation ............................................ 53
SECTION 9.3 Fiduciary Duty ......................................... 54
SECTION 9.4 Indemnification ........................................ 55
SECTION 9.5 Outside Businesses ..................................... 59
ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year ............................................ 60
SECTION 10.2 Certain Accounting Matters ............................. 60
SECTION 10.3 Banking ................................................ 61
SECTION 10.4 Withholding ............................................ 61
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments ............................................. 62
SECTION 11.2 Meetings of the Holders of Securities; Action by Written
Consent ............................................... 64
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ARTICLE XII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Property Trustee ..... 66
SECTION 12.2 Representations and Warranties of Delaware Trustee ..... 67
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices ................................................ 68
SECTION 13.2 Governing Law .......................................... 69
SECTION 13.3 Intention of the Parties ............................... 70
SECTION 13.4 Headings ............................................... 70
SECTION 13.5 Successors and Assigns ................................. 70
SECTION 13.6 Partial Enforceability ................................. 70
SECTION 13.7 Counterparts ........................................... 70
ANNEX AND EXHIBITS
ANNEX I Terms of 6% Convertible Trust
Originated Preferred Securities
and 6% Convertible Common Securities
Exhibit A-1 Form of Preferred Security
Exhibit A-2 Form of Common Security
Exhibit B Form of Debenture
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CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- ---------------
310(a)........................................................ 5.3(a)
310(c)........................................................ Inapplicable
311(c)........................................................ Inapplicable
312(a)........................................................ 2.2(a)
312(b)........................................................ 2.2(b)
313........................................................... 2.3
314(a)........................................................ 2.4
314(b)........................................................ Inapplicable
314(c)........................................................ 2.5
314(d)........................................................ Inapplicable
314(f)........................................................ Inapplicable
315(a)........................................................ 5.12(b)-(e)
315(c)........................................................ 5.12(a)
315(d)........................................................ 5.12(a)
316(a)........................................................ Annex I
316(c)........................................................ 5.9(d)(v)
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
DESIGNER FINANCE TRUST
NOVEMBER 6, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of November 6, 1996, by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Designer
Holdings Ltd., a Delaware corporation, as trust sponsor (the "Sponsor"), and by
the holders, from time to time, of undivided beneficial interests in the Trust
issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Designer
Finance Trust (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of September 26, 1996 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on September 27, 1996, for the sole purpose of
issuing and selling certain securities representing undivided beneficial
interests in the assets of the Trust and investing the proceeds thereof in
certain Debentures (as defined herein) of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have
been issued; and
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
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ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections and Annexes and Exhibits
to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) a reference to the masculine includes the feminine and vice
versa.
"Additional Interest" means if the Trust is required to pay any
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed by the United States or any other taxing
authority, such amounts as shall be required so that the net amounts received
and retained by the Trust after paying such taxes, duties, assessments and
governmental charges will not be less than the amounts the Trust would have
received had no such taxes, duties, assessments or governmental charges been
imposed.
2
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"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 8.2.
"Business Day" means any day other than a day on which banking
institutions in the City of New York or in Wilmington, Delaware are authorized
or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code 'SS'3801 et seq., as it may be amended from time to time, or
any successor legislation.
"Certificate" means a certificate in global or definitive form
representing a Common Security or a Preferred Security.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Closing Date" means November 6, 1996.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning specified in Section 7.1.
3
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"Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security substantially in the form
of Exhibit A-2.
"Common Securities Guarantee" means the guarantee agreement dated
as of November 6, 1996, of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (i) any Regular Trustee; (ii)
any Affiliate of any Regular Trustee; (iii) any officer, director, shareholder,
member, partner, employee, representative or agent of any Regular Trustee; or
(iv) any officer, employee or agent of the Trust or its Affiliates.
"Compounded Interest" means interest compounded quarterly at the
rate specified for the Debentures to the extent permitted by applicable law upon
interest accrued and unpaid (including Additional Interest) at the end of each
Extension Period.
"Conversion Agent" has the meaning set forth in Section 7.9.
"Covered Person" means (a) any officer, director, stockholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means the Sponsor in its capacity as issuer of
the Debentures.
"Debenture Trustee" means IBJ Schroder Bank & Trust Company, a
New York banking corporation, as trustee under the Indenture until a successor
is appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the Debentures to be issued by the Debenture
Issuer under the Indenture and to be held by the Property Trustee, a specimen
certificate for such Debentures being Exhibit B hereto.
"Definitive Preferred Security Certificates" has the meaning set
forth in Section 7.7.
"Delaware Trustee" has the meaning set forth in Section 5.2.
4
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"Depositary" means The Depository Trust Company, the initial
Clearing Agency, until a successor shall be appointed pursuant to Section 7.14,
and thereafter means such successor Depositary.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"Event of Default" in respect of the Securities means an Event of
Default (as defined in the Indenture) has occurred and is continuing in respect
of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder,
or any successor legislation.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 9.4(b).
"Global Certificate" has the meaning set forth in Section 7.4(a).
"Holder" means a Person in whose name a Certificate representing
a Security is registered, such Person being a beneficial owner within the
meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of November 6, 1996,
between the Debenture Issuer and the Debenture Trustee, as it may be amended
from time to time.
"Investment Company" means an investment company as defined in
the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, and the rules and regulations promulgated
thereunder, or any successor legislation.
"Legal Action" has the meaning set forth in Section 5.9(d)(vii).
5
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"Majority in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holders of outstanding Securities voting together as a single class or, as
the context may require, Holders of outstanding Preferred Securities or Holders
of outstanding Common Securities voting separately as a class, who are the
record owners of more than 50% of the aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise,
plus accrued and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I hereto.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(i) a statement that each officer signing the Certificate
has read the covenant or condition and the definitions
relating thereto;
(ii) a brief statement of the nature and scope of the
examination or investigation undertaken by each
officer in rendering the Certificate;
(iii) a statement that each such officer has made such
examination or investigation as, in such officer's
opinion, is necessary to enable such officer to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied
with.
"Paying Agent" has the meaning specified in Section 7.9.
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"Person" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Securities" has the meaning specified in Section 7.1.
"Preferred Security Certificate" means a certificate representing
a Preferred Security substantially in the form of Exhibit A-1.
"Preferred Securities Guarantee" means the Guarantee Agreement
dated as of November 6, 1996 of the Sponsor in respect of the Preferred
Securities.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a participant or
as an indirect participant, in each case in accordance with the rules of such
Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section
5.11(c).
"Purchase Agreement" means the Purchase Agreement dated as of
November 1, 1996, between the Sponsor and the underwriters named therein,
relating to the Preferred Securities.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.9.
"Registration Statement" means the Registration Statement on Form
S-1 (Reg. No. 333-13097), including any amendments thereto relating to, among
other securities, the Preferred Securities.
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"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department of the Property Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, and the rules and regulations promulgated thereunder, or any
successor legislation.
"Securities Guarantee" means the Common Securities Guarantee and
the Preferred Securities Guarantee.
"Special Event" has the meaning set forth in Annex I hereto.
"Sponsor" means Designer Holdings Ltd., a Delaware corporation,
or any successor entity in a merger, consolidation or amalgamation, in its
capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I hereto.
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"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holders of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, and the rules and regulations promulgated thereunder,
or any successor legislation.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration, which are
incorporated by reference in and made part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
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(b) The Property Trustee shall be the only Trustee that is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by 'SS''SS'310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide the Property Trustee (i) within 14 days after each
record date for payment of Distributions, a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees on behalf of the Trust shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Property Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in any List of
Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity), provided that the Property Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
'SS''SS'311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Property Trustee.
(a) Within 60 days after May 15 of each year, commencing May 15,
1997, the Property Trustee shall transmit by mail to Holders such reports
concerning the Property Trustee and its actions under this Declaration as may be
required pursuant to the Trust Indenture Act in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each stock
exchange upon which the Securities are listed, with the Commission and with the
Company. The Trust will notify the Property Trustee when the Securities are
listed on any stock exchange.
SECTION 2.3 Periodic Reports to Property Trustee.
Each of the Sponsor and the Trust shall file with the Property
Trustee and the Commission, and transmit to Holders, such information, documents
and other reports, and such summaries thereof, as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant to such
Act; provided, that any such information, documents or reports required to be
filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Property Trustee within 15 days after the same is so
required to be filed with the Commission.
Delivery of such reports, information and documents to the
Property Trustee is for informational purposes only and the Property Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein, including
the Trust's compliance with any of its covenants hereunder (as to which the
Property Trustee is entitled to rely exclusively on Officers' Certificates).
Each of the Sponsor and the Trust shall also provide to the
Property Trustee on a timely basis such information as the Property Trustee
requires to enable the Property Trustee to prepare and file any form required to
be submitted by the Company with the Internal Revenue Service and the Holders of
the Securities relating to original issue discount, if any, including, without
limitation, Form 1099-OID or any successor form.
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SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in 'SS'314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to
'SS'314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver.
(a) The Holders of a majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event
of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of the Debentures (a
"Super Majority") to be waived under the Indenture, the Event of
Default under the Declaration may only be waived by the vote of
the Holders of at least the proportion in liquidation amount of
the Preferred Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu
of 'SS'316(a)(1)(B) of the Trust Indenture Act and such 'SS'316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
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the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except
where the Holders of the Common Securities are deemed to have
waived such Event of Default under the Declaration as provided
below in this Section 2.6(b), the Event of Default under the
Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super
Majority to be waived, except where the Holders of the Common
Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the
Event of Default under the Declaration may only be waived by the
vote of the Holders of at least the proportion in liquidation
amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures
outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The foregoing provisions of this Section 2.6(b) shall be in
lieu of 'SS''SS' 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and
such 'SS''SS' 316(a)(1)(A) and 316(a)(1)(B) of
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the Trust Indenture Act are hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Subject to the
foregoing provisions of this Section 2.6(b), upon such waiver, any such default
shall cease to exist and any Event of Default with respect to the Common
Securities arising therefrom shall be deemed to have been cured for every
purpose of this Declaration, but no such waiver shall extend to any subsequent
or other default or Event of Default with respect to the Common Securities or
impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu of
'SS' 316(a)(1)(B) of the Trust Indenture Act and such 'SS' 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice.
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Securities, notices of all defaults with respect
to the Securities actually known to a Responsible Officer of the Property
Trustee, unless such defaults have been cured before the giving of such notice
(the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including any
periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures or in the
payment of any sinking fund installment established for the Debentures, the
Property Trustee shall be protected in withholding such notice if and so long as
the board of directors, the executive committee, or a trust committee of
directors and/or Responsible Officers of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
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(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 501(1) and 501(2) of
the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible
Officer of the Property Trustee charged with the administration
of the Declaration shall have actual knowledge.
ARTICLE III.
ORGANIZATION OF TRUST
SECTION 3.1 Name.
The Trust is named "Designer Finance Trust," as such name may be
modified from time to time by the Regular Trustees following 10 Business Days
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o Designer
Holdings Ltd., 1385 Broadway, 3rd Floor, New York, New York 10018, Attention:
John J. Jones, Vice President, Secretary and General Counsel. On 10 Business
Days written notice to the Holders of Securities, the Regular Trustees may
designate another principal office.
SECTION 3.3 Purpose.
The exclusive purposes and functions of the Trust are (a) to
issue and sell Securities and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
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SECTION 3.4 Prohibition of Actions by the Trust and the Trustees.
The Trust shall not, and the Trustees (including the Property
Trustee) shall not, engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and the Trustees
(including the Property Trustee) shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of Securities
pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever;
(f) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the Securities; or
(g) other than as provided in this Declaration or Annex I hereto,
(a) direct the time, method and place of exercising any trust or power conferred
upon the Debenture Trustee with respect to the Debentures, (b) waive any past
default that is waivable under the Indenture, (c) exercise any right to rescind
or annul any declaration that the principal of all the Debentures shall be due
and payable, or (d) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless the
Trust shall have received an opinion of counsel to the effect that such
amendment or modification will not cause more than an insubstantial risk that
(i) the Trust will be deemed an Investment Company required to be registered
under the Investment Company Act, or (ii) for
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United States federal income tax purposes the Trust will not be classified as a
grantor trust.
SECTION 3.5 General Authority of the Trustees.
In dealing with the Trustees acting on behalf of the Trust, no
person shall be required to inquire into the authority of the Trustees to bind
the Trust. Persons dealing with the Trust are entitled to rely conclusively on
the power and authority of the Trustees as set forth in this Declaration.
SECTION 3.6 Title to Property of the Trust.
Except as provided in Section 5.11 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.7 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities
shall be taken as the statements of the Sponsor, and the Trustees do not assume
any responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part thereof.
The Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.8 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Section 3.10 hereof, shall exist until September 27, 2021.
SECTION 3.9 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any Person, except as described in Sections
3.9(b) and 3.9(c).
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(b) The Trust may, with the consent of the Regular Trustees or,
if there are more than two, a majority of the Regular Trustees, and without the
consent of the Holders of the Securities, the Delaware Trustee or the Property
Trustee, consolidate, amalgamate, merge with or into, or be replaced by a trust
organized as such under the laws of any state of the United States; provided
that:
(i) if the Trust is not the survivor, such
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the
obligations of the Trust under the Securities; or
(B) substitutes for the Preferred
Securities other securities having substantially
the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor
Securities rank the same as the Preferred
Securities with respect to Distributions, assets
and payments upon liquidation, redemption and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a
trustee of the Successor Entity that possesses the same powers
and duties as the Property Trustee as the Holder of the
Debentures;
(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities
exchange or with another organization on which the Preferred
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally
recognized statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities (including
any Successor Securities) in any material respect (other than
with
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respect to any dilution of the Holders' interest in the new
entity);
(vi) such Successor Entity has a purpose
substantially identical to that of the Trust;
(vii) the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities at least to
the extent provided by the Preferred Securities Guarantee; and
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an opinion
of a nationally recognized independent counsel to the Trust
reasonably acceptable to the Property Trustee and experienced in
such matters to the effect that:
(A) such merger, consolidation,
amalgamation or replacement will not adversely
affect the rights, preferences and privileges of
the Holders of the Securities (including any
Successor Securities) in any material respect
(other than with respect to any dilution of the
Holders' interest in the new entity);
(B) following such merger,
consolidation, amalgamation or replacement, neither
the Trust nor the Successor Entity will be required
to register as an Investment Company; and
(C) following such merger,
consolidation, amalgamation or replacement, the
Trust (or the Successor Entity) will be treated as
a grantor trust for United States federal income
tax purposes.
(c) Notwithstanding Section 3.9(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
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SECTION 3.10 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor, the
filing of a certificate of cancellation with respect to the Trust
after having obtained the consent of at least a majority in
liquidation amount of the Securities, voting together as a single
class, to file such certificate of cancellation, or the
revocation of the Certificate of Incorporation of the Sponsor and
the expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) when all of the Securities shall have been
called for redemption and the amounts necessary for redemption
thereof, including any Additional Interest and Compounded
Interest, shall have been paid to the Holders in accordance with
the terms of the Securities;
(v) upon the occurrence and continuation of a Tax
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the
Debentures shall have been distributed to the Holders of
Securities in exchange for all of the Securities;
(vi) upon the distribution of the Sponsor's common
stock to all Securities Holders upon conversion of all
outstanding Preferred Securities;
(vii) the expiration of the term of the Trust on
September 27, 2021; or
(viii) before the issuance of any Securities, with
the consent of all the Regular Trustees and the Sponsor.
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(b) As soon as is practicable after the occurrence of an event
referred to in Section 3.10(a), the Regular Trustees shall pay (or make
provision for the payment of) all claims against the Trust and shall execute and
file a certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Article IX shall survive the termination of
the Trust.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and on any other date Preferred Securities
and Common Securities are sold pursuant to the over-allotment option granted in
the Purchase Agreement, the Sponsor will purchase all of the Common Securities
issued by the Trust, in an aggregate amount at least equal to 3% of the capital
of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities:
(a) to prepare for filing with the Commission the Registration
Statement, including any amendments thereto;
(b) to determine the states and foreign jurisdictions in which to
take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than actions that
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such states and foreign jurisdictions;
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(c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the Nasdaq National
Market for listing or quotation of the Preferred Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any amendments
thereto; and
(e) to negotiate the terms of the Purchase Agreement and other
agreements, documents and instruments providing for the sale of the Preferred
Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The initial number of Trustees shall be four, and
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that the number of Trustees shall in no event be less than
two; provided further that (i) there shall be at least one Regular Trustee who
is an employee or officer of, or is affiliated with the Sponsor and (ii) one
Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.
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SECTION 5.2 Delaware Trustee; Eligibility.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be
(a) a natural person who is resident of the State of Delaware; or
(b) if not a natural person, an entity that has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee may also be the Delaware Trustee and Section 5.14
shall have no application.
SECTION 5.3 Property Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall act as
Property Trustee and shall
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business
under the laws of the United States of America or any state or
territory thereof or of the District of Columbia, or a Person
permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000, and subject to supervision or
examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred
to above, then for the purposes of this Section 5.3(a)(ii), the
combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
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(iii) if the Trust is excluded from the definition
of an Investment Company solely by means of Rule 3a-5 and to the
extent the Investment Company Act or Trust Indenture Act requires
a trustee having certain qualifications to hold title to the
"eligible assets" of the Trust, the Property Trustee shall
possess those qualifications.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(d).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of 'SS' 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in 'SS' 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of 'SS' 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
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SECTION 5.5 Initial Trustees.
(a) The initial Regular Trustees are:
Arnold H. Simon
c/o Designer Holdings Ltd.
1385 Broadway, 3rd Floor
New York, New York 10018
Merril M. Halpern
c/o Charterhouse Group International, Inc.
535 Madison Avenue
New York, New York 10022
The initial Delaware Trustee is:
Delaware Trust Capital Management, Inc.
900 Market Street H02M12
Wilmington, DE 19801
Attention: Corporate Trust Department
The initial Property Trustee is:
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, NY 10004
Attention: Corporate Trust & Agency Department
SECTION 5.6 Appointment, Removal and Resignation of Trustees.
(a) Subject to Sections 5.6(b) and 5.6(c), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote
of the Holders of a majority in liquidation amount of the Common
Securities voting as a class.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(a) until a successor possessing the
qualifications to act as a Property Trustee under Section 5.3 (a "Successor
Property
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Trustee") has been appointed and has accepted such appointment by instrument
executed by such Successor Property Trustee and delivered to the Trust, the
Sponsor and the removed Property Trustee.
(c) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware Trustee and
delivered to the Trust, the Sponsor and the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his,
hers or its successor shall have been appointed or until his, her or its death,
removal, resignation, dissolution or liquidation. Any Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as
the Property Trustee shall be effective:
(A) until a Successor Property
Trustee has been appointed and has accepted such
appointment by instrument executed by such
Successor Property Trustee and delivered to the
Trust, the Sponsor and the resigning Property
Trustee; or
(B) until the assets of the Trust
have been completely liquidated and the proceeds
thereof distributed to the holders of the
Securities; and
(ii) no such resignation of the Trustee that acts
as the Delaware Trustee shall be effective until a Successor
Delaware Trustee has been appointed and has accepted such
appointment by instrument executed by such Successor Delaware
Trustee and delivered to the Trust, the Sponsor and the resigning
Delaware Trustee.
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(e) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with Section 5.6(d).
(f) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery pursuant to this Section 5.6 of an
instrument of resignation or removal, the Property Trustee or Delaware Trustee
resigning or being removed, as applicable, may petition any court of competent
jurisdiction for appointment of a Successor Property Trustee or Successor
Delaware Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper and prescribe, appoint a Successor Property Trustee
or Successor Delaware Trustee, as the case may be.
(g) No Property Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Property Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the number
of Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees
is increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees, shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with this Section 5.6, the Regular Trustees
in office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
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SECTION 5.8 Merger, Conversion, Consolidation or Succession to Business of a
Trustee.
Any corporation into which the Property Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Property Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Property Trustee or
the Delaware Trustee, as the case may be, hereunder, provided such corporation
shall be otherwise qualified and eligible under this Article V, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
SECTION 5.9 Authority, Powers and Duties of the Regular Trustees.
(a) Subject to the limitations provided in this Declaration and
to the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust.
(b) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 5.9, provided, that the Registration Statement,
including any amendments thereto, shall be signed by a majority of the Regular
Trustees.
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(d) The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:
(i) to issue and sell the Preferred Securities and
the Common Securities in accordance with this Declaration;
provided, however, that the Trust may issue no more than one
series of Preferred Securities and no more than one series of
Common Securities, and, provided, further, that there shall be no
interests in the Trust other than the Securities, and the
issuance of Securities shall be limited to simultaneous issuance
of both Preferred Securities and Common Securities on the Closing
Date and any other date Preferred Securities and Common
Securities are sold pursuant to the over-allotment option granted
in the Purchase Agreement;
(ii) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(A) execute the Registration
Statement prepared by the Sponsor, including any
amendments thereto relating to, among other
securities, the Preferred Securities;
(B) execute and file any documents
prepared by the Sponsor, or take any acts as
determined by the Sponsor to be necessary in order
to qualify or register all or part of the Preferred
Securities in any state or foreign jurisdiction in
which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(C) execute and file an application,
prepared by the Sponsor, to the New York Stock
Exchange or any other national stock exchange or
the Nasdaq National Market for listing or quotation
of the Preferred Securities, from time to time;
(D) execute and deliver letters,
documents, or instruments to the Depositary
relating to the Preferred Securities;
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(E) execute and file with the
Commission a registration statement on Form 8-A,
including any amendments thereto, prepared by the
Sponsor relating to the registration of the
Preferred Securities under Section 12(b) of the
Exchange Act; and
(F) execute and perform the Purchase
Agreement and other agreements, documents and
instruments providing for the sale of the Preferred
Securities;
(iii) to acquire the Debentures with the proceeds
of the sale of the Preferred Securities and the Common
Securities; provided, however, that the Regular Trustees shall
cause legal title to the Debentures to be held of record in the
name of the Property Trustee for the benefit of the Holders of
the Preferred Securities and the Holders of Common Securities;
(iv) to give the Sponsor and the Property Trustee
prompt written notice of the occurrence of a Special Event;
provided that the Regular Trustees shall consult with the Sponsor
and the Property Trustee before taking or refraining from taking
any Ministerial Action in relation to a Special Event;
(v) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including and with respect to, for the purposes of
'SS' 316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices
to the Holders of Preferred Securities and Holders of Common
Securities as to such actions and applicable record dates;
(vi) to take all actions and perform such duties as
may be required of the Regular Trustees pursuant to the terms of
the Securities;
(vii) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant
to Section
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5.11(f), the Property Trustee has the exclusive power to bring
such Legal Action;
(viii) to employ or otherwise engage employees and
agents (who may be designated as officers with titles) and
managers, advisors, and consultants and pay reasonable
compensation for such services;
(ix) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(x) to give the certificate required by 'SS'
314(a)(4) of the Trust Indenture Act to the Property Trustee,
which certificate may be executed by any Regular Trustee;
(xi) to incur expenses that are necessary or
incidental to carry out any of the purposes of the Trust;
(xii) to act as, or appoint another Person to act
as, registrar and transfer agent for the Securities;
(xiii) to give prompt written notice to the Holders
of the Securities of any notice received from the Debenture
Issuer of its election to defer payments of interest on the
Debentures by extending the interest payment period under the
Indenture;
(xiv) to execute all documents or instruments,
perform all duties and powers, and do all things for and on
behalf of the Trust in all matters necessary or incidental to the
foregoing;
(xv) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory business trust under the laws of the State of Delaware
and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the
Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created;
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(xvi) to take any action, not inconsistent with
this Declaration or with applicable law, that the Regular
Trustees determine in their discretion to be necessary or
desirable in carrying out the activities of the Trust as set out
in this Section 5.9, including, but not limited to:
(A) causing the Trust not to be
deemed to be an Investment Company required to be
registered under the Investment Company Act;
(B) causing the Trust to be
classified for United States federal income tax
purposes as a grantor trust; and
(C) cooperating with the Debenture
Issuer to ensure that the Debentures will be
treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
provided that such action does not adversely affect the interests of Holders;
and
(xvii) to take all action necessary to cause all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust to be duly
prepared and filed by the Regular Trustees, on behalf of the
Trust.
(e) The Regular Trustees must exercise the powers set forth in
this Section 5.9 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Regular Trustees shall not take any
action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
(f) Subject to this Section 5.9, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
5.11.
(g) Any expenses incurred by the Regular Trustees pursuant to
this Section 5.9 shall be reimbursed by the Debenture Issuer.
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SECTION 5.10 Delegation of Powers and Duties of the Regular Trustees.
The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein. The Regular
Trustees may, by power of attorney consistent with applicable law, delegate to
any other natural person over the age of 21 their power for the purpose of
executing any documents contemplated in Section 5.9, including the Registration
Statement or any amendment thereto or other document filed with the Commission,
or making any other governmental filing.
SECTION 5.11 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and held
of record in the name of the Property Trustee in trust for the benefit of the
Holders of the Securities. The right, title and interest of the Property Trustee
to the Debentures shall vest automatically in each Person who may hereafter be
appointed as Property Trustee in accordance with Section 5.6. Such vesting and
cessation of title shall be effective whether or not conveyancing documents with
regard to the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the "Property Trustee
Account") in the name of and under the exclusive control of the
Property Trustee on behalf of the Holders of the Securities and,
upon the receipt of payments of funds made in respect of the
Debentures held by the Property Trustee, deposit such funds into
the Property Trustee Account and make payments to the
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Holders of the Preferred Securities and Holders of the Common
Securities from the Property Trustee Account in accordance with
Section 6.1. Funds in the Property Trustee Account shall be held
uninvested until disbursed in accordance with this Declaration.
The Property Trustee Account shall be an account that is
maintained with the Property Trustee or a banking institution the
rating on whose long-term unsecured indebtedness is at least
equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization," as that
term is defined for purposes of Rule 436(g)(2) under the
Securities Act;
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities
to the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by
the Regular Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as so directed
as shall be necessary or appropriate to effect the distribution
of the Debentures to Holders of Securities upon the occurrence of
certain Special Events arising from a change in law or a change
in legal interpretation or other specified circumstances pursuant
to the terms of the Securities.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Property Trustee occurs and is continuing, the Property Trustee shall, for
the benefit of Holders of the Securities, but subject to the rights of the
Holders pursuant to the terms of such Securities, enforce its rights as holder
of the Debentures, including the right to take any Legal Action which arises out
of or in connection with such an Event of Default.
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(f) Subject to this Section 5.11, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 5.9.
(g) The Property Trustee must exercise the powers set forth in
this Section 5.11 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 5.12 Certain Duties and Responsibilities of the Property Trustee.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that may have
occurred, shall undertake to perform only such duties and obligations as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Property Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
of which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such rights and powers vested in it by this
Declaration, and use the same degree of care and skill in its exercise, as a
prudent individual would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that prior
to the occurrence of an Event of Default and after the curing or waiving of all
such Events of Default that may have occurred, in the absence of bad faith on
the part of the Property Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property Trustee and
conforming to the requirements of this Declaration; but in the case of any such
certificates or opinions that by any provision hereof are specifically required
to be furnished to the Property Trustee, the Property Trustee shall be under a
duty to examine the same to determine whether or not they conform to the
requirements of this Declaration.
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(c) The Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property Trustee,
unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts.
(d) The Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of not less than a majority in liquidation amount of
the Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or exercising any
trust or power conferred upon the Property Trustee under this Declaration.
(e) The Property Trustee shall not be responsible for monitoring
the compliance by the Regular Trustees or the Sponsor with their respective
duties under this Declaration, nor shall the Property Trustee be liable for any
default or misconduct of the Regular Trustees or the Sponsor.
(f) No provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing that the
repayment of such funds or liability is not reasonably assured to it under the
terms of this Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to it.
(g) The Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account, subject to the
protections and limitations on liability afforded to the Property Trustee under
this Declaration and the Trust Indenture Act.
(h) The Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with the
Sponsor. Money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Property Trustee Account maintained
by the Property Trustee pursuant to Sec-
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tion 5.11(c)(i) and except to the extent otherwise required by law.
(i) The Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith.
SECTION 5.13 Certain Rights of Property Trustee.
(a) Subject to the provisions of Section 5.12:
(i) the Property Trustee may rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the
Regular Trustees contemplated by this Declaration shall be
sufficiently evidenced by an Officers' Certificate;
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or
omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Regular Trustees;
(iv) the Property Trustee shall have no duty to see
to any recording, filing or registration of any instrument
(including any financing or continuation statement or any filing
under tax or securities laws) or any rerecording, refiling or
registration thereof;
(v) the Property Trustee may consult with counsel
of its choice or other experts and the advice or opinion of such
counsel and experts with respect to
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legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or
opinion, such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees. The Property
Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court
of competent jurisdiction;
(vi) the Property Trustee shall be under no
obligation to exercise any of the rights or powers vested in it
by this Declaration at the request or direction of any Holder,
unless such Holder shall have provided to the Property Trustee
adequate security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Property
Trustee's agents, nominees or custodians) and liabilities that
might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested
by the Property Trustee; provided that, nothing contained in this
Section 5.13(a)(vi) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, security, bond,
debenture, note, other evidence of indebtedness or other paper or
document, but the Property Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters
as it may see fit;
(viii) the Property Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence
on the part of any agent or attorney appointed with due care by
it hereunder;
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(ix) any action taken by the Property Trustee or
its agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Property Trustee or its
agents alone shall be sufficient and effective to perform any
such action and no third party shall be required to inquire as to
the authority of the Property Trustee to so act or as to its
compliance with any of the terms and provisions of this
Declaration, both of which shall be conclusively evidenced by the
Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this
Declaration the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder the Property Trustee
(A) may request instructions from the Holders of the Securities,
which instructions may only be given by the Holders of the same
proportion in liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (B) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (C) shall be
protected in acting in accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration; and
(xii) the Property Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Declaration.
(b) No provision of this Declaration shall be deemed to impose
any duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
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obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 5.14 Delaware Trustee.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees or the Property Trustee described in
this Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
'SS' 3807 of the Business Trust Act.
SECTION 5.15 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any in-person
meetings of the Regular Trustees shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any telephonic meetings of the
Regular Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of a Regular Trustee at a meeting
shall constitute a waiver of notice of such meeting except where a Regular
Trustee attends a meeting for the express purpose of objecting to the
transaction of any activity on the ground that the meeting has not been lawfully
called or convened. Unless provided otherwise in this Declaration, any action of
the Regular Trustees may be taken at a meeting by vote of a majority of the
Regular Trustees present (whether in person or by telephone) and eligible to
vote with respect to such matter, provided that a Quorum is present, or without
a meeting by the unanimous written consent of the Regular Trustees. In the event
there is only one Regular Trustee, any and all action of such Regular Trustee
shall be evidenced by a written consent of such Regular Trustee.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
If and to the extent that the Debenture Issuer makes a payment of
interest (including Compounded Interest), Additional Interest, premium and/or
principal on the Debentures held by the Property Trustee (the amount of any such
payment being a "Payment Amount"), the Property Trustee shall and is directed,
to the extent funds are available for that purpose, to make a distribution (a
"Distribution") of the Payment Amount to Holders of Preferred Securities and
Common Securities in accordance with the preferences set forth in the respective
terms of such Securities, as described in Annex I hereto.
ARTICLE VII
THE SECURITIES
SECTION 7.1 Title and Terms.
The Regular Trustees shall on behalf of the Trust issue one class
of convertible preferred securities, representing undivided beneficial interests
in the assets of the Trust (the "Preferred Securities"), and one class of
convertible common securities, representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"), each having such terms (the
"Terms") as are set forth in Annex I. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Preferred Securities
and the Common Securities. The aggregate number of Preferred Securities
outstanding at any time shall not exceed the number set forth in the Terms in
Annex I hereto.
The Terms of the Securities set forth in Annex I and the forms of
Certificates set forth in Exhibits A-1 and A-2 are part of the terms of this
Declaration and to the extent applicable, the Property Trustee and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
Terms and to be bound thereby.
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SECTION 7.2 General Provisions Regarding the Securities.
(a) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(b) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be validly issued, fully paid and
nonassessable.
(c) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.3 General Form of Certificates.
The Preferred Security Certificates and the Property Trustee's
certificate of authentication shall be substantially in the form of Exhibit A-1
and the Common Security Certificates shall be substantially in the form of
Exhibit A-2, each of which is hereby incorporated in and expressly made a part
of this Declaration.
The Certificates may have letters, numbers, notations or other
marks of identification or designation and such legends or endorsements required
by law, stock exchange rule, agreements to which the Trust is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Trust). The Trust at the direction of the Sponsor shall
furnish any such legend not contained in Exhibit A-1 to the Property Trustee in
writing.
The definitive Certificates shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as determined by
the Regular Trustees, as evidenced by their execution thereof. The Trust shall
issue no Securities in bearer form.
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SECTION 7.4 Form of Preferred Securities Certificates; Global Certificates.
(a) Unless otherwise specified in the terms of the Preferred
Securities, the Preferred Securities Certificates, on original issuance, will be
issued in the form of one or more, fully registered, global Preferred Security
Certificates (each a "Global Certificate"), to be delivered to The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Trust. No
Preferred Security Beneficial Owner will receive a definitive Preferred Security
Certificate representing such Preferred Security Beneficial Owner's interests in
such Global Certificates, except as provided in Section 7.7.
(b) Unless required by the Depositary, any securities exchange on
which the Preferred Securities may be listed or any rule, regulation or law,
Preferred Securities issued in the form of Global Certificates need not be
printed, lithographed or engraved on steel engraved borders, but shall be in
such form as is acceptable to the Depositary.
(c) Every Global Certificate authenticated and delivered
hereunder shall bear a legend in substantially the following form, in capital
letters and bold-face type:
THIS SECURITY IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A PREFERRED SECURITY
REGISTERED, AND NO TRANSFER OF THIS PREFERRED SECURITY IN WHOLE
OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER
THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION.
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(d) If the Depositary is the Depository Trust Company, the Global
Certificate authenticated and delivered hereunder shall also bear a legend in
substantially the following form, in capital letters and bold-face type:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY
OF THE DEPOSITORY TRUST COMPANY ("DTC") TO THE TRUST OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN
SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
SECTION 7.5 Execution and Dating of Certificates.
The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. In case any Regular Trustee who shall have signed any of the
Certificates shall cease to be such Regular Trustee before the Certificates so
signed shall be delivered by the Trust, such Certificates nevertheless may be
delivered as though the person who signed such Certificates had not ceased to be
such Regular Trustee; and any Certificates may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Certificate, shall
be the Regular Trustees of the Trust, although at the date of the execution and
delivery of the Declaration any such person was not such a Regular Trustee. Each
Preferred Security shall be dated the date of its authentication.
One Regular Trustee shall sign the Preferred Security
Certificates for the Trust by manual or facsimile signature. Unless otherwise
determined by the Trust, such signature shall, in the case of Common Security
Certificates, be a manual signature.
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SECTION 7.6 Authentication of Preferred Security Certificates.
Each Global Certificate shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of The
Depositary Trust Company, and delivered to such Depositary or a nominee thereof
or custodian therefor, and each such Global Certificate shall constitute a
single Preferred Security for all purposes of this Declaration.
A Preferred Security Certificate shall not be valid until authenticated
by the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security Certificate
has been authenticated under this Declaration. Upon a written order of the Trust
signed by one Regular Trustee, the Property Trustee shall authenticate the
Preferred Security Certificates for original issue.
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Security Certificates. An
authenticating agent may authenticate Preferred Security Certificates whenever
the Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent. An
authenticating agent has the same rights as the Property Trustee to deal with
the Sponsor or an Affiliate.
SECTION 7.7 Definitive Preferred Security Certificates.
(a) Upon the occurrence of an event specified in Section 8.2(a),
definitive, fully registered Preferred Security Certificates ("Definitive
Preferred Security Certificates") shall be prepared by the Regular Trustees on
behalf of the Trust with respect to such Preferred Securities.
(b) Upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees shall
cause Definitive Preferred Security Certificates to be delivered to Preferred
Security Beneficial Owners in accordance with the instructions of the Clearing
Agency. Neither the Trustees nor the Trust shall be liable for any delay in
delivery of such instructions and
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each of them may conclusively rely on and shall be protected in relying on, said
instructions of the Clearing Agency.
SECTION 7.8 Temporary Certificates.
Until definitive Certificates are ready for delivery, the Trust
may prepare and, in the case of the Preferred Securities, the Property Trustee
shall authenticate temporary Certificates. Temporary Certificates shall be
substantially in the form of definitive Certificates but may have variations
that the Trust considers appropriate for temporary Certificates. Without
unreasonable delay, the Trust shall prepare and, in the case of the Preferred
Securities, the Property Trustee shall authenticate definitive Certificates in
exchange for temporary Certificates.
SECTION 7.9 Registrar, Paying Agent and Conversion Agent.
In the event that the Preferred Securities are not in book entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where Preferred Securities may be
presented for registration of transfer or from exchange ("Registrar"), (ii) an
office or agency where Preferred Securities may be presented for payment
("Paying Agent"). The Trust shall maintain an office or agency where Securities
may be presented for conversion ("Conversion Agent"). The Registrar shall keep a
register of the Preferred Securities and of their transfer and exchange. The
Trust may appoint the Registrar, the Paying Agent and the Conversion Agent and
may appoint one or more co-registrars, one or more additional paying agents and
one or more additional conversion agents in such other locations as it shall
determine. The term "Paying Agent" includes any additional paying agent and the
term "Conversion Agent" includes any additional conversion agent. The Trust may
change any Paying Agent, Registrar, co-registrar or Conversion Agent without
prior notice to any Holder. The Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Regular Trustees. The Trust
shall notify the Property Trustee of the name and address of any Agent not a
party to this Declaration. If the Trust fails to appoint or maintain another
entity as Registrar, Paying Agent or Conversion Agent, the Property Trustee
shall act as such. The Trust or any of its Affiliates may act as Paying Agent,
Registrar, or Conversion
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Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and
Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar,
Paying Agent and Conversion Agent for the Preferred Securities. The Property
Trustee shall be entitled to the protections of Sections 5.12 and 5.13 and
Article IX in its capacity as Registrar, Paying Agent and Conversion Agent.
SECTION 7.10 Paying Agent to Hold Money in Trust.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of principal or distribution on the Securities, and will notify
the Property Trustee if there are insufficient funds. While any such
insufficiency continues, the Property Trustee may require a Paying Agent to pay
all money held by it to the Property Trustee. The Trust at any time may require
a Paying Agent to pay all money held by it to the Property Trustee and to
account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or an
Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall segregate
and hold in a separate trust fund for the benefit of the Holders all money held
by it as Paying Agent.
SECTION 7.11 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation, and those described in
this Section 7.11 as not outstanding.
If a Preferred Security is replaced or paid pursuant to Section
8.3, it ceases to be outstanding unless the Property Trustee receives proof
satisfactory to it that the replaced, paid or purchased Preferred Security is
held by a bona fide purchaser.
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If Preferred Securities are considered paid in accordance with
the terms of this Declaration, they cease to be outstanding and interest on them
ceases to accrue.
A Preferred Security does not cease to be outstanding because one
of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Preferred
Security.
SECTION 7.12 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Preferred
Securities which the Property Trustee knows are so owned shall be so
disregarded.
SECTION 7.13 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Regular Trustees shall,
in the case of any Global Preferred Security, give all such notices and
communications specified herein to be given to the Preferred Security Holders to
the Depositary, and shall have no notice obligations to the Preferred Security
Beneficial Owners.
SECTION 7.14 Appointment of Successor Clearing Agency.
If the Depositary elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency with
respect to such Preferred Securities.
SECTION 7.15 Deemed Security Holders.
The Trustees and any Agent may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to
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recognize any equitable or other claim to or interest in such Certificate or in
the Securities represented by such Certificate on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
ARTICLE VIII
TRANSFERS, EXCHANGES AND CANCELLATIONS
OF SECURITIES
SECTION 8.1 General.
(a) Where Preferred Security Certificates are presented to the
Registrar or a co-registrar with a request to register a transfer or to exchange
them for an equal number of Preferred Securities represented by different
certificates, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Trust shall issue and the Property Trustee shall
authenticate Preferred Security Certificates at the Registrar's request.
(b) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the Terms set forth in Annex I. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(c) Subject to this Article VIII, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for United
States federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or
the transferee would become an Investment Company.
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(d) The Regular Trustees shall provide for the registration of
Securities and of transfers of Securities, which will be effected without charge
but only upon payment (with such indemnity as the Regular Trustees may require)
in respect of any tax or other governmental charges that may be imposed in
relation to it. Upon surrender for registration of transfer of any Certificates,
the Regular Trustees shall cause one or more new Certificates to be issued in
the name of the designated transferee or transferees. Every Certificate
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of or exchange Preferred Security Certificates during a period
beginning at the opening of business 15 days before the day of any selection of
Preferred Securities for redemption and ending at 5:00 p.m. (New York City time)
on the day of selection, or (ii) to register the transfer or exchange of any
Preferred Security so selected for redemption in whole or in part, except the
unredeemed portion of any Preferred Security being redeemed in part.
SECTION 8.2 Transfer Procedures and Restrictions for Global
Certificates.
(a) Notwithstanding any other provision in this Declaration, no
Global Certificate may be exchanged in whole or in part for Preferred Securities
registered, and no transfer of a Global Certificate in whole or in part may be
registered, in the name of any Person other than the Depositary for such Global
Certificate or a nominee thereof or a successor Depositary or a nominee of such
successor Depositary, unless (i) such Depositary (x) has notified the Sponsor
that it is unwilling or unable to continue as Depositary for such Global
Certificate and is not replaced by a successor Depositary approved by the
Sponsor within 90 days or (y) at any time has ceased to be a clearing agency
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registered under the Exchange Act, or (ii) an Event of Default has occurred and
is continuing.
(b) The transfer and exchange of Global Certificates or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration and the procedures of the Clearing Agency
therefor.
(c) Unless and until Definitive Preferred Security Certificates
have been issued to the Preferred Security Beneficial Owners pursuant to Section
7.7:
(i) the Trust and the Trustees shall be entitled to
deal with the Clearing Agency for all purposes of this
Declaration (including the payment of Distributions on the Global
Certificates and receiving approvals, votes or consents
hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificates and shall have no obligation to
the Preferred Security Beneficial Owners; and
(ii) the rights of the Preferred Security
Beneficial Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law and
agreements between such Preferred Security Beneficial Owners and
the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. The Depositary
will make book entry transfers among the Clearing Agency
Participants.
SECTION 8.3 Mutilated, Destroyed, Lost or Stolen Certificates;
Replacement Securities.
If the holder of a Security claims that the Certificate
representing such Security has been lost, destroyed or wrongfully taken or if
such Certificate is mutilated and is surrendered to the Trust or in the case of
the Preferred Securities to the Property Trustee, the Trust shall issue and the
Property Trustee shall authenticate a replacement Certificate if the Property
Trustee's and the Trust's requirements, as the case may be, are met. If required
by the Property Trustee or the Trust, an indemnity bond must be sufficient in
the judgment of both to protect the Trustees, the Property Trustee, the Sponsor
or any
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authenticating agent from any loss which any of them may suffer if a Certificate
is replaced. The Company may charge for its expenses in replacing a Certificate.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Sponsor in its discretion
may, instead of issuing a new Certificate, pay such Security.
Every replacement Certificate is an additional obligation of the
Trust.
SECTION 8.4 Cancellation of Preferred Security Certificates.
The Trust at any time may deliver Preferred Security Certificates
to the Property Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Property Trustee any Preferred Securities
surrendered to them for registration of transfer, redemption, conversion,
exchange or payment. The Property Trustee shall promptly cancel all Preferred
Securities surrendered for registration of transfer, redemption, conversion,
exchange, payment, replacement or cancellation and shall dispose of cancelled
Preferred Securities as the Trust directs. The Trust may not issue new Preferred
Securities to replace Preferred Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any holder has
converted.
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES AND OTHERS
SECTION 9.1 Liability.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the
Holders of the Securities which shall be made solely from assets
of the Trust; or
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(ii) required to pay to the Trust or to any Holder
of Securities any deficit upon dissolution of the Trust or
otherwise.
(b) The Holder of the Common Securities shall be liable for all
of the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to 'SS' 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability as is extended to stockholders of private corporations for
profit organized under the General Corporation Law of the State of Delaware.
SECTION 9.2 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's gross negligence (or, in
the case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Trust, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Securities might properly be paid.
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SECTION 9.3 Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Declaration shall not be liable to the Trust or to any other Covered Person
for its good faith reliance on the provisions of this Declaration. The
provisions of this Declaration, to the extent that they restrict the duties and
liabilities of an Indemnified Person otherwise existing at law or in equity
(other than the duties imposed on the Property Trustee under the Trust Indenture
Act), are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or
arises between an Indemnified Person and any Covered Person or
(ii) whenever this Declaration or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any Holder of
Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be
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entitled to consider such interests and factors as it desires,
including its own interests, and shall have no duty or obligation
to give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Declaration or by applicable law.
SECTION 9.4 Indemnification.
(a) (i) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Trust) by reason of the
fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interests of the Trust, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct
was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full
extent permitted by law, any Company Indemnified Person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the
right of the Trust to procure a judgment in its favor by reason
of the fact
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that he is or was a Company Indemnified Person against expenses
(including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in
respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the
Trust unless and only to the extent that the Court of Chancery of
Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for
such expenses which such Court of Chancery or such other court
shall deem proper.
(iii) To the extent that a Company Indemnified Person
shall be successful on the merits or otherwise (including
dismissal of an action without prejudice or the settlement of an
action without admission of liability) in defense of any action,
suit or proceeding referred to in paragraphs (i) and (ii) of this
Section 9.4(a), or in defense of any claim, issue or matter
therein, he shall be indemnified, to the full extent permitted by
law, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of
this Section 9.4(a) (unless ordered by a court) shall be made by
the Debenture Issuer only as authorized in the specific case upon
a determination that indemnification of the Company Indemnified
Person is proper in the circumstances because he has met the
applicable standard of conduct set forth in paragraphs (i) and
(ii). Such determination shall be made (1) by the Regular
Trustees by a majority vote of a quorum consisting of such
Regular Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion, or
(3) by the Holders of the Common Securities of the Trust.
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(v) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding
referred to in paragraphs (i) and (ii) of this Section 9.4(a)
shall be paid by the Debenture Issuer in advance of the final
disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Company Indemnified Person to
repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Debenture Issuer as
authorized in this Section 9.4(a). Notwithstanding the foregoing,
no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so
directs, by independent legal counsel in a written opinion or
(iii) the Holders of the Common Securities of the Trust, that,
based upon the facts known to the Regular Trustees, counsel or
the Holders of the Common Securities at the time such
determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be
in or not opposed to the best interests of the Trust, or, with
respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct
was unlawful. In no event shall any advance be made in instances
where the Regular Trustees, independent legal counsel or the
Holders of the Common Securities reasonably determine that such
person deliberately breached his duty to the Trust or the Holders
of the Common or Preferred Securities.
(vi) The indemnification and advancement of expenses
provided by, or granted pursuant to, the other paragraphs of this
Section 9.4(a) shall not be deemed exclusive of any other rights
to which those seeking indemnification and advancement of
expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Debenture Issuer
or Holders of the Preferred Securities of the Trust or otherwise,
both as to action in his official capacity and as to action in
another capacity while holding such office. All rights to
indemnification under this Section 9.4(a) shall be deemed to be
provided by a con-
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tract between the Debenture Issuer and each Company Indemnified
Person who serves in such capacity at any time while this Section
9.4(a) is in effect. Any repeal or modification of this Section
9.4(a) shall not affect any rights or obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and
maintain insurance on behalf of any person who is or was a
Company Indemnified Person against any liability asserted against
him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Debenture Issuer would
have the power to indemnify him against such liability under the
provisions of this Section 9.4(a).
(viii) For purposes of this Section 9.4(a), references to
"the Trust" shall include, in addition to the resulting or
surviving entity, any constituent entity (including any
constituent of a constituent) absorbed in a consolidation or
merger, so that any person who is or was a director, trustee,
officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director,
trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section
9.4(a) with respect to the resulting or surviving entity as he
would have with respect to such constituent entity if its
separate existence had continued.
(ix) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 9.4(a) shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a Company Indemnified Person
and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(b) The Sponsor agrees to indemnify the (i) Property Trustee, (ii) the
Delaware Trustee, (iii) any Affiliate of the Property Trustee and the Delaware
Trustee, and (iv) any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Property
Trustee and the Delaware Trustee (each of the Persons in (i) through (iv) being
referred to as a "Fiduciary Indemnified Person") for, and to hold each Fiduciary
Indemnified Person harmless against, any and all
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loss, liability or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration or the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against or investigating any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 9.4(b) shall survive the satisfaction and
discharge of this Declaration.
SECTION 9.5 Outside Businesses.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.
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ARTICLE X
ACCOUNTING
SECTION 10.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 10.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year by a firm of independent certified public accountants selected by the
Regular Trustees.
(b) The Regular Trustees shall cause to be prepared and delivered
to each of the Holders of Securities, within 90 days after the end of each
Fiscal Year of the Trust, annual financial statements of the Trust, including a
balance sheet of the Trust as of the end of such Fiscal Year, and the related
statements of income or loss;
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States federal
income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Regular Trustees shall
endeavor to deliver all such statements within 30 days after the end of each
Fiscal Year of the Trust.
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(d) The Regular Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by the Code, and
any other annual income tax returns required to be filed by the Regular Trustees
on behalf of the Trust with any state or local taxing authority.
SECTION 10.3 Banking.
The Trust shall maintain one or more bank accounts in the name
and for the sole benefit of the Trust; provided, however, that all payments of
funds in respect of the Debentures held by the Property Trustee shall be made
directly to the Property Trustee Account and no other funds of the Trust shall
be deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Regular Trustees; provided, however, that
the Property Trustee shall designate the signatories for the Property Trustee
Account.
SECTION 10.4 Withholding.
The Trust and the Regular Trustees shall comply with all
withholding requirements under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Regular Trustee shall file required
forms with applicable jurisdictions and, unless an exemption from withholding is
properly established by a Holder, shall remit amounts withheld with respect to
the Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
distributions or allocations to any Holder, the amount withheld shall be deemed
to be a distribution in the amount of the withholding to the Holder. In the
event of any claimed overwithholding, Holders shall be limited to an action
against the applicable jurisdiction. If the amount required to be withheld was
not withheld from actual Distributions made, the Trust may reduce subsequent
Distributions by the amount of such withholding.
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ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by:
(i) the Regular Trustees (or, if there are more
than two Regular Trustees, a majority of the Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the
Property Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless, in the case of any proposed amendment,
the Property Trustee shall have first received an Officers'
Certificate from each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment
which affects the rights, powers, duties, obligations or
immunities of the Property Trustee, the Property Trustee shall
have first received:
(A) an Officers' Certificate from
each of the Trust and the Sponsor that such
amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of
the Securities); and
(B) an opinion of counsel (who may
be counsel to the Sponsor or the Trust) that such
amendment is permitted by, and conforms to, the
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terms of this Declaration (including the terms of
the Securities); and
(iii) to the extent the result of such amendment
would be to:
(A) cause the Trust to fail to
continue to be classified for purposes of United
States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely
affect the powers of the Property Trustee in
contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to
be an Investment Company that is required to be
registered under the Investment Company Act.
(c) So long as any Securities remain outstanding, any amendment
that would adversely affect the rights, privileges or preferences of any Holder
of Securities may be effected only with such additional requirements as may be
set forth in the terms of such Securities.
(d) Section 8.1(c) and this Section 11.1 shall not be amended
without the consent of all of the Holders of the Securities.
(e) Article IV and the rights of the holders of the Common
Securities under Article V to increase or decrease the number of, and appoint
and remove Trustees shall not be amended without the consent of the Holders of a
majority in liquidation amount of the Common Securities.
(f) Notwithstanding Section 11.1(c), this Declaration may be
amended without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this
Declaration that may be defective or inconsistent with any other
provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; and
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(iv) conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory
authority, which amendment does not have a material adverse
effect on the rights, preferences or privileges of the Holders.
SECTION 11.2 Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities represented by the Certificates so specified
shall be counted for purposes of determining whether the required percentage set
forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to
all the Holders of Securities having a right to vote thereat at
least seven days and not more than 60 days before the date of
such meeting. Whenever a vote, consent or approval of the Holders
of Securities is permitted or required under this Declaration or
the rules of any stock exchange or over-the-counter market on
which the Preferred Securities are listed or admitted for
trading, such vote, consent or approval may be given at a meeting
of the Holders of Securities.
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Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities
in liquidation amount that would be necessary to authorize or
take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given
to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holders for the purpose
of taking any action without a meeting shall be returned to the
Trust within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other
Person that the Regular Trustees may designate; and
(iv) unless the Business Trust Act, this
Declaration, the terms of the Securities, the Trust Indenture Act
or the listing rules of any stock exchange on which the Preferred
Securities are then listed or trading provide otherwise, the
Regular Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or pur-
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pose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy or any other
matter with respect to the exercise of any such right to vote.
ARTICLE XII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Property Trustee.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:
(a) The Property Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
New York, with trust power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Property
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee; and the Declaration has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or By-laws of the Property Trustee.
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(d) At the Closing Date, the Property Trustee has not knowingly
created any liens or encumbrances on such Debentures.
(e) No consent, approval or authorization of, or registration
with or notice to, any New York State or federal banking authority is required
for the execution, delivery or performance by the Property Trustee, of the
Declaration.
SECTION 12.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration and at
the time of Closing, and each Successor Delaware Trustee represents and warrants
to the Trust and the Sponsor at the time of the Successor Delaware Trustee's
acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is a duly organized, validly existing
and in good standing under the laws of the State of Delaware, with trust power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration.
(b) The execution, delivery and performance by the Delaware
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee; and the Declaration has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of the Declaration by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(d) No consent, approval or authorization of, or registration
with or notice to, any state or federal banking
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authority is required for the execution, delivery or performance by the Delaware
Trustee, of this Declaration.
(e) The Delaware Trustee is an entity which has its principal
place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and the Declaration.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.2 Notices.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, sent by
facsimile or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
c/o Designer Holdings Ltd.
1385 Broadway
Third Floor
New York, NY 10018
Tel: (212) 556-9600
Telecopy: (212) 556-9722
Attention: John J. Jones, General Counsel
(b) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders of the Securities):
IBJ Schroder Bank & Trust Company
1 State Street
11th Floor
New York, NY 10004
Tel: (212) 858-2529
Telecopy: (212) 858-2952
Attention: Corporate Trust & Agency Department
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(c) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
Delaware Trust Capital Management, Inc.
900 Market Street H02M12
Wilmington, DE 19801
Attention: Corporate Trust Department
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice to the Trust):
c/o Designer Holdings Ltd.
1385 Broadway
Third Floor
New York, NY 10018
Tel: (212) 556-9600
Telecopy: (212) 556-9722
Attention: John J. Jones, General Counsel
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust or the Registrar, as applicable.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 13.2 Governing Law.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
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SECTION 13.3 Intention of the Parties.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 13.4 Headings.
Headings contained in this Declaration are inserted for
convenience of reference only and do not affect the interpretation of this
Declaration or any provision hereof.
SECTION 13.5 Successors and Assigns
Whenever in this Declaration any of the parties hereto is named
or referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 13.6 Partial Enforceability.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 13.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to
be executed as of the date first above written.
By: /s/ ARNOLD H. SIMON
_________________________________
Name: Arnold H. Simon
Title: Trustee
By: /s/ MERRIL M. HALPERN
___________________________________
Name: Merril M. Halpern
Title: Trustee
DELAWARE TRUST CAPITAL
MANAGEMENT, INC., Delaware
Trustee
By:_____________________________
Name:
Title:
IBJ SCHRODER BANK & TRUST
COMPANY, Property Trustee
By:_____________________________
Name:
Title:
DESIGNER HOLDINGS LTD., Sponsor
By: /s/ ARNOLD H. SIMON
_____________________________
Name: Arnold H. Simon
Title: President, Chief,
Executive Officer and
Director
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DESIGNER HOLDINGS LTD., as Issuer
and
IBJ SCHRODER BANK & TRUST COMPANY, as Trustee
----------------
Indenture
Dated as of November 6, 1996
$123,711,350*
6% Convertible Subordinated Debentures Due 2016
----------------
- -------------------
* Subject to increase to up to $142,268,050 in the event an over-allotment
option is exercised.
<PAGE>
<PAGE>
Designer Holdings Ltd.
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Indenture
Act Section Section
- --------------- ---------
'SS'310(a)(1) ........................................... 609
(a)(2) ........................................... 609
(a)(3) ........................................... Not Applicable
(a)(4) ........................................... Not Applicable
(b) ........................................... 608, 610
'SS'311(a) ........................................... 613
(b) ........................................... 613
'SS'312(a) ........................................... 701
702(a)
(b) ........................................... 702(b)
(c) ........................................... 702(c)
'SS'313(a) ........................................... 703(a)
(a)(4) ........................................... 101, 1004
(b) ........................................... 703(a)
(c) ........................................... 703(a)
(d) ........................................... 703(b)
'SS'314(a) ........................................... 704
(b) ........................................... Not Applicable
(c)(1) ........................................... 102
(c)(2) ........................................... 102
(c)(3) ........................................... Not Applicable
(d) ........................................... Not Applicable
(e) ........................................... 102
'SS'315(a) ........................................... 601
(b) ........................................... 602
(c) ........................................... 601
(d) ........................................... 601
(e) ........................................... 514
'SS'316(a) ........................................... 101
(a)(1)(A) ........................................... 502
512
(a)(1)(B) ........................................... 513
(a)(2) ........................................... Not Applicable
(b) ........................................... 508
(c) ........................................... 104(c)
'SS'317(a)(1) ........................................... 503
(a)(2) ........................................... 504
(b) ........................................... 1003
'SS'318(a) ........................................... 107
- --------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
-ii-
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
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Recitals of the Company ..................................................... 1
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions .................................................. 3
SECTION 102. Compliance Certificates and Opinions ......................... 12
SECTION 103. Form of Documents Delivered to Trustee ....................... 13
SECTION 104. Acts of Holders; Record Dates ................................ 14
SECTION 105. Notices, Etc., to Trustee and the
Company ................................................... 15
SECTION 106. Notice to Holders; Waiver .................................... 16
SECTION 107. Conflict with Trust Indenture Act ............................ 16
SECTION 108. Effect of Headings and Table of
Contents .................................................. 17
SECTION 109. Successors and Assigns ....................................... 17
SECTION 110. Separability Clause .......................................... 17
SECTION 111. Benefits of Indenture ........................................ 17
SECTION 112. Governing Law ................................................ 17
SECTION 113. Legal Holidays ............................................... 18
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally .............................................. 18
SECTION 202. Initial Issuance to Property Trustee ......................... 19
ARTICLE THREE
The Securities
SECTION 301. Title and Terms .............................................. 19
SECTION 302. Denominations ................................................ 21
SECTION 303. Execution, Authentication, Delivery and Dating ............... 21
SECTION 304. Temporary Securities ......................................... 22
SECTION 305. Registration, Registration of Transfer and Exchange .......... 22
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities ............. 24
SECTION 307. Payment of Interest; Interest Rights Preserved ............... 25
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Page
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SECTION 308. Persons Deemed Owners ........................................ 27
SECTION 309. Cancellation ................................................. 27
SECTION 310. Right of Set Off ............................................. 28
SECTION 311. CUSIP Numbers ................................................ 28
SECTION 312. Option to Extend Interest Payment Period ..................... 28
SECTION 313. Paying Agent, Security Registrar and Conversion Agent ........ 30
SECTION 314. Global Security .............................................. 30
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture ...................... 33
SECTION 402. Application of Trust Money ................................... 34
ARTICLE FIVE
Remedies
SECTION 501. Events of Default ............................................ 35
SECTION 502. Acceleration of Maturity; Rescission and Annulment ........... 36
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee ................................................... 37
SECTION 504. Trustee May File Proofs of Claim ............................. 38
SECTION 505. Trustee May Enforce Claims Without Possession of Securities .. 39
SECTION 506. Application of Money Collected ............................... 39
SECTION 507. Limitation on Suits .......................................... 40
SECTION 508. Unconditional Right of Holders to Receive Principal
and Interest and Convert .................................. 41
SECTION 509. Restoration of Rights and Remedies ........................... 41
SECTION 510. Rights and Remedies Cumulative ............................... 41
SECTION 511. Delay or Omission Not Waiver ................................. 42
SECTION 512. Control by Holders ........................................... 42
SECTION 513. Waiver of Past Defaults ...................................... 42
SECTION 514. Undertaking for Costs ........................................ 43
SECTION 515. Waiver of Stay or Extension Laws ............................. 43
SECTION 516. Enforcement by Holders of Preferred Securities ............... 44
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ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities .......................... 44
SECTION 602. Notice of Defaults ........................................... 45
SECTION 603. Certain Rights of Trustee .................................... 45
SECTION 604. Not Responsible for Recitals or Issuance of Securities ....... 46
SECTION 605. May Hold Securities .......................................... 47
SECTION 606. Money Held in Trust .......................................... 47
SECTION 607. Compensation and Reimbursement ............................... 47
SECTION 608. Disqualification; Conflicting Interests ...................... 48
SECTION 609. Corporate Trustee Required; Eligibility ...................... 48
SECTION 610. Resignation and Removal; Appointment of Successor ............ 48
SECTION 611. Acceptance of Appointment by Successor ....................... 50
SECTION 612. Merger, Conversion, Consolidation or Succession to
Business .................................................. 51
SECTION 613. Preferential Collection of Claims Against Company ............ 51
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses
of Holders ................................................. 51
SECTION 702. Preservation of Information; Communications to Holders ....... 52
SECTION 703. Reports by Trustee ........................................... 52
SECTION 704. Reports by Company ........................................... 53
ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms ......... 54
SECTION 802. Successor Substituted ........................................ 55
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ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders ........... 55
SECTION 902. Supplemental Indentures with Consent of Holders .............. 56
SECTION 903. Execution of Supplemental Indentures ......................... 58
SECTION 904. Effect of Supplemental Indentures ............................ 58
SECTION 905. Conformity with Trust Indenture Act .......................... 58
SECTION 906. Reference in Securities to Supplemental Indentures ........... 58
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest ............................ 59
SECTION 1002. Maintenance of Office or Agency .............................. 59
SECTION 1003. Money for Security Payments to Be Held in Trust .............. 60
SECTION 1004. Statement by Officers as to Default .......................... 61
SECTION 1005. Limitation on Dividends; Transactions with Affiliates;
Covenants as to the Trust ................................. 61
SECTION 1006. Payment of Expenses of the Trust ............................. 62
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Optional Redemption .......................................... 63
SECTION 1102. Tax Event Optional Redemption ................................ 64
SECTION 1103. Applicability of Article ..................................... 65
SECTION 1104. Election to Redeem; Notice to Trustee ........................ 65
SECTION 1105. Selection by Trustee of Securities to Be Redeemed ............ 65
SECTION 1106. Notice of Redemption ......................................... 66
SECTION 1107. Deposit and Payment of Redemption Price ...................... 67
SECTION 1108. Securities Payable on Redemption Date ........................ 67
SECTION 1109. Securities Redeemed in Part .................................. 68
SECTION 1110. No Sinking Fund .............................................. 68
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ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Agreement to Subordinate ..................................... 69
SECTION 1202. Default on Senior Indebtedness ............................... 69
SECTION 1203. Liquidation; Dissolution; Bankruptcy ......................... 70
SECTION 1204. Subrogation .................................................. 72
SECTION 1205. Trustee to Effectuate Subordination .......................... 73
SECTION 1206. Notice by the Company ........................................ 73
SECTION 1207. Rights of the Trustee; Holders of Senior Indebtedness ........ 74
SECTION 1208. Subordination May Not Be Impaired ............................ 75
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Rights ............................................ 76
SECTION 1302. Conversion Procedures ........................................ 76
SECTION 1303. Conversion Price Adjustments ................................. 79
SECTION 1304. Reclassification, Consolidation, Merger or Sale
of Assets .................................................. 85
SECTION 1305. Notice of Adjustments of Conversion Price .................... 86
SECTION 1306. Prior Notice of Certain Events ............................... 86
SECTION 1307. Certain Defined Terms ........................................ 87
SECTION 1308. Dividend or Interest Reinvestment Plans ...................... 88
SECTION 1309. Certain Additional Rights .................................... 89
SECTION 1310. Trustee Not Responsible for Determining Conversion Price or
Adjustments ............................................... 90
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. No Recourse .................................................. 90
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EXHIBIT AND ANNEX
EXHIBIT A Form of Security
ANNEX A Amended and Restated Declaration of Trust among the Company, as
trust sponsor, IBJ Schroder Bank & Trust Company, as property
trustee, Delaware Trust Capital Management, Inc., as Delaware
trustee and Arnold H. Simon and Merril M. Halpern, as regular
trustees, dated as of November 6, 1996.
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Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
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INDENTURE, dated as of November 6, 1996, between Designer Holdings
Ltd., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the "Company"), having its principal office at 1385
Broadway, 3rd Floor, New York, New York 10018, and IBJ Schroder Bank & Trust
Company, a New York banking corporation, as Trustee (herein called the
"Trustee").
RECITALS OF THE COMPANY
WHEREAS, Designer Finance Trust, a Delaware business trust (the
"Trust"), formed under the Amended and Restated Declaration of Trust among the
Company, as trust sponsor, IBJ Schroder Bank & Trust Company, as property
trustee (the "Property Trustee"), Delaware Trust Capital Management, Inc., as
Delaware trustee (the "Delaware Trustee") and Arnold H. Simon and Merril M.
Halpern, as regular trustees (the "Regular Trustees"), dated as of November 6,
1996 (the "Declaration"), pursuant to the Purchase Agreement (the "Purchase
Agreement") dated November 1, 1996, among the Company and the underwriters named
therein, will issue and sell up to 2,400,000 (or 2,760,000 if the over-allotment
option is exercised) of its 6% Convertible Trust Originated Preferred Securities
(the "Preferred Securities") with a liquidation amount of $50 per Preferred
Security, having an aggregate liquidation amount with respect to the assets of
the Trust of $120,000,000 (or $138,000,000 if the over-allotment option is
exercised);
WHEREAS, the trustees of the Trust, on behalf of the Trust, will
execute and deliver to the Company 6% Convertible Common Securities (the "Common
Securities") of the Trust, registered in the name of the Company, in an
aggregate amount equal to three percent of the capitalization of the Trust,
equivalent to 74,227 Common Securities (or 85,361 Common Securities if the
over-allotment option is exercised), with a liquidation amount of $50 per Common
Security, having an aggregate liquidation amount with respect to the assets of
the Trust of $3,711,350 (or $4,268,050 if the over-allotment option is
exercised) (the "Common Securities");
WHEREAS, the Trust will use the proceeds from the sale of the
Preferred Securities and the Common Securities to purchase from the Company 6%
Convertible Subordinated Debentures Due 2016 (the "Securities") of the Company
in an
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aggregate principal amount of $123,711,350 (or $142,268,050 if the
over-allotment option is exercised);
WHEREAS, the Company is guaranteeing the payment of distributions on
the Preferred Securities, and payment of the Redemption Price and payments on
liquidation with respect to the Preferred Securities, to the extent provided in
the Preferred Securities Guarantee Agreement (the "Guarantee") dated November 6,
1996 between the Company and IBJ Schroder Bank & Trust Company, as guarantee
trustee, for the benefit of the holders of the Preferred Securities from time to
time;
WHEREAS, the Company has duly authorized the creation of the
Securities of the tenor and amount herein set forth and to provide therefor the
Company has duly authorized the execution and delivery of this Indenture;
WHEREAS, so long as the Trust is a Holder of Securities, and any
Preferred Securities are outstanding, the Declaration provides that the holders
of Preferred Securities may cause the Conversion Agent to (a) exchange such
Preferred Securities for Securities held by the Trust and (b) immediately
convert such Securities into Common Stock of the Company; and
WHEREAS, all things necessary to make the Securities, when executed by
the Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed, for the equal and
proportionate benefit of all Holders of the Securities, as follows:
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ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Act", when used with respect to any Holder, has the meaning specified
in Section 104.
"Additional Interest" has the meaning specified in Section 301.
"Additional Payments" means Compounded Interest and Additional
Interest, if any.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Agent" means any Registrar, Paying Agent, Conversion Agent or
co-registrar.
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"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day on which banking institutions in The City
of New York or in Wilmington, Delaware are authorized or required by law to
close.
"Closing Price" has the meaning specified in Section 1307.
"Commission" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, or,
if at any time after the execution of this instrument such Commission is not
existing and performing the duties now assigned to it under the Trust Indenture
Act, then the body performing such duties at such time.
"Common Securities" has the meaning specified in the recitals to this
Instrument.
"Common Securities Guarantee" means any guarantee that the Company may
enter into that operate directly or indirectly for the benefit of holders of
Common Securities of the Trust.
"Common Stock" includes any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. However, subject
to the provisions of Article Thirteen, shares issuable on conversion of
Securities shall include only shares of the class designated as Common Stock of
the Company at the date of this instrument or shares of any class or classes
resulting from any reclassification or reclassifications thereof and which have
no preference in respect of dividends or of amounts payable in the event of any
voluntary or involuntary liquidation, dissolution or winding up of the Company
and which are not subject to
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redemption by the Company; provided, that if at any time there shall be more
than one such resulting class, the shares of each such class then so issuable on
conversion shall be substantially in the proportion which the total number of
shares of such class resulting from all such reclassifications bears to the
total number of shares of all such classes resulting from all such
reclassifications.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President or a Vice President, and by its Treasurer,
an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Compounded Interest" has the meaning specified in Section 312.
"Conversion Agent" means the Person appointed to act on behalf of the
holders of Preferred Securities in effecting the conversion of Preferred
Securities as and in the manner set forth in the Declaration and Section 1302
hereof.
"Conversion Date" has the meaning specified in Section 1302.
"Corporate Trust Office" means the principal office of the Trustee in
New York, New York, at which at any particular time its corporate trust business
shall be administered and which at the date of this Indenture is One State
Street, 11th Floor, New York, New York 10004, Attention: Corporate Trust and
Agency Department.
"Declaration" has the meaning specified in the Recitals of this
instrument.
"Defaulted Interest" has the meaning specified in Section 307.
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"Delaware Trustee" has the meaning given it in the Recitals of this
instrument.
"Depositary" means, with respect to any Securities issued in the
form of one or more Global Security, a clearing agency registered under the
Exchange Act that is dedicated to act as Depositary for the Securities.
"Direct Action" means a proceeding directly instituted by a holder of
Preferred Securities for enforcement of payment to such holder of the principal
of or interest on the Securities having a principal amount equal to the
aggregate liquidation amount of the Preferred Securities of such holder on or
after the respective due date specified in the Securities, if an Event of
Default under the Declaration has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Securities on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date.)
"Dissolution Event" means that, as a result of the occurrence and
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Declaration and the Securities held by the Property Trustee are to be
distributed to the holders of Trust Securities issued by the Trust pro rata in
accordance with the Declaration.
"Dissolution Tax Opinion" has the meaning specified in the
Declaration.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations promulgated thereunder, or any
successor legislation.
"Extension Period" has the meaning specified in Section 312.
"Global Security" has the meaning specified in Section 314.
"Guarantee" has the meaning specified in the Recitals to this
instrument.
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"Holder" means a Person in whose name a Security is registered in the
Security Register.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this instrument and any such supplemental
indenture, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this instrument and any such supplemental indenture,
respectively.
"Interest Payment Date" has the meaning specified in Section 301.
"Investment Company Event" has the meaning specified in Annex I to the
Declaration.
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security becomes due and payable as therein or
herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Ministerial Action" has the meaning specified in Section 1102.
"90-Day Period" has the meaning specified in Section 1102.
"No Recognition Opinion" has the meaning specified in Annex I to the
Declaration.
"Notice of Conversion" means the notice to be given by a holder of
Preferred Securities to the Conversion Agent directing the Conversion Agent to
exchange such Preferred Securities for Securities and to convert such Securities
into Common Stock on behalf of such holder.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Vice Chairman of the Board, the President or a Vice President,
and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee. One of the officers
signing an Officers' Certificate given
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pursuant to Section 1004 shall be the principal executive, financial or
accounting officer of the Company.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Company, and who shall be acceptable to the Trustee.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except: (i) Securities theretofore cancelled by the
Trustee or delivered to the Trustee for cancellation; (ii) Securities for whose
payment or redemption money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the Company) in trust
or set aside and segregated in trust by the Company (if the Company shall act as
its own Paying Agent) for the Holders of such Securities; provided, that if such
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to this Indenture or provision therefor satisfactory to the Trustee has
been made; and (iii) Securities that have been paid pursuant to Section 307,
converted into Common Stock pursuant to Section 1301, or in exchange for or in
lieu of which other Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such Securities
are held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company, provided, however, that in determining whether the
Holders of the requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, Securities owned by the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
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"Paying Agent" means any Person authorized by the Company to pay the
principal of or interest on any Securities on behalf of the Company.
"Person" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the Recitals to
this instrument.
"Property Trustee" has the meaning specified in the Recitals of this
instrument.
"Purchase Agreement" has the meaning specified in the Recitals to this
instrument.
"Purchased Shares" has the meaning specified in Section 1303(e).
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Redemption Tax Opinion" has the meaning set forth in Annex I to the
Declaration.
"Reference Date" has the meaning specified in Section 1303(c).
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"Regular Record Date" has the meaning specified in Section 301.
"Regular Trustees" has the meaning specified in the Recitals of this
instrument.
"Responsible Officer", when used with respect to the Trustee, means
any vice-president, any assistant vice-president, the treasurer, any assistant
treasurer, any trust officer or assistant trust officer or any other officer in
the Corporate Trust Department of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Securities" has the meaning specified in the Recitals to this
instrument.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means in respect of the Company (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of such
obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the type referred
to in clauses (i) through (iv) above of other Persons for the payment of which
such obligor is responsible or liable as obligor, guarantor or otherwise, and
(vi) all obligations of the type referred to in clauses (i) through (v) above of
other Persons secured by any lien on any property or asset of such obligor
(whether or not such obligation is assumed by such obligor), except for (1) any
such indebtedness that is by its terms subordinated to or pari passu with the
Securities and (2) any indebtedness between or among such obligor or its
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affiliates, including all other debt securities and guarantees in respect of
those debt securities issued to any other trust, or a trustee of such trust,
partnership, or other entity affiliated with the Company that is, directly or
indirectly, a financing vehicle of the Company (a "Financing Entity") in
connection with the issuance by such Financing Entity of preferred securities or
other securities which rank pari passu with, or junior to, the Preferred
Securities. Such Senior Indebtedness shall continue to be Senior Indebtedness
and entitled to the benefits of the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
"Special Event" has the meaning specified in Annex I to the
Declaration.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal, together with any accrued and unpaid
interest (including Compounded Interest), of such Security or such installment
of interest is due and payable.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the policies,
management and affairs thereof.
"Tax Event" has the meaning specified in Annex I to the Declaration.
"Trading Day" has the meaning specified in Section 1307.
"Trust" has the meaning specified in the Recitals to this instrument.
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"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time, and the rules and regulations promulgated thereunder,
or any successor legislation.
"Trust Securities" means Common Securities and Preferred Securities.
"Vice President," when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons performing
similar functions) of such Person, whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee such certificates and opinions as may be required under the Trust
Indenture Act or reasonably requested by the Trustee in connection with such
application or request. Each such certificate or opinion shall be given in the
form of an Officers' Certificate, if to be given by an officer of the Company,
or an Opinion of Counsel, if to be given by counsel, and shall comply with the
applicable requirements of the Trust Indenture Act and any other applicable
requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
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(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee or the Company, as the case may be, deems
sufficient.
(c) The Company may, in the circumstances permitted by the Trust
Indenture Act, fix any day as the record date for the purpose of determining the
Holders of Outstanding Securities entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or
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other action, or to vote on any action, authorized or permitted to be given or
taken by Holders. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such action, or, in the case of any
such vote, prior to such vote, the record date for any such action or vote shall
be the 30th day (or, if later, the date of the most recent list of Holders
required to be provided pursuant to Section 701) prior to such first
solicitation or vote, as the case may be. With regard to any record date, only
the Holders on such date (or their duly designated proxies) shall be entitled to
give or take, or vote on, the relevant action.
(d) The ownership of Securities shall be proved by the Security
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(f) Without limiting the foregoing, a Holder entitled hereunder to
give or take any such action with regard to any particular Security may do so
with regard to all or any part of the principal amount of such Security or by
one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any different part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and the Company.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust &
Agency Department, or
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(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company addressed to it
at the address of its principal office specified in the first paragraph of this
instrument or at any other address previously furnished in writing to the
Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at such Holder's address as it appears in the Security Register,
not later than the latest date (if any), and not earlier than the earliest date
(if any), prescribed for the giving of such notice. In any case where notice to
Holders is given by mail, neither the failure to mail such notice, nor any
defect in any notice so mailed, to any particular Holder shall affect the
sufficiency of such notice with respect to other Holders. Any notice when mailed
to a Holder in the aforesaid manner shall be conclusively deemed to have been
received by such Holder whether or not actually received by such Holder. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Indenture, the latter provision shall control. If any
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provision of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness, the holders of Preferred
Securities (to the extent provided herein) and the Holders of Securities, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
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SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security or the last date on which a Holder has the right to
convert his Securities shall not be a Business Day, then (notwithstanding any
other provision of this Indenture or of the Securities) payment of interest or
principal or conversion of the Securities need not be made on such date, but may
be made on the next succeeding Business Day (except that, if such Business Day
is in the next succeeding calendar year, such Interest Payment Date, Redemption
Date or Stated Maturity, as the case may be, shall be the immediately preceding
Business Day) with the same force and effect as if made on the Interest Payment
Date or Redemption Date, or at the Stated Maturity or on such last day for
conversion, provided, that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Indenture. The Securities may have letters,
numbers, notations or other marks of identification or designation and such
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject, if any, or usage (provided that any such notation,
legend or endorsement is in a form acceptable to the Company). The Company shall
furnish any such legend not contained in Exhibit A to the Trustee in writing.
Each Security shall be dated the date of its authentication. The terms and
provisions of the Securities set forth in Exhibit A are part of the terms of
this Indenture and to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
The definitive Securities shall be typewritten or printed,
lithographed or engraved or produced by any combi-
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nation of these methods on steel engraved borders or may be produced in any
other manner permitted by the rules of any securities exchange on which the
Securities may be listed, all as determined by the officers executing such
Securities, as evidenced by their execution thereof.
SECTION 202. Initial Issuance to Property Trustee.
The Securities initially issued to the Property Trustee of the Trust
shall be in the form of one or more individual certificates in definitive, fully
registered form without coupons.
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities that may be authenticated
and delivered under this Indenture is limited to $123,711,350 (or up to
$142,268,050 if the over-allotment option is exercised by the Trust in
accordance with the terms and provisions of the Purchase Agreement), except for
Securities authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Securities pursuant to Section 304, 305, 306,
906, 1109 or 1301.
The Securities shall be known and designated as the "6%
Convertible Subordinated Debentures Due 2016" of the Company. Their Stated
Maturity shall be December 31, 2016, and they shall bear interest at the rate of
6% per annum, from November 6, 1996 or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, as the case may be,
payable quarterly (subject to deferral as set forth herein), in arrears, on
March 31, June 30, September 30 and December 31 (each an "Interest Payment
Date") of each year, commencing December 31, 1996, until the principal thereof
is paid or made available for payment, and they shall be paid to the Person in
whose name the Security is registered at 5:00 p.m. (New York City time) on the
9regular record date for such interest installment, which shall be the March 15,
June 15, September 15 and December 15 next preceding such Interest Payment Date
(the "Regular Record
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Date"). Interest will compound quarterly and will accrue at the rate of 6% per
annum on any interest installment in arrears for more than one quarter or during
an extension of an interest payment period as set forth in Section 312 hereof.
The amount of interest payable for any period will be computed on the
basis of a 360-day year of twelve 30-day months. Except as provided in the
following sentence, the amount of interest payable for any period shorter than a
full quarterly period for which interest in computed, will be computed on the
basis of the actual number of days elapsed per 90-day quarter. In the event that
any date on which interest is payable on the Securities is not a Business Day,
then payment of interest payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
If at any time while the Property Trustee is the Holder of any
Securities, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any such case, the Company will pay as additional interest ("Additional
Interest") on the Securities held by the Property Trustee, such amounts as shall
be required so that the net amounts received and retained by the Trust and the
Property Trustee after paying any such taxes, duties, assessments or other
governmental charges will be not less than the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other governmental charges been imposed.
The principal of and interest on the Securities shall be payable at
the office or agency of the Company in the United States maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts; provided,
however, that at the option of the Company payment of interest may be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register.
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The Securities shall be redeemable as provided in Article Eleven
hereof.
The Securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article Twelve hereof.
The Securities shall be convertible as provided in Article Thirteen
hereof.
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $50 and integral multiples thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities executed by the Company to
the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and make available for delivery such
Securities as in this Indenture provided and not otherwise.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of
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authentication substantially in the form provided for herein executed by the
Trustee by manual signature, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are typewritten, printed, lithographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at any office
or agency of the Company designated pursuant to Section 1002, without charge to
the Holder. Upon surrender for cancellation of any one or more temporary
Securities the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of authorized denominations. Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is hereby
appointed "Security Registrar" for the purpose of
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registering Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any Security at an
office or agency of the Company designated pursuant to Section 1002 for such
purpose, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate principal
amount.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like aggregate principal
amount, upon surrender of the Securities to be exchanged at such office or
agency. Whenever any Securities are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and make available for
delivery, the Securities which the Holder making the exchange is entitled to
receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906, 1109 or 1301 not involving any transfer.
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities.
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SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at 5:00 p.m. (New York City time) on the Regular Record Date.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Holder on the
relevant Regular Record Date by virtue of having been such Holder, and such
Defaulted Interest may be paid by the Company, at its election in each case, as
provided in Clause (a) or (b) below:
(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at 5:00 p.m. (New York City time) on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when deposited to be held in trust for the benefit of the Persons entitled
to such Defaulted Interest as in this Clause (a) provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the date of
the proposed payment and not less than 10 days after the receipt by the Trustee
of the notice of the proposed payment. The Trustee shall promptly notify the
Company of such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of
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the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in whose names the Securities (or their respective Predecessor
Securities) are registered at 5:00 p.m. (New York City time) on such Special
Record Date and shall no longer be payable pursuant to the following Clause (b).
(b) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and, if so listed, upon such
notice as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this Clause (B), such
manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 307, each Security
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue (including in each such case Additional Payments, if
any), which were carried by such other Security.
In the case of any Security which is converted after any Regular
Record Date and on or prior to the next succeeding Interest Payment Date (other
than any Security whose Maturity is prior to such Interest Payment Date),
interest whose Stated Maturity is on such Interest Payment Date shall be payable
on such Interest Payment Date notwithstanding such conversion, and such interest
(whether or not punctually paid or duly provided for) shall be paid to the
Person in whose name that Security (or one or more Predecessor Securities) is
registered at 5:00 p.m. (New York City time) on such Regular Record Date.
Notwithstanding the foregoing, if, during an Extension Period, a notice of
redemption is mailed pursuant to Section 1106 and a Security is converted after
such mailing but prior to the relevant Redemption Date, all accrued but unpaid
interest (including Additional Payments, if any) through the date of conversion
shall be paid to the holder of such Security on the Redemption Date. Except
as otherwise expressly provided in the immediately preceding two sentences, in
the case of any Security that is converted prior to any Regular Record Date,
interest whose Stated Maturity is after the date of conversion of such Security
shall not be payable, and the Company
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shall not make nor be required to make any other payment, adjustment or
allowance with respect to accrued but unpaid interest (including Additional
Payments, if any) on the Securities being converted, which shall be deemed to be
paid in full. Subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in this paragraph and the
second paragraph of Clause (a) of Section 1302, the Company's delivery upon
conversion of the fixed number of shares of Common Stock into which the
Securities are convertible (together with the cash payment, if any, in lieu of
fractional shares) shall be deemed to satisfy the Company's obligation to pay
the principal amount at Maturity of the portion of Securities so converted and
any unpaid interest (including Additional Payments, if any) accrued on such
Securities at the time of such conversion. If any Security called for redemption
is converted, any money deposited with the Trustee or with any Paying Agent or
so segregated and held in trust for the redemption of such Security shall
(subject to any right of the Holder of such Security or any Predecessor Security
to receive interest as provided in this paragraph) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 307) interest (including Additional Payments, if any) on such Security
and for all other purposes whatsoever, whether or not such Security be overdue,
and neither the Company, the Trustee nor any agent of the Company or the Trustee
shall be affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or conversion shall, if surrendered to any Person other
than the Trustee, be delivered to the Trustee and shall be promptly cancelled by
it. The Company may at any time deliver to the Trustee for cancellation any
Securities previously authenticated and delivered hereunder which the Company
may have acquired in
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any manner whatsoever, and all Securities so delivered shall be promptly
cancelled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities held by the
Trustee shall be disposed of as directed by a Company Order; provided, however,
that the Trustee shall not be required to destroy the certificates representing
such cancelled Securities.
SECTION 310. Right of Set Off.
Notwithstanding anything to the contrary in this Indenture, the
Company shall have the right to set off any payment it is otherwise required to
make hereunder to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee.
SECTION 311. CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, that any such notice may
state that no representation is made as to the correctness of such numbers
either as printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers.
SECTION 312. Option to Extend Interest Payment Period.
(a) The Company shall have the right at any time during the term of
the Securities to defer interest payments (including Additional Payments) from
time to time by extending the interest payment period for successive periods
(each, an "Extension Period") not exceeding 20 consecutive quarters for each
such period; provided, no Extension Period may extend beyond the maturity date
of the Securities. At the end of each Extension Period, the Company shall pay
all interest then accrued and unpaid (including Additional Interest) together
with interest thereon compounded quarterly at the rate specified for the
Securities to the extent permitted by applicable law ("Compounded Interest");
provided, that during any Extension Period, the Company shall (i)
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not declare or pay dividends on, or make a distribution with respect to, or
redeem or purchase or acquire, or make a liquidation payment with respect to,
any of its capital stock (other than (A) purchases or acquisitions of shares of
Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security requiring the Company to
purchase shares of Common Stock, (B) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's capital
stock or (C) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged) or make any guarantee
payments with respect to the foregoing, (ii) not make any payment of interest,
principal or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees) issued by the Company that rank pari passu
with or junior to the Securities and (iii) not make any guarantee payments with
respect to the foregoing (other than pursuant to the Guarantee). Prior to the
termination of any such Extension Period, the Company may further extend such
Extension Period; provided, that such Extension Period, together with all such
previous and further extensions thereof, may not exceed 20 consecutive quarters
or extend beyond the maturity date of the Securities. Upon the termination of
any Extension Period and the payment of all amounts then due, the Company may
commence a new Extension Period, subject to the above requirements. No interest
during an Extension Period shall be due and payable. Notwithstanding any other
provision in this Indenture to the contrary, the Company shall not have the
right at any time to defer any Additional Interest, including by extending the
interest payment period.
(b) If the Property Trustee is the sole Holder of the Securities
at the time the Company selects an Extension Period, the Company shall give
written notice to the Regular Trustees, the Property Trustee and the Trustee of
its selection of such Extension Period at least one Business Day prior to the
earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) if the Preferred Securities are listed on the New York Stock
Exchange or other stock exchange or quotation system, the date the Trust is
required to give notice to the New York Stock
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Exchange or other applicable self-regulatory organization or to holders of the
Preferred Securities of the record date or the date such distributions are
payable, but in any event not less than 10 Business Days prior to such record
date.
(c) If the Property Trustee is not the sole holder of the Securities
at the time the Company selects an Extension Period, the Company shall give the
Holders of the Securities and the Trustee written notice of its selection of
such Extension Period at least 10 Business Days prior to the earlier of (i) the
next succeeding Interest Payment Date or (ii) if the Preferred Securities are
listed on the New York Stock Exchange or other stock exchange or quotation
system, the date the Company is required to give notice to the New York Stock
Exchange or other applicable self-regulatory organization or to holders of the
Securities on the record or payment date of such related interest payment, but
in any event not less than two Business Days prior to such record date.
(d) The quarter in which any notice is given pursuant to paragraphs
(b) and (c) hereof shall be counted as one of the 20 quarters permitted in the
maximum Extension Period permitted under paragraph (a) hereof.
SECTION 313. Paying Agent, Security Registrar and Conversion Agent.
The Trustee will initially act as Paying Agent, Security Registrar and
Conversion Agent. The Company may change any Paying Agent, Security Registrar,
co-registrar or Conversion Agent without prior notice. The Company or any of its
Affiliates may act in any such capacity. The Trustee is entitled to the
protections of Article VI in its capacity as Paying agent, Registrar and
Conversion Agent.
SECTION 314. Global Security.
(a) In connection with a Dissolution Event,
(1) the Securities in certificated form may be presented to the
Trustee by the Property Trustee in exchange for a global Security in an
aggregate principal amount equal to the aggregate principal amount of all
outstanding Securities (a "Global Security"), to be registered in the name of
the Depositary, or its nominee, and delivered by the Trustee to the Depositary
for crediting to the ac-
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counts of its participants pursuant to the instructions of the Regular Trustees.
The Company upon any such presentation shall execute a Global Security in such
aggregate principal amount and deliver the same to the Trustee for
authentication and delivery in accordance with this Indenture. Payments on the
Securities issued as a Global Security will be made to the Depositary; and
(2) if any Preferred Securities are held in non book-entry
certificated form, the Securities in certificated form may be presented to the
Trustee by the Property Trustee and any Preferred Security Certificate which
represents Preferred Securities other than Preferred Securities held by the
Depositary or its nominee ("Non Book-Entry Preferred Securities") will be deemed
to represent beneficial interests in Securities presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to the aggregate
liquidation amount of the Non Book-Entry Preferred Securities until such
Preferred Security Certificates are presented to the Security Registrar for
transfer or reissuance at which time such Preferred Security Certificates will
be cancelled and a Security, registered in the name of the holder of the
Preferred Security Certificate or the transferee of the holder of such Preferred
Security Certificate, as the case may be, with an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred Security Certificate
cancelled, will be executed by the Company and delivered to the Trustee for
authentication and delivery in accordance with this Indenture. On issue of such
Securities, Securities with an equivalent aggregate principal amount that were
presented by the Property Trustee to the Trustee will be deemed to have been
cancelled.
(b) A Global Security may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a nominee of such successor
Depositary.
(c) If (i) the Depositary notifies the Company that it is unwilling or
unable to continue as a depositary for such Global Security and no successor
depositary shall have been appointed, (ii) the Depositary, at any time, ceases
to be a clearing agency registered under the Exchange Act at which time the
Depositary is required to be so registered to act as such depositary and no
successor depositary shall have been appointed, (iii) the Company, in its sole
discretion, determines that such Global Security shall be so
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exchangeable or (iv) there shall have occurred an Event of Default with respect
to such Securities, as the case may be, the Company will execute, and, subject
to Article Three of this Indenture, the Trustee, upon written notice from the
Company and receipt of a Company Order, will authenticate and deliver the
Securities in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Security in exchange for such Global Security. In addition,
upon an Event of Default or if the Company may at any time determine that the
Securities shall no longer be represented by a Global Security, in such event
the Company will execute, and subject to Section 305 of this Indenture, the
Trustee, upon receipt of an Officers' Certificate evidencing such determination
by the Company, will authenticate and make available for delivery the Securities
in definitive registered form without coupons, in authorized denominations, and
in an aggregate principal amount equal to the principal amount of the Global
Security in exchange for such Global Security. Upon the exchange of the Global
Security for such Securities in definitive registered form without coupons, in
authorized denominations, the Global Security shall be cancelled by the Trustee.
Such Securities in definitive registered form issued in exchange for the Global
Security shall be registered in such names and in such authorized denominations
as the Depositary, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee shall deliver
such Securities to the Depositary for delivery to the Persons in whose names
such Securities are so registered.
(c) Every Global Security authenticated and delivered hereunder shall
bear a legend in substantially the following form, in capital letters and
bold-face type:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR
A SECURITY REGISTERED, AND NO TRANSFER OF THIS SECURITY IN WHOLE OR IN PART
MAY BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH DEPOSITARY OR
A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
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(d) If the Depositary is the Depository Trust Company, the Global
Security authenticated and delivered hereunder shall also bear a legend in
substantially the following form, in capital letters and bold-face type:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED SIGNATORY OF THE
DEPOSITORY TRUST COMPANY ("DTC") TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect (except as to any
surviving rights of conversion, registration of transfer or exchange of
Securities herein expressly provided for), and the Trustee, on demand of and at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated and delivered
(other than (A) Securities which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 306 and (B)
Securities for whose payment money has theretofore been deposited in trust
or segregated and held in trust by the Company and thereafter repaid to the
Company or discharged from such trust, as provided in Section 1003) have
been delivered to the Trustee for cancellation; or
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(ii) all such Securities not theretofore delivered to the Trustee
for cancellation have become due and payable, and the Company has deposited
or caused to be deposited with the Trustee as trust funds in trust for the
purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for
cancellation, for principal and interest (including Additional Payments, if
any) to the date of such deposit (in the case of Securities which have
become due and payable) or to the Stated Maturity or Redemption Date, as
the case may be, along with an accountant's certificate stating such funds
are sufficient to pay principal and interest on the Securities when and as
due;
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of Clause (a) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal and interest for
whose payment such money has been deposited with the Trustee. All moneys
deposited with the Trustee pursuant to Section 401 (and held by it or any Paying
Agent) for the payment of Securities subsequently converted shall be returned to
the Company upon Company Request.
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ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events that has occurred and is continuing (whatever the reason for
such Event of Default and whether it shall be occasioned by the provisions of
Article Twelve or be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) failure for 30 days to pay interest on the Securities, including
any Additional Payments in respect thereof, when due; provided that a valid
extension of an interest payment period will not constitute a default in the
payment of interest (including Additional Payments, if any) for this purpose;
(b) failure to pay principal of or premium, if any, on the Securities
when due, whether at maturity, upon redemption, by declaration or otherwise;
(c) failure by the Company to deliver shares of its Common Stock upon
an election by a holder of Preferred Securities to convert such Preferred
Securities;
(d) failure to observe or perform any other covenant contained in the
Indenture for 90 days after notice to the Company by the Trustee or by the
holders of not less than 25% in aggregate outstanding principal amount of the
Securities;
(e) entry by a court having jurisdiction in the premises of (i) a
decree or order for relief in respect of the Company in an involuntary case or
proceeding under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or (ii) a decree or order adjudging the
Company a bankrupt or insolvent, or approving as properly filed a petition
seeking reorganization, arrangement, adjustment or composition of or in respect
of the Company under any applicable federal or state law, or ap-
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pointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or of substantially all of the property of
the Company, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order unstayed and in effect for a period of 60 consecutive days;
(f) the commencement by the Company of a voluntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or of any other case or proceeding to be adjudicated a
bankrupt or insolvent, or the consent by the Company or to the entry of a decree
or order for relief in respect of itself in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any bankruptcy or insolvency case or
proceeding against the Company, or the filing by the Company of a petition or
answer or consent seeking reorganization or relief under any applicable federal
or state law, or the consent by the Company to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the Company or of
substantially all of the property of the Company, or the making by the Company
of an assignment for the benefit of creditors, or the admission by the Company
in writing of its inability to pay its debts generally as they become due, or
the taking of corporate action by the Company in furtherance of any such action;
or
(g) the voluntary or involuntary dissolution, winding up or
termination of the Trust, except in connection with (i) the distribution of
Securities to holders of Preferred Securities in liquidation of the Trust upon
the redemption of all of the outstanding Preferred Securities of the Trust or
(ii) certain mergers, consolidations or amalgamations, each as permitted by the
Declaration.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding
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Securities may declare the principal of all the Securities and any other amounts
payable hereunder to be due and payable immediately, by a notice in writing to
the Company (and to the Trustee if given by Holders), and upon any such
declaration such principal and all accrued interest shall become immediately due
and payable.
At any time after such a declaration of acceleration has been made and
before a judgment or decree for payment of the money due has been obtained by
the Trustee as provided in this Article, the Holders of a majority in aggregate
principal amount of the Outstanding Securities, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(i) all overdue interest (including Additional Payments, if any)
on all Securities,
(ii) the principal of any Securities which have become due
otherwise than by such declaration of acceleration and interest thereon at
the rate borne by the Securities, and
(iii) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel;
and
(b) all Events of Default, other than the non-payment of the principal
of Securities which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
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(a) default is made in the payment of any interest (including
Additional Payments, if any) on any Security when such interest becomes due and
payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of any Security at
the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and interest (including Additional Payments, if any)
and, to the extent that payment thereof shall be legally enforceable, interest
on any overdue principal and on any overdue interest (including Additional
Payments, if any), at the rate borne by the Securities, and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or any
other obligor upon the Securities), its property or its creditors, the Trustee
shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys or other property payable or deliverable on any such claims
and to distribute the same; and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay
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to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Subject to Article Twelve, any money collected by the Trustee pursuant
to this Article shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal or interest (including Additional Payments, if any), upon
presentation of the Securities and the notation thereon of the payment if only
partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of and interest (including Additional Payments, if any) on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably,
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without preference or priority of any kind, according to the amounts due
and payable on such Securities for principal and interest (including
Additional Payments, if any), respectively.
SECTION 507. Limitation on Suits.
Subject to Section 516, no Holder of any Security shall have any right
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(a) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
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SECTION 508. Unconditional Right of Holders to Receive Principal and Interest
and Convert.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and (subject to Section 307) interest
(including Additional Payments, if any) on such Security on the respective
Stated Maturities expressed in such Security (or, in the case of redemption, on
the Redemption Date) and to convert such Security in accordance with Article
Thirteen and to institute suit for the enforcement of any such payment and right
to convert, and such rights shall not be impaired without the consent of such
Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
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SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Security
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of a majority in principal amount of the Outstanding
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee; provided, that
(a) such direction shall not be in conflict with any rule of law or
with this Indenture; and
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
Subject to Section 902 hereof, the Holders of not less than a majority
in principal amount of the Outstanding Securities may on behalf of the Holders
of all the Securities waive any past default hereunder and its consequences,
except a default
(a) in the payment of the principal of, premium, if any, or interest
(including Additional Payments, if any) on any Security (unless such default has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Trustee); or
(b) in respect of a covenant or provision hereof that under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected; provided, however, that if the Securities are
held by the Trust or a trustee of the Trust, such waiver shall
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not be effective until the holders of a majority in liquidation amount of Trust
Securities shall have consented to such waiver; provided, further, that if the
consent of the Holder of each outstanding Security is required, such waiver
shall not be effective until each holder of the Trust Securities shall have
consented to such waiver.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken, suffered or
omitted by it as Trustee, a court may require any party litigant in such suit to
file an undertaking to pay the costs of such suit, and may assess costs against
any such party litigant, in the manner and to the extent provided in the Trust
Indenture Act; provided, that neither this Section nor the Trust Indenture Act
shall be deemed to authorize any court to require such an undertaking or to make
such an assessment in any suit instituted by the Company or the Trustee or in
any suit for the enforcement of the right to receive the principal of and
interest (including Additional Payments, if any) on any Security or to convert
any Security in accordance with Article Thirteen.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
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SECTION 516. Enforcement by Holders of Preferred Securities.
Notwithstanding the foregoing, if an Event of Default has occurred and
is continuing and such event is attributable to the failure of the Company to
pay interest or principal on the Securities on the date such interest or
principal is otherwise payable, the Company acknowledges that, in such event, a
holder of Preferred Securities may institute a Direct Action for payment on or
after the respective due date specified in the Securities. The Company may not
amend this Indenture to remove the foregoing right to bring a Direct Action
without the prior written consent of all the holders of Preferred Securities.
Notwithstanding any payment made to such holder of Preferred Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of and interest on the Securities (including Additional
Payments, if any) held by the Trust or the Property Trustee and the Company
shall be subrogated to the rights of the holder of such Preferred Securities
with respect to payments on the Preferred Securities to the extent of any
payments made by the Company to such holder in any Direct Action. The holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the Holders of the Securities.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as provided by
the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Indenture shall require the Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or indemnity reasonably
satisfactory to the Trustee against such risk or liability is not reasonably
assured to it. Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the
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Trustee shall be subject to the provisions of this Section 601.
SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any default
hereunder as and to the extent provided by the Trust Indenture Act; provided,
however, that in the case of any default of the character specified in Section
501(d), no such notice to Holders shall be given until at least 30 days after
the occurrence thereof. For the purpose of this Section 602, the term "default"
means any event which is, or after notice or lapse of time or both would become,
an Event of Default.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its choice and the advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to reasonable
examination of the books, records and premises of the Company, personally or by
agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be liable for any action taken, suffered, or
omitted to be taken by it in good faith, without negligence or willful
misconduct, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be accountable for the use
or application by the Company of the Securities or the proceeds thereof.
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SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar or any other
agent of the Company, in its individual or any other capacity, may become the
owner or pledgee of Securities and, subject to Sections 608 and 613, may
otherwise deal with the Company with the same rights it would have if it were
not Trustee, Paying Agent, Security Registrar, or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder;
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, fees, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee and any predecessor Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the exercise
or performance of any of its powers or duties hereunder.
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When the Trustee incurs expenses or renders services in connection
with an Event of Default specified in Section 501(f) or Section 501(g), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the termination of this
Indenture.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and has its Corporate
Trust Office in New York, New York. If such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611.
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(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Securities, delivered to the
Trustee and to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(ii) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (A) the Company by Board Resolution may remove the
Trustee, or (B) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
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(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Trustee. If,
within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee to all Holders in the
manner provided in Section 106. Each notice shall include the name of the
successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to the retiring Trustee an instrument accepting
such appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee; provided, that on request of the Company or
the successor Trustee, such retiring Trustee shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments required to more fully and
certainly vest in and confirm to such successor Trustee all such rights, powers
and trusts.
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No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company
(or any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims against
the Company (or any such other obligor).
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semiannually, not later than February 15 and August 15 in each
year, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the
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Holders as of a date not more than 15 days prior to the delivery thereof, and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year, commencing May 15, 1997,
the Trustee shall transmit by mail to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act in the manner provided pursuant thereto.
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(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which the
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when the Securities are listed on any stock exchange.
SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act; provided, that any such
information, documents or reports required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act shall be filed with the
Trustee within 15 days after the same is so required to be filed with the
Commission.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
The Company shall also provide to the Trustee on a timely basis such
information as the Trustee requires to enable the Trustee to prepare and file
any form required to be submitted by the Company with the Internal Revenue
Service and the Holders of the Securities relating to original issue discount,
if any, including, without limitation, Form 1099-OID or any successor form.
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ARTICLE EIGHT
Consolidation, Merger, Conveyance, Transfer or Lease
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge with or into any other
Person or, directly or indirectly, convey, transfer or lease all or
substantially all of its properties and assets on a consolidated basis to any
Person, unless:
(a) the Person formed by such consolidation or into which the Company
is merged or the Person which acquires by conveyance, transfer or lease, all or
substantially all of the properties and assets of the Company on a consolidated
basis shall be a corporation, partnership or trust, shall be organized and
validly existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the principal of
(and premium, if any) and interest (including Additional Payments, if any) on
all the Securities and the performance or observance of every covenant of this
Indenture on the part of the Company to be performed or observed and shall have
provided for conversion rights in accordance with Article Thirteen;
(b) immediately after giving effect to such transaction and treating
any indebtedness which becomes an obligation of the Company or a Subsidiary as a
result of such transaction as having been incurred by the Company or such
Subsidiary at the time of such transaction, no Event of Default, and no event
which, after notice or lapse of time or both, would become an Event of Default,
shall have happened and be continuing; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture, comply with this
Article and that all conditions precedent herein provided for relating to such
transaction have been complied with.
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This Section shall only apply to a merger or consolidation in which
the Company is not the surviving corporation and to conveyances, leases and
transfers by the Company as transferor or lessor.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the Company
into, any other Person or any conveyance, transfer or lease of all or
substantially all the properties and assets of the Company on a consolidated
basis in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein,
and thereafter the predecessor Person shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:
(a) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein and
in the Securities; or
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the Company;
or
(c) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article Thirteen; or
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(d) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this Indenture;
provided, that such action pursuant to this Clause (d) shall not adversely
affect the interests of the Holders of the Securities or, so long as any of the
Preferred Securities shall remain outstanding, the holders of the Preferred
Securities;
(e) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust Indenture
Act; or
(f) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any, to be
placed on Securities, and all other matters required pursuant to Section 305(b)
or otherwise necessary, desirable or appropriate in connection with the issuance
of Securities to holders of Preferred Securities in the event of a distribution
of Securities by the Trust if a Special Event occurs and is continuing.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities, by Act of said Holders delivered
to the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders under this Indenture;
provided, however, that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(a) extend the Stated Maturity of the principal of, or any installment
of interest (including Additional Payments, if any) on, any Security, or reduce
the principal amount thereof, or reduce the rate or extend the time for payment
of interest thereon, or extend the Extension Period, or reduce any premium
payable upon the redemption thereof, or change the place of payment where, or
the coin or curren-
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cy in which, any Security or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date), or adversely affect the right to convert any Security as provided in
Article Thirteen (except as permitted by Section 901(c)), or modify the
provisions of this Indenture with respect to the subordination of the Securities
in a manner adverse to the Holders,
(b) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this Indenture, or
(c) modify any of the provisions of this Section or Section 513,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the consent of
the Holder of each Outstanding Security affected thereby;
provided that if the Securities are held by the Trust or a trustee of the Trust,
such supplemental indenture shall not be effective until the holders of a
majority in liquidation amount of Trust Securities shall have consented to such
supplemental indenture; provided, further, that if the consent of the Holder of
each Outstanding Security is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Persons entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Holders on such record date,
or their duly designated proxies, and only such Persons, shall be entitled to
consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided that unless such consent shall have
become
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effective by virtue of the requisite percentage having been obtained prior to
the date which is 90 days after such record date, any such consent previously
given shall automatically and without further action by any Holder be cancelled
and of no further effect.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby. No such supplemental indenture shall directly or
indirectly modify the provisions of Article Twelve in any manner which might
terminate or impair the rights of the Senior Indebtedness pursuant to such
subordination provisions.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company
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shall so determine, new Securities so modified as to conform, in the opinion of
the Trustee and the Company, to any such supplemental indenture may be prepared
and executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities.
ARTICLE TEN
Covenants; Representations and Warranties
SECTION 1001. Payment of Principal and Interest.
The Company will duly and punctually pay the principal of and interest
on the Securities and Additional Payments, if any in accordance with the terms
of the Securities and this Indenture.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the United States an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company will give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies (in the United States) where the Securities may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the United States for such purposes. The Company will give prompt
written notice to the Trustee of any such designation or rescission and of any
change in the location of any such other office or agency.
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SECTION 1003. Money for Security Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it will,
on or before each due date of the principal of or interest on any of the
Securities, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal or interest so becoming due until
such sums shall be paid to such Persons or otherwise disposed of as herein
provided and will promptly notify the Trustee of its action or failure so to
act.
Whenever the Company shall have one or more Paying Agents, it will,
prior to each due date of the principal of or interest on any Securities,
deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be
held as provided by the Trust Indenture Act, and (unless such Paying Agent is
the Trustee) the Company will promptly notify the Trustee of its action or
failure so to act.
The Company will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will (i) comply with the provisions of the Trust Indenture Act
applicable to it as a Paying Agent and (ii) during the continuance of any
default by the Company (or any other obligor upon the Securities) in the making
of any payment in respect of the Securities, upon the written request of the
Trustee, forthwith pay to the Trustee all sums held in trust by such Paying
Agent as such.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of or interest on
(including Additional Payments, if any) any Security and remaining unclaimed for
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two years after such principal or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of any such Security shall
thereafter, as an unsecured general creditor, look only to the Company for
payment thereof, and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease.
SECTION 1004. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after the end
of each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the
material terms, provisions and conditions of this Indenture (without regard to
any period of grace or requirement of notice provided hereunder) and, if the
Company shall be in default, specifying all such defaults and the nature and
status thereof of which they may have knowledge.
SECTION 1005. Limitation on Dividends; Covenants as to the Trust.
(a) The Company covenants that so long as the Securities are
outstanding, if (i) there shall have occurred and be continuing any event that
with the giving of notice or the lapse of time or both, would constitute an
Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Guarantee, or (iii) the Company has
exercised its option to defer interest payments on the Securities by extending
the interest payment period and such period, or any extension thereof, shall be
continuing, then the Company shall (A) not declare or pay dividends on, or make
a distribution with respect to, or redeem or purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (x)
purchases or acquisitions of shares of Common Stock in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security requiring the Company to purchase shares of Common Stock, (y) as a
result of a reclassification of the Company's capital stock or the exchange or
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conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock or (z) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged) or make any guarantee payments with respect to the foregoing, (B) not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees) issued by the
Company that rank pari passu with or junior to the Securities and (C) not make
any guarantee payments with respect to the foregoing (other than pursuant to the
Guarantee).
(b) The Company also covenants and agrees (i) that it shall directly
or indirectly maintain 100% ownership of the Common Securities of the Trust;
provided, however, that any permitted successor of the Company hereunder may
succeed to the Company's ownership of such Common Securities and (ii) that it
shall use its reasonable efforts, consistent with the terms and provisions of
the Declaration, to cause the Trust (x) to remain a statutory business trust,
except in connection with the distribution of the Securities to the holders of
Trust Securities in liquidation of the Trust, the redemption of all of the Trust
Securities of the Trust, or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, and (y) to otherwise continue to be
classified as a grantor trust for United States Federal income tax purposes.
SECTION 1006. Payment of Expenses of the Trust.
In connection with the offering, sale and issuance of the Securities
to the Property Trustee in connection with the sale of the Trust Securities by
the Trust, the Company shall:
(a) pay for all costs, fees and expenses relating to the offering,
sale and issuance of the Securities, including commissions, discounts and
expenses payable pursuant to the Purchase Agreement and compensation of the
Trustee under the Indenture in accordance with the provisions of Section 607 of
the Indenture;
(b) be responsible for and pay for all debts and obligations (other
than with respect to the Trust Securities) of the Trust, pay for all costs and
expenses of the
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Trust (including, but not limited to, costs and expenses relating to the
organization of the Trust, the offering, sale and issuance of the Trust
Securities (including commissions, discounts and expenses in connection
therewith), the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of the Trust,
including without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, paying agent(s), registrar(s), transfer
agent(s), duplicating, travel and telephone and other telecommunications
expenses and costs and expenses incurred in connection with the acquisition,
financing, and disposition of Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Optional Redemption.
(a) The Company shall have the right to redeem the Securities, in
whole or in part, at any time or from time to time after December 31, 1999 upon
not less than 30 nor more than 60 days' notice, at a redemption price equal to
104.02% of the principal amount of the Securities to be redeemed plus any
accrued and unpaid interest (including Additional Payments, if any) to the
Redemption Date, if redeemed before December 31, 2000, and at the following
optional redemption prices (expressed as a percentage of the principal amount of
Securities), if redeemed during the 12-month period beginning December 31:
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<TABLE>
<CAPTION>
Percentage of
Principal
Year Amount
---- --------------
<S> <C>
2000 .................................... 103.60%
2001 .................................... 103.00%
2002 .................................... 102.40%
2003 .................................... 101.80%
2004 .................................... 101.20%
2005 .................................... 100.60%
2006 and thereafter........................ 100.00%
</TABLE>
plus, in each case, accrued and unpaid interest (including Additional Payments,
if any) to the Redemption Date. Any redemption pursuant to this Section 1101
shall be made pursuant to the provisions of Sections 1103 through 1108 hereof.
(b) If a partial redemption of the Securities would result in the
delisting of the Preferred Securities issued by the Trust from any national
securities exchange or other organization on which the Preferred Securities are
listed, the Company shall not be permitted to effect such partial redemption and
may only redeem the Securities in whole.
SECTION 1102. Tax Event Optional Redemption.
If a Tax Event has occurred and is continuing and:
(a) the Company has received a Redemption Tax Opinion; or
(b) after receiving a Dissolution Tax Opinion, the Regular Trustees
shall have been informed by tax counsel rendering the Dissolution Tax Opinion
that a No Recognition Opinion cannot be delivered to the Trust,
then, notwithstanding Section 1101(a) but subject to Section 1101(b), the
Company shall have the right upon not less than 30 days nor more than 60 days
notice to the Holders of the Securities to redeem the Securities in whole (but
not in part) for cash at a redemption price equal to 100% of the principal
amount of the Securities plus accrued and unpaid interest (including Additional
Payments), if any, within 90 days following the occurrence of such Tax Event
(the "90-Day Period"); provided, however, that if, at the time there is
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available to the Company or the Trust the opportunity to eliminate within the
90-Day Period, the Tax Event by taking some ministerial action ("Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which, in the sole judgment of the Company, has or
will cause no adverse effect on the Company, the Trust or the Holders of the
Trust Securities and will involve no material cost, the Company or the Trust
shall pursue such Ministerial Action or other measure in lieu of redemption, and
provided, further, that the Company shall have no right to redeem the Securities
while the Trust is pursuing any Ministerial Action or other similar measure
pursuant to its obligations under the Declaration.
SECTION 1103. Applicability of Article.
Redemption of Securities at the election of the Company, as permitted
by Sections 1101 and 1102, shall be made in accordance with such provision and
this Article.
SECTION 1104. Election to Redeem; Notice to Trustee.
The election of the Company to redeem Securities pursuant to Section
1101 or 1102 shall be evidenced by a Board Resolution. In case of any redemption
at the election of the Company, the Company shall, at least 45 days and no more
than 90 days prior to the Redemption Date fixed by the Company, notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed and provide a copy of the notice of redemption given
to Holders of Securities to be redeemed pursuant to Section 1105.
SECTION 1105. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed (unless such
redemption affects only a single Security), the particular Securities to be
redeemed shall be selected not more than 45 days prior to the Redemption Date by
the Trustee, from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of portions (equal to $50 or
any integral multiple thereof) of the principal amount of the Securities.
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The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption as aforesaid and, in case of any Securities
selected for partial redemption as aforesaid, the principal amount thereof to be
redeemed.
The provisions of the two preceding paragraphs shall not apply with
respect to any redemption affecting only a single Security, whether such
Security is to be redeemed in whole or in part. In the case of any such
redemption in part, the unredeemed portion of the principal amount of the
Security shall be in an authorized denomination (which shall not be less than
the minimum authorized denomination) for such Security.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1106. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption shall identify the Securities to be redeemed
(including, if relevant, CUSIP number or ISIN) and shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and that interest thereon
will cease to accrue on and after said date, and
(d) the place or places where such Securities are to be surrendered
for payment of the Redemption Price.
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Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1107. Deposit and Payment of Redemption Price.
Prior to 10:00 a.m. (New York City time) on the Redemption Date, the
Company shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) an amount of money sufficient to pay the Redemption
Price of, plus (except if the Redemption Date shall be an Interest Payment Date)
accrued and unpaid interest (including Additional Payments, if any) on all the
Securities which are to be redeemed on that date. Such redemption payment shall
be made to the Holders prior to 12:00 noon (New York City time) on the
Redemption Date or such earlier time as the Company determines.
If any Security called for redemption is converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Security shall (subject to any right of the
Holder of such Security or any Predecessor Security to receive interest as
provided in the last paragraph of Section 307) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 1108. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued and
unpaid interest, including Additional Payments, if any) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Company at the
Redemption Price, together with accrued and unpaid interest (including
Additional Payments, if any) to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at 5:00 p.m. (New York City time) on
the relevant
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Record Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid, bear interest
from the Redemption Date at the rate borne by the Security.
SECTION 1109. Securities Redeemed in Part.
In the event of any redemption in part, the Company shall not be
required to (i) issue, register the transfer of or exchange any Security during
a period beginning at 9:00 a.m. (New York City time) 15 Business Days before any
selection for redemption of Securities and ending at 5:00 p.m. (New York City
time) on the earliest date in which the relevant notice of redemption is deemed
to have been given to all holders of Securities to be so redeemed and (ii)
register the transfer of or exchange any Securities so selected for redemption,
in whole or in part, except for the unredeemed portion of any Securities being
redeemed in part.
Any Security which is to be redeemed only in part shall be surrendered
at a place of payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Security without service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered.
SECTION 1110. No Sinking Fund.
The Securities are not entitled to the benefit of any sinking fund.
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ARTICLE TWELVE
Subordination of Securities
SECTION 1201. Agreement to Subordinate.
The Company covenants and agrees, and each Holder of Securities by
such Holder's acceptance thereof likewise covenants and agrees, that all
Securities shall be issued subject to the provisions of this Article Twelve; and
each Holder of a Security, whether upon original issue or upon transfer or
assignment thereof, accepts and agrees to be bound by such provisions. The
payment by the Company of the principal of, premium, if any, and interest
(including Additional Payments, if any) on all Securities issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and junior in right of payment to the prior payment in full of all existing and
future Senior Indebtedness, whether outstanding at the date of this Indenture or
thereafter incurred; provided however, that no provision of this Article Twelve
shall prevent the occurrence of any default or Event of Default hereunder.
SECTION 1202. Default on Senior Indebtedness.
In the event and during the continuation of any default by the Company
in the payment of principal, premium, interest or any other payment due on any
Senior Indebtedness continuing beyond the period of grace, if any, specified in
the instrument evidencing such Senior Indebtedness, unless and until such
default shall have been cured or waived or shall have ceased to exist, and in
the event that the maturity of any Senior Indebtedness has been accelerated
because of a default, then no payment shall be made by the Company with respect
to the principal of (including redemption payments, if any), premium, if any, or
interest on the Securities.
In the event that, notwithstanding the foregoing, any payment shall be
received by the Trustee when such payment is prohibited by the preceding
paragraph of this Section 1202, such payment shall be held in trust for the
benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness or their respective representatives, or to the trustee or trustees
under any indenture pursuant to which any of such Senior Indebtedness may have
been issued, as their respective interests may appear, but
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only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
SECTION 1203. Liquidation; Dissolution; Bankruptcy.
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all principal of, and premium, if any, and
interest due or to become due on, all Senior Indebtedness must be paid in full
before any payment is made on account of the principal (and premium, if any) or
interest (including Additional Payments, if any) on the Securities; and upon any
such dissolution or winding up or liquidation or reorganization, any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Holders of the Securities
or the Trustee would be entitled, except for the provisions of this Article
Twelve, shall be paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Holders of the Securities or by the Trustee under this Indenture if
received by them or it, directly to the holders of Senior Indebtedness (pro rata
to such holders on the basis of the respective amounts of Senior Indebtedness
held by such holders, as calculated by the Company) or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
as their respective interests may appear, to the extent necessary to pay such
Senior Indebtedness in full, in money or money's worth, after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness, before any payment or distribution is made to the Holders of
Securities or to the Trustee.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities,
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prohibited by the foregoing, shall be received by the Trustee or the Holders of
the Securities before all Senior Indebtedness is paid in full, or provision is
made for such payment in money in accordance with its terms, such payment or
distribution shall be held in trust for the benefit of and shall be paid over or
delivered to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing such Senior Indebtedness may have been issued,
and their respective interests may appear, as calculated by the Company, for
application to the payment of all Senior Indebtedness remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the holders of such Senior Indebtedness.
For purposes of this Article Twelve, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Twelve with
respect to the Securities to the payment of all Senior Indebtedness which may at
the time be outstanding; provided, that (i) such Senior Indebtedness is assumed
by the new corporation, if any, resulting from any such reorganization or
readjustment, and (ii) the rights of the holders of such Senior Indebtedness are
not, without the consent of such holders, altered by such reorganization or
readjustment. The consolidation of the Company with, or the merger of the
Company with or into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer or lease of all or substantially all
its properties and assets on a consolidated basis to another Person upon the
terms and conditions provided for in Article Eight hereof shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of this
Section 1203 if such other Person shall, as a part of such consolidation,
merger, conveyance, transfer or lease, comply with the conditions stated in
Article Eight hereof. Nothing in Section 1202 or in this Section 1203 shall
apply to claims of, or payments to, the Trustee under or pursuant to Section 607
hereof.
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SECTION 1204. Subrogation.
Subject to the payment in full of all Senior Indebtedness, the rights
of the Holders of the Securities shall be subrogated to the rights of the
holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of (and premium, if any,) and
interest (including Additional Payments, if any) on the Securities shall be paid
in full; and, for the purposes of such subrogation, no payments or distributions
to the holders of such Senior Indebtedness of any cash, property or securities
to which the Holders of the Securities or the Trustee would be entitled except
for the provisions of this Article Twelve, and no payment over pursuant to the
provisions of this Article Twelve, to or for the benefit of the holders of such
Senior Indebtedness by Holders of the Securities or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Indebtedness,
and the Holders of the Securities, be deemed to be a payment by the Company to
or on account of such Senior Indebtedness. It is understood that the provisions
of this Article Twelve are and are intended solely for the purposes of defining
the relative rights of the Holders of the Securities, on the one hand, and the
holders of such Senior Indebtedness on the other hand.
Nothing contained in this Article Twelve or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders of the Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including Additional Payments, if any) on the
Securities as and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative rights of the
Holders of the Securities and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness, nor shall anything herein or
therein prevent the Trustee or the Holder of any Security from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture, subject to the rights, if any, under this Article Twelve of the
holders of such Senior Indebtedness in respect of cash, property or securities
of the Company, as the case may be, received upon the exercise of any such
remedy.
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Upon any payment or distribution of assets of the Company referred to
in this Article Twelve, the Trustee, subject to the provisions of Section 603,
and the Holders of the Securities, shall be entitled to rely upon any order or
decree made by any court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are pending, or a
certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent
or other Person making such payment or distribution, delivered to the Trustee or
to the Holders of the Securities, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, as the case may be, the
amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article Twelve.
SECTION 1205. Trustee to Effectuate Subordination.
Each Holder of Securities by such Holder's acceptance thereof
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination provided in
this Article Twelve and appoints the Trustee as such Holder's attorney-in-fact
for any and all such purposes.
SECTION 1206. Notice by the Company.
The Company shall give prompt written notice to a Responsible Officer
of the Trustee of any fact known to the Company which would prohibit the making
of any payment of monies to or by the Trustee in respect of the Securities
pursuant to the provisions of this Article Twelve. Notwithstanding the
provisions of this Article Twelve or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts which
would prohibit the making of any payment of monies to or by the Trustee in
respect of the Securities pursuant to the provision of this Article Twelve,
unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office of the Trustee from the
Company or a holder or holders of Senior Indebtedness or from any trustee
therefor; and before the receipt of any such written notice, the Trustee,
subject to the provisions of Section 603 hereof, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice
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provided for in this Section 1206 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (and premium, if
any) or interest (including Additional Payments, if any) on any Security), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such money and to apply the same to the
purposes for which they were received, and shall not be affected by any notice
to the contrary which may be received by it within two Business Days prior to
such date.
The Trustee, subject to the provisions of Section 603, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been given by a holder
of such Senior Indebtedness or a trustee on behalf of any such holder or
holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article Twelve, the Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
right of such Person under this Article Twelve, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 1207. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Twelve in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness of the Company, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are set forth in this Article Twelve, and no implied covenants
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or obligations with respect to the holders of such Senior Indebtedness shall be
read into this Indenture against the Trustee. The Trustee shall not be deemed to
owe any fiduciary duty to the holders of such Senior Indebtedness and, subject
to the provisions of Section 603, the Trustee shall not be liable to any holder
of such Senior Indebtedness if it shall pay over or deliver to Holders of
Securities, the Company or any other Person money or assets to which any holder
of such Senior Indebtedness shall be entitled by virtue of this Article Twelve
or otherwise. With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants or obligations as
are specifically set forth in this Article Twelve and no implied covenants or
obligations with respect to holders of Senior Indebtedness shall be read into
this Indenture against the Trustee.
SECTION 1208. Subordination May Not Be Impaired.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
otherwise be charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the holders of the Securities
and without impairing or releasing the subordination provided in this Article
Twelve or the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or renew
or alter, such Senior Indebtedness, or otherwise amend or supplement in any
manner such Senior Indebtedness or any instrument evidencing the same or any
agreement under which such Senior Indebtedness is outstanding; (ii) sell,
exchange, release or otherwise deal with any property pledged, mortgaged or
otherwise securing such Senior Indebtedness; (iii) release any Person liable in
any manner for the collection of such Senior
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Indebtedness; and (iv) exercise or refrain from exercising any rights against
the Company and any other Person.
ARTICLE THIRTEEN
Conversion of Securities
SECTION 1301. Conversion Rights.
Subject to and upon compliance with the provisions of this Article,
the Securities are convertible, at the option of the Holder, at any time on or
before 5:00 p.m. (New York City time) on the Business Day immediately preceding
the date of repayment of such Securities, whether at maturity or upon redemption
(either at the option of the Company or pursuant to a Tax Event), into fully
paid and nonassessable shares of Common Stock of the Company at an initial
conversion rate of 2.126 shares of Common Stock for each $50 in aggregate
principal amount of Securities (equal to a conversion price of $23.52 per share
of Common Stock), subject to adjustment as described in this Article Thirteen. A
Holder of Securities may convert any portion of the principal amount of the
Securities into that number of fully paid and nonassessable shares of Common
Stock (calculated as to each conversion to the nearest 1/100th of a share)
obtained by dividing the principal amount of the Securities to be converted by
such conversion price. In case a Security or portion thereof is called for
redemption, such conversion right in respect of the Security or portion so
called shall expire at 5:00 p.m. (New York City time) on the Business Day
immediately preceding the corresponding Redemption Date, unless the Company
defaults in making the payment due upon redemption.
SECTION 1302. Conversion Procedures.
(a) In order to convert all or a portion of the Securities, the Holder
thereof shall deliver to the Conversion Agent an irrevocable Notice of
Conversion setting forth the principal amount of Securities to be converted,
together with the name or names, if other than the Holder, in which the shares
of Common Stock should be issued upon conversion and, if such Securities are
definitive Securities, surrender to the Conversion Agent the Securities to be
converted, duly endorsed or assigned to the Company or in blank. In addition, a
holder of Preferred Securities may exercise its
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right under the Declaration to convert such Preferred Securities into Common
Stock by delivering to the Conversion Agent an irrevocable Notice of Conversion
setting forth the information called for by the preceding sentence and directing
the Conversion Agent (i) to exchange such Preferred Security for a portion of
the Securities held by the Trust (at an exchange rate of $50 liquidation amount
of Securities for each Preferred Security) and (ii) to immediately convert such
Securities, on behalf of such holder, into Common Stock of the Company pursuant
to this Article Thirteen and, if such Preferred Securities are in definitive
form, surrendering such Preferred Securities, duly endorsed or assigned to the
Company or in blank. So long as any Preferred Securities are outstanding, the
Trust shall not convert any Securities except pursuant to a Notice of Conversion
delivered to the Conversion Agent by a holder of Preferred Securities.
If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder will be
entitled to receive the interest payable on the subsequent Interest Payment Date
on the portion of Securities to be converted notwithstanding the conversion
thereof prior to such Interest Payment Date. Notwithstanding the foregoing, if,
during an Extension Period, a notice of redemption is mailed pursuant to Section
1106 and a Security is converted after such mailing but prior to the relevant
Redemption Date, all accrued but unpaid interest (including Additional Payments,
if any) through the date of conversion shall be paid to the holder of such
Security on the Redemption Date. Except as otherwise provided in the immediately
preceding sentence, in the case of any Security which is converted, interest
whose Stated Maturity is after the date of conversion of such Security shall not
be payable, and the Company shall not make nor be required to make any other
payment, adjustment or allowance with respect to accrued but unpaid interest
(including Additional Payments, if any) on the Securities being converted, which
shall be deemed to be paid in full. If any Security called for redemption is
converted, any money deposited with the Trustee or with any Paying Agent or so
segregated and held in trust for the redemption of such Security shall (subject
to any right of the Holder of such Security or any Predecessor Security to
receive interest as provided in the last paragraph of Section 307 and this
paragraph) be paid to the Company upon Company Request or, if then held by the
Company, shall be discharged from such trust.
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Each conversion shall be deemed to have been effected immediately
prior to 5:00 p.m. (New York City time) on the day on which the Notice of
Conversion was received (the "Conversion Date") by the Conversion Agent from the
Holder or from a holder of the Preferred Securities effecting a conversion
thereof pursuant to its conversion rights under the Declaration, as the case may
be. The Person or Persons entitled to receive the Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Common Stock as of the Conversion Date. As promptly as
practicable on or after the Conversion Date, the Company shall issue and deliver
at the office of the Conversion Agent, unless otherwise directed by the Holder
in the Notice of Conversion, a certificate or certificates for the number of
full shares of Common Stock issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share to the Person or
Persons entitled to receive the same. The Conversion Agent shall deliver such
certificate or certificates to such Person or Persons.
(b) Subject to any right of the Holder of such Security or any
Predecessor Security to receive interest as provided in the last paragraph of
Section 307 and the second paragraph of Clause (a) of Section 1302, the
Company's delivery upon conversion of the fixed number of shares of Common Stock
into which the Securities are convertible (together with the cash payment, if
any, in lieu of fractional shares) shall be deemed to satisfy the Company's
obligation to pay the principal amount at Maturity of the portion of Securities
so converted and any unpaid interest (including Additional Payments, if any)
accrued on such Securities at the time of such conversion.
(c) No fractional shares of Common Stock will be issued as a result of
conversion, but in lieu thereof, the Company shall pay to the Conversion Agent a
cash adjustment in an amount equal to the same fraction of the last reported
sale price of such fractional interest on the date on which the Securities or
Preferred Securities, as the case may be, were duly surrendered to the
Conversion Agent for conversion, or, if such day is not a Trading Day, on the
next Trading Day, and the Conversion Agent in turn will make such payment, if
any, to the Holder of the Securities or the holder of the Preferred Securities
so converted.
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(d) In the event of the conversion of any Security in part only, a new
Security or Securities for the unconverted portion thereof will be issued in the
name of the Holder thereof upon the cancellation thereof in accordance with
Section 305.
(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of Preferred
Securities (in the exchange of Preferred Securities for Securities) and as agent
of the Holders of Securities (in the conversion of Securities into Common
Stock), as the case may be, directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Securities held by the
Trust from time to time for Preferred Securities in connection with the
conversion of such Preferred Securities in accordance with this Article Thirteen
and (ii) to convert all or a portion of the Securities into Common Stock and
thereupon to deliver such shares of Common Stock in accordance with the
provisions of this Article Thirteen and to deliver to the Trust a new Security
or Securities for any resulting unconverted principal amount.
SECTION 1303. Conversion Price Adjustments.
The conversion price shall be subject to adjustment (without
duplication) from time to time as follows:
(a) In case the Company shall, while any of the Securities are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock in shares of Common Stock, (ii) subdivide its outstanding shares of
Common Stock, (iii) combine its outstanding shares of Common Stock into a
smaller number of shares or (iv) issue by reclassification of its shares of
Common Stock any shares of capital stock of the Company, the conversion price in
effect immediately prior to such action shall be adjusted so that the Holder of
any Securities thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which he would have
owned immediately following such action had such Securities been converted
immediately prior thereto. An adjustment made pursuant to this Section 1303(a)
shall become effective immediately after the record date in the case of a
dividend or other distribution and shall become effective immediately after the
effective date in case of a subdivision, combination or reclassification (or
immediately after the record
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date if a record date shall have been established for such event). If, as a
result of an adjustment made pursuant to this Section 1303(a), the Holder of any
Security thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes or series of capital stock of the Company, the
Board of Directors (whose determination shall be conclusive and shall be
described in a Board Resolution filed with the Trustee) shall determine the
allocation of the adjusted conversion price between or among shares of such
classes or series of capital stock.
(b) In case the Company shall, while any of the Securities are
outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring within 45 days after the record date
mentioned in this Section 1303(b)) to subscribe for or purchase shares of Common
Stock at a price per share less than the current market price per share of
Common Stock (as determined pursuant to 1303(f) below) on such record date, the
conversion price for the Securities shall be adjusted so that the same shall
equal the price determined by multiplying the conversion price in effect
immediately prior to the date of issuance of such rights or warrants by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of shares which the aggregate offering price of the total number of shares so
offered for subscription or purchase would purchase at such current market
price, and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the record
date for the determination of stockholders entitled to receive such rights or
warrants. For the purposes of this subsection, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company. The Company shall not issue any rights or warrants in respect of
shares of Common Stock held in the treasury of the Company. In case any rights
or warrants referred to in this subsection in respect of which an adjustment
shall have been made shall expire unexercised within 45 days after the same
shall have been distributed or issued by the Company, the conversion price shall
be readjusted at the time of such expiration to the conversion price that would
have been in effect if no adjustment had
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been made on account of the distribution or issuance of such expired rights or
warrants.
(c) Subject to the last sentence of this Section 1303(c), in case the
Company shall, by dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness, shares of any class or series of capital
stock, cash or assets (including securities, but excluding any rights or
warrants referred to in Section 1303(b), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in Section
1303(a)), the conversion price shall be reduced so that the same shall equal the
price determined by multiplying the conversion price in effect immediately prior
to the effectiveness of the conversion price reduction contemplated by Section
1303(c) by a fraction of which the numerator shall be the current market price
per share (determined as provided in Section 1303(f)) of the Common Stock on the
date fixed for the payment of such distribution (the "Reference Date") less the
fair market value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed applicable
to one share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day following the Reference
Date. In the event that such dividend or distribution is not so paid or made,
the conversion price shall again be adjusted to be the conversion price which
would then be in effect if such dividend or distribution had not occurred. If
the Board of Directors determines the fair market value of any distribution for
purposes of this Section 1303(c) by reference to the actual or when issued
trading market for any securities comprising such distribution, it must in doing
so consider the prices in such market over the same period used in computing the
current market price per share of Common Stock (determined as provided in
Section 1303(f)). For purposes of this Section 1303(c), any dividend or
distribution that includes shares of Common Stock or rights or warrants to
subscribe for or purchase shares of Common Stock shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, shares of
capital stock, cash or assets other than such shares of Common Stock or such
rights or warrants (making any conversion price reduction required by
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this Section 1303(c)) immediately followed by (2) a dividend or distribution of
such shares of Common Stock or such rights or warrants (making any further
conversion price reduction required by Section 1303(a) or 1303(b)), except (A)
the Reference Date of such dividend or distribution as defined in this 1303(c)
shall be substituted as (a) "the record date in the case of a dividend or other
distribution," and (b) "the record date for the determination of stockholders
entitled to receive such rights or warrants" and (c) "the date fixed for such
determination" within the meaning of Sections 1303(a) and 1303(b) and (B) any
shares of Common Stock included in such dividend or distribution shall not be
deemed outstanding for purposes of computing any adjustment of the conversion
price in Section 1303(a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding all regular cash
dividends, if the annualized amount thereof per share of Common Stock does not
exceed 15% of the current market price per share determined as provided in
Section 1303(f) of the Common Stock on the Trading Day immediately preceding the
date of declaration of such dividend), the conversion price shall be reduced so
that the same shall equal the price determined by multiplying the conversion
price in effect immediately prior to the effectiveness of the conversion price
reduction contemplated by this Section 1303(d) by a fraction of which the
numerator shall be the current market price per share (determined as provided in
Section 1303(f)) of the Common Stock on the date fixed for the payment of such
distribution less the amount of cash so distributed and not excluded as provided
applicable to one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such reduction to become
effective immediately prior to the opening of business on the day following the
date fixed for the payment of such distribution; provided, however, that in the
event the portion of the cash so distributed applicable to one share of Common
Stock is equal to or greater than the current market price per share (as defined
in Section 1303(f)) of the Common Stock on the record date mentioned above, in
lieu of the foregoing adjustment, adequate provision shall be made so that each
Holder of shares of Securities shall have the right to receive upon conversion
the amount of cash such Holder would have received had such Holder converted
each share of the Securities immediately prior to the record date for the
distribution of the cash. In the event that such dividend
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or distribution is not so paid or made, the conversion price shall again be
adjusted to be the conversion price which would then be in effect if such record
date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion of
the Company's Common Stock shall expire and such tender or exchange offer shall
involve the payment by the Company or such Subsidiary of consideration per share
of Common Stock having a fair market value (as determined in good faith by the
Board of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the "Expiration Time")
tenders or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds 110% of the current market price per
share (determined as provided in Section 1303(f)) of the Common Stock on the
Trading Day next succeeding the Expiration Time, the conversion price shall be
reduced so that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the effectiveness of the
conversion price reduction contemplated by this Section 1303(e) by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time multiplied
by the current market price per share (determined as provided in Section
1303(f)) of the Common Stock on the Trading Day next succeeding the Expiration
Time and the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to stockholders
based on the acceptance (up to any maximum specified in the terms of the tender
or exchange offer) of all shares validly tendered or exchanged and not withdrawn
as of the Expiration Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Purchased Shares) at the
Expiration Time and the current market price per share (determined as provided
in Section 1303(f)) of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction to become effective immediately prior to the
opening of business on the day following the Expiration Time.
(f) For the purpose of any computation under Section 1303(b), 1303(c),
1303(d) or 1303(e), the current
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market price per share of Common Stock on any date in question shall be deemed
to be the average of the daily Closing Prices for the five consecutive Trading
Days selected by the Company commencing not more than 20 Trading Days before,
and ending not later than, the earlier of the day in question or, if applicable,
the day before the "ex" date with respect to the issuance or distribution
requiring such computation; provided, however, that if another event occurs that
would require an adjustment pursuant to Section 1303(a) through (e), inclusive,
the Board of Directors may make such adjustments to the Closing Prices during
such five Trading Day period as it deems appropriate to effectuate the intent of
the adjustments in this Section 1303, in which case any such determination by
the Board of Directors shall be set forth in a Board Resolution and shall be
conclusive. For purposes of this paragraph, the term "ex" date, (i) when used
with respect to any issuance or distribution, means the first date on which the
Common Stock trades regular way on the New York Stock Exchange or on such
successor securities exchange as the Common Stock may be listed or in the
relevant market from which the Closing Prices were obtained without the right to
receive such issuance or distribution, and (ii) when used with respect to any
tender or exchange offer, means the first date on which the Common Stock trades
regular way on such securities exchange or in such market after the Expiration
Time of such offer.
(g) The Company may make such reductions in the conversion price, in
addition to those required by Sections 1303 (a) through (e), as it considers to
be advisable to avoid or diminish any income tax to holders of Common Stock or
rights to purchase Common Stock resulting from any dividend or distribution of
stock (or rights to acquire stock) or from any event treated as such for income
tax purposes. The Company from time to time may reduce the conversion price by
any amount for any period of time if the period is at least 20 days, the
reduction is irrevocable during the period, and the Board of Directors of the
Company shall have made a determination that such reduction would be in the best
interest of the Company, which determination shall be conclusive. Whenever the
conversion price is reduced pursuant to the preceding sentence, the Company
shall mail to holders of record of the Securities a notice of the reduction at
least 15 days prior to the date the reduced conversion price takes effect, and
such notice shall state the reduced conversion price and the period it will be
in effect.
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(h) No adjustment in the conversion price shall be required unless
such adjustment would require an increase or decrease of at least 1% in the
conversion price; provided, however, that any adjustments which by reason of
this Section 1303(h) are not required to be made shall be carried forward and
taken into account in determining whether any subsequent adjustment shall be
required.
(i) If any action would require adjustment of the conversion price
pursuant to more than one of the provisions described above, only one adjustment
shall be made and such adjustment shall be the amount of adjustment that has the
highest absolute value to the Holder of the Securities.
SECTION 1304. Reclassification, Consolidation, Merger or Sale of Assets.
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (b) any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), (c) any sale, transfer or lease of all or substantially all of the
assets of the Company or (d) any compulsory share exchange) pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, then lawful provision shall be made as part of the terms of
such transaction whereby the Holder of each Security then outstanding shall have
the right thereafter to convert such Security only into the kind and amount of
securities, cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock of the Company
into which such Security could have been converted immediately prior to such
transaction.
The Company or the Person formed by such consolidation or resulting
from such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or articles
of incorporation or other constituent document to establish such right. Such
certificate or articles of incorporation
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or other constituent document shall provide for adjustments which, for events
subsequent to the effective date of such certificate or articles of
incorporation or other constituent document, shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Article Thirteen. The
above provisions shall similarly apply to successive transactions of the
foregoing type.
SECTION 1305. Notice of Adjustments of Conversion Price.
Whenever the conversion price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and shall
prepare a certificate signed by the Chief Financial Officer or the Treasurer of
the Company setting forth the adjusted conversion price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed with the Trustee, the Conversion Agent and
the transfer agent for the Preferred Securities and the Securities; and
(b) a notice stating the conversion price has been adjusted and
setting forth the adjusted conversion price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities and the
Securities at their last addresses as they appear upon the stock transfer books
of the Company and the Trust.
SECTION 1306. Prior Notice of Certain Events.
In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in shares
of Common Stock or (B) a dividend payable in cash that would not require an
adjustment pursuant to Section 1303(c) or 1303(d), or (ii) authorize a tender or
exchange offer that would require an adjustment pursuant to Section 1303(e);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of stock of
any class or series or of any other rights or warrants;
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(c) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value, or
from par value to no par value, or from no par value to par value), or of any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company shall be required, or of the sale or transfer
of all or substantially all of the assets of the Company or of any compulsory
share exchange whereby the Common Stock is converted into other securities, cash
or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall (1) if any Preferred Securities are outstanding, cause to
be filed with the transfer agent for the Preferred Securities, and shall cause
to be mailed to the holders of record of the Preferred Securities, at their last
addresses as they shall appear upon the stock transfer books the Trust or (2)
shall cause to be mailed to all Holders at their last addresses as they shall
appear in the Security Register, at least 15 days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which
a record (if any) is to be taken for the purpose of such dividend, distribution,
rights or warrants or, if a record is not to be taken, the date as of which the
holders of Common Stock of record to be entitled to such dividend, distribution,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale,
transfer, share exchange, dissolution, liquidation or winding up (but no failure
to mail such notice or any defect therein or in the mailing thereof shall affect
the validity of the corporate action required to be specified in such notice).
SECTION 1307. Certain Defined Terms.
The following definitions shall apply to terms used in this Article
Thirteen:
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(a) "Closing Price" of any Common Stock on any day shall mean the last
reported sale price regular way on such day or, in case no such sale takes place
on such day, the average of the reported closing bid and asked prices regular
way of such Common Stock, in each case on the New York Stock Exchange Composite
Tape or, if the Common Stock is not listed or admitted to trading on such
exchange, on the principal national securities exchange on which such common
stock is listed or admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors of the Company for that purpose or, if
not so available in such manner, as otherwise determined in good faith by the
Board of Directors.
(b) "Trading Day" shall mean a day on which securities are traded on
the national securities exchange or quotation system used to determine the
Closing Price.
SECTION 1308. Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any shares
of Common Stock pursuant to any plan providing for the reinvestment of dividends
or interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan, and
the issuance of any shares of Common Stock or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Company or
pursuant to any option, warrant, right or exercisable, exchangeable or
convertible security outstanding as of the date the Securities were first
issued, shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which any
of the adjustment provisions described above applies. There shall also be no
adjustment of the conversion price in case of the issuance of any stock (or
securities convertible into or exchangeable for stock) of the Company except as
specifically described in this Article Thirteen.
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SECTION 1309. Certain Additional Rights.
In case the Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in Section 1303(c) or 1303(d)
(including, without limitation, dividends or distributions referred to in the
last sentence of Section 1303(c)), the Holder of the Securities, upon the
conversion thereof subsequent to 5:00 p.m. (New York City time) on the date
fixed for the determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the conversion price adjustment
in respect of such distribution, shall also be entitled to receive for each
share of Common Stock into which the Securities are converted, the portion of
the shares of Common Stock, rights, warrants, evidences of indebtedness, shares
of capital stock, cash and assets so distributed applicable to one share of
Common Stock; provided, however, that, at the election of the Company (whose
election shall be evidenced by a resolution of the Board of Directors) with
respect to all Holders so converting, the Company may, in lieu of distributing
to such Holder any portion of such distribution not consisting of cash or
securities of the Company, pay such Holder an amount in cash equal to the fair
market value thereof (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a resolution of the
Board of Directors). If any conversion of Securities described in the
immediately preceding sentence occurs prior to the payment date for a
distribution to holders of Common Stock which the Holder of Securities so
converted is entitled to receive in accordance with the immediately preceding
sentence, the Company may elect (such election to be evidenced by a resolution
of the Board of Directors) to distribute to such Holder a due bill for the
shares of Common Stock, rights, warrants, evidences of indebtedness, shares of
capital stock, cash or assets to which such Holder is so entitled, provided,
that such due bill (i) meets any applicable requirements of the principal
national securities exchange or other market on which the Common Stock is then
traded and (ii) requires payment or delivery of such shares of Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash or
assets no later than the date of payment or delivery thereof to holders of
shares of Common Stock receiving such distribution.
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SECTION 1310. Trustee Not Responsible for Determining Conversion Price or
Adjustments.
Neither the Trustee nor any Conversion Agent shall at any time be
under any duty or responsibility to any Holder of any Security to determine
whether any facts exist which may require any adjustment of the conversion
price, or with respect to the nature or extent of any such adjustment when made,
or with respect to the method employed, or herein or in any supplemental
indenture provided to be employed, in making the same. Neither the Trustee nor
any Conversion Agent shall be accountable with respect to the validity or value
(or the kind of account) of any shares of Common Stock or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Security; and neither the Trustee nor any Conversion Agent makes any
representation with respect thereto. Neither the Trustee nor any Conversion
Agent shall be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver any shares of Common Stock or stock
certificates or other securities or property upon the surrender of any Security
for the purpose of conversion, or, except as expressly herein provided, to
comply with any of the covenants of the Company contained in Article Ten or this
Article Thirteen.
ARTICLE FOURTEEN
Immunity of Incorporators, Stockholders,
Officers and Directors
SECTION 1401. No Recourse.
No recourse under or upon any obligation, covenant or agreement of
this Indenture, or of any Security, or for any claim based thereon or otherwise
in respect thereof, shall be had against any incorporator, stockholder, officer
or director, past, present or future as such, of the Company or of any
predecessor or successor corporation, either directly or through the Company or
any such predecessor or successor corporation, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Indenture and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall
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be incurred by, the incorporators, stockholders, officers or directors as such,
of the Company or of any predecessor or successor corporation, or any of them,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom; and that any and all such
personal liability of every name and nature, either at common law or in equity
or by constitution or statute, of, and any and all such rights and claims
against, every such incorporator, stockholder, officer or director as such,
because of the creation of the indebtedness hereby authorized, or under or by
reason of the obligations, covenants or agreements contained in this Indenture
or in any of the Securities or implied therefrom, are hereby expressly waived
and released as a condition of, and as a consideration for, the execution of
this Indenture and the issuance of such Securities.
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This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
DESIGNER HOLDINGS LTD.
By: /s/ ARNOLD H. SIMON
--------------------------------
Name: Arnold H. Simon
Title: President, Chief Executive
Officer and Director
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:
----------------------------------
Name:
Title:
<PAGE>
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PREFERRED SECURITIES GUARANTEE AGREEMENT
Designer Holdings Ltd.
Dated as of November 6, 1996
====================================
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation............................ 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.......................... 6
SECTION 2.2. Lists of Holders of Securities............................ 7
SECTION 2.3. Reports by the Preferred Guarantee
Trustee................................................. 7
SECTION 2.4. Periodic Reports to the Preferred
Guarantee Trustee....................................... 8
SECTION 2.5. Evidence of Compliance with
Conditions Precedent.................................... 8
SECTION 2.6. Event of Default; Waiver.................................. 8
SECTION 2.7. Event of Default; Notice.................................. 8
SECTION 2.8. Conflicting Interests..................................... 9
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
THE PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred
Guarantee Trustee....................................... 9
SECTION 3.2. Certain Rights of the Preferred
Guarantee Trustee....................................... 11
SECTION 3.3. Not Responsible for Recitals or
Issuance of Guarantee................................... 14
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee;
Eligibility............................................. 15
SECTION 4.2. Appointment, Removal and Resignation
of Preferred Guarantee Trustees.......................... 15
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ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee................................................. 17
SECTION 5.2. Subordination............................................. 17
SECTION 5.3. Waiver of Notice and Demand............................... 17
SECTION 5.4. Obligations Not Affected.................................. 17
SECTION 5.5. Rights of Holders......................................... 19
SECTION 5.6. Guarantee of Payment...................................... 19
SECTION 5.7. Subrogation............................................... 19
SECTION 5.8. Independent Obligations................................... 20
SECTION 5.9. Conversion................................................ 20
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING
SECTION 6.1. Limitation of Transactions................................ 20
SECTION 6.2. Ranking................................................... 21
ARTICLE VII
TERMINATION
SECTION 7.1. Termination............................................... 21
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation............................................... 22
SECTION 8.2. Indemnification........................................... 22
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.................................... 23
SECTION 9.2. Amendments................................................ 23
SECTION 9.3. Notices................................................... 23
SECTION 9.4. Benefit................................................... 24
SECTION 9.5. Governing Law............................................. 24
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PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred Securities
Guarantee"), dated as of November 6, 1996, is executed and delivered by Designer
Holdings Ltd., a Delaware corporation (the "Guarantor"), and IBJ Schroder Bank &
Trust Company, a New York banking corporation as trustee (the "Preferred
Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of Designer Finance
Trust, a Delaware statutory business trust (the "Trust");
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of November 6, 1996, among the trustees of the Trust
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof 2,400,000 preferred securities, having an aggregate
liquidation amount of $120,000,000 (plus up to an additional 360,000 preferred
securities, having an aggregate liquidation amount of $18,000,000 to cover
over-allotments), designated the 6% Convertible Trust Originated Preferred
Securities'sm' (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Preferred Securities Guarantee, to guarantee the obligations
of the Trust to the Holders of the Preferred Securities on the terms and
conditions set forth herein;
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an event of default (as
defined in the Indenture (as defined herein)), has occurred and is continuing,
the rights of holders of the Common Securities to receive Guarantee Payments (as
defined in the Common Securities Guarantee) under the Common Securities
Guarantee shall be subordinated to the rights of Holders of Preferred Securities
to receive Guarantee
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Payments (as defined herein) under this Preferred Securities Guarantee; and
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation.
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) Capitalized terms used in this Preferred
Securities Guarantee but not defined in the
preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) terms defined in the Declaration as at the date
hereof have the same meaning when used in this
Preferred Securities Guarantee unless otherwise
defined in this Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred
Securities Guarantee has the same meaning
throughout;
(d) all references to "the Preferred Securities
Guarantee" or "this Preferred Securities
Guarantee" are to this Preferred Securities
Guarantee as modified, supplemented or amended
from time to time;
(e) all references in this Preferred Securities
Guarantee to Articles and Sections are to Articles
and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
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(f) a term defined in the Trust Indenture Act has the
same meaning when used in this Preferred
Securities Guarantee, unless otherwise defined in
this Preferred Securities Guarantee or unless the
context otherwise requires;
(g) a reference to the singular includes the plural
and vice versa;
(h) a reference to any Person shall include its
successors and assigns;
(i) a reference to any agreement or instrument shall
mean such agreement or instrument, as
supplemented, modified, amended, or amended and
restated, and in effect from time to time; and
(j) a reference to any statute, law, rule or
regulation, shall include any amendments thereto
applicable to the relevant Person, and any
successor statute, law, rule or regulation.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act of 1933, as amended, or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to bind
such Person.
"Business Day" means any day other than a day on which banking institutions
in New York, New York or in Wilmington, Delaware are authorized or required by
any applicable law or executive order to close.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Corporate Trust Office" means the office of the Preferred Guarantee Trustee
at which the corporate trust business of the Preferred Guarantee Trustee shall,
at any particular time, be principally administered, which office at the date of
execution of this Agreement is located at One State Street, 11th Floor, New
York, New
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York 10004, Attention: Corporate Trust & Agency Department.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the 6% Convertible Subordinated Debentures due December
31, 2016 of the Guarantor held by the Property Trustee (as defined in the
Declaration).
"Event of Default" means a default by the Guarantor on any of its payment or
other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by the Trust: (i) any accrued and unpaid Distributions (as defined in the
Declaration) that are required to be paid on the Preferred Securities to the
extent the Trust has funds available therefor, (ii) the redemption price, with
respect to any Preferred Securities called for redemption by the Trust (the
"Redemption Price"), to the extent the Trust has funds available therefor, and
(iii) upon a voluntary or involuntary dissolution, winding-up or termination of
the Trust (other than in connection with the distribution of Convertible
Subordinated Debentures to the Holders of Preferred Securities or the redemption
of all the Preferred Securities (as provided in the Declaration)), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment to the extent
the Trust has funds available therefor and (b) the amount of assets of the Trust
remaining available for distribution to Holders of Preferred Securities upon the
liquidation of the Trust (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
the Trust of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor or any Affiliate of the Guarantor.
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"Indemnified Person" means the Preferred Guarantee Trustee, any Affiliate of
the Preferred Guarantee Trustee, or any officers, directors, shareholders,
members, partners, employees, representatives, nominees, custodians or agents of
the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of November 6, 1996, among the
Guarantor (the "Convertible Debenture Issuer") and IBJ Schroder Bank & Trust
Company, a New York banking corporation, as trustee, pursuant to which the
Debentures are to be issued to the Property Trustee of the Trust.
"Indenture Trustee" means the Person acting as trustee under the Indenture,
initially IBJ Schroder Bank & Trust Company.
"Majority in liquidation amount of the Preferred Securities" means, except
as provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two Authorized Officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in
rendering the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
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(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Preferred Guarantee Trustee" means IBJ Schroder Bank & Trust Company, until
a Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust Office of the Preferred
Guarantee Trustee, including any vice president, any assistant vice president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the provisions of the
Trust Indenture Act that are required to be part of this Preferred Securities
Guarantee and shall, to the extent applicable, be governed by such provisions.
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(b) If and to the extent that any provision of this Preferred Securities
Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2. List of Holders of Securities.
(a) The Guarantor shall provide the Preferred Guarantee Trustee with a list,
in such form as the Preferred Guarantee Trustee may reasonably require, of the
names and addresses of the Holders of the Preferred Securities ("List of
Holders") as of such date, (i) within one Business Day after January 1 and June
30 of each year, and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Preferred Guarantee Trustee,
provided that the Guarantor shall not be obligated to provide such List of
Holders at any time (x) the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor or (y)
the Preferred Securities are represented by one or more Global Securities (as
defined in the Indenture). The Preferred Guarantee Trustee may destroy any List
of Holders previously given to it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Preferred Guarantee Trustee.
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Preferred
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.
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SECTION 2.4. Periodic Reports to the Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314, if any, and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6. Event of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Preferred
Securities Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7. Event of Default; Notice.
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided that the Preferred Guarantee Trustee shall be protected in withholding
such notice if and so long as a Responsible Officer of the Preferred Guarantee
Trustee in good faith
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determines that the withholding of such notice is in the interests of the
Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Preferred Guarantee Trustee shall have received
written notice, or of which a Responsible Officer of the Preferred Guarantee
Trustee charged with the administration of the Declaration shall have obtained
actual knowledge.
SECTION 2.8. Conflicting Interests.
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred Securities
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.5(b) or to a Successor Preferred Guarantee Trustee on acceptance by
such Successor Preferred Guarantee Trustee of its appointment to act as
Successor Preferred Guarantee Trustee. The right, title and interest of the
Preferred Guarantee Trustee shall automatically vest in any Successor Preferred
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
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(c) The Preferred Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to a Responsible Officer of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such
of the rights and powers vested in it by this Preferred Securities Guarantee,
and use the same degree of care and skill in its exercise thereof, as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs.
(d) No provision of this Preferred Securities Guarantee shall be construed to
relieve the Preferred Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Preferred Guarantee
Trustee shall be determined solely by the express provisions of
this Preferred Securities Guarantee, and the Preferred Guarantee
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this
Preferred Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities Guarantee
against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in the
case of any such certificates or opinions that by any provision
hereof
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are specifically required to be furnished to the Preferred
Guarantee Trustee, the Preferred Guarantee Trustee shall be under a
duty to examine the same to determine whether or not they conform
to the requirements of this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any proceeding
for any remedy available to the Preferred Guarantee Trustee, or
exercising any trust or power conferred upon the Preferred Guarantee
Trustee under this Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2. Certain Rights of the Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from
acting upon, any resolution, certificate, statement,
instrument,
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opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have
been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently
evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall
deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the
Preferred Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument
(or any rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult with
counsel of its selection, and the written advice or opinion of
such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion. Such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions
concerning the administration of this Preferred Securities
Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the
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rights or powers vested in it by this Preferred Securities
Guarantee at the request or direction of any Holder, unless
such Holder shall have provided to the Preferred Guarantee
Trustee such security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with
such request or direction, including such reasonable advances
as may be requested by the Preferred Guarantee Trustee;
provided that nothing contained in this Section 3.2(a)(vi)
shall be taken to relieve the Preferred Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound
to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Preferred Guarantee Trustee, in its
discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians
or attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of
any agent or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee
or its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the Preferred
Guarantee Trustee or its agents alone shall be sufficient and
effective to perform any such action. No third party shall be
required to inquire as to the authority of the Preferred
Guarantee Trustee to so act or as to its compliance with any
of the terms
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and provisions of this Preferred Securities Guarantee, both of
which shall be conclusively evidenced by the Preferred
Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action
hereunder, the Preferred Guarantee Trustee (i) may request
instructions from the Holders of a Majority in liquidation
amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received and (iii) shall be
protected in conclusively relying on or acting in accordance
with such instructions.
(xi) The Preferred Guarantee Trustee shall not be liable
for any action taken, suffered, or omitted to be taken by it
in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it
by this Preferred Securities Guarantee.
(b) No provision of this Preferred Securities Guarantee shall be deemed to
impose any duty or obligation on the Preferred Guarantee Trustee to perform any
act or acts or exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be illegal, or in which the
Preferred Guarantee Trustee shall be unqualified or incompetent in accordance
with applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available to
the Preferred Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Preferred Securities Guarantee shall be
taken as the statements of the Guarantor, and the Preferred Guarantee Trustee
does not assume any responsibility for their correctness. The Preferred
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Guarantee Trustee makes no representation as to the validity or sufficiency of
this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and
subject to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Preferred Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of
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Preferred Guarantee Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance with
Section 4.2(a) until a Successor Preferred Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold office
until a Successor Preferred Guarantee Trustee shall have been appointed or until
its removal or resignation. The Preferred Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the
resigning or removed Preferred Guarantee Trustee may petition any court of
competent jurisdiction for appointment of a Successor Preferred Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal or
resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2, the
Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued to
the date of such termination, removal or
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resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders (except to the extent paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust may
have or assert, the Guarantee Payments, without duplication. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Trust to pay
such amounts to the Holders.
SECTION 5.2. Subordination.
If an Event of Default (as defined in the Indenture), has occurred and
is continuing, the rights of Holders of Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinate to the rights of
Preferred Securities to receive Guarantee Payments under this Preferred
Securities Guarantee.
SECTION 5.3. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Trust or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.4. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under
this Preferred Securities Guarantee shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of
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any express or implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any portion
of the Distributions, Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Preferred Securities or the extension of
time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures permitted
by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of the
Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed hereby or
hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute a legal
or equitable discharge or defense of a guarantor, it being the intent of this
Section 5.4 that the obligations of the Guarantor hereunder shall be absolute
and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Persons to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
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SECTION 5.5. Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or to direct the exercise of any
trust or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee.
(b) Any Holder may directly institute a legal proceeding against the
Guarantor to enforce the obligations of the Guarantor under this Preferred
Securities Guarantee without first instituting a legal proceeding against the
Trust, the Preferred Guarantee Trustee or any other Person.
(c) If an Event of Default with respect to the Debentures (an "Indenture
Event of Default"), constituting the failure to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable has
occurred and is continuing, then a Holder of Preferred Securities may directly,
at any time, institute a proceeding for enforcement of payment to such Holder of
the principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such Holder
on or after the respective due date specified in the Debentures. The Holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures unless the Property Trustee (as
defined in the Indenture) fails to do so.
SECTION 5.6. Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.7. Subrogation.
The Guarantor shall be subrogated to all, if any, rights of the Holders
against the Trust in respect of any amounts paid to such Holders by the
Guarantor under this Preferred Securities Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or
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exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Preferred Securities Guarantee, if, at the time of any such payment, any amounts
are due and unpaid under this Preferred Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.8. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Trust with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g) inclusive, of Section 5.4 hereof.
SECTION 5.9. Conversion.
The Guarantor acknowledges its obligation to issue and deliver common
stock of the Guarantor upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING
SECTION 6.1. Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if there shall
have occurred any event of default under this Preferred Securities Guarantee or
any event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture, then the Guarantor has
agreed not to declare or pay dividends on, or make a distribution with respect
to, or redeem, purchase acquire or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
common stock in connection with the satisfaction by the Guarantor of its
obligations under any employee benefit plans or the satisfaction by the
Guarantor of its obligations pursuant to any contract or security requiring the
Guarantor to purchase shares of common stock, (ii) as a result of a
reclassification of the
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Guarantor's capital stock or the exchange or conversion of one class or series
of the Guarantor's capital stock for another class or series of the Guarantor's
capital stock or (iii) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged (or make any
guarantee payments with respect to the foregoing).
SECTION 6.2. Ranking.
(a) This Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior to all
other liabilities of the Guarantor except any liabilities that may be pari passu
expressly by their terms, (ii) pari passu with the most senior preferred stock
issued from time to time by the Guarantor and with any guarantee now or
hereafter entered into by the Guarantor in respect of any preferred or
preference stock or preferred securities of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
(b) The holders of any obligations of the Guarantor that are senior in
priority to the obligations under this Preferred Securities Guarantee will be
entitled to all of the rights inuring to the holders of "Senior Indebtedness"
under Article 12 of the Indenture, and the Holders of the Preferred Securities
will be subject to all of the terms and conditions of such Article 12 with
respect to any claims or rights hereunder with the same effect as though fully
set forth herein.
ARTICLE VII
TERMINATION
SECTION 7 Termination.
This Preferred Securities Guarantee will terminate as to each Holder upon (i)
full payment of the Redemption Price of all Preferred Securities; or (ii)
distribution of the Debentures held by the Trust to the Holders; or (iii)
liquidation of the Trust, or (iv) upon the distribution of Guarantor's common
stock to such Holder in respect of conversion of such Holder's Preferred
Securities into common stock of the Guarantor. The Guarantee also will terminate
completely upon full payment of the amounts payable in
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accordance with the Declaration of the Trust. This Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under such
Preferred Securities or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Preferred Securities
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Preferred Securities Guarantee or by law, except that an Indemnified Person
shall be liable for any such loss, damage or claim incurred by reason of such
Indemnified Person's negligence or willful misconduct with respect to such acts
or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2. Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any loss, liability or expense
incurred without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
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hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against, or investigating, any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding. Except in connection with any
permitted merger or consolidation of the Guarantor with or into another entity
or any permitted sale, transfer or lease of the Guarantor's assets to another
entity as described in the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Preferred Securities Guarantee without the
prior approval of the Holders of at least a Majority of the aggregate stated
liquidation amount of the Preferred Securities then outstanding.
SECTION 9.2. Amendments.
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no vote will be required), this Preferred
Securities Guarantee may be amended only with the prior approval of the Holders
of at least a Majority in liquidation amount of all the outstanding Preferred
Securities. The provisions of Section 11.2 of the Declaration with respect to
meetings of Holders of the Preferred Securities apply to the giving of such
approval.
SECTION 9.3. Notices.
All notices provided for in this Preferred Securities Guarantee shall be in
writing, duly signed by the party giving such notice, and shall be delivered,
sent by facsimile or mailed by registered or certified mail, as follows:
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(a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee
Trustee's mailing address set forth below (or such other address as the
Preferred Guarantee Trustee may give notice of to the Holders of the Preferred
Securities):
IBJ Schroder Bank & Trust Company
One State Street, 11th Floor
New York, New York 10004
Attention: Corporate Trust & Agency Department
(b) If given to the Guarantor, at the Guarantor's mailing address set forth
below (or such other address as the Guarantor may give notice of to the Holders
of the Preferred Securities):
Designer Holdings Ltd.
1385 Broadway, 3rd Floor
New York, New York 10018
Attention: General Counsel
(c) If given to any Holder at the address set forth on the books and records
of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4. Benefit.
This Preferred Securities Guarantee is solely for the benefit of the Holders
of the Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.
SECTION 9.5. Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK AND ALL
RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT REGARD TO ITS
PRINCIPLES OF CONFLICTS OF LAWS.
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THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first
above written.
DESIGNER HOLDINGS LTD., as Guarantor
By: /s/ ARNOLD H. SIMON
---------------------------------------
Name: Arnold H. Simon
Title: President, Chief Executive
Officer and Director
IBJ SCHRODER BANK & TRUST COMPANY,
as Preferred Guarantee Trustee
By: /s/ BARBARA McCLUSKEY
---------------------------------------
Name: Barbara McCluskey
Title: Vice President
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EXECUTION COPY
U.S. $600,000,000
CREDIT AGREEMENT
Dated as of August 12, 1997
Among
WARNACO INC.
as Borrower
and
THE WARNACO GROUP, INC.
and
THE INITIAL LENDERS NAMED HEREIN
as Initial Lenders
and
THE BANK OF NOVA SCOTIA and CITIBANK, N.A.
as Managing Agents
and
CITIBANK, N.A.
as Documentation Agent
and
THE BANK OF NOVA SCOTIA
as Administrative Agent, Competitive Bid Agent,
Swing Line Bank and an Issuing Bank
<PAGE>
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms......................................... 1
SECTION 1.02. Computation of Time Periods...................................25
SECTION 1.03. Accounting Terms..............................................25
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances..................................................25
SECTION 2.02. Making the Advances...........................................27
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
Credit......................................................31
SECTION 2.04. The Competitive Bid Advances..................................33
SECTION 2.05. Repayment of Advances.........................................38
SECTION 2.06. Termination or Reduction of the Commitments...................39
SECTION 2.07. Prepayments...................................................39
SECTION 2.08. Interest......................................................40
SECTION 2.09. Fees..........................................................41
SECTION 2.10. Conversion of Advances........................................42
SECTION 2.11. Increased Costs, Etc..........................................43
SECTION 2.12. Illegality....................................................45
SECTION 2.13. Payments and Computations.....................................45
SECTION 2.14. Taxes.........................................................46
SECTION 2.15. Sharing of Payments, Etc......................................49
SECTION 2.16. Use of Proceeds...............................................50
SECTION 2.17. Defaulting Lenders............................................50
SECTION 2.18. Evidence of Debt..............................................53
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of Section 2.01
and 2.03....................................................54
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance...........55
SECTION 3.03. Determinations Under Section 3.01.............................56
ARTICLE IV
REPRESENTATIONS AND WARRANTIES..................57
SECTION 4.01. Representations and Warranties of the Borrower................57
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ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants.........................................60
SECTION 5.02. Negative Covenants............................................63
SECTION 5.03. Financial Covenants...........................................68
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default.............................................69
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default......72
ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action......................................73
SECTION 7.02. Agents' Reliance, Etc.........................................73
SECTION 7.03. Scotiabank, Citibank and Affiliates...........................74
SECTION 7.04. Lender Credit Decision........................................74
SECTION 7.05. Indemnification...............................................74
SECTION 7.06. Successor Agents..............................................75
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc...............................................75
SECTION 8.02. Notices, Etc..................................................76
SECTION 8.03. No Waiver; Remedies ..........................................77
SECTION 8.04. Costs and Expenses............................................77
SECTION 8.05. Right of Set-off..............................................79
SECTION 8.06. Binding Effect................................................79
SECTION 8.07. Assignments, Designations and Participations..................79
SECTION 8.08. Confidentiality...............................................85
SECTION 8.09. No Liability of the Issuing Banks.............................85
SECTION 8.10. Execution in Counterparts.....................................86
SECTION 8.11. Governing Law.................................................86
SECTION 8.12. Jurisdiction, Etc.............................................86
SECTION 8.13. Waiver of Jury Trial..........................................88
<PAGE>
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Page
Schedules
Schedule I - List of Applicable Lending Offices
Schedule 2.03(e) - Existing Letters of Credit
Schedule 4.01(b) - Subsidiaries
Schedule 5.02(d) - Assets Held For Sale
Exhibits
Exhibit A-1 - Form of Competitive Bid Note
Exhibit A-2 - Form of Revolving Credit Note
Exhibit B-1 - Form of Notice of Borrowing
Exhibit B-2 - Form of Notice of Competitive Bid Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Designation Agreement
Exhibit E - Form of Opinion of Counsel for the Loan Parties
Exhibit F - Form of Group Guaranty
Exhibit G - Form of Subsidiary Guaranty
<PAGE>
<PAGE>
CREDIT AGREEMENT
Dated as of August 12, 1997
WARNACO INC., a Delaware corporation (together with any
successors-in-interest permitted hereunder, the "Borrower"), THE WARNACO GROUP,
INC., a Delaware corporation (together with any successors-in-interest permitted
hereunder, "Group"), the banks, financial institutions and other institutional
lenders (the "Initial Lenders") listed on the signature pages hereof, and THE
BANK OF NOVA SCOTIA ("Scotiabank") and CITIBANK, N.A. ("Citibank") as managing
agents (the "Managing Agents") for the Lenders (as hereinafter defined),
Citibank as documentation agent (the "Documentation Agent") for the Lenders, and
Scotiabank as administrative agent (the "Administrative Agent") and competitive
bid agent (the "Competitive Bid Agent") for the Lenders and as a Swing Line Bank
and an Issuing Bank hereunder, agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Administrative Agent" has the meaning specified in the recital
of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with
Scotiabank at its office at One Liberty Plaza, New York, New York
10006, Special Management Account No. 0608335, Reference: Warnaco.
"Advance" means a Revolving Credit Advance, a Competitive Bid
Advance, a Swing Line Advance, or a Letter of Credit Advance.
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling", "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 10% or more
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2
of the Voting Stock of such Person or to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of Voting Stock, by contract or otherwise.
"Agents" means each of the Managing Agents, the Documentation
Agent, the Administrative Agent and the Competitive Bid Agent,
together, in each case, with any successor or successors of any thereof
appointed pursuant to Article VII hereof.
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base
Rate Advance and such Lender's Eurodollar Lending Office in the case of
a Eurodollar Rate Advance and, in the case of a Competitive Bid
Advance, the office of such Lender notified by such Lender to the
Administrative Agent as its Applicable Lending Office with respect to
such Competitive Bid Advance.
"Applicable Margin" means, as of any date, a percentage per
annum determined by reference to the Rating Level in effect on such
date as set forth below:
================== ================ ============= ==============
Rating Debt Base Rate Eurodollar
Level Rating Advances Rate Advances
- ------------------ ---------------- ------------- --------------
Level 1 A-/A3 or higher 0.000% 0.250%
- ------------------ ---------------- ------------- --------------
Level 2 BBB+/Baa1 0.000% 0.275%
- ------------------ ---------------- ------------- --------------
Level 3 BBB/Baa2 0.000% 0.300%
- ------------------ ---------------- ------------- --------------
Level 4 BBB-/Baa3 0.000% 0.425%
- ------------------ ---------------- ------------- --------------
Level 5 BB+/Ba1 or 0.250% 0.625%
lower
================== ================ ============= ==============
provided, that at any time that the Rating Level is Level 1, 2 or 3 and
the aggregate Available Amount of Letters of Credit plus the principal
amount of Advances exceeds 25% of the aggregate Commitments, the
Applicable Margin shall be increased by 0.075% per annum.
"Applicable Percentage" means, as of any date, a percentage
per annum determined by reference to the Rating Level in effect on such
date as set forth below:
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3
============= ================ ===============
Rating Debt Applicable
Level Rating Percentage
------------- ---------------- ---------------
Level 1 A-/A3 or higher 0.080%
------------- ---------------- ---------------
Level 2 BBB+/Baa1 0.090%
----------------------------- ---------------
Level 3 BBB/ Baa2 0.125%
------------- ---------------- ---------------
Level 4 BBB-/Baa3 0.150%
------------- ---------------- ---------------
Level 5 BB+/Ba1 or 0.200%
lower
============= ================ ===============
"Appropriate Lender" means, at any time, with respect to (a)
the Revolving Credit Facility, a Lender that has a Revolving Credit
Commitment at such time, (b) the Letter of Credit Facility, (i) the
Issuing Banks and (ii) if the other Revolving Credit Lenders shall have
made Letter of Credit Advances pursuant to Section 2.03(c) that are
outstanding at such time, each such other Revolving Credit Lender and
(c) the Swing Line Facility, (i) the Swing Line Bank and (ii) if the
other Revolving Credit Lenders have made Swing Line Advances pursuant
to Section 2.02(b) that are outstanding at such time, such other
Revolving Credit Lenders.
"Approved Accounting Firm" means Arthur Andersen LLP, Coopers
& Lybrand L.L.P., Deloitte & Touche LLP, Ernst & Young LLP, Price
Waterhouse LLP or KPMG Peat Marwick LLP, or any successor thereof.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, and accepted by the
Documentation Agent, in accordance with Section 8.07 and in
substantially the form of Exhibit C hereto.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the higher of:
(a) the rate of interest established by the
Administrative Agent, from time to time, at its Domestic
Lending Office as its base rate for loans in United States
dollars; and
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4
(b) 1/2 of one percent per annum above the Federal
Funds Rate.
"Base Rate Advance" means an Advance that bears interest as
provided in Section 2.08(a)(i).
"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrower's Account" means the account of the Borrower
maintained by the Borrower with Citibank at its office at 399 Park
Avenue, New York, New York 10043, Account No. 3846-9269.
"Borrowing" means a Revolving Credit Borrowing, a Competitive
Bid Borrowing or a Swing Line Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings are carried on in the London interbank market.
"Capital Stock Issuance" means the sale or issuance by any
Loan Party or any of its Subsidiaries of any capital stock, any
securities convertible into or exchangeable for capital stock or any
warrants, rights or options to acquire capital stock of Group or any of
its Subsidiaries other than any such sale or issuance by a wholly owned
Subsidiary of the Borrower to the Borrower or to another wholly owned
Subsidiary of the Borrower and other than the issuance or sale of
common stock (or options to purchase common stock) by Group pursuant to
customary management, employee or director stock option and stock
purchase programs or other stock option or stock purchase programs with
respect to common stock of Group approved by the Board of Directors of
Group.
"Capitalized Lease Obligations" of any Person shall at any
time mean all Obligations under Capitalized Leases of such Person, in
each case taken at the amount thereof accounted for as liabilities in
accordance with GAAP at such time.
"Capitalized Leases" has the meaning specified in clause (e)
of the definition of "Debt".
"Cash Equivalents" means cash equivalents and marketable
securities (other than equity securities).
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5
"Cash Interest Expense" means, for any period, interest
expense net of interest income on all Debt of Group and its
Subsidiaries, in each case determined for such period on a Consolidated
basis for Group and its Subsidiaries in accordance with GAAP and
including, without limitation, to the extent not otherwise included in
accordance with GAAP, (a) interest expense in respect of Debt resulting
from Advances, (b) the interest component of obligations as lessee
under Capitalized Leases, (c) commissions, discounts and other fees and
charges payable in connection with letters of credit, (d) the net
payment, if any, payable in connection with interest rate hedge
agreements and other interest rate protection contracts and (e) fees
paid pursuant to Section 2.09(a), but excluding, in each case, (x)
amortization of original issue discount, (y) the interest portion of
any deferred payment obligation and (z) other interest not payable in
cash.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980.
"Citibank" has the meaning specified in the recital of parties
to this Agreement.
"Commitment" means a Revolving Credit Commitment or a Letter
of Credit Commitment.
"Competitive Bid Advance" means an advance by a Lender to the
Borrower as part of a Competitive Bid Borrowing resulting from the
competitive bidding procedure described in Section 2.04 and refers to a
Fixed Rate Advance or a LIBO Rate Advance.
"Competitive Bid Agent" has the meaning specified in the
recital of parties to this Agreement.
"Competitive Bid Borrowing" means a borrowing consisting of
simultaneous Competitive Bid Advances from each of the Lenders whose
offer to make one or more Competitive Bid Advances as part of such
borrowing has been accepted under the competitive bidding procedure
described in Section 2.04.
"Competitive Bid Note" means a promissory note of the Borrower
payable to the order of any Lender, in substantially the form of
Exhibit A-1 hereto, evidencing the indebtedness of the Borrower to such
Lender resulting from a Competitive Bid Advance made by such Lender.
"Confidential Information" means any information, whether
written or oral that the Borrower or Group furnishes to any Agent or
Lender which is designated as confidential or which could reasonably be
expected by such Agent or Lender to be
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6
confidential, provided, that for purposes of this definition, unless
otherwise specified by the Borrower or Group, the term "Confidential
Information" will include, without limitation, any information
furnished by the Borrower or Group regarding proposed acquisitions and
new product launches by Group or its Subsidiaries, and provided,
further, that the term "Confidential Information" does not include any
information that is or becomes generally available to the public or
that is or becomes available to such Agent or Lender from a source
other than the Borrower or Group.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Convert", "Conversion" and "Converted" each refers to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.10 or 2.11.
"Current Liabilities" of any Person means (a) all Debt of such
Person except Funded Debt and Debt in respect of Revolving Credit
Advances, Letter of Credit Advances and Swing Line Advances, (b) all
amounts of Funded Debt of such Person required to be paid or prepaid
within one year after the date of determination and (c) all other items
(including taxes accrued as estimated) that in accordance with GAAP
would be classified as current liabilities of such Person.
"Debt" of any Person means, without duplication, the
following:
(a) all indebtedness of such Person for borrowed
money,
(b) all Obligations of such Person for the deferred
purchase price of property or services (other than trade
payables not overdue by more than 90 days incurred in the
ordinary course of such Person's business), including, without
limitation, the Trade Credit Facility,
(c) all Obligations of such Person evidenced by
notes, bonds, debentures or other similar instruments,
(d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though
the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession
or sale of such property),
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7
(e) all Obligations of such Person as lessee under
leases that have been or should be, in accordance with GAAP,
recorded as capital leases ("Capitalized Leases"),
(f) all Obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar
facilities,
(g) all Obligations of such Person to purchase,
redeem, retire, defease or otherwise make any payment in
respect of any capital stock of or other ownership or profit
interest in such Person or any other Person or any warrants,
rights or options to acquire such capital stock, valued, in
the case of Redeemable preferred stock, at the greater of its
voluntary or involuntary liquidation preference plus accrued
and unpaid dividends,
(h) all Obligations of such Person in respect of
Hedge Agreements,
(i) all Debt of others of the kinds referred to in
clauses (a) through (h) above guaranteed directly or
indirectly in any manner by such Person, or in effect
guaranteed directly or indirectly by such Person through an
agreement (A) to pay or purchase such Debt or to advance or
supply funds for the payment or purchase of such Debt, (B) to
purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Debt or to assure
the holder of such Debt against loss, (C) to supply funds to
or in any other manner invest in the debtor (including any
agreement to pay for property or services irrespective of
whether such property is received or such services are
rendered) or (D) otherwise to assure a creditor against loss,
and
(j) all Debt referred to in clauses (a) through (h)
above secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any
Lien on property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such Debt.
"Debt Rating" means, as of any date, the Public Debt Rating in
effect on such date or, if no Public Debt Rating is then in effect, the
Implied Debt Rating in effect on such date, provided that if neither
S&P nor Moody's shall have in effect a Public Debt Rating or an Implied
Debt Rating, the Applicable Margin and the Applicable Percentage will
be set in accordance with Rating Level 5 under the definition of
"Applicable Margin" or "Applicable Percentage", as the case may be.
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8
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the amount of any Advance required to be made by such Lender
Party to the Borrower or for the account of the Borrower pursuant to
Section 2.01 at or prior to such time which has not been so made as of
such time; provided, however, any Advance made by the Administrative
Agent for the account of such Lender Party pursuant to Section 2.02(e)
shall not be considered a Defaulted Advance even if, at such time, such
Lender Party shall not have reimbursed the Administrative Agent
therefor as provided in Section 2.02(e). In the event that a portion of
a Defaulted Advance shall be deemed made pursuant to Section 2.17(a),
the remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section
2.01 on the same date as the Defaulted Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at
any time, any amount required to be paid by such Lender to any Agent or
any other Lender Party hereunder or under any other Loan Document at or
prior to such time which has not been so paid as of such time,
including, without limitation, any amount required to be paid by such
Lender Party to (a) the Swing Line Bank pursuant to Section 2.02(b) to
purchase a portion of a Swing Line Advance made by the Swing Line Bank,
(b) any Issuing Bank pursuant to Section 2.03(c) to purchase a portion
of a Letter of Credit Advance made by such Issuing Bank, (c) the
Administrative Agent pursuant to Section 2.02(e) to reimburse the
Administrative Agent for the amount of any Advance made by the
Administrative Agent for the account of such Lender Party, (d) any
other Lender Party pursuant to Section 2.15 to purchase any
participation in Advances owing to such other Lender Party and (e) any
Agent pursuant to Section 7.05 to reimburse such Agent for such Lender
Party's ratable share of any amount required to be paid by the Lender
Parties to such Agent as provided therein. In the event that a portion
of a Defaulted Amount shall be deemed paid pursuant to Section 2.17(b),
the remaining portion of such Defaulted Amount shall be considered a
Defaulted Amount originally required to be made hereunder or under any
other Loan Document on the same date as the Defaulted Amount so deemed
paid in part.
"Defaulting Lender" means, at any time, any Lender Party that,
at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
shall take or be the subject of any action or proceeding of a type
described in Section 6.01(e).
"Designated Lender" means each special purpose corporation
that (i) shall have been designated by a Designating Lender and shall
have become a party to this Agreement, all pursuant to Section 8.07(d),
and (ii) is not otherwise a Lender.
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9
"Designating Lender" shall mean each Lender that is a party
hereto (other than by virtue of a Designation Agreement) that shall
designate a Designated Lender pursuant to a Designation Agreement in
accordance with Section 8.07(d).
"Designation Agreement" means a designation agreement entered
into by a Designating Lender and a Designated Lender, and accepted by
the Administrative Agent, in substantially the form of Exhibit D
hereto.
"Documentary Letter of Credit" means any Letter of Credit that
is issued under the Letter of Credit Facility for the benefit of a
supplier of Inventory to the Borrower or any of its Subsidiaries to
effect payment for such Inventory.
"Documentation Agent" has the meaning specified in the recital
of parties to this Agreement.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender, or such other office
of such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"Domestic Subsidiary" means any Subsidiary of Group that is
not a Foreign Subsidiary.
"EBITDA" means, for any period, net income (or net loss) from
operations (determined without giving effect to extraordinary or
non-recurring gains or losses) plus, to the extent deducted in
calculating such net income (loss), the sum of (a) Interest Expense,
(b) income tax expense, (c) depreciation expense and (d) amortization
expense, in each case determined in accordance with GAAP.
"Effective Date" means the first date on which the conditions
specified in Sections 3.01 and 3.02 have been satisfied.
"Eligible Assignee" means any Person approved by the Managing
Agents and the Borrower, such approval not to be unreasonably withheld;
provided, however, that neither the Borrower nor an Affiliate of the
Borrower shall qualify as an Eligible Assignee.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of
non-compliance or violation, notice of
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10
liability or potential liability, investigation, proceeding, consent
order or consent agreement relating in any way to any Environmental
Law, Environmental Permit or Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the
environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response,
remedial or other actions or damages and (b) by any governmental or
regulatory authority or any third party for damages, contribution,
indemnification, cost recovery, compensation or injunctive relief.
"Environmental Law" means any federal, state, local or foreign
statute, law, ordinance, rule, regulation, code, order, judgment or
decree relating to the environment, health, safety or Hazardous
Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization required under
any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the Borrower's controlled group, or under
common control with the Borrower, within the meaning of Section 414 of
the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with respect to a contributing sponsor, as defined in
Section 4001(a)(13) of ERISA, of a Plan, and an event described in
paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA is
reasonably expected to occur with respect to such Plan within the
following 30 days; (b) the application for a minimum funding waiver
with respect to a Plan; (c) the provision by the administrator of any
Plan of a notice of intent to terminate such Plan pursuant to Section
4041(a)(2) of ERISA (including any such notice with respect to a plan
amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of the Borrower or any of its ERISA
Affiliates in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by the Borrower or any of its ERISA Affiliates from
a Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f)
the failure by the Borrower or any of its ERISA Affiliates to make a
payment to a Plan if the conditions
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11
for the imposition of a lien under Section 302(f)(1) of ERISA are
satisfied; (g) the adoption of an amendment to a Plan requiring the
provision of security to such Plan, pursuant to Section 307 of ERISA;
or (h) the institution by the PBGC of proceedings to terminate a Plan,
pursuant to Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that could constitute
grounds for the termination of, or the appointment of a trustee to
administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that
term in Regulation D of the Board of Governors of the Federal Reserve
System, as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name on Schedule I hereto or in the Assignment and
Acceptance pursuant to which it became a Lender (or, if no such office
is specified, its Domestic Lending Office), or such other office of
such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars are
offered by the principal office of the Administrative Agent in London,
England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to the Administrative Agent's
Eurodollar Rate Advance comprising part of such Borrowing to be
outstanding during such Interest Period and for a period equal to such
Interest Period by (b) a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest
as provided in Section 2.08(a)(ii).
"Eurodollar Rate Reserve Percentage" for any Interest Period
for all Eurodollar Rate Advances or LIBO Rate Advances comprising part
of the same Borrowing means the reserve percentage applicable two
Business Days before the first day of such Interest Period under
regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for a member bank
of the Federal Reserve System in New York City with respect to
liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
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12
includes deposits by reference to which the interest rate on Eurodollar
Rate Advances or LIBO Rate Advances is determined) having a term equal
to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excluded Person" means (i) Linda J. Wachner or (ii) any trust
of which Linda J. Wachner is the sole trustee or is a trustee with
effective control over the voting stock held by such trust or over the
management or policies of Group (or, in case of her death or
disability, another trustee of comparable experience and ability
selected by the Borrower within 180 days thereafter after consultation
with the Managing Agents).
"Excluded Taxes" means, in the case of each Lender Party,
franchise taxes and taxes upon or determined by reference to such
Lender Party's net income (including, without limitation, branch profit
taxes), in each case imposed by the United States or any political
subdivision or taxing authority thereof or therein or by any
jurisdiction in which such Lender Party has its Applicable Lending
Office, is resident or in which such Lender Party is organized or has
its principal or registered office and, in the case of each Agent,
franchise taxes and net income taxes upon or determined by reference to
such Agent's net income (including, without limitation, branch profits
taxes) imposed by the United States or by the state or foreign
jurisdiction under the laws of which such Agent is organized (or by any
political subdivision of such state or foreign jurisdiction), is
resident or has its principal or registered office.
"Existing Credit Agreement means the Credit Agreement, dated
as of October 12, 1995, as amended, among the Borrower, Group, the
financial institutions named therein, Scotiabank and Citicorp, as
Managing Agents, Citicorp, as Documentation Agent and Collateral Agent,
and Scotiabank, as Paying Agent and as Swing Line Bank and an Issuing
Bank thereunder.
"Existing Letters of Credit" has the meaning specified in
Section 2.03(e).
"Facility" means the Revolving Credit Facility, the Swing Line
Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a
Business Day, the average of the quotations for such day on such
transactions received by the
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13
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Fiscal Quarter" means a fiscal quarter of Group and its
Consolidated Subsidiaries ending on or about March 31, June 30,
September 30 or December 31 of each year.
"Fiscal Year" means a fiscal year of Group and its
Consolidated Subsidiaries ending on or about December 31 of each year.
"Fixed Rate Advances" has the meaning specified in Section
2.04(a)(i).
"Foreign Subsidiary" means a Subsidiary of Group organized
under the laws of a country other than the United States or any state
thereof.
"Funded Debt" of any Person means Debt (other than Debt
incurred pursuant to Section 5.02(c)(iii) hereof) of such Person that
by its terms matures more than one year from the date of its creation
or matures within one year from such date but is renewable or
extendible, at the option of such Person, to a date more than one year
after such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year after such date, including, without limitation,
all amounts of Funded Debt of such Person required to be paid or
prepaid within one year after the date of its creation.
"GAAP" has the meaning specified in Section 1.03.
"Group" has the meaning specified in the recital of parties to
this Agreement.
"Group Guaranty" has the meaning specified in Section
3.01(f)(i).
"Guaranties" means the Group Guaranty and the Subsidiary
Guaranty.
"Guarantors" means Group and each of its Domestic Subsidiaries
(other than the Borrower) which is required to guarantee the Borrower's
Obligations under the Loan Documents pursuant to Section 5.01(k).
"Hazardous Materials" means petroleum and petroleum products,
byproducts or breakdown products, radioactive materials,
asbestos-containing materials, radon gas and any other chemicals,
materials or substances designated, classified or regulated as being
"hazardous" or "toxic", or words of similar import, under any
Environmental Law.
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14
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Implied Senior Rating" means the rating assigned by S&P to
Group's unsecured "implied senior debt" from time to time, as reported
by S&P on July 11, 1997 or any subsequent report or notification in
writing issued by S&P (which rating on the date hereof is BBB), or, if
such rating is unavailable, the equivalent rating assigned by Moody's
to Group's unsecured "implied senior debt", as notified in writing to
Group by Moody's.
"Indebtedness for Borrowed Money" of any Person means all Debt
of such Person for borrowed money or evidenced by notes, bonds,
debentures or other similar instruments, all Obligations of such Person
for the deferred purchase price of any property, service or business
(other than trade accounts payable (including the Trade Credit
Facility) incurred in the ordinary course of business and constituting
Current Liabilities), and all Obligations of such Person under
Capitalized Leases and finance leases.
"Indemnified Party" has the meaning specified in Section
8.04(b).
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency"means, with respect to any Plan, the amount, if
any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Interest Expense" means, with respect to any Person for any
period, the excess, if any, of (i) interest expense (whether cash or
accretion) of such Person during such period determined in accordance
with GAAP, and shall include in any event, without limitation, interest
expense with respect to Indebtedness for Borrowed Money, the Trade
Credit Facility and payments under Hedge Agreements over (ii) interest
income of such Person for such period, including payments received
under Hedge Agreements.
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Revolving Credit Borrowing and each LIBO
Rate Advance comprising part of the same Competitive Bid Borrowing, the
period commencing on the date of such Eurodollar Rate Advance or LIBO
Rate Advance or the date of the Conversion of any Base Rate Advance
into such Eurodollar Rate Advance, and ending on the last day of
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15
the period selected by the Borrower pursuant to the provisions below
and, thereafter, with respect to Eurodollar Rate Advances, each
subsequent period commencing on the last day of the immediately
preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below. The duration
of each such Interest Period shall be one, two, three, four, five or
six months, or, if available to all Lenders, nine or 12 months, as the
Borrower may, upon notice received by the Administrative Agent not
later than 11:00 A.M. (New York City time) on the third Business Day
prior to the first day of such Interest Period, select; provided,
however, that:
(a) the Borrower may not select any Interest Period
that ends after the Termination Date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Revolving
Credit Borrowing or for LIBO Rate Advances comprising part of
the same Competitive Bid Borrowing shall be of the same
duration;
(c) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day, unless the Borrower and the Administrative Agent
otherwise agree; and
(d) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month unless the Borrower and the
Administrative Agent otherwise agree.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or
other securities of such Person, any capital contribution to such
Person or any other investment in such Person, including, without
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16
limitation, any arrangement pursuant to which the investor incurs Debt
of the types referred to in clauses (i) or (j) of the definition of
"Debt" in respect of such Person.
"Issuing Bank" means Scotiabank and any other Revolving Credit
Lender approved by the Borrower and the Managing Agents that is a
commercial bank, acting through a domestic branch, and has a Letter of
Credit Commitment, as issuer of a Letter of Credit, and, with respect
to the Existing Letters of Credit issued by it pursuant to the Existing
Credit Agreement, Societe Generale.
"L/C Cash Collateral Account" means the interest-bearing cash
collateral account to be established and maintained by the
Administrative Agent, over which the Administrative Agent shall have
sole dominion and control, upon terms as may be satisfactory to the
Administrative Agent.
"L/C Related Documents" has the meaning specified in Section
2.05(c)(ii)(A).
"Lender Party" means any Lender, any Issuing Bank and any
Swing Line Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a party hereto pursuant to Section 8.07, including the
Designated Lenders, if any; provided, however, that the term "Lender"
shall exclude each Designated Lender when used (i) in reference to a
Revolving Credit Advance or the Commitments or terms relating thereto,
except to the extent a Designated Lender is the obligee of a Revolving
Credit Advance actually funded by such Designated Lender pursuant to
Section 2.01(a) hereof and (ii) in any determination or calculation of
Required Lenders, it being understood that for purposes hereof, any
Advance made by a Designated Lender shall be deemed to have been made
by the applicable Designating Lender.
"Letter of Credit Advance" means an advance made by any
Issuing Bank or any Revolving Credit Lender pursuant to Section
2.03(c).
"Letter of Credit Agreement" has the meaning specified in
Section 2.03(a).
"Letter of Credit Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such Issuing
Bank's name on Schedule I hereto under the caption "Letter of Credit
Commitment" or, if such Issuing Bank has entered into one or more
Assignments and Acceptances, set forth for such Issuing Bank in the
Register maintained by the Documentation Agent pursuant to Section
8.07(c) as such Issuing Bank's "Letter of Credit Commitment", as such
amount may be reduced at or prior to such time pursuant to Section
2.06.
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17
"Letter of Credit Facility" means, at any time, an amount
equal to the lesser of (a) the aggregate amount of the Letter of Credit
Commitments of the Issuing Banks at such time and (b) $100,000,000, as
such amount may be reduced at or prior to such time pursuant to Section
2.06.
"Letters of Credit" has the meaning specified in Section
2.01(c).
"LIBO Rate" means, for any Interest Period for all LIBO Rate
Advances comprising part of the same Competitive Bid Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars are
offered by the principal office of the Administrative Agent, in London,
England to prime banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of such Interest
Period in an amount substantially equal to the amount that would be the
Administrative Agent's ratable share of such Borrowing if such
Borrowing were to be a Revolving Credit Borrowing to be outstanding
during such Interest Period and for a period equal to such Interest
Period by (b) a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage for such Interest Period.
"LIBO Rate Advances" has the meaning specified in Section
2.04(a)(i).
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"Loan Documents" means (a) for purposes of this Agreement, the
Notes, if any, and any amendments or modifications hereof or thereof
and for all other purposes other than for purposes of the Guarantees,
(i) this Agreement, (ii) the Notes, if any, (iii) the Guarantees, (iv)
each Letter of Credit Agreement and (v) each L/C Related Document, and
(b) for purposes of the Guarantees, (i) this Agreement, (ii) the Notes,
if any, (iii) the Guarantees, (iv) each Letter of Credit Agreement, (v)
each L/C Related Document and (v) the interest rate Hedge Agreements
entered into by Group or the Borrower with Lender Parties, in the case
of each of the foregoing agreements referred to in clause (a) or (b),
and any amendments, supplements or modifications hereof or thereof.
"Loan Parties" means the Borrower and the Guarantors.
"Managing Agents" has the meaning specified in the recital of
parties to this Agreement.
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18
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or of Group and
its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower or of Group and
its Subsidiaries taken as a whole, (b) the rights and remedies of any
Agent or Lender Party under any Loan Document or (c) the ability of any
Loan Party to perform its Obligations under any Loan Document to which
it is or is to be a party.
"Material Guarantor" means, at any time, a Guarantor having
(i) at least 10% of Consolidated total assets of Group and its
Subsidiaries (determined as of the last day of the most recent Fiscal
Quarter) or (ii) at least 10% of Consolidated EBITDA of Group and its
Subsidiaries for the 12-month period ending on the last day of the most
recent Fiscal Quarter.
"Material Subsidiary" of any Person means, at any time, a
Subsidiary of such Person having (i) at least $5,000,000 in total
assets (determined as of the last day of the most recent fiscal quarter
of such Person) or (ii) EBITDA of at least $5,000,000 for the 12-month
period ending on the last day of the most recent fiscal quarter of such
Person.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Borrower or any of its ERISA
Affiliates is making or accruing an obligation to make contributions,
or has within any of the preceding five plan years made or accrued an
obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Borrower or any of its ERISA Affiliates and at least
one Person other than the Borrower and its ERISA Affiliates or (b) was
so maintained and in respect of which the Borrower or any of its ERISA
Affiliates could have liability under Section 4064 or 4069 of ERISA in
the event such plan has been or were to be terminated.
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19
"Net Worth" at any time means the excess of total assets of
Group and its Subsidiaries at such time over total liabilities of Group
and its Subsidiaries at such time, in each case as determined on a
Consolidated basis in accordance with GAAP.
"Note" means a Revolving Credit Note or a Competitive Bid
Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Competitive Bid Borrowing" has the meaning
specified in Section 2.04(a)(i).
"Notice of Issuance" has the meaning specified in Section
2.03(a).
"Notice of Swing Line Borrowing" has the meaning specified in
Section 2.02(b).
"Obligation" means, with respect to any Person, any obligation
of such Person of any kind, including, without limitation, any
liability of such Person on any claim, whether or not the right of any
creditor to payment in respect of such claim is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, disputed,
undisputed, legal, equitable, secured or unsecured, and whether or not
such claim is discharged, stayed or otherwise affected by any
proceeding referred to in Section 6.01(e). Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under
the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the
obligation to reimburse any amount in respect of any of the foregoing
that any Lender, in its sole discretion, may elect to pay or advance on
behalf of such Loan Party.
"Other Taxes" has the meaning specified in Section 2.14(b).
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor).
"Permitted Liens" means the following:
(a) Liens, other than in favor of the PBGC, arising
out of judgments or awards in respect of which Group or any of
its Subsidiaries shall in good faith be prosecuting an appeal
or proceedings for review and in respect of which it shall
have secured a subsisting stay of execution pending such
appeal or proceedings for review, provided it shall have set
aside on its books adequate
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20
reserves, in accordance with GAAP, with respect to such
judgment or award and provided further that the aggregate
amount secured by such Liens does not exceed $5,000,000 in any
one case or $10,000,000 in the aggregate;
(b) Liens for taxes, assessments or governmental
charges or levies, provided payment thereof shall not at the
time be required in accordance with the provisions of Section
5.01(b) and such amount, when taken together with any amount
payable under Section 5.01(b) as to which any Lien has been
attached as described in the last phrase thereof, shall not
exceed $10,000,000;
(c) deposits, Liens or pledges to secure payments of
workmen's compensation and other payments, unemployment and
other insurance, old-age pensions or other social security
obligations, or the performance of bids, tenders, leases,
contracts (other than contracts for the payment of money),
public or statutory obligations, surety, stay or appeal bonds,
or other similar obligations arising in the ordinary course of
business;
(d) mechanics', workmen's, repairmen's,
warehousemen's, vendors' or carriers' Liens or other similar
Liens arising in the ordinary course of business and securing
sums which are not past due, or deposits or pledges to obtain
the release of any such Liens;
(e) statutory landlord's Liens under leases to which
Group or any of its Subsidiaries is a party;
(f) any Lien constituting a renewal, extension or
replacement of a Lien constituting a Permitted Lien, but only
if at the time such Lien is granted and immediately after
giving effect thereto, no Default would exist;
(g) leases or subleases granted to other Persons not
materially interfering with the conduct of the business of
Group and its Subsidiaries, taken as a whole;
(h) zoning restrictions, easements, rights of way,
licenses and restrictions on the use of real property or minor
irregularities in title thereto, which do not materially
impair the use of such property in the normal operation of the
business of Group or any of its Subsidiaries or the value of
such property for the purpose of such business; and
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21
(i) statutory or common law Liens (such as rights of
set-off) on deposit accounts of Group and its Subsidiaries and
other Liens under the L/C Related Documents.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, joint venture, limited liability company or
other entity, or a government or any political subdivision or agency
thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Pro Rata Share" of any amount means, with respect to any
Revolving Credit Lender at any time, the product of such amount times a
fraction the numerator of which is the amount of such Lender's
Revolving Credit Commitment at such time and the denominator of which
is the Revolving Credit Facility at such time.
"Public Debt Rating" means, as of any date, the higher rating
that has been most recently announced by either S&P or Moody's, as the
case may be, for any class of non-credit enhanced long-term senior
unsecured debt issued by Group. For purposes of the foregoing, (a) if
only one of S&P and Moody's shall have in effect a Public Debt Rating,
the Applicable Margin and the Applicable Percentage shall be determined
by reference to the available rating; (b) if the ratings established by
S&P and Moody's shall fall within different levels separated by two or
more levels, the Applicable Margin and the Applicable Percentage shall
be based upon the level that is one level below the higher rating; (c)
if any rating established by S&P or Moody's shall be changed, such
change shall be effective as of the date on which such change is first
announced publicly by the rating agency making such change; and (d) if
S&P or Moody's shall change the basis on which ratings are established,
each reference to the Public Debt Rating announced by S&P or Moody's,
as the case may be, shall refer to the then equivalent rating by S&P or
Moody's, as the case may be.
"Redeemable" means, with respect to any capital stock, Debt or
other right or Obligation, any such right or Obligation that (a) the
issuer has undertaken to redeem at a fixed or determinable date or
dates, whether by operation of a sinking fund or otherwise, or upon the
occurrence of a condition not solely within the control of the issuer
or (b) is redeemable at the option of the holder.
"Register" has the meaning specified in Section 8.07(g).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
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22
"Required Lenders" means, at any time, Lenders owed or holding
more than 51% of the sum of (a) the aggregate principal amount of the
Advances (other than Competitive Bid Advances) outstanding at such
time, (b) the aggregate Available Amount of all Letters of Credit
outstanding at such time and (c) the aggregate Unused Revolving Credit
Commitments at such time; provided, however, if any Lender shall be a
Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (i) the aggregate
principal amount of the Advances owing to such Lender (in its capacity
as a Lender) and outstanding at such time, (ii) such Lender's Pro Rata
Share of the aggregate Available Amount of all Letters of Credit
outstanding at such time and (iii) the Unused Revolving Credit
Commitment of such Lender at such time and provided further, that for
purposes of this definition, any Advance made by a Designated Lender
shall be deemed to have been made by its applicable Designating Lender.
For purposes of this definition, the aggregate principal amount of
Swing Line Advances owing to the Swing Line Bank and of Letter of
Credit Advances owing to any Issuing Bank and the Available Amount of
each Letter of Credit shall be considered to be owed to the Revolving
Credit Lenders ratably in accordance with their respective Revolving
Credit Commitments.
"Revolving Credit Advance" has the meaning specified in
Section 2.01(a).
"Revolving Credit Borrowing" means a borrowing consisting of
simultaneous Revolving Credit Advances of the same Type made by the
Revolving Credit Lenders pursuant to Section 2.01.
"Revolving Credit Commitment" means, with respect to any
Revolving Credit Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Revolving Credit
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Documentation Agent pursuant to Section 8.07(c) as such Lender's
"Revolving Credit Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.06.
"Revolving Credit Facility" means, at any time, the aggregate
amount of the Revolving Credit Lenders' Revolving Credit Commitments at
such time.
"Revolving Credit Lender" means any Lender that has a
Revolving Credit Commitment.
"Revolving Credit Note" has the meaning specified in Section
2.18.
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23
"S&P" means Standard & Poor's Ratings Group, currently a
division of The McGraw-Hill Companies, Inc., or any successor thereto.
"Scotiabank" has the meaning specified in the recital of
parties to this Agreement.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for
employees of the Borrower or any of its ERISA Affiliates and no Person
other than the Borrower and its ERISA Affiliates or (b) was so
maintained and in respect of which the Borrower or any of its ERISA
Affiliates could have liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
as such debts and liabilities mature and (d) such Person is not engaged
in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities at any
time shall be computed as the amount that, in the light of all the
facts and circumstances existing at such time, represents the amount
that can reasonably be expected to become an actual or matured
liability.
"Standby Letter of Credit" means any Letter of Credit issued
under the Letter of Credit Facility, other than a Documentary Letter of
Credit.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such limited liability
company, partnership or joint venture or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries. The
term "wholly owned
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24
Subsidiary" shall exclude any directors' or officers' qualifying shares
which may be outstanding.
"Subsidiary Guaranty" has the meaning specified in Section
3.01(f)(ii).
"Swing Line Advance" means an advance made by (a) the Swing
Line Bank pursuant to Section 2.01(b), or (b) any Revolving Credit
Lender pursuant to Section 2.02(b).
"Swing Line Bank" means Scotiabank (and its successors and
assigns), provided that Scotiabank (and any such successors and assigns
as Swing Line Bank hereunder) may resign, and thereupon be released
from its obligations, as Swing Line Bank under this Agreement upon
receipt by the Borrower and the Managing Agents, in writing and in a
form reasonably satisfactory to the Borrower and the Managing Agents,
of the assumption by another Revolving Credit Lender of the rights and
obligations of the Swing Line Bank hereunder.
"Swing Line Borrowing" means a borrowing consisting of a Swing
Line Advance made by the Swing Line Bank.
"Swing Line Facility" has the meaning specified in Section
2.01(b).
"Tangible Assets" means total assets minus goodwill and
intangibles, in each case determined in accordance with GAAP.
"Taxes" has the meaning specified in Section 2.14(a).
"Termination Date" means the earlier of August 12, 2002 and
the date of termination in whole of the Commitments pursuant to Section
2.06 or 6.01.
"Total Debt" means, as of the end of any period of four
consecutive Fiscal Quarters, all Indebtedness for Borrowed Money
(including, without limitation, the aggregate outstanding principal
amount of all Advances and loans under other revolving credit
facilities and lines of credit and the like but excluding undrawn
letters of credit and the Trade Credit Facility) of Group and its
Subsidiaries, on a Consolidated basis at such time.
"Trade Credit Facility" means the revolving loan facility
under the Amended and Restated Credit Agreement dated as of the date
hereof among the Borrower, certain lenders party thereto and
Scotiabank, as agent for said lenders, as each such agreement has been
amended to date and the same may be amended, extended, renewed,
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25
refinanced, replaced or otherwise modified from time to time (provided,
however, that the aggregate principal amount of Debt thereunder shall
not exceed $300,000,000 at any time outstanding).
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
"Unused Revolving Credit Commitment" means, with respect to
any Revolving Credit Lender at any time,
(a) such Lender's Revolving Credit Commitment at such
time minus
(b) the sum of (i) the aggregate principal amount of
all Revolving Credit Advances, Swing Line Advances and Letter
of Credit Advances made by such Lender and outstanding at such
time, plus (ii) such Lender's Pro Rata Share of (A) the
aggregate Available Amount of all Letters of Credit
outstanding at such time, (B) for all purposes other than for
purposes of calculating commitment fees pursuant to Section
2.09(a), the aggregate amount of Competitive Bid Advances
outstanding at such time, (C) the aggregate principal amount
of all Letter of Credit Advances made by the Issuing Banks
pursuant to Section 2.03(c) and outstanding at such time other
than any such Letter of Credit Advance which, at or prior to
such time, has been assigned in part to such Revolving Credit
Lender pursuant to Section 2.03(c) and other than, in the case
of each Lender that is an Issuing Bank, any such Letter of
Credit Advance in respect of a Letter of Credit issued by it
and (D) for all purposes other than for purposes of
calculating commitment fees pursuant to Section 2.09(a), the
aggregate principal amount of all Swing Line Advances made by
the Swing Line Bank pursuant to Section 2.01(b) and
outstanding at such time other than any such Swing Line
Advance which, at or prior to such time, has been assigned in
part to such Revolving Credit Lender pursuant to Section
2.02(b).
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA.
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26
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
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27
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. (a) The Revolving Credit Advances.
Each Revolving Credit Lender severally agrees, on the terms and conditions
hereinafter set forth, to make Advances (each a "Revolving Credit Advance") to
the Borrower from time to time on any Business Day during the period from the
Effective Date until the Termination Date in an amount for each such Advance not
to exceed such Lender's Unused Revolving Credit Commitment at such time. Each
Revolving Credit Borrowing shall be in an aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof (or, if less, an aggregate
amount equal to the amount by which the aggregate amount of a proposed
Competitive Bid Borrowing requested by the Borrower exceeds the aggregate amount
of Competitive Bid Advances offered to be made by the Revolving Credit Lenders
and accepted by the Borrower in respect of such Competitive Bid Borrowing, if
such Competitive Bid Borrowing is made on the same date as such Revolving Credit
Borrowing) and shall consist of Revolving Credit Advances of the same Type made
on the same day by the Revolving Credit Lenders ratably according to their
respective Revolving Credit Commitments. Within the limits of each Revolving
Credit Lender's Unused Revolving Credit Commitment in effect from time to time,
the Borrower may borrow under this Section 2.01(a), prepay pursuant to Section
2.07(a) and reborrow under this Section 2.01(a). For any Lender which is a
Designating Lender, any Revolving Credit Advance to be made by such Lender may
from time to time and upon notice to the Administrative Agent, be made by its
Designated Lender pursuant to the terms hereof in such Designating Lender's sole
discretion, and nothing herein shall constitute a Commitment to make Revolving
Credit Advances by such Designated Lender; provided, that (i) if any Designated
Lender elects not to, or fails for any reason whatsoever to, make such Revolving
Credit Advance, its Designating Lender hereby agrees that it shall make such
Revolving Credit Advance pursuant to the terms hereof and (ii) notwithstanding
anything to the contrary, neither the designation of a Designated Lender, the
election or other determination that a Designated Lender will make any Revolving
Credit Advance nor any other condition or circumstance relating to the
Designated Lender shall in any way release, diminish or otherwise affect the
relevant Designating Lender's Commitment or any of its other obligations
hereunder or under any other Loan Document or any rights of the Borrower, any
Agent or any Lender Party with respect to such Designating Lender. Any Revolving
Credit Advance actually funded by a Designated Lender shall constitute a
utilization of the Commitment of the Designating Lender for all purposes
hereunder.
(b) The Swing Line Advances. The Borrower may request the
Swing Line Bank to make, and the Swing Line Bank shall make, on the terms and
conditions hereinafter set forth, Swing Line Advances to the Borrower from time
to time on any Business Day during the period from the date hereof until the
Termination Date (i) in an aggregate amount not to
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28
exceed at any time outstanding $30,000,000 (the "Swing Line Facility") and (ii)
in an amount for each such Swing Line Borrowing not to exceed the aggregate of
the Unused Revolving Credit Commitments of the Revolving Credit Lenders at such
time. No Swing Line Advance shall be used for the purpose of funding the payment
of principal of any other Swing Line Advance. Each Swing Line Borrowing shall be
in an amount of $100,000 or an integral multiple of $1,000 in excess thereof and
shall be made as a Base Rate Advance. Within the limits of the Swing Line
Facility and within the limits referred to in clause (ii) above, the Borrower
may borrow under this Section 2.01(b), repay pursuant to Section 2.05(b) or
prepay pursuant to Section 2.07(a) and reborrow under this Section 2.01(b).
(c) Letters of Credit. Each Issuing Bank severally agrees, on
the terms and conditions hereinafter set forth, to issue letters of credit
(together with the Existing Letters of Credit referred to in Section 2.03(e),
the "Letters of Credit") for the account of the Borrower from time to time on
any Business Day during the period from the date hereof until 10 days before the
Termination Date (i) in an aggregate Available Amount for all Letters of Credit
issued by such Issuing Bank not to exceed at any time such Issuing Bank's Letter
of Credit Commitment at such time and (ii) in an Available Amount for each such
Letter of Credit not to exceed the lesser of (x) the Letter of Credit Facility
at such time and (y) an amount equal to the Unused Revolving Credit Commitments
of the Revolving Credit Lenders at such time. No Letter of Credit shall have an
expiration date (including all rights of the Borrower or the beneficiary to
require renewal) later than the earlier of 10 days before the Termination Date
and, in the case of a Documentary Letter of Credit, 180 days after the date of
issuance thereof. Within the limits of the Letter of Credit Facility, and
subject to the limits referred to above, the Borrower may request the issuance
of Letters of Credit under this Section 2.01(c), repay any Letter of Credit
Advances resulting from drawings thereunder pursuant to Sections 2.03(c) and
2.05(c) and request the issuance of additional Letters of Credit under this
Section 2.01(c). Each Letter of Credit issued pursuant to this Section 2.01(c)
shall, effective upon its issuance and without further action, be issued on
behalf of all Lenders (including the applicable Issuing Bank) according to their
respective Pro Rata Shares. Each Lender shall, to the extent of its Pro Rata
Share, be deemed irrevocably to have participated in the issuance of such Letter
of Credit and shall be responsible to reimburse the Issuing Bank promptly for
Letter of Credit Advances in accordance with Section 2.03.
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice,
given not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or on the date of the proposed Borrowing
in the case of a Borrowing consisting of Base Rate Advances, by the Borrower to
the Administrative Agent, which shall give to each Appropriate Lender prompt
notice thereof by telecopier or telex. Each such notice of a Borrowing (a
"Notice of Borrowing") shall be by telephone, confirmed immediately in writing,
or telecopier or telex in
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29
substantially the form of Exhibit B-1 hereto, specifying therein the requested
(i) date of such Borrowing, (ii) Facility under which such Borrowing is to be
made, (iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of
such Borrowing, and (v) in the case of a Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each Appropriate Lender
shall, before 12:00 Noon (New York City time) on the date of such Borrowing,
make available for the account of its Applicable Lending Office to the
Administrative Agent at the Administrative Agent's Account, in same day funds,
such Lender's ratable portion of such Borrowing in accordance with the
respective Commitments under the applicable Facility of such Lender and the
other Appropriate Lenders. After the Administrative Agent's receipt of such
funds and upon fulfillment of the applicable conditions set forth in Article
III, the Administrative Agent will make such funds available to the Borrower by
crediting the Borrower's Account; provided, however, that, in the case of any
Revolving Credit Borrowing, the Administrative Agent shall first make a portion
of such funds equal to the aggregate principal amount of any Swing Line Advances
and Letter of Credit Advances made by the Swing Line Bank or any Issuing Bank,
as the case may be, and by any other Revolving Credit Lender and outstanding on
the date of such Revolving Credit Borrowing, plus interest accrued and unpaid
thereon to and as of such date, available to the Swing Line Bank or such Issuing
Bank, as the case may be, and such other Revolving Credit Lenders for repayment
of such Swing Line Advances and Letter of Credit Advances.
(b) (i) Each Swing Line Borrowing shall be made on notice,
given not later than 11:30 A.M. (New York City time) on the date of the proposed
Swing Line Borrowing, by the Borrower to the Swing Line Bank and the
Administrative Agent. Each such notice of a Swing Line Borrowing (a "Notice of
Swing Line Borrowing") shall be by telephone, confirmed immediately in writing
or telex or telecopier, specifying therein the requested (A) date of such
Borrowing and (B) amount of such Borrowing and shall constitute a representation
and warranty by the Borrower (upon which the Swing Line Bank may conclusively
rely, in the absence of prior receipt by the Swing Line Bank of written notice
from an Agent or Revolving Credit Lenders holding at least 51% of the Revolving
Credit Commitments that the conditions precedent to the making of Swing Line
Advances have not been satisfied or duly waived). Upon fulfillment of the
applicable conditions set forth in Article III, the Swing Line Bank will make
the amount thereof available to the Borrower by crediting the Borrower's
Account.
(ii) (A) (1) Subject to clause (ii)(B) below, in the event
that on any Business Day the Swing Line Bank desires that all or any portion of
one or more Swing Line Advances be paid, the Swing Line Bank shall promptly
notify the Administrative Agent to that effect and indicate the portion of the
Swing Line Advances to be paid.
(2) The Administrative Agent agrees to promptly transmit to
the Lenders the information contained in each notice received by the
Administrative Agent under clause (ii)(A)(1) above, and shall concurrently
notify the other Agents and the Revolving Credit
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30
Lenders of each Revolving Credit Lender's Pro Rata Share of the Swing Line
Advances (or portion thereof) to be paid.
(3) Each Revolving Credit Lender hereby unconditionally and
irrevocably agrees to fund to the Administrative Agent for the benefit of the
Swing Line Bank, in lawful money of the United States and in same day funds, not
later than 12:00 noon (New York City time) on the Business Day immediately
following the Business Day of such Lender's receipt of such notice from the
Administrative Agent (provided that if any Lender shall receive such notice at
or prior to 1:00 P.M. (New York City time) on a Business Day, such funding shall
be made by such Lender on such Business Day), a Revolving Credit Advance in the
amount of such Lender's Pro Rata Share of the payment of the Swing Line Advances
to be made on such date, regardless, however, of whether (x) the conditions
precedent thereto set forth in Article III are then satisfied, (y) the Borrower
has provided a Notice of Borrowing under Section 2.02(a) hereof and (z) the
Revolving Credit Facility has been terminated, any Default or Event of Default
exists or all or any of the Advances have been accelerated, but subject to
clause (B) below and subject to the limitations in respect of the amount of
Revolving Credit Advances contained in Section 2.01(a). The proceeds of each
such Revolving Credit Advance shall be immediately paid over to the
Administrative Agent for the benefit of the Swing Line Bank for application to
the Swing Line Facility. Each such Revolving Credit Advance shall initially be a
Base Rate Advance and shall be deemed to be requested by the Borrower pursuant
to Section 2.02(a).
(B) In the event that Commitments of the Lenders shall have
terminated pursuant to Section 6.01 following an Event of Default of the type
described in Section 6.01(f) with respect to Group or the Borrower, no further
Revolving Credit Advances of the type described in clause (ii)(A) above shall be
made, and each of the Revolving Credit Lenders (other than the Swing Line Bank)
shall be deemed to have irrevocably, unconditionally and immediately purchased
from the Swing Line Bank such Revolving Credit Lender's Pro Rata Share of the
principal amount of the Swing Line Advances outstanding as of the date of the
occurrence of such Event of Default. Each Revolving Credit Lender shall effect
such purchase by making available an amount equal to its participation on the
date of such purchase in U.S. dollars in immediately available funds at the
office of the Swing Line Bank located at 600 Peachtree Street Northeast, Suite
2700, Atlanta, Georgia 30308 or such other office as the Swing Line Bank may
from time to time direct for the account of such office of the Swing Line Bank.
(C) Each purchase made pursuant to clause (ii)(B) above by a
Revolving Credit Lender shall be made without recourse to the Swing Line Bank,
and, except as to the absence of liens created by the Swing Line Bank on the
Swing Line Advance and the Swing Line Bank's right to effect such sale, without
representation or warranty of any kind, and shall
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31
be effected and evidenced pursuant to documents reasonably acceptable to the
Swing Line Bank.
(D) The obligations of the Revolving Credit Lenders under this
Section 2.02(b)(ii) shall be absolute, irrevocable and unconditional, shall be
made under all circumstances and shall not be affected, reduced or impaired for
any reason whatsoever, including (without limitation): (1) any Default, Event of
Default, misrepresentation, negligence, misconduct or other action or inaction
of any kind by any of the Loan Parties or any other Person, whether in, under or
in connection with this Agreement, the Guaranty or any of the other Loan
Documents; (2) any extension, renewal, release or waiver of the time of
performance of or compliance with any of the obligations or other provisions
hereof or of any other Loan Document; (3) any settlement, compromise or
subordination of any or all of the obligations to the claims of others, or any
failure by any Agent, the Swing Line Bank or any other Lender to mitigate
damages; (4) any amendment, modification or other waiver of any one or more of
the Loan Documents; (5) the insolvency, bankruptcy, reorganization or cessation
of existence of any of the Loan Parties; (6) any impossibility or illegality of
performance or the lack of genuineness, validity, legality or enforceability of
any of this Agreement or the other Loan Documents, or any term thereof or any
other agreement or instrument relating thereto for any reason, or the lack of
power or authority of any party to enter into any of the Loan Documents; (7) any
dispute, setoff, recoupment, counterclaim or other defense or right any Lender
may have at any time, whether against any Agent, the Swing Line Bank, any other
Lender or any of the Loan Parties; (8) any merger or consolidation of any of the
Loan Parties or any Lender, or any sale, lease or transfer of any or all of the
assets of any such Person; or (9) any other circumstances whether similar or
dissimilar to any of the foregoing.
(c) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
any Borrowing if the aggregate amount of such Borrowing is less than $10,000,000
or if the obligation of the Appropriate Lenders to make Eurodollar Rate Advances
shall then be suspended pursuant to Section 2.10, 2.11 or 2.12 and (ii) the
Advances under the Revolving Credit Facility may not be outstanding as part of
more than 20 separate Borrowings.
(d) Each Notice of Borrowing and Notice of Swing Line
Borrowing shall be irrevocable and binding on the Borrower. In the case of any
Borrowing that the related Notice of Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the Borrower shall indemnify each Appropriate Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Borrowing
for such Borrowing the applicable conditions set forth in Article III,
including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund
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the Advance to be made by such Lender as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date.
(e) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) or (b) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the
Administrative Agent, the Administrative Agent agrees to give prompt notice
thereof to the Borrower (provided that failure to give such notice shall not
affect the obligations of the Borrower under this Section 2.02(e)), and such
Lender and the Borrower severally agree to repay to the Administrative Agent
forthwith on demand such corresponding amount together with interest thereon,
for each day from the date such amount is made available to the Borrower until
the date such amount is repaid to the Administrative Agent, at (i) in the case
of the Borrower, the interest rate applicable at such time under Section 2.08 to
Advances comprising such Borrowing and (ii) in the case of such Lender, the
Federal Funds Rate. If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount so repaid shall constitute such Lender's
Advance as part of such Borrowing for purposes of this Agreement.
(f) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
first Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telex or telecopier. Each such notice of issuance of a Letter of Credit (a
"Notice of Issuance") shall be by telephone, confirmed immediately in writing,
or telex or telecopier, specifying therein the requested (A) date of such
issuance (which shall be a Business Day), (B) Available Amount of such Letter of
Credit, (C) expiration date of such Letter of Credit, (D) name and address of
the beneficiary of such Letter of Credit and (E) form of such Letter of Credit,
and shall be accompanied by such application and agreement for letter of credit
as such Issuing Bank may specify to the Borrower for use in connection with such
requested
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Letter of Credit (a "Letter of Credit Agreement"). If (x) the requested form of
such Letter of Credit is acceptable to such Issuing Bank in its sole discretion
and (y) it has not received written notice from an Agent or Lenders holding at
least 51% of the Revolving Credit Commitments that the conditions to issuing
such Letter of Credit have not been satisfied or duly waived, such Issuing Bank
will, upon fulfillment of the applicable conditions set forth in Article III,
make such Letter of Credit available to the Borrower at its office referred to
in Section 8.02 or as otherwise agreed with the Borrower in connection with such
issuance. In the event and to the extent that the provisions of any Letter of
Credit Agreement shall conflict with this Agreement, the provisions of this
Agreement shall govern.
(b) Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Administrative Agent, the Documentation Agent and each Revolving
Credit Lender on the first Business Day of each month a written report
summarizing issuance and expiration dates of Letters of Credit issued during the
preceding month and drawings during such month under all Letters of Credit
issued by such Issuing Bank and (B) to the Administrative Agent, the
Documentation Agent and each Revolving Credit Lender on the first Business Day
of each calendar quarter a written report setting forth the average daily
aggregate Available Amount during the preceding calendar quarter of all Letters
of Credit issued by such Issuing Bank.
(c) Drawing and Reimbursement. The payment by any Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by such Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon written
demand by any Issuing Bank with an outstanding Letter of Credit Advance, with a
copy of such demand to the Administrative Agent, each Revolving Credit Lender
shall purchase from such Issuing Bank, and such Issuing Bank shall sell and
assign to each such Revolving Credit Lender, such Lender's Pro Rata Share of
such outstanding Letter of Credit Advance as of the date of such purchase, by
making available for the account of its Applicable Lending Office to the
Administrative Agent for the account of such Issuing Bank, by deposit to the
Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit Advance to
be purchased by such Lender. Promptly after receipt thereof, the Administrative
Agent shall transfer such funds to such Issuing Bank. The Borrower hereby agrees
to each such sale and assignment. Each Revolving Credit Lender agrees to
purchase its Pro Rata Share of an outstanding Letter of Credit Advance on (i)
the Business Day on which demand therefor is made by the Issuing Bank, provided
notice of such demand is given not later than 11:00 A.M. (New York City time) on
such Business Day or (ii) the first Business Day next succeeding such demand if
notice of such demand is given after such time. Upon any such assignment by any
Issuing Bank to any other Revolving Credit Lender of a portion of a Letter of
Credit Advance, such Issuing Bank represents and warrants to such other Lender
that such Issuing Bank is the legal and beneficial owner of such interest being
assigned by it, free and clear of any liens, but makes no other representation
or warranty and assumes no
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34
responsibility with respect to such Letter of Credit Advance, the Loan Documents
or any Loan Party. If and to the extent that any Revolving Credit Lender shall
not have so made the amount of such Letter of Credit Advance available to the
Administrative Agent, such Revolving Credit Lender agrees to pay to the
Administrative Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by such Issuing Bank until the
date such amount is paid to the Administrative Agent, at the Federal Funds Rate
for its account or the account of such Issuing Bank, as applicable. If such
Lender shall pay to the Administrative Agent such amount for the account of such
Issuing Bank on any Business Day, such amount so paid in respect of principal
shall constitute a Letter of Credit Advance made by such Lender on such Business
Day for purposes of this Agreement, and the outstanding principal amount of the
Letter of Credit Advance made by such Issuing Bank shall be reduced by such
amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
(e) Existing Letters of Credit. Effective as of the Effective
Date, (i) the "Letters of Credit" issued for the account of the Borrower
pursuant to the Existing Credit Agreement (such Letters of Credit as are
outstanding thereunder on the date hereof and set forth on Schedule 2.03(e)
hereto being the "Existing Letters of Credit") will be deemed to be Letters of
Credit hereunder and (ii) the Existing Letters of Credit will no longer be
Obligations outstanding under the Existing Credit Agreement.
SECTION 2.04. The Competitive Bid Advances. (a) Each Lender
severally agrees that the Borrower may make Competitive Bid Borrowings under
this Section 2.04 from time to time on any Business Day during the period from
the date hereof until the date occurring 10 days prior to the Termination Date
in the manner set forth below; provided that, following the making of each
Competitive Bid Borrowing, (x) the aggregate amount of the Advances then
outstanding shall not exceed the aggregate amount of the Revolving Credit
Commitments of the Lenders and (y) the aggregate amount of the Competitive Bid
Advances then outstanding shall not exceed $350,000,000.
(i) The Borrower may request a Competitive Bid Borrowing under
this Section 2.04 by delivering to the Competitive Bid Agent, by
telecopier or telex, a notice of a Competitive Bid Borrowing (a "Notice
of Competitive Bid Borrowing"), in substantially the form of Exhibit
B-2 hereto, specifying therein the requested (v) date of such proposed
Competitive Bid Borrowing, (w) aggregate amount of such proposed
Competitive Bid Borrowing, (x) in the case of a Competitive Bid
Borrowing consisting
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35
of LIBO Rate Advances, Interest Period, or in the case of a Competitive
Bid Borrowing consisting of Fixed Rate Advances, maturity date for
repayment of each Fixed Rate Advance to be made as part of such
Competitive Bid Borrowing (which maturity date may not be earlier than
the date occurring 7 days after the date of such Competitive Bid
Borrowing or later than the earlier of (I) 180 days after the date of
such Competitive Bid Borrowing and (II) the Termination Date), (y)
interest payment date or dates relating thereto, and (z) other terms
(if any) to be applicable to such Competitive Bid Borrowing, not later
than 10:00 A.M. (New York City time) (A) at least four Business Days
prior to the date of the proposed Competitive Bid Borrowing, if the
Borrower shall specify in the Notice of Competitive Bid Borrowing that
the rates of interest to be offered by the Lenders shall be fixed rates
per annum (the Advances comprising any such Competitive Bid Borrowing
being referred to herein as "Fixed Rate Advances") and (B) at least
four Business Days prior to the date of the proposed Competitive Bid
Borrowing, if the Borrower shall instead specify in the Notice of
Competitive Bid Borrowing that the rates of interest be offered by the
Lenders are to be based on the LIBO Rate (the Advances comprising such
Competitive Bid Borrowing being referred to herein as "LIBO Rate
Advances"). Each Notice of Competitive Bid Borrowing shall be
irrevocable and binding on the Borrower. The Competitive Bid Agent
shall in turn promptly notify each Lender of each request for a
Competitive Bid Borrowing received by it from the Borrower by sending
such Lender a copy of the related Notice of Competitive Bid Borrowing.
(ii) Each Lender may, if, in its sole discretion, it elects to
do so, irrevocably offer to make one or more Competitive Bid Advances
to the Borrower as part of such proposed Competitive Bid Borrowing at a
rate or rates of interest specified by such Lender in its sole
discretion, by notifying the Competitive Bid Agent (which shall give
prompt notice thereof to the Borrower), before 10:00 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing in
the case of a Competitive Bid Borrowing consisting of Fixed Rate
Advances and on the third Business Day before the date of such proposed
Competitive Bid Borrowing, in the case of a Competitive Bid Borrowing
consisting of LIBO Rate Advances, of the minimum amount and maximum
amount of each Competitive Bid Advance which such Lender would be
willing to make as part of such proposed Competitive Bid Borrowing
(which amounts may, subject to the proviso to the first sentence of
this Section 2.04(a), exceed such Lender's Revolving Credit Commitment,
if any), the rate or rates of interest therefor and such Lender's
Applicable Lending Office with respect to such Competitive Bid Advance;
provided that if the Administrative Agent in its capacity as a Lender
shall, in its sole discretion, elect to make any such offer, it shall
notify the Borrower of such offer before 9:00 A.M. (New York City time)
on the date on which notice of such election is to be given to the
Administrative Agent by the other Lenders. If any Lender shall elect
not to make such an offer, such Lender shall so notify the Competitive
Bid Agent,
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36
before 10:00 A.M. (New York City time) on the date on which notice of
such election is to be given to the Administrative Agent by the other
Lenders, and such Lender shall not be obligated to, and shall not, make
any Competitive Bid Advance as part of such Competitive Bid Borrowing;
provided that the failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Bid Advance
as part of such proposed Competitive Bid Borrowing.
(iii) The Borrower shall, in turn, before 11:00 A.M. (New York
City time) on the date of such proposed Competitive Bid Borrowing in
the case of a Competitive Bid Borrowing consisting of Fixed Rate
Advances, and before 1:00 P.M. (New York City time) three Business Days
before the date of such proposed Competitive Bid Borrowing in the case
of a Competitive Bid Borrowing consisting of LIBO Rate Advances,
either:
(x) cancel such Competitive Bid Borrowing by giving
the Competitive Bid Agent notice to that effect, or
(y) accept one or more of the offers made by any
Lender or Lenders pursuant to paragraph (ii) above, in its
sole discretion, by giving notice to the Administrative Agent
of the amount of each Competitive Bid Advance (which amount
shall be equal to or greater than the minimum amount, and
equal to or less than the maximum amount, notified to the
Borrower by the Competitive Bid Agent on behalf of such Lender
for such Competitive Bid Advance pursuant to paragraph (ii)
above) to be made by each Lender as part of such Competitive
Bid Borrowing, and reject any remaining offers made by Lenders
pursuant to paragraph (ii) above by giving the Competitive Bid
Agent notice to that effect. The Borrower shall accept the
offers made by any Lender or Lenders to make Competitive Bid
Advances in order of the lowest to the highest rates of
interest offered by such Lenders. If two or more Lenders have
offered the same interest rate, the amount to be borrowed at
such interest rate will be allocated by the Administrative
Agent among such Lenders in proportion to the maximum amount
that each such Lender offered at such interest rate.
(iv) If the Borrower notifies the Competitive Bid Agent that
such Competitive Bid Borrowing is cancelled pursuant to paragraph
(iii)(x) above, the Competitive Bid Agent shall give prompt notice
thereof to the Lenders and such Competitive Bid Borrowing shall not be
made.
(v) If the Borrower accepts one or more of the offers made by
any Lender or Lenders pursuant to paragraph (iii)(y) above, the
Competitive Bid Agent shall in turn promptly notify (A) each Lender
that has made an offer as described in paragraph (ii)
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37
above, of the date and aggregate amount of such Competitive Bid
Borrowing and whether or not any offer or offers made by such Lender
pursuant to paragraph (ii) above have been accepted by the Borrower,
(B) each Lender that is to make a Competitive Bid Advance as part of
such Competitive Bid Borrowing, of the amount of each Competitive Bid
Advance to be made by such Lender as part of such Competitive Bid
Borrowing, and (C) each Lender that is to make a Competitive Bid
Advance as part of such Competitive Bid Borrowing, upon receipt, that
the Competitive Bid Agent has received forms of documents, if any,
requested pursuant to Section 3.02(b). Each Lender that is to make a
Competitive Bid Advance as part of such Competitive Bid Borrowing
shall, before 12:00 noon (New York City time) on the date of such
Competitive Bid Borrowing specified in the notice received from the
Competitive Bid Agent pursuant to clause (A) of the preceding sentence
or any later time when such Lender shall have received notice from the
Competitive Bid Agent pursuant to clause (C) of the preceding sentence,
make available for the account of its Applicable Lending Office to the
Competitive Bid Agent at the Competitive Bid Agent's Account, in same
day funds, such Lender's portion of such Competitive Bid Borrowing.
Upon fulfillment of the applicable conditions set forth in Article III
and after receipt by the Competitive Bid Agent of such funds, the
Competitive Bid Agent will, as promptly as possible, transfer such
funds to the Borrower's Account. Promptly after each Competitive Bid
Borrowing, the Competitive Bid Agent will notify each Lender of the
amount of the Competitive Bid Borrowing, the consequent deemed use of
the aggregate amount of the Commitments as a result thereof and the
dates upon which such Competitive Bid Borrowing commenced and will
terminate. For any Lender which is a Designating Lender, any
Competitive Bid Advance to be made by such Lender may from time to time
be made by its Designated Lender pursuant to the terms hereof in such
Designating Lender's sole discretion, and nothing herein shall
constitute a commitment to make Competitive Bid Advances by such
Designated Lender, provided, that (i) if any Designated Lender elects
not to, or fails for any reason whatsoever to, make any such
Competitive Bid Advance that has been accepted by the Borrower in
accordance with the foregoing, its Designating Lender hereby agrees
that it shall make such Competitive Bid Advance pursuant to the terms
hereof and (ii) notwithstanding anything to the contrary, neither the
designation of a Designated Lender, the election or other determination
that a Designated Lender will make any Competitive Bid Advance nor any
other condition or circumstance relating to the Designated Lender shall
in any way release, diminish or otherwise affect the relevant
Designating Lender's Commitment or any of its other obligations
hereunder or under any other Loan Document or any rights of the
Borrower, any Agent or any Lender Party with respect to such
Designating Lender.
(vi) If the Borrower notifies the Competitive Bid Agent that
it accepts one or more of the offers made by any Lender or Lenders
pursuant to paragraph (iii)(y) above,
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such notice of acceptance shall be irrevocable and binding on the
Borrower. The Borrower shall indemnify each Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to
fulfill on or before the date specified in the related Notice of
Competitive Bid Borrowing for such Competitive Bid Borrowing the
applicable conditions set forth in Article III, including, without
limitation, any loss (excluding loss of anticipated profits), cost or
expense incurred by reason of the liquidation or reemployment of
deposits or other funds acquired by such Lender to fund the Competitive
Bid Advance to be made by such Lender as part of such Competitive Bid
Borrowing when such Competitive Bid Advance, as a result of such
failure, is not made on such date.
(b) Each Competitive Bid Borrowing shall be in an aggregate
amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof
and, following the making of each Competitive Bid Borrowing, the Borrower shall
be in compliance with the limitation set forth in the proviso to the first
sentence of subsection (a) above.
(c) Within the limits and on the conditions set forth in this
Section 2.04, the Borrower may from time to time borrow under this Section 2.04,
repay or prepay pursuant to subsection (d) below, and reborrow under this
Section 2.04, provided that a Competitive Bid Borrowing shall not be made within
three Business Days of the date of any other Competitive Bid Borrowing.
(d) The Borrower shall repay to the Competitive Bid Agent for
the account of each Lender that has made a Competitive Bid Advance, on the
maturity date of each Competitive Bid Advance (such maturity date being that
specified by the Borrower for repayment of such Competitive Bid Advance in the
related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above and provided in the Competitive Bid Note evidencing such
Competitive Bid Advance), the then unpaid principal amount of such Competitive
Bid Advance. The Borrower shall have no right to prepay any principal amount of
any Competitive Bid Advance unless, and then only on the terms, specified by the
Borrower for such Competitive Bid Advance in the related Notice of Competitive
Bid Borrowing delivered pursuant to subsection (a)(i) above, or unless
separately agreed between the Borrower and any Lender that has made a
Competitive Bid Advance, and set forth in the Competitive Bid Note evidencing
such Competitive Bid Advance.
(e) The Borrower shall pay interest on the unpaid principal
amount of each Competitive Bid Advance from the date of such Competitive Bid
Advance to the date the principal amount of such Competitive Bid Advance is
repaid in full, at the rate of interest for such Competitive Bid Advance
specified by the Lender making such Competitive Bid Advance in its notice with
respect thereto delivered pursuant to subsection (a)(ii) above, payable on the
interest payment date or dates specified by the Borrower for such Competitive
Bid Advance in
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the related Notice of Competitive Bid Borrowing delivered pursuant to subsection
(a)(i) above, as provided in the Competitive Bid Note evidencing such
Competitive Bid Advance. Upon the occurrence and during the continuance of an
Event of Default, the Borrower shall pay interest on the amount of unpaid
principal of and interest on each Competitive Bid Advance owing to a Lender,
payable in arrears on the date or dates interest is payable thereon, at a rate
per annum equal at all times to 2% per annum above the rate per annum required
to be paid on such Competitive Bid Advance under the terms of the Competitive
Bid Note evidencing such Competitive Bid Advance unless otherwise agreed in such
Competitive Bid Note.
(f) The indebtedness of the Borrower resulting from each
Competitive Bid Advance made to the Borrower as part of a Competitive Bid
Borrowing shall be evidenced by a separate Competitive Bid Note of the Borrower
payable to the order of the Lender making such Competitive Bid Advance.
(g) Upon delivery of each Notice of Competitive Bid Borrowing,
the Borrower shall pay a non-refundable fee of $2,000 to the Competitive Bid
Agent for its own account.
SECTION 2.05. Repayment of Advances. (a) Revolving Credit
Advances. The Borrower shall repay to the Administrative Agent for the ratable
account of the Revolving Credit Lenders on the Termination Date the aggregate
outstanding principal amount of the Revolving Credit Advances then outstanding.
(b) Swing Line Advances. The Borrower shall repay to the
Administrative Agent for the account of the Swing Line Bank and each other
Revolving Credit Lender that has purchased a Swing Line Advance pursuant to
Section 2.02(b) the outstanding principal amount of each Swing Line Advance at
the times and in the manner and amounts specified in Section 2.02(b) and on the
Termination Date.
(c) Letter of Credit Advances. (i) The Borrower shall repay to
the Administrative Agent for the account of each Issuing Bank and each other
Revolving Credit Lender that has made a Letter of Credit Advance on the earlier
of demand and the Termination Date the outstanding principal amount of each
Letter of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument relating to any
Letter of Credit shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement, such Letter of Credit
Agreement and such other agreement or instrument under all circumstances,
including, without limitation, the following circumstances:
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(A) any lack of validity or enforceability of any Loan
Document, any Letter of Credit Agreement, any Letter of Credit or any
other agreement or instrument relating thereto (all of the foregoing
being, collectively, the "L/C Related Documents");
(B) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations of the Borrower in
respect of any L/C Related Document or any other amendment or waiver of
or any consent to departure from all or any of the L/C Related
Documents;
(C) the existence of any claim, set-off, defense or other
right that the Borrower may have at any time against any beneficiary or
any transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), any Issuing Bank or
any other Person, whether in connection with the transactions
contemplated by the L/C Related Documents or any unrelated transaction;
(D) any statement or any other document presented under a
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(E) payment by any Issuing Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(F) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from
the Guaranties or any other guaranty, for all or any of the Obligations
of the Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including, without limitation, any
other circumstance that might otherwise constitute a defense available
to, or a discharge of, the Borrower or a guarantor.
SECTION 2.06. Termination or Reduction of the Commitments. The
Borrower shall have the right, upon at least three Business Days' notice to the
Administrative Agent, to terminate in whole or reduce ratably in part the unused
portions of the respective Commitments of the Lenders, provided that each
partial reduction (i) shall be in the aggregate amount of $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and (ii) shall be made ratably
among the Appropriate Lenders in accordance with their Commitments with respect
to such Facility, and provided further that after giving effect to any such
reduction, the
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Letter of Credit Commitments shall be less than or equal to the Revolving Credit
Commitments, and provided still further that the aggregate amount of the
Commitments of the Lenders shall not be reduced to an amount that is less than
the aggregate principal amount of the Competitive Bid Advances then outstanding.
SECTION 2.07. Prepayments. (a) Optional Prepayments. (i) The
Borrower may, upon at least one Business Day's notice in the case of the Swing
Line Facility and Base Rate Advances and three Business Days' notice in the case
of any Eurodollar Rate Advances, in each case to the Administrative Agent
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given the Borrower shall, prepay the outstanding aggregate
principal amount of the Advances comprising part of the same Borrowing in whole
or ratably in part, together with accrued interest to the date of such
prepayment on the aggregate principal amount prepaid; provided, however, that
(x) each partial prepayment of the Revolving Credit Facility shall be in an
aggregate principal amount of $1,000,000 or an integral multiple of $1,000,000
in excess thereof and (y) any such prepayment of a Eurodollar Rate Advance made
other than on the last day of an Interest Period therefor shall be made together
with payment of all amounts, if any, required pursuant to Section 8.04(c).
(ii) Competitive Bid Advances may be prepaid only in
accordance with the provisions of Section 2.04(d).
(b) Mandatory Prepayments. (i) The Borrower shall, on each
Business Day, prepay an aggregate principal amount of the Revolving
Credit Advances comprising part of the same Borrowings, the Letter of
Credit Advances and the Swing Line Advances equal to the amount by
which (A) the sum of the aggregate principal amount of (x) the
Revolving Credit Advances, (y) the Letter of Credit Advances and (z)
the Swing Line Advances then outstanding plus the aggregate Available
Amount of all Letters of Credit then outstanding exceeds (B) the
Revolving Credit Facility on such Business Day.
(ii) The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an
amount sufficient to cause the aggregate amount on deposit in such
Account to equal the amount by which the aggregate Available Amount of
all Letters of Credit then outstanding exceeds the Letter of Credit
Facility on such Business Day.
SECTION 2.08. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
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42
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(x) the Base Rate in effect from time to time plus (y) the Applicable
Margin in effect from time to time, payable in arrears quarterly on the
first day of each January, April, July and October during such periods.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (x)
the Eurodollar Rate for such Interest Period for such Advance plus (y)
the Applicable Margin in effect from time to time, payable in arrears
on the last day of such Interest Period and, if such Interest Period
has a duration of more than three months, on each day that occurs
during such Interest Period every three months from the first day of
such Interest Period and on the date such Eurodollar Rate Advance shall
be Converted or paid in full.
(b) Default Interest. Upon the occurrence and during the
continuance of a Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender (except as otherwise
provided in Section 2.04(e)), payable in arrears on the dates referred to in
clause (a)(i) or (a)(ii) above, at a rate per annum equal at all times to 2% per
annum above the rate per annum required to be paid on such Advance pursuant to
clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law,
the amount of any interest, fee or other amount payable hereunder that is not
paid when due, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on Base Rate Advances pursuant to clause
(a)(i) above.
SECTION 2.09. Fees. (a) Commitment Fee. The Borrower shall pay
to the Administrative Agent for the account of the Lenders a commitment fee,
from the date hereof in the case of each Initial Lender and from the effective
date specified in the Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender until the Termination Date, payable
quarterly on the first Business Day of each January, April, July and October,
commencing October 1, 1997, and on the Termination Date, at the rate per annum
equal to the Applicable Percentage in effect from time to time on the average
daily Unused Revolving Credit Commitment of such Lender; provided, however, (i)
that any commitment fee accrued with respect to any of the Commitments of a
Defaulting Lender during the period prior to the time such Lender became a
Defaulting Lender and unpaid at such time shall not be payable by the Borrower
so long as such Lender shall be a Defaulting Lender except to the extent that
such commitment fee shall otherwise have been due and payable by the Borrower
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43
prior to such time and (ii) that no commitment fee shall accrue on any of the
Commitments of a Defaulting Lender so long as such Lender shall be a Defaulting
Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Administrative Agent for the account of each Revolving Credit Lender a
commission, payable in arrears quarterly on the first Business Day of each
January, April, July and October, commencing October 1, 1997, and on the
earliest to occur of the full drawing, expiration, termination or cancellation
of any such Letter of Credit and on the Termination Date, on such Lender's Pro
Rata Share of the average daily aggregate Available Amount during such quarter
at a rate per annum determined by reference to the Rating Level in effect from
time to time as set forth below:
============= ================= ================ ================
Rating Debt Standby Trade Letter
Level Rating Letters of of Credit
Credit
------------- ----------------- ---------------- ----------------
Level 1 A-/A3 or higher 0.250% 0.175%
------------- ----------------- ---------------- ----------------
Level 2 BBB+ /Baa1 0.275% 0.200%
------------- ----------------- ---------------- ----------------
Level 3 BBB /Baa2 0.300% 0.225%
------------- ----------------- ---------------- ----------------
Level 4 BBB-/Baa3 0.425% 0.350%
------------- ----------------- ---------------- ----------------
Level 5 BB+/Ba1 or lower 0.625% 0.550%
============= ================= ================ ================
provided, that at any time that the Rating Level is Level 1, 2 or 3 and the
aggregate Available Amount of Letters of Credit plus the principal amount of
Advances exceeds 25% of the aggregate Commitments, the Letter of Credit fees
shall be increased by 0.075% per annum.
(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees and other
fees and charges in connection with the issuance or administration of each
Letter of Credit as the Borrower and such Issuing Bank shall agree.
(c) Agent's Fees. The Borrower shall pay to each of the Agents
for its own account such fees as may from time to time be agreed between the
Borrower and such Agent.
SECTION 2.10. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion
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44
and subject to the provisions of Sections 2.10, 2.11 and 2.12, Convert all
Advances of one Type comprising the same Borrowing into Advances of the other
Type; provided, however, that any Conversion of Eurodollar Rate Advances into
Base Rate Advances shall be made only on the last day of an Interest Period for
such Eurodollar Rate Advances, any Conversion of Base Rate Advances into
Eurodollar Rate Advances shall be in an amount not less than the minimum amount
specified in Section 2.02(c) and no Conversion of any Advances shall result in
more separate Borrowings than permitted under Section 2.02(c). Each such notice
of a Conversion shall, within the restrictions specified above, specify (i) the
date of such Conversion, (ii) the Advances to be Converted, and (iii) if such
Conversion is into Eurodollar Rate Advances, the duration of the initial
Interest Period for each such Advance. Each notice of Conversion shall be
irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by payment or prepayment or otherwise, to less than $10,000,000, such
Advances shall automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section 1.01, the
Administrative Agent will forthwith so notify the Borrower and the Appropriate
Lenders, whereupon each such Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a Base Rate
Advance.
(iii) Upon the occurrence and during the continuance of any
Default, (x) each Eurodollar Rate Advance will automatically, on the last day of
the then existing Interest Period therefor, Convert into a Base Rate Advance and
(y) the obligation of the Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended.
SECTION 2.11. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation 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),
there shall be any increase in the cost (other than in taxes, including
interest, additions to tax and penalties relating thereto, except to the extent
that the same are required to be paid pursuant to Section 2.14 hereof) to any
Lender Party of agreeing to make or of making, funding or maintaining Eurodollar
Rate Advances or LIBO Rate Advances or of agreeing to issue or of issuing or
maintaining Letters of Credit or of agreeing to make or of making or maintaining
Letter of Credit Advances (excluding for purposes of this Section 2.11 any such
increased costs resulting from (x) Taxes, Other Taxes, Excluded Taxes or taxes
excluded from the definitions of Taxes or Other Taxes in Section 2.14(e) or from
indemnification pursuant to Section 2.14(f) (as to which Section 2.14 shall
govern) and
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45
(y) changes in the basis of taxation of overall net income or overall gross
income by the United States or by the foreign jurisdiction or state under the
laws of which such Lender Party is organized or has its Applicable Lending
Office or any political subdivision thereof), then the Borrower shall from time
to time, upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender Party additional amounts sufficient to compensate such Lender Party for
such increased cost; provided, however, that, before making any such demand,
each Lender Party agrees to use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to designate a different
Applicable Lending Office if the making of such a designation would avoid the
need for, or reduce the amount of, such increased cost and would not, in the
reasonable judgment of such Lender Party, be otherwise disadvantageous to such
Lender Party and provided, further, that the Borrower's obligations to any
Designated Lender hereunder shall be limited as set forth in Section 8.04(e). A
certificate as to the amount of such increased cost, submitted to the Borrower
by such Lender Party, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If any Lender Party determines that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue Letters of Credit hereunder and
other commitments of such type or the issuance or maintenance of the Letters of
Credit (or similar contingent obligations), then, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent), the Borrower
shall pay to the Administrative Agent for the account of such Lender Party, from
time to time as specified by such Lender Party, additional amounts sufficient to
compensate such Lender Party in the light of such circumstances, to the extent
that such Lender Party reasonably determines such increase in capital to be
allocable to the existence of such Lender Party's commitment to lend or to issue
Letters of Credit hereunder or to the issuance or maintenance of any Letters of
Credit, provided, however, that the Borrower's obligations to any Designated
Lender hereunder shall be limited as set forth in Section 8.04(e). A certificate
as to such amounts submitted to the Borrower by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders (other than Designated Lenders) owed at least a majority of
the then aggregate unpaid principal amount thereof notify the Administrative
Agent that the Eurodollar Rate for any Interest Period for such Advances will
not adequately reflect the cost (excluding for purposes of this Section 2.11 any
such increased costs resulting from (i) Taxes, Other Taxes, Excluded Taxes or
taxes excluded from the definitions of Taxes or Other Taxes in Section 2.14(e)
or from indemnification pursuant to Section 2.14(f) (as to which Section 2.14
shall govern) and
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46
(ii) changes in the basis of taxation of overall net income or overall gross
income by the United States or by the foreign jurisdiction or state under the
laws of which such Lender Party is organized or has its Applicable Lending
Office or any political subdivision thereof) to such Lenders of making, funding
or maintaining their Eurodollar Rate Advances for such Interest Period, the
Administrative Agent shall forthwith so notify the Borrower and the Appropriate
Lenders, whereupon (i) each such Eurodollar Rate Advance under any Facility will
automatically, on the last day of the then existing Interest Period therefor,
Convert into a Base Rate Advance and (ii) the obligation of the Appropriate
Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall be
suspended until the Administrative Agent shall notify the Borrower that such
Lenders have determined that the circumstances causing such suspension no longer
exist.
SECTION 2.12. Illegality. Notwithstanding any other provision
of this Agreement, if any Lender (other than a Designated Lender) shall notify
the Administrative Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for any Lender or
its Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or LIBO Rate Advances or to fund or maintain Eurodollar
Rate Advances or LIBO Rate Advances hereunder, (i) each Eurodollar Rate Advance
or LIBO Rate Advance, as the case may be, will automatically, upon such demand,
Convert into a Base Rate Advance and (ii) the obligation of the Lenders to make
Eurodollar Rate Advances or LIBO Rate Advances or to Convert Revolving Credit
Advances into Eurodollar Rate Advances shall be suspended until the
Administrative Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist; provided, that if it
becomes unlawful for any Designated Lender or its Eurodollar Lending Office to
perform its obligations hereunder to make or fund or maintain Eurodollar Rate
Advances or LIBO Rate Advances, such Designated Lender shall immediately assign
its rights and obligations with respect to such Advance to its applicable
Designating Lender.
SECTION 2.13. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, if any, irrespective of
counterclaim or set-off (except as otherwise provided in Section 2.15), not
later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent's Account in same day
funds. The Administrative Agent will promptly thereafter cause to be distributed
like funds relating to the payment of principal or interest or commitment fees
ratably (other than amounts payable pursuant to Section 2.04, 2.11, 2.14 or
8.04(c)) to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(c), from and after
the
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47
effective date specified in such Assignment and Acceptance, the Administrative
Agent shall make all payments hereunder and under any Notes issued in connection
therewith in respect of the interest assigned thereby to the Lender assignee
thereunder, and the parties to such Assignment and Acceptance shall make all
appropriate adjustments in such payments for periods prior to such effective
date directly between themselves.
(b) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.
(c) The Borrower hereby authorizes each Lender, if and to the
extent payment owed to such Lender is not made when due hereunder or under the
Note, if any, held by such Lender, to charge from time to time against any or
all of the Borrower's accounts with such Lender any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest or
commitment fees are payable. Each determination by the Administrative Agent of
an interest rate hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(e) Whenever any payment hereunder or under the Notes, if any,
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 payment of interest or commitment
fee, as the case may be; provided, however, that, if such extension would cause
payment of interest on or principal of Eurodollar Rate Advances or LIBO Rate
Advances to be made in the next following calendar month, such payment shall be
made on the next preceding Business Day.
(f) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Lenders
hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to each
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48
Lender on such due date an amount equal to the amount then due such Lender. If
and to the extent the Borrower shall not have so made such payment in full to
the Administrative Agent, each Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with
interest thereon, for each day from the date such amount is distributed to such
Lender until the date such Lender repays such amount to the Administrative
Agent, at the Federal Funds Rate.
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
hereunder or under any Notes shall be made, in accordance with Section 2.13,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender Party and each Agent,
Excluded Taxes (all such non-Excluded Taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to any Lender Party or any Agent,
(i) the sum payable shall be increased as may be necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.14) such Lender or such 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 Borrower shall make such deductions and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or under any Notes
or from the execution, delivery or registration of, or otherwise with respect
to, this Agreement or any Note (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender Party and each
Agent for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.14) paid by such Lender Party or such Agent (as the
case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender Party or such Agent (as the case may
be) makes written demand therefor, including in such demand an identification of
the Taxes or Other Taxes (together with the amounts thereof) with respect to
which such indemnification is being sought.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the Administrative Agent and the Documentation Agent,
at their respective addresses referred to in Section 8.02, the original or a
certified copy of a receipt evidencing payment thereof. In the case of any
payment hereunder or under any Notes by or on behalf of
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49
the Borrower through an account or branch outside the United States or on behalf
of the Borrower by a payor that is not a United States person, if the Borrower
determines that no Taxes are payable in respect thereof, the Borrower shall
furnish, or shall cause such payor to furnish, to the Administrative Agent and
the Documentation Agent, at such address, an opinion of counsel acceptable to
the Administrative Agent stating that such payment is exempt from Taxes. For
purposes of this subsection (d) and subsection (e), the terms "United States"
and "United States person" shall have the meanings specified in Section 7701 of
the Internal Revenue Code.
(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its execution
and delivery of this Agreement in the case of each initial Lender or initial
Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance or Designation Agreement pursuant to which it becomes a Lender Party
in the case of each other Lender Party, and from time to time thereafter if
requested in writing by the Borrower (but only so long as such Lender remains
lawfully able to do so), shall provide the Borrower with two original Internal
Revenue Service forms 1001, 4224 or W-8 as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such
Lender Party is exempt from or entitled to a reduced rate of United States
withholding tax on payments pursuant to this Agreement or the Notes, if any. If
any Lender Party which is not a "United States person" determines that it is
unable to submit to the Borrower or the Documentation Agent any form or
certificate that such Lender is otherwise required to submit pursuant to this
Section 2.14, or that it is required to withdraw or cancel any such form or
certificate, or that any such form or certificate previously submitted has
otherwise become ineffective or inaccurate, such Lender shall promptly notify
the Borrower and the Documentation Agent of such fact. In addition, if a Lender
provides a form W-8 (or any successor or related form) to the Documentation
Agent and the Borrower pursuant to this Section 2.14, such Lender shall also
provide a certificate stating that such Lender is not a "bank" within the
meaning of section 881(c)(3)(A) of the Internal Revenue Code of 1986 and shall
promptly notify the Documentation Agent and the Borrower if such Lender
determines that it is no longer able to provide such certification. If the form
provided by a Lender Party at the time such Lender Party first becomes a party
to this Agreement indicates a United States interest withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes unless and until such Lender Party provides the appropriate form
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender Party becomes a party to this Agreement, the Lender
Party assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term Taxes shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender assignee on such date. Upon the
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50
reasonable request of the Borrower or the Documentation Agent, each Lender Party
that has not provided the forms or other documents, as provided above, on the
basis of being a United States person shall submit to the Borrower and the
Documentation Agent a certificate to the effect that it is such a "United States
person" (as defined in Section 7701(a)(30) of the Internal Revenue Code).
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in Section
2.14(e) (other than if such failure is due to a change in law occurring
subsequent to the date on which such Lender became a Lender Party hereunder, or
if such form otherwise is not required under the first sentence of subsection
(e) above because the Borrower has not requested in writing such form subsequent
to the date on which such Lender Party became a Lender Party hereunder), such
Lender Party shall not be entitled to indemnification under Section 2.14(a) or
(c) with respect to Taxes imposed by the United States; provided, however, that
should a Lender Party become subject to Taxes because of its failure to deliver
a form required hereunder, the Borrower shall take such steps as the Lender
Party shall reasonably request to assist the Lender Party to recover such Taxes.
(g) Any Lender Party or Agent claiming any additional amounts
payable pursuant to this Section 2.14 shall use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Eurodollar Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party.
(h) Within 60 days after the written request of the Borrower,
each Lender Party or Agent shall execute and deliver to the Borrower such
certificates or forms as are reasonably requested by the Borrower in such
request, which can be furnished consistent with the facts and which are
reasonably necessary to assist the Borrower in applying for refunds of Taxes
paid by the Borrower hereunder or making payment of Taxes hereunder; provided,
however, that no Lender Party or Agent shall be required to furnish to the
Borrower and financial or other information which it considers confidential. The
cost of preparing any materials referred to in the previous sentence shall be
borne by the Borrower. If a Lender Party or Agent determines in good faith that
it has received a refund of any Taxes or Other Taxes with respect to which
Borrower has made a payment of additional amounts, such Lender Party or Agent
shall pay to the Borrower an amount that such Lender Party or Agent determines
in good faith to be equal to the net benefit, after tax, that was obtained by
such Lender Party or Agent (as the case may be) as a consequence of such refund.
(i) All obligations of the Borrower owed to any Designated
Lender pursuant to this Section 2.14 shall be limited to the amount that the
Borrower would be
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51
obligated to pay to such Designated Lender's applicable Designating Lender but
for such designation, as set forth in Section 8.04(e).
SECTION 2.15. Sharing of Payments, Etc. If any Lender Party
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of Obligations owing to it
(other than pursuant to Section 2.11, 2.14 or 8.04(c)) in excess of its ratable
share of payments on account of the Obligations obtained by all the Lender
Parties, such Lender Party shall forthwith purchase from the other Lender
Parties such participations in Obligations owing to them as shall be necessary
to cause such purchasing Lender Party 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 such purchasing Lender Party, such purchase
from each Lender Party shall be rescinded and such Lender Party shall repay to
the purchasing Lender Party the purchase price to the extent of such recovery
together with an amount equal to such Lender Party's ratable share (according to
the proportion of (i) the amount of such Lender Party's required repayment to
(ii) the total amount so recovered from the purchasing Lender Party) of any
interest or other amount paid or payable by the purchasing Lender Party in
respect of the total amount so recovered. The Borrower agrees that any Lender
Party so purchasing a participation from another Lender Party pursuant to this
Section 2.15 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender Party were the direct creditor of the
Borrower in the amount of such participation.
SECTION 2.16. Use of Proceeds. The proceeds of the Advances
shall be available to refinance amounts outstanding under the Existing Credit
Agreement, to provide working capital for the Borrower and for general corporate
purposes, including commercial paper backstop, of the Borrower and its
Subsidiaries.
SECTION 2.17. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower may,
so long as no Default shall occur or be continuing at such time and to the
fullest extent permitted by applicable law, set off and otherwise apply the
Obligation of the Borrower to make such payment to or for the account of such
Defaulting Lender against the Obligation of such Defaulting Lender to make such
Defaulted Advance. In the event that, on any date, the Borrower shall so set off
and otherwise apply its Obligation to make any such payment against the
Obligation of such Defaulting Lender to make any such Defaulted Advance on or
prior to such date, the amount so set off and otherwise applied by the Borrower
shall constitute for all purposes of this Agreement and the other Loan Documents
an Advance by such Defaulting Lender made on the date under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.01.
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52
Such Advance shall be a Base Rate Advance and shall be considered, for all
purposes of this Agreement, to comprise part of the Borrowing in connection with
which such Defaulted Advance was originally required to have been made pursuant
to Section 2.01, even if the other Advances comprising such Borrowing shall be
Eurodollar Rate Advances on the date such Advance is deemed to be made pursuant
to this subsection (a). The Borrower shall notify the Administrative Agent at
any time the Borrower exercises its right of set-off pursuant to this subsection
(a) and shall set forth in such notice (A) the name of the Defaulting Lender and
the Defaulted Advance required to be made by such Defaulting Lender and (B) the
amount set off and otherwise applied in respect of such Defaulted Advance
pursuant to this subsection (a). Any portion of such payment otherwise required
to be made by the Borrower to or for the account of such Defaulting Lender which
is paid by the Borrower, after giving effect to the amount set off and otherwise
applied by the Borrower pursuant to this subsection (a), shall be applied by the
Administrative Agent as specified in subsection (b) or (c) of this Section 2.17.
(b) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to any Agent or any of the other Lender Parties and (iii) the Borrower
shall make any payment hereunder or under any other Loan Document to the
Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Lender Parties, ratably in
accordance with the respective portions of such Defaulted Amounts payable at
such time to the Administrative Agent and such other Lender Parties and, if the
amount of such payment made by the Borrower shall at such time be insufficient
to pay all Defaulted Amounts owing at such time to the Administrative Agent and
the other Lender Parties, in the following order of priority:
(i) first, to the Agents for any Defaulted Amount then owing
to the Agents; and
(ii) second, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other Lender
Parties.
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Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.17.
(c) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a
Defaulted Advance or a Defaulted Amount and (iii) the Borrower, any Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with the Administrative Agent, in the name and under the control of the
Administrative Agent, but subject to the provisions of this subsection (c). The
terms applicable to such account, including the rate of interest payable with
respect to the credit balance of such account from time to time, shall be the
Administrative Agent's standard terms applicable to escrow accounts maintained
with it. Any interest credited to such account from time to time shall be held
by the Administrative Agent in escrow under, and applied by the Administrative
Agent from time to time in accordance with the provisions of, this subsection
(c). The Administrative Agent shall, to the fullest extent permitted by
applicable law, apply all funds so held in escrow from time to time to the
extent necessary to make any Advances required to be made by such Defaulting
Lender and to pay any amount payable by such Defaulting Lender hereunder and
under the other Loan Documents to any Agent or any other Lender Party, as and
when such Advances or amounts are required to be made or paid and, if the amount
so held in escrow shall at any time be insufficient to make and pay all such
Advances and amounts required to be made or paid at such time, in the following
order of priority:
(i) first, to the Agents for any amount then due and payable
by such Defaulting Lender to the Agents hereunder;
(ii) second, to any other Lender Parties for any amount then
due and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due
and payable to such other Lender Parties; and
(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
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54
In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.17 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that any Agent or any Lender Party may have against such Defaulting Lender
with respect to any Defaulted Amount.
SECTION 2.18. Evidence of Debt . (a) Each Lender shall
maintain in accordance with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting from each Advance
owing to such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder. The
Borrower agrees that upon notice by any Lender to the Borrower (with a copy of
such notice to the Administrative Agent) to the effect that a promissory note or
other evidence of indebtedness is required or appropriate in order for such
Lender to evidence (whether for purposes of pledge, enforcement or otherwise)
the Revolving Credit Advances owing to, or to be made by, such Lender, the
Borrower shall promptly execute and deliver to such Lender a promissory note in
the form of Exhibit A-2 hereto (each a "Revolving Credit Note"), payable to the
order of such Lender in a principal amount equal to the Revolving Credit
Commitment of such Lender.
(b) The Register maintained by the Administrative Agent
pursuant to Section 8.07(g) shall include a control account, and a subsidiary
account for each Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Borrowing made hereunder, the Type of Advances
comprising such Borrowing and, if appropriate, the Interest Period applicable
thereto, (ii) the terms of each Assignment and Acceptance delivered to and
accepted by it, (iii) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder, and (iv)
the amount of any sum received by the Administrative Agent from the Borrower
hereunder and each Lender's share thereof.
(c) Entries made in good faith by the Administrative Agent in
the Register pursuant to subsection (b) above, and by each Lender in its account
or accounts pursuant to subsection (a) above, shall be prima facie evidence of
the amount of principal and interest due and payable or to become due and
payable from the Borrower to, in the case of the Register, each Lender and, in
the case of such account or accounts, such Lender, under this Agreement, absent
manifest error; provided, however, that the failure of the Administrative Agent
or such
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55
Lender to make an entry, or any finding that an entry is incorrect, in the
Register or such account or accounts shall not limit or otherwise affect the
obligations of the Borrower under this Agreement.
ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION 3.01. Conditions Precedent to Effectiveness of
Section 2.01 and 2.03. Sections 2.01 and 2.03 of this Agreement shall become
effective on and as of the first date (the "Effective Date") on which the
following conditions precedent have been satisfied:
(a) The Lender Parties shall be satisfied that all obligations
of the Borrower under the Existing Credit Agreement, whether for
principal, interest, fees, expenses or otherwise, have been or,
concurrently with the making of the initial Borrowing, will be paid in
full in cash and all "Commitments" (as defined therein) terminated.
(b) There shall have occurred no Material Adverse Change since
January 4, 1997 and all information provided by or on behalf of the
Borrower to the Lenders prior to the delivery of their commitments
shall be true and correct in all material aspects.
(c) All governmental and third party consents and approvals
necessary in connection with the transactions contemplated hereby shall
have been obtained (without the imposition of any conditions that are
not acceptable to the Lender Parties) and shall remain in effect, all
applicable waiting periods shall have expired without any action being
taken by any competent authority and no law or regulation shall be
applicable in the reasonable judgment of the Lender Parties that
restrains, prevents or imposes materially adverse conditions upon the
transactions contemplated hereby.
(d) The Borrower shall have paid all accrued and invoiced fees
and expenses of the Managing Agents and the Lender Parties (including
the accrued and invoiced fees and expenses of counsel to the Agents).
(e) On the Effective Date, the following statements shall be
true and the Documentation Agent shall have received for the account of
each Lender a certificate signed by a duly authorized officer of the
Borrower, dated the Effective Date, stating that:
(i) The representations and warranties contained in
each Loan Document are correct on and as of the Effective
Date, and
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(ii) No event has occurred and is continuing that
constitutes a Default.
(f) The Documentation Agent shall have received on or before
the Effective Date the following, each dated such day, in form and
substance satisfactory to the Documentation Agent and in sufficient
copies for each Lender Party:
(i) A guaranty in substantially the form of Exhibit F
(as amended, supplemented or otherwise modified from time to
time in accordance with its terms, the "Group Guaranty"), duly
executed by Group.
(ii) A guaranty in substantially the form of Exhibit
G (together with each other guaranty delivered pursuant to
Section 5.01(k), in each case as amended, supplemented or
otherwise modified from time to time in accordance with its
terms, the "Subsidiary Guaranty"), duly executed by the
Guarantors (other than Group).
(iii) Certified copies of the resolutions of the
Board of Directors of the Borrower and each other Loan Party
approving this Agreement and each other Loan Document to which
it is or is to be a party, and of all documents evidencing
other necessary corporate action and governmental approvals,
if any, with respect to this Agreement and each other Loan
Document.
(iv) A certificate of the Secretary or an Assistant
Secretary of the Borrower and each other Loan Party certifying
the names and true signatures of the officers of the Borrower
and such other Loan Party authorized to sign this Agreement,
each other Loan Document to which they are or are to be
parties and the other documents to be delivered hereunder and
thereunder.
(v) A favorable opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel for the Loan Parties, in
substantially the form of Exhibit E-1 hereto and as to such
other matters as any Lender Party through the Managing Agents
may reasonably request.
(vi) A favorable opinion of Stanley P. Silverstein,
General Counsel for the Borrower, in substantially the form of
Exhibit E-2 hereto and as to such other matters as any Lender
Party through the Managing Agents may reasonably request.
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(vi) A favorable opinion of Shearman & Sterling,
counsel for the Managing Agents, in form and substance
satisfactory to the Managing Agents.
SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit Advance and other than a Swing Line Advance made by a
Revolving Credit Lender pursuant to Section 2.02(b)) on the occasion of each
Borrowing (including the initial Borrowing), and the obligation of each Issuing
Bank to issue a Letter of Credit (including the initial issuance) and the right
of the Borrower to request a Swing Line Borrowing, shall be subject to the
further conditions precedent that on the date of such Borrowing or issuance:
(a) the following statements shall be true (and each of the
giving of the applicable Notice of Borrowing, Notice of Swing Line
Borrowing or Notice of Issuance and the acceptance by the Borrower of
the proceeds of such Borrowing or of such Letter of Credit shall
constitute a representation and warranty by the Borrower that on the
date of such Borrowing or issuance such statements are true):
(i) the representations and warranties contained in
each Loan Document are correct in all material respects on and
as of the date of such Borrowing or issuance, before and after
giving effect to such Borrowing or issuance and to the
application of the proceeds therefrom, as though made on and
as of such date other than any such representations or
warranties that, by their terms, refer to a specific date
other than the date of such Borrowing or issuance, in which
case such representations and warranties shall be correct as
of such specific date, and
(ii) no event has occurred and is continuing, or
would result from such Borrowing or from the application of
the proceeds therefrom, that constitutes a Default; and
(b) the Documentation Agent shall have received such other
approvals or documents, if any, as any Appropriate Lender through the
Documentation Agent may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Documentation Agent responsible for the transactions contemplated
by Loan Documents shall have received notice from such Lender Party prior to the
date that the Borrower, by notice to the Lenders, designates as the proposed
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Effective Date, specifying its objection thereto. The Administrative Agent shall
promptly notify the Lender Parties of the occurrence of the Effective Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
Each of Group and the Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed would not have a Material Adverse Effect and
(iii) has all requisite corporate power and authority to own or lease
and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party, showing as of the
date hereof (as to each such Subsidiary) whether or not such Subsidiary
is a wholly-owned Subsidiary. Each such Subsidiary (i) is a corporation
duly organized or a limited liability corporation duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) is duly qualified and in good standing as a foreign
corporation in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so qualify or be
licensed would not have a Material Adverse Effect and (iii) has all
requisite corporate power and authority to own or lease and operate its
properties and to carry on its business as now conducted and as
proposed to be conducted.
(c) The execution, delivery and performance by each Loan Party
of this Agreement and each other Loan Document to which it is or is to
be a party, and the consummation of the transactions contemplated
hereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Loan Party's charter or by-laws, (ii) violate any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award, (iii) conflict with or result in the breach of, or constitute a
default under, any contract, loan agreement, indenture, mortgage, deed
of trust, lease or other instrument binding on or affecting any Loan
Party, any of its Subsidiaries or any of their properties or
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(iv) result in or require the creation or imposition of any Lien upon
or with respect to any of the properties of any Loan Party or any of
its Subsidiaries. No Loan Party or any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which is or would be
reasonably likely to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for the due execution, delivery,
recordation, filing or performance by any Loan Party of this Agreement
or any other Loan Document to which it is or is to be a party, or for
the consummation of the transactions contemplated hereby.
(e) This Agreement has been, and each other Loan Document when
delivered hereunder will have been, duly executed and delivered by each
Loan Party party thereto. This Agreement is, and each other Loan
Document when delivered hereunder will be, the legal, valid and binding
obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally
and by general principles of equity (regardless of whether enforcement
is sought in equity or at law).
(f) (i) The Consolidated balance sheets of Group and its
Subsidiaries as at January 4, 1997, and the related Consolidated
statements of operations, stockholders' equity and cash flow of Group
and its Subsidiaries for the fiscal years then ended, accompanied by an
opinion of Price Waterhouse, independent public accountants, and the
Consolidated balance sheet of Group and its Subsidiaries as at April 5,
1997, and the related Consolidated statements of operations,
stockholders' equity and cash flow of Group and its Subsidiaries for
the six months then ended, duly certified by the chief financial
officer of Group, copies of which have been furnished to each Lender,
fairly present, subject, in the case of said balance sheet as at April
5, 1997, and said statements of operations, stockholders' equity and
cash flow for the six months then ended, to year-end audit adjustments,
the Consolidated financial condition of Group and its Subsidiaries as
at such dates and the Consolidated results of the operations of Group
and its Subsidiaries for the periods ended on such dates, all in
accordance with generally accepted accounting principles applied on a
consistent basis, and (ii) since January 4, 1997, there has been no
Material Adverse Change.
(g) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action,
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pending or threatened before any court, governmental agency or
arbitrator that (i) purports to affect the legality, validity or
enforceability of this Agreement or any other Loan Document or the
consummation of the transactions contemplated hereby or (ii) is or
would be reasonably likely to have a Material Adverse Effect.
(h) No proceeds of any Advance will be used to acquire any
equity security of a class that is registered pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (other than (i) shares
of capital stock of Group and (ii) to the extent applicable, in
connection with an acquisition of a company, so long as (x) the board
of directors of such company shall have approved such acquisition at
the time such acquisition is first publicly announced, (y) if such
company shall have been soliciting bids for its acquisition, the board
of directors of such company shall not have determined either to accept
no offer or to accept an offer other than the offer of Group or one of
its Subsidiaries or (z) if such company shall not have been soliciting
bids for its acquisition or if the board of directors of such company
shall have solicited bids for its acquisition but shall have initially
determined either to accept no offer or to accept an offer other than
the offer of Group or one of its Subsidiaries, the existence, amount
and availability for the acquisition of such company of the Commitments
hereunder shall not have been disclosed, orally or in writing, to such
company or its advisors; provided, that the public filing of this
Agreement shall not be deemed to be disclosure of the Commitments
hereunder to such company or its advisors, until after such time as the
board of directors of such company shall have approved such acquisition
by Group or one of its Subsidiaries and so long as, in any case, such
acquisition is otherwise permitted hereunder).
(i) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance 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 except for shares of capital stock of Group
and as otherwise permitted in Sections 4.01(h).
(j) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or an "affiliated person" of, or "promoter" or
"principal underwriter" for, an "investment company," as such terms are
defined in the Investment Company Act of 1940, as amended. Neither the
making of any Advances, nor the issuance of any Letters of Credit, nor
the application of the proceeds or repayment thereof by the Borrower,
nor the consummation of the other transactions contemplated hereby,
will violate any provision of such Act or any rule, regulation or order
of the Securities and Exchange Commission thereunder.
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ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Group and the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and Environmental Laws,
except where the failure so to comply would not have a Material Adverse
Effect.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges or
levies imposed upon it or upon its property and (ii) all lawful claims
that, if unpaid, would reasonably be likely to by law become a Lien
upon its property; provided, however, that neither the Borrower nor any
of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good faith and
by proper proceedings and as to which appropriate reserves are being
maintained, unless and until any Lien resulting therefrom attaches to
its property and becomes enforceable against its other creditors so
long as any such amount, when taken together with any amount required
to be paid as described in clause (b) of the definition of "Permitted
Liens", shall not exceed $10 million.
(c) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the
Borrower or such Subsidiary operates.
(d) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its corporate existence, rights (charter and statutory) and franchises;
provided, however, that Group and its Subsidiaries may consummate any
merger, consolidation or voluntary dissolution or liquidation permitted
under Section 5.02(b).
(e) Visitation Rights. At any reasonable time and from time to
time, permit any Agent or any of the Lender Parties or any agents or
representatives thereof, upon
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reasonable notice to the Borrower to examine and make copies of and
abstracts from the records and books of account of, and visit the
properties of, the Borrower and any of its Subsidiaries, and to discuss
the affairs, finances and accounts of the Borrower and any of its
Subsidiaries with any of their officers or directors and with their
independent certified public accountants.
(f) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
generally accepted accounting principles in effect from time to time.
(g) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted.
(h) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, (i) other than with respect to
transactions between the Borrower and its wholly owned Subsidiaries,
all transactions otherwise permitted under the Loan Documents with any
of their Affiliates on terms that are fair and reasonable and no less
favorable to the Borrower or such Subsidiary than it would obtain in a
comparable arm's-length transaction with a Person not an Affiliate and
(ii) with respect to transactions between the Borrower and its wholly
owned Subsidiaries, all transactions otherwise permitted under the Loan
Documents on terms that are no less favorable to the Borrower than it
would obtain in a comparable arm's-length transaction with a Person not
an Affiliate, provided, however, that the foregoing restrictions shall
not apply to transactions pursuant to any agreement referred to in
Section 5.02(a)(ii) and provided, further, that the Borrower shall not
engage in any transaction with any such Subsidiary that would render
such Subsidiary insolvent or cause a default under, or a breach of, any
material contract to which such Subsidiary is a party.
(i) Implied Senior Rating. So long as no Public Debt Rating is
in effect, no less frequently than once during every Fiscal Year,
obtain from S&P (or, if unavailable, from Moody's) an update of the
Implied Senior Rating and deliver a letter to the Managing Agents from
S&P (or Moody's, as the case may be) advising the Managing Agents of
the current Implied Senior Rating.
(j) Reporting Requirements. Furnish to the Lenders (and for
purposes hereof, any Designated Lender shall be deemed to have received
the following information from its Designating Lender):
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(i) as soon as available and in any event within 45
days after the end of each of the first three quarters of each
Fiscal Year, Consolidated and consolidating balance sheets of
Group and its Subsidiaries as of the end of such quarter and
Consolidated and consolidating statements of income and
Consolidated statements of cash flows of Group and its
Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
duly certified (subject to year-end audit adjustments) by the
chief financial officer of the Borrower as having been
prepared in accordance with generally accepted accounting
principles and a certificate of the chief financial officer of
Group as to compliance with the terms of this Agreement and
setting forth in reasonable detail the calculations necessary
to demonstrate compliance with Section 5.03, provided that in
the event of any change in GAAP used in the preparation of
such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Section
5.03, a statement of reconciliation conforming such financial
statements to GAAP;
(ii) as soon as available and in any event within 90
days after the end of each Fiscal Year of Group, a copy of the
annual audit report for such year for Group and its
Subsidiaries, containing Consolidated balance sheet of Group
and its Subsidiaries as of the end of such fiscal year and
Consolidated statements of income and cash flows of the
Borrower and its Subsidiaries for such Fiscal Year, in each
case accompanied by an opinion acceptable to the Required
Lenders by any Approved Accounting Firm or by other
independent public accountants acceptable to the Required
Lenders, and a certificate of the chief financial officer or
Group as to compliance with the terms of this Agreement
setting forth in reasonable detail the calculations necessary
to demonstrate compliance with Section 5.03 provided that in
the event of any change in GAAP used in the preparation of
such financial statements, the Borrower shall also provide, if
necessary for the determination of compliance with Section
5.03, a statement of reconciliation conforming such financial
statements to GAAP;
(iii) as soon as possible and in any event within two
Business Days after the occurrence of each Default continuing
on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth details of
such Default and the action that the Borrower has taken and
proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all
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reports that the Borrower sends to any of its securityholders
generally, and copies of all reports and registration
statements that Group or any Subsidiary files with the
Securities and Exchange Commission or any national securities
exchange;
(v) promptly after the commencement thereof, notice
of all actions and proceedings before any court, governmental
agency or arbitrator affecting the Borrower or any of its
Subsidiaries of the type described in Section 4.01(g);
(vi) so long as no Public Debt Rating is then in
effect, within five Business Days after receipt thereof by any
Loan Party, copies of each notice from S&P (or Moody's, if S&P
has ceased to provide Implied Senior Ratings) indicating any
change in the Implied Senior Rating; and
(vii) such other information respecting the Borrower
or any of its Subsidiaries as any Lender Party through the
Managing Agents may from time to time reasonably request.
(k) Covenant To Guarantee Obligations. At such time as any new
direct or indirect Domestic Subsidiary is formed or acquired, cause
such new Subsidiary that is a wholly owned Subsidiary to (i) within 30
days thereafter or such later time as the Borrower and the
Documentation Agent shall agree (but in any event no later than 30
additional days thereafter), duly execute and deliver to the
Documentation Agent guarantees, in substantially the form of Exhibit G
and otherwise in form and substance reasonably satisfactory to the
Documentation Agent, guaranteeing the Borrower's Obligations under the
Loan Documents, provided, however, that the foregoing shall not apply
to (A) joint ventures or (B) any Subsidiary organized solely for the
purpose of entering into any agreements and transactions referred to in
Section 5.02(a)(ii) to the extent that such agreements require that
such Subsidiary not be a Guarantor hereunder, and (ii) within 30 days
thereafter or such later time as the Borrower and the Documentation
Agent shall agree (but in any event no later than 30 additional days
thereafter), deliver to the Documentation Agent a signed copy of a
favorable opinion, addressed to the Documentation Agent, of counsel for
the Loan Parties acceptable to the Documentation Agent as to the
documents contained in clause (i) above, as to such guarantees being
legal, valid and binding obligations of such Domestic Subsidiaries
enforceable in accordance with their terms and as to such other matters
as the Documentation Agent may reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, neither Group nor the Borrower will at any
time:
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(a) Liens, Etc. Create or suffer to exist, or permit any of
its Subsidiaries to create, incur, assume or suffer to exist, any Lien
on or with respect to any of its properties of any character, whether
now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, other than:
(i) Permitted Liens,
(ii) Liens on receivables of any kind (and in
property securing or otherwise supporting such receivables) in
connection with agreements for limited recourse sales or
financings by the Borrower or any of its Subsidiaries for cash
of such receivables or interests therein, provided that (A)
any such agreement is of a type and on terms customary for
comparable transactions in the good faith judgment of the
Board of Directors of the Borrower, (B) such agreement does
not create any interest in any asset other than receivables
(and property securing or otherwise supporting such
receivables) and proceeds of the foregoing, and (C) in the
case of sales or financings of receivables to Persons other
than Group, the Borrower or any of their Domestic
Subsidiaries, on any date of determination, the aggregate face
value of such receivables shall not exceed at any time
outstanding $150,000,000,
(iii) other Liens securing Debt, including Liens
incurred pursuant to subsection (v) below, in an aggregate
principal amount outstanding at any time not to exceed 20% of
Consolidated Tangible Assets of Group and its Subsidiaries at
such time,
(iv) Liens arising from covenants by the Borrower or
its Subsidiaries to grant security interests in the assets of
Warnaco of Canada Limited or its Subsidiaries (the "Canadian
Subsidiaries") to secure Debt of the Canadian Subsidiaries in
the event that the Lenders hereunder are granted Liens by
Group or its Subsidiaries in their respective assets to secure
the Obligations under the Loan Documents, and
(v) Liens on Margin Stock.
(b) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries
to do so or to voluntarily liquidate, except that (i) any Domestic
Subsidiary of Group may merge into or consolidate with any other
Domestic Subsidiary of Group, provided that the person formed thereby
shall be a direct or indirect wholly owned Domestic Subsidiary of
Group, (ii) any Foreign Subsidiary of Group may merge into or
consolidate with any other Foreign Subsidiary of Group, provided that
the Person formed thereby shall be a
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direct or indirect wholly owned Foreign Subsidiary of Group, (iii) any
Domestic Subsidiary of Group may merge into or consolidate with Group,
(iv) the Borrower may merge into or consolidate with any other Person
so long as the Borrower is the surviving corporation and (v) any
Subsidiary of Group may voluntarily liquidate and distribute its assets
to Group or any direct or indirect wholly owned Domestic Subsidiary of
Group, provided, in each case, that no Default shall have occurred and
be continuing at the time of such proposed transaction or would result
therefrom.
(c) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i) Debt under the Loan Documents;
(ii) Debt secured by Liens permitted by Section
5.02(a)(iii) hereof;
(iii) Debt incurred on terms customary for comparable
transactions in the good faith judgment of the Board of
Directors of the Borrower in connection with any obligation
under or resulting from any agreement referred to in
Section 5.02(a)(ii);
(iv) Debt of Foreign Subsidiaries (and, without
duplication, guarantees thereof) for general corporate
purposes (other than acquisitions) not to exceed an aggregate
of $125,000,000 outstanding at any time;
(v) unsecured Debt (other than letters of credit) of
the Borrower, Group or any Domestic Subsidiary that is a
Guarantor;
(vi) Debt under the Trade Credit Facility in an
aggregate principal amount not to exceed $300,000,000 at any
time outstanding;
(vii) Debt secured by Liens permitted by Section
5.02(a)(i) hereof;
(viii) in the case of any of its Subsidiaries, Debt
owing to Group or to any of its Subsidiaries; and
(ix) Debt of Group or any of its Subsidiaries in an
aggregate amount not to exceed $250,000,000 for purposes of
Section 5.02(e)(i).
No incurrence of Debt shall be permitted unless the Borrower shall be
in compliance with each of the covenants set forth in Section 5.03 both
before and after giving effect thereto.
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(d) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer
or otherwise dispose of, any assets, or grant any option or other right
to purchase, lease or otherwise acquire any assets, except:
(i) sales of inventory in the ordinary course of its
business;
(ii) sales, leases, transfers or other disposals of
assets, or grants of any option or other right to purchase,
lease or otherwise acquire assets, following the Effective
Date for fair value (valued at the time of any such sale,
lease, transfer or other disposal), in an aggregate amount
from the Effective Date not to exceed 15% of the Consolidated
total assets of the Borrower and its Subsidiaries as valued at
January 4, 1997, and the fair value of such assets shall have
been determined in good faith by the Board of Directors of the
Borrower;
(iii) sales of assets on terms customary for
comparable transactions in the good faith judgment of the
Board of Directors of the Borrower pursuant to agreements
referred to in Section 5.02(a)(ii);
(iv) transfers of assets between Group and its
Subsidiaries, and, in the case of the Borrower, subject to
Section 5.02(f)(ii);
(v) sales of assets listed on Schedule 5.02(d)
hereto;
(vi) sales of assets and properties of Group and its
Subsidiaries in connection with sale-leaseback transactions
otherwise permitted hereunder (including, without limitation,
under Section 5.02(c));
(vii) the sale or discount of accounts (A) owing by
Persons incorporated, residing or having their principal place
of business in the United States in an aggregate amount not
exceeding $10,000,000 in face amount per calendar year or (B)
that are past due by more than 90 days, provided that the sale
or discount of such accounts is in the ordinary course of the
Borrower's business and consistent with prudent business
practices;
(viii) the licensing of trademarks and trade names by
the Borrower or any of its Subsidiaries in the ordinary course
of its business, provided that such licensing takes place on
an arm's-length basis;
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(ix) the rental by the Borrower and its Subsidiaries,
as lessors, in the ordinary course of their respective
businesses, on an arm's-length basis, of real property and
personal property, in each case under leases (other than
Capitalized Leases); and
(x) sales of Margin Stock for fair value as
determined in good faith by the Board of Directors of the
Borrower.
(e) Investments in Other Persons. Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment in any Person other
than:
(i) Investments by Group or its wholly owned
Subsidiaries in Persons or assets located outside the United
States in a net aggregate amount (after giving effect to any
dividends or other returns of capital received from any such
Investments) invested from the date hereof not to exceed
$250,000,000;
(ii) Investments by Group or its wholly owned
Subsidiaries in Persons or assets located in the United
States;
(iii) the Guaranties;
(iv) Investments in Cash Equivalents;
(v) other Investments in a net aggregate amount
(after giving effect to any dividends or other returns of
capital) invested from the date hereof not to exceed
$55,000,000;
(vi) endorsement of negotiable instruments for
deposit or collection in the ordinary course of business;
(vii) Investments representing stock or obligations
issued to Group or any of its Subsidiaries in settlement of
claims against any other Person by reason of a composition or
readjustment of debt or a reorganization of any debtor of
Group or such Subsidiary;
(viii) Investments representing the Debt of any
Person owing as a result of the sale by Group or any of its
Subsidiaries in the ordinary course of business of products or
services (on customary trade terms);
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(ix) loans or advances, not to exceed $15,000,000 in
the aggregate at any one time outstanding, to (A) employees of
the Borrower and its Subsidiaries as travel advances,
short-term loans or relocation expenses, and (B) to employees
and independent sales representatives as commission advances;
(x) Investments outstanding on the date hereof, but
not any additional investments therein;
(xi) Investments represented by the L/C Cash
Collateral Account and the other bank accounts permitted
hereunder;
(xii) Investments made with the capital stock of
Group or any of its Subsidiaries or with the proceeds of any
Capital Stock Issuance by Group; and
(xiii) Investments otherwise permitted under Section
5.02(c).
(f) Nature of Business. (i) Make, or permit any of its
Subsidiaries to make, (A) except as otherwise permitted pursuant to
subsection (B) below, any change in the nature of its business as
carried on at the date hereof in a manner materially adverse to the
Agents and the Lender Parties or (B) any investments including, without
limitation, Investments (except as permitted pursuant to Section
5.02(e)(v)) other than in apparel manufacturing or wholesaling
businesses or apparel accessories manufacturing or wholesaling
businesses or in related retail businesses, provided that on an annual
basis, at least 51% of the revenue of Group and its Subsidiaries on a
Consolidated basis is derived from apparel manufacturing or wholesaling
businesses or apparel accessories manufacturing or wholesaling
businesses, or (ii) transfer, in aggregate from the Effective Date,
from the Borrower to Group or to any of the Subsidiaries of Group other
than the Borrower operating assets (valued at the time of any such
transfer) in excess of 20% of the Consolidated total assets of Group
and its Subsidiaries as valued at January 4, 1997, provided, however,
that the limitation of this clause (ii) shall not apply to mergers,
consolidations or liquidations permitted under Section 5.02(b).
(g) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in accounting policies
(except as required or permitted by the Financial Accounting Standards
Board or generally accepted accounting principles), reporting practices
or Fiscal Year.
SECTION 5.03. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, Group and the Borrower will:
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(a) Leverage Ratio. Maintain, as of the end of each Fiscal
Quarter, a ratio of Total Debt to the sum of Total Debt plus Net Worth
of not greater than 0.55:1.00 provided, that for the purposes of
calculating Net Worth, the amount of the one time, nonrecurring charge
during the Fiscal Year ended January 1997 in an amount of $88,804,000
shall be added thereto.
(b) Coverage Ratio. Maintain, as of the end of each period of
four consecutive Fiscal Quarters, a ratio of Consolidated EBITDA of
Group and its Subsidiaries for any four consecutive Fiscal Quarter
period to Consolidated Interest Expense of Group and its Subsidiaries
for such period of not less than 3.00:1.00.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any
Advance when the same becomes due and payable; or the Borrower or any
other Loan Party shall fail to pay any interest on any Advance or make
any other payment of fees or other amounts payable under any Loan
Document within three Business Days after the same becomes due and
payable; or
(b) Any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) (i) Group or the Borrower shall fail to perform or observe
any term, covenant or agreement contained in Section 5.01(d) or (k),
5.02 or 5.03, or (ii) any Loan Party shall fail to perform or observe
any other term, covenant or agreement contained in any Loan Document on
its part to be performed or observed if such failure shall remain
unremedied for 30 days (A) after written notice thereof shall have been
given to the Borrower by any Agent or any Lender or (B) after any
officer of the Borrower obtains knowledge thereof; or
(d) Any Loan Party or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt under the Trade
Credit Facility or other Debt that is outstanding in a principal or
notional amount of at least $20,000,000 in the aggregate (but excluding
Debt outstanding hereunder) of such Loan Party or such
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Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt; or any such Debt shall be declared to be due and
payable, or required to be prepaid or redeemed (other than by a
regularly scheduled required prepayment or redemption or other than as
a result of any event which provides cash to such Loan Party in an
amount sufficient to satisfy such redemption or prepayment), purchased
or defeased, or an offer to prepay, redeem, purchase or defease such
Debt shall be required to be made, in each case prior to the stated
maturity thereof; or
(e) Group, the Borrower or any of their Material Subsidiaries
(or any group of Subsidiaries which, in the aggregate, would constitute
a Material Subsidiary) shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any
Group, the Borrower or any of their Subsidiaries (or any group of
Subsidiaries which, in the aggregate, would constitute a Material
Subsidiary) seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of
any such proceeding instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or unstayed for a
period of 30 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief
against, or the appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its property)
shall occur; or such Loan Party or any of its Subsidiaries shall take
any corporate action to authorize any of the actions set forth above in
this subsection (e); or
(f) Any judgment or order for the payment of money in excess
of $20,000,000 shall be rendered against any Loan Party or any of its
Subsidiaries and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
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or otherwise, shall not be in effect unless the payment of such
judgment or order is covered by insurance and such insurance coverage
is not in dispute.
(g) Any non-monetary judgment or order shall be rendered
against any Loan Party or any of its Subsidiaries that could be
reasonably expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(h) any provision of any Loan Document, after delivery thereof
pursuant to Section 3.01 or 5.01(k), shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to it,
or any such Loan Party shall so state in writing; or
(i) (A) Group shall at any time cease to have legal and
beneficial ownership of 100% of the capital stock of the Borrower
(except if such parties shall merge); or (B) any Person, or two or more
Persons acting in concert, shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or
indirectly, of Voting Stock of Group (or other securities convertible
into such Voting Stock) representing 25% or more of the combined voting
power of all Voting Stock of Group (other than Excluded Persons); or
(C) any Person, or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of, the power to exercise, directly or indirectly, a
controlling influence over the management or policies of Group, or
control over Voting Stock of Group (or other securities convertible
into such securities) representing 25% or more of combined voting power
of all Voting Stock of Group (other than Excluded Persons); or (D)
Linda J. Wachner (or, in the case of her death or disability, another
officer or officers of comparable experience and ability selected by
the Borrower within 180 days thereafter after consultation with the
Managing Agents) shall cease to be Chairman and Chief Executive Officer
of Group and the Borrower); or
(j) Any Loan Party or any of its ERISA Affiliates shall incur,
or shall be reasonably likely to incur, liability in excess of
$20,000,000 in the aggregate as a result of one or more of the
following: (i) the occurrence of any ERISA Event; (ii) the partial or
complete withdrawal of such Loan Party or any of its ERISA Affiliates
from a Multiemployer Plan; or (iii) the reorganization or termination
of a Multiemployer Plan;
then, and in any such event, the Managing Agents (i) shall at the request, or
may with the consent, of the Required Lenders, by notice to the Borrower,
declare the obligation of each
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Appropriate Lender to make
Advances (other than Letter of Credit Advances by an Issuing Bank or a Revolving
Credit Lender pursuant to Section 2.03(c) and Swing Line Advances by a Revolving
Credit Lender pursuant to Section 2.02(b)) and of each Issuing Bank to issue
Letters of Credit to be terminated, whereupon the same shall forthwith
terminate, and (ii) shall at the request, or may with the consent, of the
Required Lenders, (A) by notice to the Borrower, declare the Advances, all
interest thereon and all other amounts payable under this Agreement and the
other Loan Documents to be forthwith due and payable, whereupon the Advances,
all such interest and all such amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower and (B) by notice to each
party required under the terms of any agreement in support of which a Standby
Letter of Credit is issued, request that all Obligations under such agreement be
declared to be due and payable; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to any Loan Party or
any of its Material Subsidiaries (or any group of Subsidiaries which, in the
aggregate, would constitute a Material Subsidiary) under the Federal Bankruptcy
Code, (x) the obligation of each Lender to make Advances (other than Letter of
Credit Advances by the Issuing Bank or a Revolving Credit Lender pursuant to
Section 2.03(c) and Swing Line Advances by a Revolving Credit Lender pursuant to
Section 2.02(b)) and of each Issuing Bank to issue Letters of Credit shall
automatically be terminated and (y) the Advances, all such interest and all such
amounts shall automatically become and be due and payable, without presentment,
demand, protest or any notice of any kind, all of which are hereby expressly
waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default . If any Event of Default shall have occurred and be continuing, the
Managing Agents may, or shall at the request of the Required Lenders,
irrespective of whether they are taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding. If
at any time the Managing Agents determine that any funds held in the L/C Cash
Collateral Account are subject to any right or claim of any Person other than
the Agents and the Lender Parties or that the total amount of such funds is less
than the aggregate Available Amount of all Letters of Credit, the Borrower will,
forthwith upon demand by the Managing Agents, pay to the Administrative Agent,
as additional funds to be deposited and held in the L/C Cash Collateral Account,
an amount equal to the excess of (a) such aggregate Available Amount over (b)
the total amount of funds, if any, then held in the L/C Cash Collateral Account
that the Managing Agents determine to be free and clear of any such right and
claim.
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ARTICLE VII
THE AGENTS
SECTION 7.01. Authorization and Action. Each Lender Party
hereby appoints and authorizes each Agent to take such action as agent on its
behalf and to exercise such powers and discretion under this Agreement and the
other Loan Documents as are delegated to such Agent by the terms hereof,
together with such powers and discretion as are reasonably incidental thereto.
As to any matters not expressly provided for by this Agreement and the other
Loan Documents (including, without limitation, enforcement or collection of the
Notes, if any), each Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders, and such instructions shall be binding
upon all Lender Parties and all holders of Notes; provided, however, that no
Agent shall be required to take any action that exposes such Agent to personal
liability or that is contrary to this Agreement or applicable law. Each Agent
agrees to give to each Lender prompt notice of each notice given to it by the
Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. None of the Agents nor
any of their directors, officers, agents or employees shall be liable for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement and the other Loan Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, each Agent: (i) may treat the payee of any Note as the holder thereof
until the Documentation Agent receives and accepts an Assignment and Acceptance
entered into by the Lender that is the payee of such Note, as assignor, and an
Eligible Assignee, as assignee, as provided in Section 8.07; (ii) may consult
with legal counsel (including counsel for any Loan Party), independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender Party and shall not be responsible to any Lender
Party for any statements, warranties or representations (whether written or
oral) made in or in connection with this Agreement and the other Loan Documents;
(iv) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement and
the other Loan Documents on the part of any Loan Party or to inspect the
property (including the books and records) of any Loan Party (v) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of or the other Loan Documents
or any other instrument or document furnished pursuant hereto; and (vi) shall
incur no liability under or in respect of this Agreement or the other Loan
Documents by acting upon any notice, consent, certificate or
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other instrument or writing (which may be by telecopier, telegram or telex)
believed by it to be genuine and signed or sent by the proper party or parties.
SECTION 7.03. Scotiabank, Citibank and Affiliates. With
respect to its Commitment, the Advances made by it and any Notes issued to it,
each of Scotiabank and Citibank shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not an Agent; and the term "Lender Party" or "Lender
Parties" shall, unless otherwise expressly indicated, include Scotiabank and
Citibank in their individual capacities. Each of Scotiabank and Citibank and
their Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Scotiabank and Citibank were not Agents and without any
duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon any Agent or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon any Agent or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05. Indemnification. Each Lender Party (other than
the Designated Lenders which have only Competitive Bid Advances outstanding)
agrees to indemnify each Agent (to the extent not reimbursed by the Borrower),
ratably according to the respective principal amounts of the Advances then owed
to each of them (or if no Advances are at the time outstanding or if any
Advances are owed to Persons that are not Lenders, ratably according to the
respective amounts of their Commitments), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever that may be
imposed on, incurred by, or asserted against such Agent in any way relating to
or arising out of this Agreement or the other Loan Documents or any action taken
or omitted by such Agent under this Agreement or the other Loan Documents,
provided that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Agent's gross negligence or
willful misconduct; and provided, further, that no Designated Lender shall be
liable for any payment under this Section 7.05 so long as, and to the extent
that, its Designating Lender makes such payments on its behalf. The Borrower,
the Agents and the other Lender Parties shall continue to deal solely and
directly with the Designating Lender in connection with the Designated Lender's
rights
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and obligations under this Agreement. Without limitation of the foregoing, each
Lender Party (other than the Designated Lenders which have only Competitive Bid
Advances outstanding) agrees to reimburse each Agent promptly upon demand for
its ratable share of any out-of-pocket expenses (including counsel fees)
incurred by such 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 and the other Loan Documents,
to the extent that such Agent is not reimbursed for such expenses by the
Borrower.
SECTION 7.06. Successor Agents. Any Agent may resign at any
time by giving written notice thereof to the Lender Parties and the Borrower and
may be removed at any time with or without cause by the Required Lenders. Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint a successor Agent with the approval of the Borrower. If no successor
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Agent's giving of
notice of resignation or the Required Lenders' removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor
Agent, which shall be a commercial bank organized under the laws of the United
States of America or of any State thereof and having a combined capital and
surplus of at least $500,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, discretion, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
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ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Required Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, however, that (a) no amendment, waiver or consent shall, unless
in writing and signed by all the Lenders (other than the Designated Lenders and
other than any Lender Party which is, at such time, a Defaulting Lender), do any
of the following at any time: (i) waive any of the conditions specified in
Section 3.01 or, in the case of the initial Borrowing, Section 3.02, (ii) change
the percentage of the Commitments or of the aggregate unpaid principal amount of
the Advances, or the number of Lenders, that shall be required for the Lenders
or any of them to take any action hereunder, (iii) release any Material
Guarantor, or (vi) amend this Section 8.01, (b) no amendment, waiver or consent
shall, unless in writing and signed by the Required Lenders and each Lender
affected by such amendment, waiver or consent (other than the Designated Lenders
and other than any Lender which is, at such time, a Defaulting Lender), (i)
reduce the principal of, or interest on, the Advances owed to such Lender or any
fees or other amounts payable hereunder to such Lender or (ii) postpone any date
fixed for any payment of principal of, or interest on, the Advances owed to such
Lender or any fees or other amounts payable hereunder to such Lender and (c) no
amendment, waiver or consent shall, unless in writing and signed by the Required
Lenders and, for each Facility directly affected by such amendment, waiver or
consent, each Lender that has a Commitment under such Facility (other than the
Designated Lenders and other than any Lender which is, at such time, a
Defaulting Lender), increase the Commitments of such Lender or subject such
Lender to any additional obligations; provided further that no amendment, waiver
or consent shall, unless in writing and signed by the Swing Line Bank or any
Issuing Bank, as the case may be, in addition to the Lenders required above to
take such action, affect the rights or obligations of the Swing Line Bank or of
such Issuing Bank, as the case may be, under this Agreement; and provided
further that no amendment, waiver or consent shall, unless in writing and signed
by an Agent in addition to the Lenders required above to take such action,
affect the rights or duties of such Agent under this Agreement. Each Designating
Lender shall act as its Designated Lender's agent and attorney in fact and
exercise on behalf of its Designated Lender all rights, if any, to vote and to
grant and make approvals, waivers, consents or waivers in accordance with this
Section 8.01. The Borrower, the Agents and the other Lender Parties shall
continue to deal solely and directly with the Designating Lender in connection
with the Designated Lender's rights and obligations under this Agreement. Any
request by any Loan Party for an amendment or waiver of any provision of any
Loan Document shall be made by such Loan Party by giving a written request
therefor to the Documentation Agent.
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SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy, telex or cable communication) and mailed, telegraphed,
telecopied, telexed, cabled or delivered, if to the Borrower, at its address at
90 Park Avenue, New York, New York 10016, Attention: Chief Financial Officer,
with a copy to General Counsel; if to any Initial Lender or initial Issuing Bank
or Agent, at its Domestic Lending Office specified opposite its name on Schedule
I hereto; if to any other Lender Party, at its Domestic Lending Office specified
in the Assignment and Acceptance pursuant to which it became a Lender; or, as to
each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall,
when mailed, telegraphed, telecopied, telexed or cabled, be effective when
deposited in the mails, delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the cable company,
respectively, except that notices and communications to an Agent pursuant to
Article II, III or VII shall not be effective until received by such Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Exhibit hereto to be executed and
delivered hereunder shall be effective as delivery of a manually executed
counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender Party or Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) Group and the Borrower
agree to pay on demand (i) all reasonable costs and expenses (other than taxes,
including interest, additions to tax and penalties relating thereto, except to
the extent that the same are required to be paid pursuant to Section 2.14
hereof) of the Agents in connection with the preparation, execution, delivery,
administration, modification and amendment of the Loan Documents (including,
without limitation, (A) all due diligence, syndication (including printing,
distribution and bank meetings), transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees and
all other out-of-pocket expenses and (B) the reasonable fees and expenses of
counsel for the Agents with respect thereto, with respect to advising the Agents
as to their respective rights and responsibilities, or the protection or
preservation of rights or interests, under the Loan Documents, with respect to
negotiations with any Loan Party or with other creditors of any Loan Party or
any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally, and any
proceeding ancillary thereto) and (ii) all reasonable costs and expenses (other
than
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taxes, including interest, additions to tax and penalties relating thereto,
except to the extent that the same are required to be paid pursuant to Section
2.14 hereof) of the Agents and the Lender Parties in connection with the
enforcement of the Loan Documents, whether in any action, suit or litigation,
any bankruptcy, insolvency or other similar proceeding affecting creditors'
rights generally or otherwise (including, without limitation, the reasonable
fees and expenses of counsel for the Agents and each Lender Party with respect
thereto).
(b) Group and the Borrower agree to indemnify and hold
harmless each of the Agents and each Lender (other than any Designated Lender to
the extent such indemnification obligation exceeds that which the Borrower would
owe to its Designating Lender) and each of their Affiliates and their officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel, but
other than taxes, including interest, additions to tax and penalties relating
thereto, except to the extent that the same are required to be paid pursuant to
Section 2.14 hereof) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) this Agreement, the Facilities, any of the transactions
contemplated herein or the actual or proposed use of the proceeds of the
Advances or (ii) the actual or alleged presence of Hazardous Materials on any
property of the Borrower or any of its Subsidiaries or any Environmental Action
relating in any way to the Borrower or any of its Subsidiaries, in each case
whether or not such investigation, litigation or proceeding is brought by the
Borrower, its directors, shareholders or creditors or an Indemnified Party or
any other Person or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are consummated, except to
the extent such claim, damage, loss, liability or expense is found in a final,
non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct. The
Borrower also agrees not to assert any claim against any Agent, any Lender, any
of their Affiliates, or any of their respective directors, officers, employees,
attorneys and agents, on any theory of liability, for special, indirect,
consequential or punitive damages arising out of or otherwise relating to this
Agreement, any of the transactions contemplated herein or the actual or proposed
use of the proceeds of the Advances, except in the event of gross negligence or
willful misconduct on the part of such Agent, Lender or Affiliate.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance or LIBO Rate Advance is made by the Borrower to or for
the account of a Lender other than on the last day of the Interest Period for
such Advance, as a result of a payment or Conversion pursuant to Section 2.11,
2.12 or 2.14, acceleration of the maturity of the Advances pursuant to Section
6.01 or for any other reason, the Borrower shall, upon demand by such Lender
Party (with a copy of such demand to the Administrative Agent), pay to the
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Administrative Agent for the account of such Lender Party any amounts required
to compensate such Lender Party for any additional losses, costs or expenses
that it may reasonably incur as a result of such payment or Conversion,
including, without limitation, any loss (excluding loss of anticipated profits
and taxes, including interest, additions to tax and penalties relating thereto,
except to the extent that the same are required to be paid pursuant to Section
2.14 hereof), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender Party to fund or
maintain such Advance; provided, however, that notwithstanding any of the
foregoing, the Borrower shall not be required to compensate any Designated
Lender for any losses, costs or expenses to the extent such amounts exceed that
which the Borrower would owe to its Designating Lender, but for such
designation.
(d) Without prejudice to the survival of any other agreement
of the Borrower hereunder, the agreements and obligations of the Borrower
contained in Sections 2.11, 2.14 and 8.04 and the agreements and obligations of
any Lender Party or Agent contained in Section 2.14 shall survive the payment in
full of principal, interest and all other amounts payable hereunder.
(e) Notwithstanding anything to the contrary, neither the
designation of any Designated Lender, any Advance made by any Designated Lender,
nor any other condition or circumstance relating to any Designated Lender shall
increase (i) any obligations or liabilities of the Borrower hereunder,
including, without limitation, pursuant to Section 2.11, 2.12, 2.14 or this
Section 8.04, or (ii) any obligations or liabilities of the Borrower under any
Loan Documents, in each case, as compared with any obligations or liabilities
which would arise if the Designating Lender were the Lender for all purposes and
had not otherwise appointed a Designated Lender.
SECTION 8.05. Right of Set-off. Upon (i) the occurrence and
during the continuance of any Event of Default and (ii) the making of the
request or the granting of the consent specified by Section 6.01 to authorize
the Managing Agents to declare the Advances due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by such Lender Party or such Affiliate to or for the credit or
the account of the Borrower against any and all of the Obligations of the
Borrower now or hereafter existing under this Agreement and any Note held by
such Lender, whether or not such Lender Party shall have made any demand under
this Agreement or such Note, if any, and although such obligations may be
unmatured. Each Lender agrees promptly to notify the Borrower after any such
set-off and application, provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its Affiliates under this Section are in addition to other
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rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective (other than Sections 2.01 and 2.03, which shall only become effective
upon satisfaction of the conditions precedent set forth in Section 3.01) when it
shall have been executed by the Borrower, Group and the Agents and when the
Managing Agents shall have been notified by each Initial Lender and initial
Issuing Bank that such Initial Lender and initial Issuing Bank has executed it
and thereafter shall be binding upon and inure to the benefit of the Borrower,
the Agents and each Lender Party and their respective successors and assigns,
except that the Borrower shall not have the right to assign its rights hereunder
or any interest herein without the prior written consent of the Lender Parties.
SECTION 8.07. Assignments, Designations and Participations (a)
Each Lender Party (other than any Designated Lender except for an assignments to
its Designating Lender) may assign, and, if (i) demanded by the Borrower
following either (x) a payment by the Borrower of Taxes with respect to such
Lender in accordance with Section 2.14 or (y) the occurrence of an event that
would, upon payment to such Lender of amounts hereunder, require a payment by
the Borrower of Taxes with respect to such Lender in accordance with Section
2.14 and (ii) upon at least 30 Business Days' notice to such Lender and the
Administrative Agent, will assign, to one or more banks or other entities all or
a portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment or Commitments, the Advances
owing to it (including accrued interest) and any Revolving Credit Note held by
it but not including any right to make Competitive Bid Advances, Competitive Bid
Advances owing to it and Competitive Bid Notes); provided, however, that (A)
each such assignment shall be of a fixed percentage of all rights and
obligations under and in respect of all of the Facilities under which it has a
Commitment; (B) except in the case of (x) an assignment to a Person that,
immediately prior to such assignment, was a Lender, (y) an assignment to an
Affiliate of the assigning Lender (including an assignment by a Designated
Lender to its Designating Lender) or (z) an assignment of all of a Lender's
rights and obligations under this Agreement, the amount of the Commitment of the
assigning Lender being assigned pursuant to each such assignment (determined as
of the date of the Assignment and Acceptance with respect to such assignment)
shall in no event be less than $10,000,000, and the amount of the Commitment of
the assigning Lender being retained by such Lender immediately after giving
effect to such assignment (determined as of the effective date of the Assignment
and Acceptance with respect to such assignment) shall in no event be less than
$10,000,000, (C) each such assignment shall be to an Eligible Assignee, (D) each
such assignment made as a result of a demand by the Borrower pursuant to this
Section 8.07(a) shall be arranged by the Borrower after consultation with the
Managing Agents and shall be either an assignment of all of the rights and
obligations of the assigning Lender under this Agreement or an assignment of a
portion of such rights and obligations made concurrently
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with another such assignment or other such assignments that together cover all
of the rights and obligations of the assigning Lender under this Agreement, (E)
no Lender shall be obligated to make any such assignment as a result of a demand
by the Borrower pursuant to this Section 8.07(a) unless and until such Lender
shall have received one or more payments from either the Borrower or one or more
Eligible Assignees in an aggregate amount at least equal to the aggregate
outstanding principal amount of the Advances owing to such Lender, together with
accrued interest thereon to the date of payment of such principal amount and all
other amounts payable to such Lender under this Agreement, (F) no such
assignments will be permitted without the consent of the Managing Agents until
the Managing Agents shall have notified the Lender Parties that syndication of
the Commitments thereunder has been completed, and (G) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with any Revolving Credit Note subject to such assignment and a processing and
recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, (x) 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, have the rights and obligations of a Lender
Party's hereunder and (y) the Lender Party's assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender Party's
rights and obligations under this Agreement, such Lender Party shall cease to be
a party hereto).
(b) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
or any other Loan Document or any other instrument or document furnished
pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the any Agent, such assigning Lender Party or any other
Lender Party and based on such documents and information as it shall deem
appropriate
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at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v)such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
this Agreement as are delegated to the each Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations that by the terms of this Agreement are required to be performed
by it as a Lender Party.
(c) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee representing that it is an Eligible
Assignee, together with any Revolving Credit Note subject to such assignment,
the Administrative Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit C hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(d) Any Lender (other than a Designated Lender) may at any
time designate not more than one Designated Lender to fund Revolving Credit
Advances and/or Competitive Bid Advances on behalf of such Designating Lender
subject to the terms of this Section 8.07(d). Such designation may occur by
execution by such parties of a Designation Agreement. The parties to each such
designation shall execute and deliver to the Administrative Agent and the
Borrower for their acceptance a Designation Agreement. Upon receipt of an
appropriately completed Designation Agreement executed by a Designating Lender
and a designee representing that it is a Designated Lender and consented by the
Borrower, the Administrative Agent will accept such Designation Agreement and
will give prompt notice thereof to the Borrower and the other Lenders,
whereupon, (i) upon the written request of the Designating Lender, the Borrower
shall execute and deliver to the Designating Lender a Revolving Credit Note
and/or from time to time a Competitive Bid Note, as applicable, in each case
payable to the order of the Designated Lender, (ii) from and after the effective
date specified in the Designation Agreement, the Designated Lender shall become
a party to this Agreement with a right to make Revolving Credit Advances and/or
Competitive Bid Advances on behalf of its Designating Lender pursuant to
Sections 2.01(a) and 2.04, respectively, and (iii) the Designated Lender shall
not be required to make payments with respect to any obligations in this
Agreement except to the extent of excess cash flow of such Designated Lender
which is not otherwise required to repay obligations of such Designated Lender
which are then due and payable; provided, however, that regardless of such
designation and assumption by the Designated Lender, the Designating Lender (i)
shall be and remain obligated to the Borrower, the Agents and the Lender Parties
for each and every of the obligations of the Designating Lender and its related
Designated Lender with respect to this Agreement, including, without limitation,
any indemnification obligations under Section 7.05 hereof and any sums otherwise
payable to the Borrower by the Designated Lender and (ii) neither the
designation of a
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Designated Lender, the election or other determination that a Designated Lender
will make any Advance nor any other condition or circumstance relating to the
Designated Lender shall in any way release, diminish or otherwise affect the
relevant Designating Lender's Commitment or any other of its obligations
hereunder or under any other Loan Document or any rights of the Borrower, any
Agent or any Lender with respect to such Designating Lender.
The Borrower, the Agents and the Lender Parties may, at their option, pursue
remedies against any Designating Lender which arise out of any failure of
its Designated Lender to perform such Designated Lender's obligations
under this Agreement or any other Loan Document. Each Designating Lender shall
serve as the administrative agent and attorney in fact for its Designated Lender
and shall on behalf of its Designated Lender: (i) receive any and all payments
made for the benefit of such Designated Lender and (ii) give and receive all
communications and notices and take all actions hereunder, including, without
limitation, votes, approvals, waivers, consents and amendments under or relating
to this Agreement and the other Loan Documents to the extent, if any, such
Designated Lender shall have any rights hereunder or thereunder. To the extent a
Designated Lender shall have the right to receive or give any such notice,
communication, vote, approval, waiver, consent or amendment, it shall be signed
by its Designating Lender as administrative agent and attorney in fact for such
Designated Lender and need not be signed by such Designated Lender on his own
behalf. The Borrower, the Agents and the Lender Parties may rely thereon without
any requirement that the Designated Lender sign or acknowledge the same.
Notwithstanding anything to the contrary contained herein, no Designated Lender
may assign or transfer all or any portion of its interest hereunder or under any
other Loan Document, other than via an assignment to its Designating Lender in
accordance with the provisions of this Section 8.07.
(e) By executing and delivering a Designation Agreement, the
Lender Party making the designation thereunder and its designee thereunder
confirm and agree with each other and the other parties hereto as follows: (i)
such Lender Party makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; (ii) such Lender
Party makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such designee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.01 and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Designation Agreement; (iv) such designee will,
independently and without reliance upon any Agent, such designating Lender Party
or any other Lender Party and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
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credit decisions in taking or not taking action under this Agreement; (v) such
designee confirms that it is a Designated Lender; (vi) such designee appoints
and authorizes each Agent to take such action as agent on its behalf and to
exercise such powers and discretion under this Agreement as are delegated to
such Agent by the terms hereof, together with such powers and discretion as are
reasonably incidental thereto; and (vii) such designee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of this Agreement are required to be performed by it as a Lender Party.
(f) Upon its receipt of a Designation Agreement executed by a
designating Lender Party and a designee representing that it is a Designated
Lender, the Administrative Agent shall, if such Designation Agreement has been
completed and is substantially in the form of Exhibit D hereto, (i) accept such
Designation Agreement, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.
(g) The Administrative Agent shall maintain at its address
referred to in Section 8.02 a copy of each Assignment and Acceptance and each
Designation Agreement delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lender Parties and, with respect
to Lenders other than Designated Lenders, the Commitment of, and principal
amount of the Advances owing to, each Lender from time to time (the "Register").
The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and the Borrower, the Agents and the Lender Parties may
treat each Person whose name is recorded in the Register as a Lender Party
hereunder for all purposes of this Agreement. The Register shall be available
for inspection by the Borrower or any Lender Party at any reasonable time and
from time to time upon reasonable prior notice.
(h) Each Lender Party may sell participations to one or more
banks or other entities in or to all or a portion of its rights and obligations
under this Agreement (including, without limitation, all or a portion of its
Commitment and the Advances owing to it); provided, however, that (i) such
Lender Party's obligations under this Agreement (including, without limitation,
its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such
Lender Party shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender Party shall remain the holder
of any Note issued to it for all purposes of this Agreement, (iv) the Borrower,
the Agents and the other Lender Parties shall continue to deal solely and
directly with such Lender Party in connection with such Lender Party's rights
and obligations under this Agreement and (v) no participant under any such
participation shall have any right to approve any amendment or waiver of any
provision of this Agreement or any Loan Document, or any consent to any
departure by any Loan Party therefrom, except to the extent that such amendment,
waiver or consent would (i) reduce the principal of, or interest on, the
Advances or any fees or other amounts payable hereunder, in each case to the
extent subject to such participation, (ii) postpone any date fixed for any
payment of principal of, or interest on, the Advances or any fees or other
amounts
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payable hereunder, in each case to the extent subject to such participation or
(iii) release any Material Guarantor.
(i) Any Lender Party may, in connection with any assignment,
designation or participation or proposed assignment, designation or
participation pursuant to this Section 8.07, disclose to the assignee, designee
or participant or proposed assignee, designee or participant, any information
relating to the Borrower furnished to such Lender Party by or on behalf of the
Borrower; provided that, prior to any such disclosure, the assignee, designee or
participant or proposed assignee, designee or participant shall agree to
preserve the confidentiality of any Confidential Information relating to the
Borrower received by it from such Lender Party.
(j) Each Issuing Bank may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided, however, that
(i) except in the case of an assignment to a Person that immediately prior to
such assignment was an Issuing Bank or an assignment of all of an Issuing Bank's
rights and obligations under this Agreement, the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $10,000,000 and shall
be in an integral multiple of $1,000,000 in excess thereof, (ii) each such
assignment shall be to an Eligible Assignee and (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with a
processing and recordation fee of $3,500.
(k) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and any Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
(l) Each of the Borrower, the Lenders and the Agents agrees
that it will not institute against any Designated Lender or join any other
Person in instituting against any Designated Lender any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding under any
federal or state bankruptcy or similar law, for one year and one day after the
payment in full of the latest maturing commercial paper note issued by such
Designated Lender. Notwithstanding the foregoing, the Designating Lender
unconditionally agrees to indemnify the Borrower, the Agents and each Lender
Party against all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever which may be incurred by or asserted against the Borrower, such Agent
or such Lender Party, as the case may be, in any way relating to or arising as a
<PAGE>
<PAGE>
87
consequence of any such forbearance or delay in the initiation of any such
proceeding against its Designated Lender.
SECTION 8.08. Confidentiality. None of the Agents nor any
Lender Party shall disclose any Confidential Information to any other Person
without the consent of Group and the Borrower, other than (a) to such Agent's or
such Lender Party's Affiliates and their officers, directors, employees, agents
and advisors and, as contemplated by Section 8.07(i), to actual or prospective
assignees and participants, and then only on a confidential basis, (b) as
required by any law, rule or regulation or judicial process, (c) to any rating
agency when required by it, provided that, prior to any such disclosure, such
rating agency shall undertake to preserve the confidentiality of any
Confidential Information relating to Group or the Borrower received by it from
such Lender Party and (d) as requested or required by any state, federal or
foreign authority or examiner regulating banks or banking.
SECTION 8.09. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any of its officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused by (i)such Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit comply with
the terms of the Letter of Credit or (ii) such Issuing Bank's willful failure to
make lawful payment under a Letter of Credit after the presentation to it of a
draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, such
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
<PAGE>
<PAGE>
88
SECTION 8.11. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York.
SECTION 8.12. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement in
the courts of any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any New
York State or federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
<PAGE>
<PAGE>
SECTION 8.13. Waiver of Jury Trial. Each of the Borrower, the
Agents and the Lender Parties hereby irrevocably waives all right to trial by
jury in any action, proceeding or counterclaim (whether based on contract, tort
or otherwise) arising out of or relating to this Agreement or the actions of any
Agent or any Lender Party in the negotiation, administration, performance or
enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
WARNACO INC.
By /s/ WILLIAM S. FINKELSTEIN
_______________________________
Title: Senior Vice President
and Chief Financial Officer
THE WARNACO GROUP, INC.
By /s/ WILLIAM S. FINKELSTEIN
_______________________________
Title: Senior Vice President
and Chief Financial Officer
<PAGE>
<PAGE>
THE BANK OF NOVA SCOTIA
as Managing Agent, Administrative
Agent, Competitive Bid Agent,
Swing Line Bank and an Issuing
Bank
By /s/ JOHN HOPMANS
_______________________________
Title:
<PAGE>
<PAGE>
CITIBANK, N.A.
as Managing Agent and
Documentation Agent
By /s/ ROBERT D. WETRUN
_______________________________
Title: Attorney-in-Fact
<PAGE>
<PAGE>
Initial Lenders
UNION BANK OF CALIFORNIA, N.A.
By /s/ CARY MOORE
_______________________________
Title: Vice President
<PAGE>
<PAGE>
THE BANK OF NEW YORK
By /s/ ELIZA S. ADAMS
_______________________________
Title: Vice President
<PAGE>
<PAGE>
THE BANK OF NOVA SCOTIA
By /s/ JOHN HOPMANS
_______________________________
Title:
<PAGE>
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By /s/ G. STEWART
_______________________________
Title:
<PAGE>
<PAGE>
BANKBOSTON, N.A.
By /s/ NANCY FULLER
_______________________________
Title: Director
<PAGE>
<PAGE>
CITIBANK, N.A.
By /s/ ROBERT D. WETRUN
_______________________________
Title: Attorney-in-Fact
<PAGE>
<PAGE>
COMMERZBANK A.G., NEW YORK BRANCH
By /s/ ROBERT DONOHUE
_______________________________
Title: Vice President
By /s/ PETER DOYLE
-------------------------------
Title: Assistant Treasurer
<PAGE>
<PAGE>
CORESTATES BANK, N.A.
By /s/ IRENE ROSEN MARTES
_______________________________
Title: Vice President
<PAGE>
<PAGE>
CREDITO ITALIANO BANK
By /s/ SAIYED A. ABBAS
-------------------------------
Title: Assistant Vice President
By /s/ PIERLUIGI MAINARDI
-------------------------------
Title: Assistant Vice President
<PAGE>
<PAGE>
DAI-ICHI KANGYO BANK, LIMITED
By /s/ THOMAS K. FENNESSEY
_______________________________
Title: Assistant Vice President
<PAGE>
<PAGE>
FIRST UNION NATIONAL BANK
By /s/ WILLIAM JOHNSON
_______________________________
Title: Vice President
<PAGE>
<PAGE>
FLEET BANK, N.A.
By /s/ ELIZABETH ALLEN
_______________________________
Title: Vice President
<PAGE>
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By /s/ RAYMOND VENTURA
_______________________________
Title: Vice President & Manager
<PAGE>
<PAGE>
THE INDUSTRIAL BANK OF JAPAN,
LTD., NEW YORK BRANCH
By /s/ JEFFREY COLE
_______________________________
Title: Senior Vice President
<PAGE>
<PAGE>
GENERAL ELECTRIC CAPITAL
CORPORATION
By /s/ PEGGY ERLENKOTTER
________________________________
Title: Duly Authorized Signatory
<PAGE>
<PAGE>
KREDIETBANK N.V.
By /s/ ARMEN KAROZICHIAN
_______________________________
Title: Vice President
<PAGE>
<PAGE>
MARINE MIDLAND BANK
By /s/ PAUL J. DECHAGAS
_______________________________
Title: Vice President
<PAGE>
<PAGE>
MERITA BANK LTD - NEW YORK BRANCH
By
_______________________________
Title: Vice President
By _______________________________
Title: Vice President
<PAGE>
<PAGE>
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By /s/ JAMES E. CONDON
_______________________________
Title: Vice President
<PAGE>
<PAGE>
NATIONSBANK, N.A.
By /s/ JOSEPH R. NETZEL
_______________________________
Title: Vice President
<PAGE>
<PAGE>
THE SANWA BANK, LIMITED, NEW YORK
BRANCH
By /s/ PAUL E. JUDICKE
_______________________________
Title: Vice President
<PAGE>
<PAGE>
SOCIETE GENERALE
By /s/ SEDARE CORADIN
_______________________________
Title: Vice President
<PAGE>
<PAGE>
WACHOVIA BANK, N.A.
By /s/ J. BARWIS
_______________________________
Title: Vice President
<PAGE>
<PAGE>
U.S. $300,000,000
SECOND AMENDED AND RESTATED
CREDIT AGREEMENT,
dated as of August 12, 1997,
among
WARNACO INC.,
as the U.S. Borrower,
WARNACO (HK) Ltd.,
as the Foreign Borrower,
THE WARNACO GROUP, INC.,
as a Guarantor,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders,
CITIBANK, N.A.,
as the Documentation Agent, for the Lenders,
and
THE BANK OF NOVA SCOTIA,
as the Administrative Agent for the Lenders.
Arrangers:
---------
THE BANK OF NOVA SCOTIA
and
CITICORP SECURITIES, INC.
<PAGE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C> <C>
1.1. Defined Terms
1.2. Use of Defined Terms............................................15
1.3. Cross-References................................................15
1.4. Accounting and Financial Determinations.........................16
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments.....................................................16
2.1.1. Loan Commitment.................................................16
2.1.2. Commitment to Issue Letters of Credit...........................18
2.1.3. Lenders Not Permitted or Required to Make Loans
and Fronting Bank Not Permitted or Required to
Issue Letters of Credit Under Certain
Circumstances................................................18
2.2. Reduction of the Commitment Amount..............................19
2.3. Borrowing Procedure.............................................19
2.4. Continuation and Conversion Elections...........................21
2.5. Funding.........................................................22
2.6. Notes...........................................................22
2.7. Extension of Commitment Termination Date........................23
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments......................................23
3.2. Interest Provisions.............................................24
3.2.1. Rates...........................................................24
3.2.2. Post-Maturity Rates.............................................25
3.2.3. Payment Dates...................................................26
3.2.4. Allocation of Interest Payments.................................26
3.3. Fees............................................................27
3.3.1. Letter of Credit Face Amount Fee................................27
3.3.2. Letter of Credit Fees...........................................28
3.3.3. Fee Letter......................................................28
3.3.4. Commitment Fee..................................................28
3.4. Guaranty........................................................29
3.4.1. Guaranty........................................................29
3.4.2. Acceleration of Guaranty........................................30
3.4.3. Guarantee Absolute, etc.........................................30
</TABLE>
<PAGE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
3.4.4. Reinstatement, etc...............................................32
3.4.5. Waiver, etc......................................................32
3.4.6. Postponement of Subrogation, etc.................................32
ARTICLE IV
LETTERS OF CREDIT
4.1. Issuance Requests................................................33
4.2. Issuances and Extensions.........................................35
4.3. Destruction of Goods, etc........................................35
4.4. Other Lenders' Participation.....................................35
4.5. Disbursements....................................................37
4.6. Reimbursement; Outstanding Letters, etc..........................37
4.7. Deemed Disbursements.............................................40
4.8. Nature of Reimbursement Obligations..............................41
4.9. Existing Letters of Credit.......................................41
ARTICLE V
CERTAIN LIBO RATE AND OTHER PROVISIONS
5.1. LIBO Rate Lending Unlawful.......................................42
5.2. Deposits Unavailable.............................................42
5.3. Increased LIBO Rate Loan Costs, etc..............................42
5.4. Funding Losses...................................................43
5.5. Increased Capital Costs, etc.....................................43
5.6. Taxes............................................................44
5.7. Payments, Computations, etc......................................46
5.8. Sharing of Payments..............................................47
5.9. Setoff...........................................................48
5.10. Use of Proceeds..................................................48
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Initial Credit Extension.........................................48
6.1.1. Resolutions, etc.................................................48
6.1.2. Delivery of Notes................................................49
6.1.3. Guarantees.......................................................49
6.1.4. Delivery of Form 1001 or 4224....................................49
6.1.5. Certificates as to No Default, etc...............................49
6.1.6. No Material Adverse Change........................................49
</TABLE>
-ii-
<PAGE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
6.1.7. Tradexpress Agreement.............................................50
6.1.8. U.S. Credit Agreement.............................................50
6.1.9. Opinions of Counsel...............................................50
6.2. All Credit Extensions.............................................50
6.2.1. Compliance with Warranties, No Default, etc.......................50
6.2.2. Credit Request....................................................51
6.2.3. Satisfactory Legal Form...........................................51
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. Organization, etc.................................................52
7.2. Due Authorization, Non-Contravention, etc.........................52
7.3. Government Approval, Regulation, etc..............................52
7.4. Validity, etc.....................................................53
7.5. No Material Adverse Change........................................53
7.6. Litigation, etc...................................................53
7.7. Regulations G, U and X............................................53
7.8. Accuracy of Information...........................................53
7.9. U.S. Credit Agreement Representations and
Warranties.....................................................54
ARTICLE VIII
COVENANTS
8.1. Covenants.........................................................54
8.1.1. Financial Information, Reports, Notices, etc......................54
8.1.2. Future Subsidiaries of Group......................................55
8.1.3. U.S. Credit Agreement Covenants...................................55
8.1.4. Default Notice....................................................55
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default......................................55
9.1.1. Non-Payment of Obligations........................................55
9.1.2. Breach of Warranty................................................56
9.1.3. Non-Performance of Certain Covenants and
Obligations....................................................56
9.1.4. Non-Performance of Other Covenants and
Obligations...................................................56
</TABLE>
-iii-
<PAGE>
<PAGE>
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
9.1.5. Default Under U.S. Credit Agreement..............................56
9.1.6. Bankruptcy, Insolvency, etc......................................56
9.1.7. Termination, etc. of Loan Documents..............................56
9.2. Action Upon Bankruptcy...........................................56
9.3. Action Upon Other Event of Default...............................57
ARTICLE X
THE AGENTS
10.1. Actions..........................................................57
10.2. Copies, etc......................................................58
10.3. Exculpation......................................................58
10.4. Successor........................................................58
10.5. Loans Made or Letters of Credit Issued by
Scotiabank and Loans made by Citibank.........................59
10.6. Credit Decisions.................................................59
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc.........................................60
11.2. Notices..........................................................61
11.3. Payment of Costs and Expenses....................................61
11.4. Indemnification..................................................62
11.5. Survival.........................................................63
11.6. Severability.....................................................63
11.7. Headings.........................................................63
11.8. Execution in Counterparts, Effectiveness, etc....................63
11.9. Governing Law; Entire Agreement..................................63
11.10. Successors and Assigns...........................................63
11.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes.............................64
11.11.1. Assignments......................................................64
11.11.2. Participations...................................................66
11.11.3. Fronting Bank Assignments........................................66
11.12. Other Transactions...............................................67
11.13. Forum Selection and Consent to Jurisdiction......................67
11.14. Waiver of Jury Trial.............................................68
11.15. UCP; etc.........................................................68
11.16. Usury Restraint..................................................69
11.17. Judgment Currency................................................69
</TABLE>
-iv-
<PAGE>
<PAGE>
SCHEDULE I - List of Existing Letters of Credit and Existing
Loans
EXHIBIT A - Form of Note
EXHIBIT B - Form of Issuance Request
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Lender Assignment Agreement
EXHIBIT F-1 - Form of Group Guaranty
EXHIBIT F-2 - Form of Subsidiary Guaranty
EXHIBIT G - Form of Opinion of New York Counsel to the
Obligors
EXHIBIT H - Form of Opinion of General Counsel for the U.S.
Borrower
EXHIBIT I - Form of Opinion of Barbados Counsel to the
Obligors
-v-
<PAGE>
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of August
12, 1997 (amending and restating the Existing Credit Agreement (as defined
below)), is among WARNACO INC., a Delaware corporation (the "U.S. Borrower"),
WARNACO (HK) LTD., a company organized under the laws of Barbados (the "Foreign
Borrower"), THE WARNACO GROUP, INC., a Delaware corporation ("Group"), the
various financial institutions as are or may become parties hereto
(collectively, the "Lenders"), CITIBANK, N.A. ("Citibank"), as documentation
agent (in such capacity, the "Documentation Agent") and THE BANK OF NOVA SCOTIA
("Scotiabank"), as administrative agent (in such capacity, the "Administrative
Agent") for the Lenders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the U.S. Borrower, certain financial institutions and
Scotiabank are parties to an Amended and Restated Credit Agreement, dated as of
June 30, 1997 (as amended or otherwise modified to the date hereof, the
"Existing Credit Agreement"), pursuant to which, inter alia, such financial
institutions have made (or participated in) loans to the U.S. Borrower, as
listed on Schedule I hereto (the "Existing Loans"), and Scotiabank provides a
documentary letter of credit facility in favor of the U.S. Borrower and has
issued those documentary letters of credit (the "Existing Letters of Credit")
listed on Schedule I hereto;
WHEREAS, the Borrowers have requested that the Lenders and the Fronting
Bank amend and restate the Existing Credit Agreement with this Agreement;
WHEREAS, pursuant to this Agreement the Borrowers desire to obtain
Commitments from the Lenders pursuant to which
(a) Letters of Credit will be issued by the Fronting Bank for the
account of the U.S. Borrower to support obligations of the U.S. Borrower
and its wholly-owned Subsidiaries (and their respective divisions) and
for the account of the Foreign Borrower to support obligations of the
Foreign Borrower and, under the several obligations hereunder, each of
the Lenders will, to the extent of such Lender's Percentage, participate
in Letters of Credit (including the Existing Letters of Credit) issued
from time to time hereunder prior to the Commitment Termination Date;
and
<PAGE>
<PAGE>
(b) Loans will be made by the Fronting Bank to the Borrowers and,
under the several obligations hereunder, each of the Lenders will, to
the extent of such Lender's Percentage, participate in or make the Loans
from time to time prior to the Commitment Termination Date;
WHEREAS, the Fronting Bank and the Lenders are willing, on the terms and
subject to the conditions hereinafter set forth (including Article VI), to amend
and restate the Existing Credit Agreement pursuant to the terms and conditions
of this Agreement, extend such Commitments hereunder, make and participate in
such Loans and issue and participate in such Letters of Credit; and
WHEREAS, the proceeds of Loans will be used for the sole purpose of
providing the Borrowers with up to a four-month (or 120-day, in the case of Base
Rate Loans) trade credit in respect of disbursements made to the beneficiaries
of Letters of Credit and Letters of Credit will be issued solely to support the
worldwide sourcing of merchandise by the U.S. Borrower and its wholly-owned
Subsidiaries (or divisions), including the Foreign Borrower;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Administrative Agent" is defined in the preamble and includes each
other Person as shall have subsequently been appointed as the successor
Administrative Agent pursuant to Section 10.4.
"Agent" means, as the context may require, the Administrative Agent, the
Documentation Agent and/or the Managing Agents.
"Agreement" means, on any date, this Amended and Restated Credit
Agreement as originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.
-2-
<PAGE>
<PAGE>
"Alternate Base Rate" means, on any date and with respect to all Base
Rate Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest most recently announced by Scotiabank at
its Domestic Office as its base rate for Dollar loans; and
(b) the Federal Funds Rate most recently determined by the
Administrative Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by Scotiabank in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Alternate
Base Rate. The Administrative Agent will give notice promptly to the U.S.
Borrower of changes in the Alternate Base Rate.
"Applicable Margin" means, on any date, a percentage per annum
determined by reference to the Rating Level in effect on such date as set forth
below:
<TABLE>
<CAPTION>
Applicable Applicable
Margin for Margin for
Rating Base Rate LIBO Rate
Level Debt Rating Loans Loans
----- ----------- ---------- ----------
<S> <C> <C> <C>
Level 1 A-/A3 or higher 0.000% 0.250%
Level 2 BBB+/Baa1 0.000% 0.275%
Level 3 BBB/Baa2 0.000% 0.300%
Level 4 BBB-/Baa3 0.000% 0.425%
Level 5 BB+/Ba1 or lower 0.250% 0.625%;
</TABLE>
provided, however, that at any time when the aggregate outstanding principal
amount of all Loans, together with the aggregate amount of all Letter of Credit
Outstandings exceeds $75,000,000 and the then existing Rating Level is equal to
Level 1, Level 2 or Level 3, the Applicable Margin shall be increased by 0.075%
per annum.
The Applicable Margin shall be determined by reference to the Rating
Level in effect from time to time; provided, however, that no change in the
Applicable Margin shall be effective until three Business Days after the date on
which the Administrative Agent receives evidence reasonably satisfactory to it
from Group or the U.S. Borrower that a new Rating Level is in effect. In the
event that at any time no Debt Rating shall be in effect, the Applicable Margin
shall be 0.250% for each Base Rate Loan and 0.625% for each LIBO Rate Loan.
-3-
<PAGE>
<PAGE>
"Applicable Time" shall mean New York time, or in the case of actions or
notices by or relating to the Foreign Borrower, Hong Kong time.
"Assignee Lender" is defined in Section 11.11.1.
"Authorized Officer" means, relative to either Borrower or any other
Obligor, those of its officers whose signatures and incumbency shall have been
certified to the Managing Agents and the Lenders pursuant to Section 6.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrowers" means, collectively, the U.S. Borrower and the Foreign
Borrower.
"Borrowing" means the making of Loans of the same type and, in the case
of LIBO Rate Loans, having the same Interest Period by the Fronting Bank
following a disbursement under a Letter of Credit and the funding of a Lender's
Percentage of such Loans, in each case in accordance with the terms of this
Agreement.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of a Borrower, substantially in the form of Exhibit C
hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal
holiday on which banks are authorized or required to be closed in New
York or Hong Kong in the case of actions relating to the Foreign
Borrower; and
(b) relative to the making, continuing, prepaying or repaying of
any LIBO Rate Loans, any day on which dealings in Dollars are carried on
in the London interbank market.
"Citibank" is defined in the preamble.
"Commitment" means, as the context may require, a Lender's Loan
Commitment or the Fronting Bank's or a Lender's Letter of Credit Commitment.
"Commitment Amount" means $300,000,000, as such amount may be reduced by
Section 2.2.
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"Commitment Termination Date" means the earliest of
(a) August 11, 1998, as such date may be extended pursuant to the
terms of this Agreement;
(b) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the Commitments
shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any event or condition described in clause
(e) of Section 6.01 of the U.S. Credit Agreement;
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving of notice
by the Administrative Agent, acting at the direction of the
Required Lenders, to the Borrowers that the Commitments have been
terminated; or
(c) the termination of, or any refinancing, refunding,
replacement, renewal or restatement of, the U.S. Credit Agreement.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of a Borrower,
substantially in the form of Exhibit D hereto.
"Credit Extension" means and includes
(a) the advancing of any Loans by the Lenders in connection with
a Borrowing (including the making of a Loan by the Fronting Bank to a
Borrower on a Disbursement Date and the refunding and refinancing of
such Loans by the Lenders); and
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(b) any issuance or extension by the Fronting Bank of a Letter of
Credit.
"Debt Rating" means, on any date, the Public Debt Rating in effect on
such date or, if no Public Debt Rating is then in effect, the Implied Debt
Rating in effect on such date.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event of
Default.
"Disbursement" means any payment made under a Letter of Credit by the
Fronting Bank to the beneficiary of such Letter of Credit.
"Disbursement Date" is defined in Section 4.5.
"Documentary Letter of Credit" is defined in clause (a) of Section 4.1,
and shall also mean and include each Existing Letter of Credit.
"Documentation Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor Documentation
Agent pursuant to Section 10.4.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto.
"Domestic Subsidiary" means any Subsidiary of Group (other than the U.S.
Borrower) organized under the laws of the United States or any state thereof.
"Draft" means and includes any draft, bill, cable or written demand for
payment or receipt drawn or issued under a Documentary Letter of Credit.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Environmental Action" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, notice of liability or potential
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liability, investigation, proceeding, consent order or consent agreement
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment, including (a) by any governmental or regulatory authority
for enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or any third party
for damages, contribution, indemnification, cost recovery, compensation or
injunctive relief.
"Environmental Law" means any federal, state, local or foreign statute,
law, ordinance, rule, regulation, code, order, judgment or decree relating to
the environment, health, safety or Hazardous Materials.
"Environment Permit" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"Event of Default" is defined in Section 9.1.
"Excess" is defined in Section 11.16.
"Existing Credit Agreement" is defined in the first recital.
"Existing Letters of Credit" is defined in the first recital.
"Existing Loans" is defined in the first recital.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day in New York) by the
Federal Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day in New York, the average of the quotations for such day on
such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it.
If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive, absent manifest error) that it is unable to
ascertain the Federal Funds Rate for any reason, including the inability or
failure of the Administrative
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Agent to obtain sufficient bids or publications in accordance with the terms
hereof, the rate announced by the Administrative Agent at its New York Agency as
its "Base Rate New York" shall be the Alternate Base Rate until the
circumstances giving rise to such inability no longer exists.
"Fee Letter" means the confidential Fee Letter, dated July 14, 1997,
between the U.S. Borrower and the Administrative Agent.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the U.S. Borrower ending on or
about December 31 of each year.
"Foreign Borrower" is defined in the preamble.
"Foreign Borrower Tradexpress Agreement" means the Tradexpress
Transmission Agreement duly executed and delivered by the Foreign Borrower and
the Fronting Bank pursuant to Section 6.1.7 in a form agreed to by the Fronting
Bank and the U.S. Borrower.
"Fronting Bank" means Scotiabank, in its capacity as the issuer of
Letters of Credit (regardless of which office, branch or agency of Scotiabank
issues a Letter of Credit) and in its capacity as the Lender of Loans made prior
to a Funding Date pursuant to the terms of this Agreement.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Funding Date" is defined in clause (c) of Section 2.3.
"GAAP" has the meaning set forth in the U.S. Credit Agreement.
"Goods" means, collectively, all goods (including all inventory), wares,
merchandise and other commodities purchased by or shipped to or to the order of
a Borrower under or by virtue of or in connection with the issuance of a
Documentary Letter of Credit.
"Group" is defined in the preamble.
"Group Guaranty" means the Amended and Restated Guaranty executed and
delivered by an Authorized Officer of Group pursuant to Section 6.1.3,
substantially in the form of Exhibit F-1 hereto, as amended, supplemented,
restated or otherwise modified from time to time.
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"Hazardous Materials" means petroleum and petroleum products, byproducts
or breakdown products, radioactive materials, asbestos-containing materials,
radon gas and any other chemicals, materials or substances designated,
classified or regulated as being "hazardous" or "toxic", or words of similar
import, under any Environmental Law.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"Implied Senior Rating" means the rating assigned by S&P to Group's
unsecured "implied senior debt" from time to time, as reported by S&P on July
11, 1997 or any subsequent report or notification in writing issued by S&P
(which rating on the date hereof is BBB), or, if such rating is unavailable, the
equivalent rating assigned by Moody's to Group's unsecured "implied senior
debt", as notified in writing to Group by Moody's.
"including" means including without limiting the generality of any
description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as capitalized
lease liabilities;
(d) all obligations of such Person to pay the deferred purchase
price of property or services (other than trade debt incurred in the
ordinary course of business), and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased
by such Person (including indebtedness arising under conditional sales
or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse; and
(e) all contingent liabilities of such Person in respect of any
of the foregoing.
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"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Period" means, relative to any LIBO Rate Loans, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and ending on (but excluding) the day which numerically corresponds to such date
one, two, three or four months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in each case as such
Loan may be made or as a Borrower may select in its relevant notice pursuant to
Section 2.3 or 2.4; provided, however, that
(a) Interest Periods commencing on the same date for Loans
comprising part of the same Borrowing shall be of the same duration;
(b) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period
shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period may end later than the Stated Maturity
Date for such Loan or, if earlier, the date set forth in clause (a) of
the definition of "Commitment Termination Date", as such date may be
extended from time to time pursuant to the terms of this Agreement.
"Issuance Request" means either (a) a request delivered by a Borrower to
the Fronting Bank in accordance with the provisions of the Tradexpress Agreement
or (b) a request and certificate duly executed by an Authorized Officer of a
Borrower, in substantially the form of Exhibit B attached hereto (with such
changes thereto as may be agreed upon from time to time by the Administrative
Agent and the U.S. Borrower).
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit E hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" means, as the context may require, a Documentary
Letter of Credit and/or a Standby Letter of Credit.
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"Letter of Credit Availability" means, at any time, the then existing
Commitment Amount minus the sum of the aggregate outstanding principal amount of
all Loans, together with the aggregate amount of all Letter of Credit
Outstandings.
"Letter of Credit Commitment" means, relative to the Fronting Bank, the
Fronting Bank's obligation to issue Letters of Credit pursuant to Section 2.1.2
and, with respect to each of the other Lenders, the obligations of each such
Lender to participate in such Letters of Credit pursuant to the terms of this
Agreement.
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the aggregate Stated Amount at such time of all Letters of
Credit then outstanding and undrawn (as such aggregate Stated Amount
shall be adjusted, from time to time, as a result of drawings, the
issuance of Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate (Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of any Lender as designated from time
to time by notice from such Lender to the U.S. Borrower and the Administrative
Agent, whether or not outside the United States, which shall be making or
maintaining LIBO Rate Loans hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
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"Loans" is defined in Section 2.1.1, and shall also mean and include the
Existing Loans.
"Loan Commitment" means, relative to (i) the Fronting Bank (in such
capacity), its obligation to make Loans to the Borrowers on a Disbursement Date
and (ii) each Lender (other than the Fronting Bank in such capacity), such
Lender's obligation to participate in the Loans made by the Fronting Bank to the
Borrowers and, as set forth in this Agreement, to refund and reimburse the
Fronting Bank for such Loans, in each case pursuant to the terms of this
Agreement.
"Loan Document" means this Agreement, each Note, the Tradexpress
Agreement, the Group Guaranty, the Subsidiary Guaranty, the Fee Letter and each
other agreement, document or instrument delivered in connection with this
Agreement, whether or not specifically mentioned herein.
"Managing Agents" means, collectively, Scotiabank and Citibank.
"Maximum Rate" is defined in Section 11.16.
"Moody's" means Moody's Investors Service, Inc.
"Note" means any promissory note of either Borrower payable to the order
of any Lender (including the Fronting Bank), in the form of Exhibit A (as any
such promissory note may be amended, endorsed or otherwise modified from time to
time), evidencing the aggregate Indebtedness of such Borrower to such Lender
resulting from outstanding Loans made by such Lender, and also means all other
promissory notes accepted from time to time in substitution therefor or renewal
thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrowers and each other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"Obligor" means the Borrowers and each other Person (other than the
Agents, the Fronting Bank and the Lenders) obligated under any Loan Document.
"Order" is defined in clause (b) of Section 4.6.
"Organic Document" means, relative to any Obligor, as applicable, its
certificate of incorporation, by-laws, certificate of formation or limited
liability company agreement, and all shareholder agreements, voting trusts and
similar arrangements applicable to any of the authorized shares of capital stock
or other ownership interest of such Obligor.
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"Participant" is defined in Section 11.11.2.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in a Lender Assignment Agreement, as
such percentage may be adjusted from time to time pursuant to the terms hereof
or a Lender Assignment Agreement executed by such Lender and its Assignee Lender
and delivered pursuant to Section 11.11; provided, that the Percentage of each
Lender's Loan Commitment and Letter of Credit Commitment shall be identical.
"Person" means any natural person, corporation, limited liability
company, partnership, firm, association, trust, government, governmental agency
or any other entity, whether acting in an individual, fiduciary or other
capacity.
"Public Debt Rating" means, as of any date, the higher rating that has
been most recently announced by either S&P or Moody's, as the case may be, for
any class of non-credit enhanced long-term senior unsecured debt issued by
Group. For purposes of the foregoing, (a) if only one of S&P and Moody's shall
have in effect a Public Debt Rating, the Applicable Margin and the letter of
credit face amount fees shall be determined by reference to the available
rating; (b) if the ratings established by S&P and Moody's shall fall within
different levels separated by two or more levels, the Applicable Margin and the
Applicable Percentage shall be based upon the level that is one level below the
higher rating; (c) if any rating established by S&P or Moody's shall be changed,
such change shall be effective as of the date on which such change is first
announced publicly by the rating agency making such change; and (d) if S&P or
Moody's shall change the basis on which ratings are established, each reference
to the Public Debt Rating announced by S&P or Moody's, as the case may be, shall
refer to the then equivalent rating by S&P or Moody's, as the case may be.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day in New York,
the next succeeding Business Day in New York.
"Received Amount" is defined in clause (c) of Section 4.6.
"Reimbursement Obligation" is defined in Section 4.6.
"Required Lenders" means, at any time, Lenders holding at least 51% of
the then aggregate outstanding principal amount of the Notes then held by the
Lenders or, if no such principal amount is then outstanding, Lenders having
Percentages that equal at least 51% of the Commitments; provided, that so long
as the Fronting Bank (in such capacity) has any Loans outstanding and
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owing to it from either Borrower, each Lender will be deemed to have outstanding
and owing to it a principal amount equal to such Lender's Percentage multiplied
by the aggregate outstanding principal amount of Loans owing to the Fronting
Bank.
"S&P" means Standard & Poor's Ratings Group, currently a division of
McGraw-Hill, Inc., or any successor thereto.
"Scotiabank" is defined in the preamble.
"Standby Letter of Credit" is defined in clause (b) of Section 4.1.
"Stated Amount" of each Letter of Credit means the maximum amount of
such Letter of Credit that may then be drawn under such Letter of Credit whether
or not the conditions for drawing thereunder have been met.
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means, in the case of any Loan, the earlier of
(a) the date which is four months following the date of the making of such Loan
(in the case of a Loan initially made as a LIBO Rate Loan) or (in the case of a
Loan initially made as a Base Rate Loan), the date that is 120 days after the
making of such Loan and (b) the Commitment Termination Date (as such date may be
extended pursuant to the terms of this Agreement).
"Stated Rate" is defined in Section 11.16.
"Subsidiary" of any Person means any corporation, partnership, joint
venture, limited liability company, trust or estate of which (or in which) more
than 50% of (a) the issued and outstanding capital stock having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency), (b) the interest in the capital or profits of such limited
liability company, partnership or joint venture or (c) the beneficial interest
in such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries. The term
"wholly owned Subsidiary" shall exclude any directors' or officers' qualifying
shares which may be outstanding.
"Subsidiary Guaranty" means the Amended and Restated Guaranty executed
and delivered by each Domestic Subsidiary pursuant to Section 6.1.3 or Section
8.1.3, substantially in the
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form of Exhibit F-2 hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Taxes" is defined in Section 5.6.
"Tradexpress Agreement" means, as the context may require, the U.S.
Borrower Tradexpress Agreement and/or the Foreign Borrower Tradexpress
Agreement.
"type" means relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"UCP" is defined in Section 11.15.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"U.S. Borrower" is defined in the preamble.
"U.S. Borrower Tradexpress Agreement" means the Tradexpress Transmission
Agreement duly executed and delivered by the U.S. Borrower and the Fronting Bank
pursuant to Section 6.1.7 in a form agreed to by the Fronting Bank and the U.S.
Borrower.
"U.S. Credit Agreement" means the Credit Agreement, dated as of August
12, 1997, among the U.S. Borrower, Group, the initial lenders named therein,
Scotiabank and Citibank, as managing agents, Citibank, as documentation agent,
and Scotiabank, as administrative agent, competitive bid agent, swing line bank
and an issuing bank, as further amended, restated or waived from time to time
with the consent of the Required Lenders hereunder solely for purposes of this
Agreement, and regardless of whether such U.S. Credit Agreement is terminated,
unless in connection with such termination a replacement credit facility
satisfactory to the Required Lenders hereunder is entered into, in which case
the affirmative and negative covenants in such facility shall become the subject
of this Agreement.
"Usury Restraint" is defined in Section 11.16.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in each Note, Borrowing Request,
Continuation/ Conversion Notice, Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or any other
Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or
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Section are references to such Article or Section of this Agreement or such
other Loan Document, as the case may be, and, unless otherwise specified,
references in any Article, Section or definition to any clause are references to
such clause of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein shall be interpreted, all accounting
determinations and computations hereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, GAAP.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions of
this Agreement (including Article VI), each Lender severally agrees as follows:
SECTION 2.1.1. Loan Commitment. The Borrowers, Group, the Agents, the
Fronting Bank and the Lenders hereby agree that the Existing Credit Agreement is
hereby amended and restated in its entirety to become effective and binding on
the Borrowers, Group and the other parties to this Agreement pursuant to the
terms of this Agreement, and that the commitments which the Fronting Bank and
the Lenders have agreed to extend to the Borrowers under the Existing Credit
Agreement shall be extended or advanced to the Borrowers upon the amended and
restated terms and conditions contained in this Agreement with the intent that
the terms of this Agreement shall supersede the terms of the Existing Credit
Agreement (which shall hereafter have no further effect upon the parties
thereto, other than for accrued fees and expenses, and indemnification
provisions, accrued and owing under the terms of the Existing Credit Agreement
on or prior to the date hereof or arising (in the case of an indemnification)
under the terms of the Existing Credit Agreement). In furtherance of the
foregoing, from time to time on any Business Day each Lender severally agrees,
subject to the terms of this Agreement (including Article VI) that
(a) in the case of the Fronting Bank, it will make loans
(the "Loans") to (i) the U.S. Borrower (in the case of each Letter of
Credit issued for the account of other than the Foreign Borrower) and
(ii) the Foreign Borrower (in the case of each Letter of Credit issued
for the account of the Foreign Borrower), and (in each case), on the
Disbursement Date of each Letter of Credit for a period not to exceed
the Stated Maturity Date for such Loan in a principal amount
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equal to the aggregate amount of Disbursements made under one or more
Letters of Credit on such Disbursement Date; and
(b) in the case of each Lender (other than the Fronting Bank
in such capacity), such Lender will participate in the Loans made by the
Fronting Bank pursuant to this Agreement and, if required pursuant to
the terms of this Agreement, such Lender will refinance and reimburse
the Fronting Bank for the outstanding principal amount of Loans
previously made by the Fronting Bank in an amount equal to its
Percentage of the aggregate amount of all (or, if elected by the
Fronting Bank, less than all) Loans (determined, in the sole discretion
of the Fronting Bank, as between Loans made to the U.S. Borrower and the
Foreign Borrower) then outstanding and owing to the Fronting Bank (in
its capacity as the Fronting Bank), and upon the receipt by the Fronting
Bank of immediately available funds from a Lender in respect of the
reimbursement or refinancing of a Loan previously made by and owing to
the Fronting Bank, the amount so received by the Fronting Bank will
thereafter be a Loan to the applicable Borrower owing to such Lender
(and no longer owing to the Fronting Bank). No Lender's obligation to
make any Loan shall be affected by any other Lender's failure to make
any Loan. On the terms and subject to the conditions hereof, the
Borrowers may from time to time borrow Loans and continue or convert
such Loans as Base Rate Loans or LIBO Rate Loans pursuant to the terms
hereof, but once a particular Loan is repaid or prepaid by a Borrower,
it cannot be reborrowed. Notwithstanding anything contained herein to
the contrary, so long as any Lender shall be in default in its
obligation to fund its pro rata share of any Loans (as notified to such
Lender by the Administrative Agent, the Administrative Agent agreeing to
use good faith efforts to give such notification promptly following the
occurrence of such default) or shall have rejected its obligations under
its Commitments, then such Lender shall not be entitled to receive any
payments of principal of or interest on its pro rata share of the Loans
or its share of any commitment or other fees payable hereunder
(including fees payable pursuant to Section 3.3) unless and until (x)
the Loans of all the other Lenders and all interest thereon have been
paid in full, (y) such failure to fulfill its obligation to fund is
cured or (z) the Obligations under this Agreement shall have been
declared or shall have become immediately due and payable, and for
purposes of voting or consenting to matters with respect to the Loan
Documents, such Lender shall be deemed not to be a "Lender" hereunder
and such Lender's Percentage shall each be deemed to be zero (0) (with
each other Lender's Percentage being increased proportionately for
purposes of the definition of "Required Lenders" so that all such
non-defaulting Lenders' Percentages
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shall collectively equal 100%). No Commitment of any Lender shall be
increased or otherwise affected by any such failure or rejections by any
other Lender. Any payments of principal of or interest on Obligations
which would, but for this Section, be paid to any Lender, shall be paid
to the Lenders who shall not be in default under their respective
Commitments and who shall not have rejected any Commitment, for
application to the Obligations or cash collateral in respect of Letters
of Credit in such manner and order (pro rata among such Lenders) as
shall be determined by the Administrative Agent. The parties hereto
acknowledge and agree that a Lender's failure to make a Loan based on
either Borrower's failure to satisfy one or more of the conditions
precedent to the making of Loans set forth in Article VI shall not be
construed as such Lender being in default of its obligations to fund its
pro rata share of Loans or a rejection of such Lender's Commitments.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to time
on any Business Day prior to the Commitment Termination Date, the Fronting Bank
will issue, and each Lender will participate in, the Letters of Credit, in
accordance with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required to Make Loans and
Fronting Bank Not Permitted or Required to Issue Letters of Credit Under Certain
Circumstances. In addition to the other terms of this Agreement (including
Article VI):
(a) No Lender (other than, in the case of clause (a)(ii),
the Fronting Bank acting in such capacity) shall be permitted or
required to make any Loan if, after giving effect thereto (and the
payment of any Reimbursement Obligations with the proceeds of such Loans
or the refunding and refinancing of Loans made by the Fronting Bank with
the proceeds of the Loans made by the Lenders hereunder), the aggregate
outstanding principal amount of all Loans
(i) together with the aggregate amount of all Letter of
Credit Outstandings, would exceed the Commitment Amount, or
(ii) of such Lender, together with such Lender's Percentage
of the aggregate amount of all Letter of Credit Outstandings
would exceed the amount of such Lender's Percentage multiplied by
the Commitment Amount.
(b) The Fronting Bank shall not be permitted or required to
issue any Letter of Credit or extend for an additional period of time
the Stated Expiry Date of a
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<PAGE>
previously issued Letter of Credit if, after giving effect thereto the aggregate
amount of all Letter of Credit Outstandings, together with the aggregate
outstanding principal amount of all Loans would exceed the Commitment Amount.
(c) The Fronting Bank shall not be permitted or required to
make any Loan on any Disbursement Date if, after giving effect thereto
(and the payment of any Reimbursement Obligations with the proceeds of
such Loans), the aggregate outstanding principal amount of all Loans,
together with the aggregate amount of all Letter of Credit Outstandings,
would exceed the Commitment Amount.
SECTION 2.2. Reduction of the Commitment Amount. The U.S. Borrower may,
from time to time on any Business Day, voluntarily reduce the amount of the
Commitment Amount; provided, however, that all such reductions shall be binding
on both Borrowers, shall require at least three Business Days' prior notice to
the Administrative Agent and be permanent.
SECTION 2.3. Borrowing Procedure. (a) Upon any Disbursements being made
in respect of one or more Letters of Credit (whether such Letters of Credit were
issued to support the obligations of the Foreign Borrower, the U.S. Borrower or
any Subsidiary of the U.S. Borrower (or any of their respective divisions)), the
U.S. Borrower (in the case of a Letter of Credit issued for the account of other
than the Foreign Borrower) and the Foreign Borrower (in the case of a Letter of
Credit issued for its account) shall (unless it shall have given notice to the
Administrative Agent to the contrary prior to 3:00 p.m., Applicable Time, at
least three Business Days prior to the date of such Disbursement) be deemed to
have delivered to the Administrative Agent a Borrowing Request pursuant to which
such Borrower shall have been deemed to irrevocably request that the Fronting
Bank make a LIBO Rate Loan to such Borrower with a four month Interest Period in
a principal amount equal to the aggregate amount of the Disbursements made on
such date. Each Borrower hereby acknowledges and agrees that each Borrowing
Request deemed to be delivered hereunder, the making of a Loan by the Fronting
Bank to reimburse the Fronting Bank for Disbursements made under the Letters of
Credit and the acceptance by either Borrower of the proceeds of the Borrowing
shall constitute a representation and warranty by the Borrowers that on the date
of such Borrowing (both immediately before and after giving effect to such
Borrowing and the application of the proceeds thereof) the statements made in
Section 6.2.1 are in each case true and correct. Proceeds of such Loans shall be
used to fund the Reimbursement Obligations in respect of Letters of Credit under
which one or more Disbursements were made on the date of the Loan. Each of the
parties hereto acknowledge and
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agree that upon the satisfaction of the conditions precedent set forth in
Section 6.1, the Existing Loans shall be deemed to be Loans made by the Fronting
Bank on the Effective Date under the terms of this Agreement and shall
thereafter accrue interest and fees pursuant to the terms hereof, and each
Lender shall continue to participate in such Loans in an amount equal to such
Lender's Percentage of the outstanding principal amount of the Existing Loans.
(b) In addition to the provisions of the making of Loans set forth in
clause (a), above, by delivering a Borrowing Request to the Administrative Agent
on or before 11:00 a.m., Applicable Time, on a Business Day, a Borrower may from
time to time irrevocably request, on not less than three nor more than five
Business Days' notice (in the case of LIBO Rate Loans) and on the date of such
Borrowing (in the case of Base Rate Loans), that a Borrowing be made as other
than a LIBO Rate Loan having a four month Interest Period or in an amount other
than the full amount of Disbursements with respect to which such Loan is to be
made. If either Borrower elects that a Borrowing be made as a LIBO Rate Loan
having a one, two or three month Interest Period pursuant to this clause, then
upon the expiration of such Interest Period such Borrower shall (unless it shall
have given notice to the Administrative Agent to the contrary prior to 11:00
a.m., Applicable Time, at least three Business Days prior to the date of such
Disbursement) be deemed to have delivered to the Administrative Agent a
Continuation/Conversion Notice pursuant to which such Borrower shall have been
deemed to irrevocably request that the Fronting Bank continue the outstanding
LIBO Rate Loan as a LIBO Rate Loan with an Interest Period of (i) one month, in
the case of the expiration of a three month Interest Period or Interest Periods
which, in the aggregate, equal three months, (ii) two months, in the case of the
expiration of a two month Interest Period or Interest Periods which, in the
aggregate, equal two months, or (iii) three months, in the case of the
expiration of a one month Interest Period, in each case in a principal amount
equal to the amount of the LIBO Rate Loan with an Interest Period then expiring.
On the terms and subject to the conditions of this Agreement, each Borrowing
shall be comprised of the type of Loans, and shall be made on the Business Day,
specified (or deemed to be specified) in such Borrowing Request.
(c) The Fronting Bank may, at any time (whether or not a Default or
Event of Default has occurred and is then continuing), in its sole and absolute
discretion but subject to clause (a)(ii) of Section 2.1.3, demand that each
other Lender make a Loan in an amount equal to such Lender's Percentage of the
aggregate principal amount of all or a portion of the Loans outstanding on the
date such demand is made, and may (in its sole discretion) elect which Loans (as
among the Borrowers) are to be chosen as
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the Loans to be refunded by the Lenders. Each Lender (other than the Fronting
Bank) irrevocably agrees that it shall (whether or not the conditions to the
making of a Credit Extension contained in Article VI have been (or can be)
satisfied) make such Loan by depositing the amount so demanded in same day funds
in an account specified by the Fronting Bank on or before 11:00 a.m. New York
City time on the first Business Day following receipt of such a demand. The
Fronting Bank agrees to apply all such funds received by it under this clause to
refund and refinance the Loans previously made by it to either Borrower, as
identified in the demand that it delivers to the Lenders pursuant to this
clause. On the date (a "Funding Date") that the Lenders (other than the Fronting
Bank) advance funds to the Fronting Bank pursuant to this clause, the principal
amount so refunded and refinanced shall become a Loan to the Borrower identified
by the Fronting Bank outstanding under such Lender's Note to that particular
Borrower and shall no longer be a Loan owed to the Fronting Bank under the
Fronting Bank's Note to that particular Borrower.
All interest payable with respect to any Loans made pursuant to this
clause shall be appropriately adjusted to reflect the period of time during
which such Loans were owing to the Fronting Bank and, on and subsequent to a
Funding Date, such Loans were owing to the Lenders.
The obligation of each Lender to make Loans by way of advancing
immediately available funds to the Fronting Bank on a Funding Date to be applied
to refund and refinance the Loans previously made by the Fronting Bank to the
Borrowers (or either one of them) under this clause shall be absolute and
unconditional and shall not be affected by any circumstance, including (i) any
set-off, counterclaim, recoupment, defense or other right which any Lender may
have against Scotiabank, the Borrowers or any other Person for any reason
whatsoever; (ii) the occurrence or continuance of any Default or the inability
of the Borrowers to otherwise satisfy the conditions precedent set forth in
Article VI; (iii) any adverse change in the condition (financial or otherwise)
of either Borrower or any other Obligor; (iv) the acceleration or maturity of
any Loans or other Obligations or the termination of any Commitment after the
making of any Loan; (v) any breach of this Agreement or any other Loan Document
by either Borrower, any other Obligor or any Lender; or (vi) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Administrative Agent on or before 10:00
a.m., Applicable Time, on a Business Day, either Borrower may from time to time
irrevocably elect, on not less than three nor more than five Business Days'
notice that
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all, or any portion of any Loans made to it be, in the case of Base Rate Loans,
converted into LIBO Rate Loans or, in the case of a LIBO Rate Loan, converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the absence of
delivery of a Continuation/Conversion Notice with respect to any LIBO Rate Loan
at least three Business Days before the last day of the then current Interest
Period with respect thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a LIBO Rate Loan pursuant to the provisions of clause
(b) of Section 2.3, unless such Loan is otherwise required to be paid pursuant
to the terms of this Agreement (including the first sentence of Section 3.1));
provided, however, that (i) no portion of the outstanding principal amount of
any Loans may be continued as, or be converted into, LIBO Rate Loans when any
Default has occurred and is continuing and (ii) the maximum length of any
Interest Period or combination of Interest Periods for any particular Loan shall
not exceed four months.
Section 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to participate in, and to make, continue or convert LIBO Rate Loans
hereunder by causing one of its foreign branches or affiliates (or an
international banking facility all of the capital stock or other ownership
interests of which are wholly-owned by such Lender) to make or maintain such
LIBO Rate Loan; provided, however, that such LIBO Rate Loan shall nonetheless be
deemed to have been made and to be held by such Lender, and the obligation of
the Lender to refund and refinance such LIBO Rate Loan on the Funding Date and
the obligation of the Borrowers to repay such LIBO Rate Loan shall nevertheless
be of or to such Lender for the account of such foreign branch, affiliate or
international banking facility; provided, further that the Borrowers shall not
be required to pay any amount under this Section or Section 5.6 that is greater
than the amount which it would have been required to pay had such Lender not
caused such branch, affiliate or facility to make or maintain such LIBO Rate
Loan. In addition, the Borrower hereby consents and agrees that, for purposes of
any determination to be made for purposes of Section 5.1, 5.2, 5.3 or 5.4, it
shall be conclusively assumed that such Lender elected to fund all LIBO Rate
Loans by purchasing Dollar deposits in its LIBOR Office's interbank eurodollar
market.
SECTION 2.6. Notes. The Loans of the Fronting Bank under the Loan
Commitment shall be evidenced by Notes payable to the order of the Fronting Bank
from each Borrower in an aggregate maximum principal amount equal to the
original Commitment Amount, and the Loans of each Lender (other than the
Fronting Bank) under the Loan Commitment shall be evidenced by Notes payable
from each Borrower to the order of such Lender in a maximum principal amount
equal to such Lender's Percentage multiplied by the original Commitment Amount.
Each Borrower hereby irrevocably
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authorizes each Lender to make (or cause to be made) appropriate notations on
the grid attached to such Lender's Notes (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date of, the
outstanding principal of, and the interest rate and Interest Period applicable
to the Loans evidenced thereby and the principal amount of Loans that have been
repaid (including, in the case of the Fronting Bank, Loans that have been
refunded and refinanced by the Lenders on a Funding Date). Such notations shall
be conclusive and binding on the Borrowers absent manifest error; provided,
however, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of either Borrower.
SECTION 2.7. Extension of Commitment Termination Date. The Commitment
Termination Date may be extended by the Lenders in their sole and absolute
discretion upon written request of the U.S. Borrower received at least 60 days
but not more than 90 days prior to the then effective Commitment Termination
Date (as such date may have been extended). The Lenders shall give written
notice to the U.S. Borrower of their decision and, if approved, of the new
Commitment Termination Date; provided, that notwithstanding any other provision
in this Agreement to the contrary, in no event shall the modified Commitment
Termination Date exceed 364 days from the then expiring Commitment Termination
Date. The Lenders shall give written notice to the U.S. Borrower of their
decision within 30 days of request. In the absence of the approval of any one of
the Lenders, the then effective Commitment Termination Date shall not be
extended and shall terminate and expire as otherwise provided in this Agreement,
and the failure of any Lender to deliver a written notice within the requisite
period set forth above shall be deemed to be an election by that Lender not to
extend the Commitment Termination Date.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrowers shall repay in
full the entire unpaid principal amount of each Loan upon the Stated Maturity
Date therefor; provided, that notwithstanding anything contained in this
Agreement or any Loan Document to the contrary, the Foreign Borrower shall only
be obligated to repay the principal amount of the Loans made to it and
Reimbursement Obligations in respect of Letters of Credit issued for its
account. Prior thereto (and subject to Section 2.1.1), each Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the
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outstanding principal amount of any Loans; provided, however, that all
such voluntary prepayments shall require at least one Business Day's
prior written notice to the Administrative Agent;
(b) shall, on each date when any reduction in the Commitment
Amount shall become effective (which reduction shall be subject to
Section 2.2), make a mandatory prepayment (which shall be applied (or
held as cash collateral for application to the aggregate amount of all
Letter of Credit Outstandings not consisting of unpaid and outstanding
Reimbursement Obligations) by the Administrative Agent to the payment of
the Loans and unpaid and outstanding Reimbursement Obligations of the
then Letter of Credit Outstandings) equal to the excess, if any, of the
aggregate outstanding principal amount of all Loans, together with the
aggregate amount of all Letter of Credit Outstandings over the
Commitment Amount as so reduced; and
(c) shall, immediately upon any acceleration of the Stated
Maturity Date of any Obligations pursuant to Section 9.2 or Section 9.3,
repay all Obligations, unless, pursuant to Section 9.3, only a portion
of all Obligations is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 5.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.2. Interest Provisions. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Loans comprising a Borrowing shall accrue
interest at a rate per annum:
(a) on that portion maintained from time to time as a Base
Rate Loan, equal to the sum of the Alternate Base Rate from time to time
in effect plus the Applicable Margin in effect from time to time; or
(b) on that portion maintained as a LIBO Rate Loan (whether
made pursuant to clause (a) or clause (b) of Section 2.3), during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin
in effect from time to time.
The "LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be
made, continued or maintained as, or converted into, a
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LIBO Rate Loan for any Interest Period, a rate per annum (rounded upwards, if
necessary, to the nearest 1/16 of 1%) determined pursuant to the following
formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) -------------------------------
1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate Loans
will be determined by the Administrative Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Administrative Agent from Scotiabank, two Business Days before the first day
of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO Rate Loans,
the rate of interest per annum (rounded upwards, if necessary, to the nearest
1/16 of 1%) reported, on the first day of such Interest Period as of 11:00 a.m.
London time, on Telerate Access Service Page 3750 (British Bankers Association
Settlement Rate) as the London Interbank Offered Rate for Dollar deposits having
a term comparable to such Interest Period and in an amount of $1,000,000 or more
(or, if said page shall cease to be publicly available, as reported by any
publicly available source of similar market data selected by the Administrative
Agent that, in the Administrative Agent's reasonable judgment, accurately
reflects such London Interbank Offered Rate).
"LIBOR Reserve Percentage" means, relative to any Interest Period for
LIBO Rate Loans, the reserve percentage, if any (expressed as a decimal) equal
to the maximum aggregate reserve requirements (including all basic, emergency,
supplemental, marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve requirements)
specified under regulations issued from time to time by the F.R.S. Board and
then applicable to assets or liabilities consisting of and including
"Eurocurrency Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such Interest Period.
All LIBO Rate Loans shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such LIBO Rate
Loan.
SECTION 3.2.2. Post-Maturity Rates. After and during the continuance of
a Default or an Event of Default (after giving effect to any grace periods in
respect thereof in the case of an Event of Default described in Section 9.1.1),
the Borrowers shall pay interest (after as well as before judgment) on (a) the
unpaid principal amount of each outstanding Loan at a rate per annum
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equal to 2% per annum above the then applicable interest rate in respect of such
Loan and (b) to the fullest extent permitted by law, the amount of any interest,
fee or other amount payable hereunder at a rate per annum equal at all times to
2% per annum above the Alternate Base Rate then in effect.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any optional or required payment or
prepayment, in whole or in part, of principal outstanding on such Loan
(including, with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period for such LIBO Rate Loan);
(c) with respect to any Base Rate Loans converted into LIBO
Rate Loans on a day when interest would not otherwise have been payable
pursuant to the terms hereof, on the date of such conversion; and
(d) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 9.2 or Section 9.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.2.4. Allocation of Interest Payments. Accrued and unpaid
interest on the outstanding principal amount of the Loans shall be allocated and
payable to the Lenders as set forth in this Section:
(a) Interest shall be payable by a Borrower to the Fronting
Bank (for its own account) on the outstanding principal amount of its
Loans from the date such Loans are made to (but excluding) the Funding
Date in an amount equal to the difference between (x) (i) in the case of
LIBO Rate Loans, the LIBO Rate (Reserve Adjusted) or, in the case of
Base Rate Loans, the Alternate Base Rate, plus the Applicable Margin
then in effect for LIBO Rate Loans or Base Rate Loans (as applicable)
multiplied by (ii) the outstanding principal amount of the LIBO Rate
Loans or Base Rate Loans, as the case may be, minus (y) the Interest
Amount (as defined below). Prior to the Funding Date each Lender (other
than the Fronting Bank) shall be paid interest in an aggregate amount
(referred to as the "Interest
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Amount") equal to such Lender's Percentage of (i) the principal amount
of the Loans outstanding prior to a Funding Date multiplied by (ii) the
Applicable Margin then in effect for LIBO Rate Loans (in the case of the
outstanding principal amount of LIBO Rate Loans) or Base Rate Loans (in
the case of the outstanding principal amount of Base Rate Loans).
(b) On and subsequent to a Funding Date, interest shall be
payable by a Borrower for the account of each Lender (including the
Fronting Bank, in its capacity as a Lender) in accordance with its
Percentage on the principal amount of its Loans actually funded by such
Lender in an amount equal to (in the case of the outstanding principal
amount of LIBO Rate Loans) the LIBO Rate (Reserve Adjusted) plus the
Applicable Margin for such LIBO Rate Loans or, if applicable (in the
case of the outstanding principal amount of Base Rate Loans), the
Alternate Base Rate plus the Applicable Margin for Base Rate Loans.
SECTION 3.3. Fees. Each Borrower agrees to pay the fees payable by it
set forth in this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Letter of Credit Face Amount Fee. The Borrowers agree to
pay to the Administrative Agent, for the pro rata account of the Lenders
determined in accordance with each Lender's Percentage, a fee for each Letter of
Credit for the period from and including the date of the issuance of such Letter
of Credit to (but not including) the earlier of (a) the date upon which such
Letter of Credit expires and (b) the date upon which the Stated Amount of such
Letter of Credit is irrevocably reduced to zero (by the making of a Disbursement
by the Fronting Bank or otherwise), at the rates per annum determined by
reference to the Rating Level in effect from time to time as set forth below for
such type of Letter of Credit (provided, however, that no change in the rate for
Letters of Credit shall be effective until three Business Days after the date on
which the Administrative Agent receives evidence reasonably satisfactory to it
from Group or the U.S. Borrower that a new Rating Level is in effect):
<TABLE>
<CAPTION>
Rate for Rate for
Documentary Standby
Rating Letters of Letters of
Level Debt Rating Credit Credit
----- ----------- ----------- ----------
<S> <C> <C> <C>
Level 1 A-/A3 or higher 0.175% 0.250%
Level 2 BBB+/Baa1 0.200% 0.275%
Level 3 BBB/Baa2 0.225% 0.300%
</TABLE>
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<TABLE>
<S> <C> <C> <C>
Level 4 BBB-/Baa3 0.350% 0.425%
Level 5 BB+/Ba1 or lower 0.550% 0.625%;
</TABLE>
provided, however, that at any time when the aggregate outstanding principal
amount of all Loans, together with the aggregate amount of all Letter of Credit
Outstandings exceeds $75,000,000 and the then existing Rating Level is equal to
Level 1, Level 2 or Level 3, such fee shall be increased by 0.075% per annum.
The Foreign Borrower shall only be liable for the fee that has accrued on those
Letters of Credit issued for its account. In the event that at any time no Debt
Rating shall be in effect, the applicable rate per annum for purposes of
determining the Letter of Credit fees provided for under this Section shall be
0.550% in the case of Documentary Letters of Credit and 0.625% in the case of
Standby Letters of Credit. Such fee shall be payable by the applicable Borrower
in arrears on each Quarterly Payment Date (commencing on the first such date
after the issuance of such Letter of Credit), on the Commitment Termination Date
and, in the case of Documentary Letters of Credit with expiry dates that extend
beyond the Commitment Termination Date, on the expiration of or, if earlier, on
the date of any disbursement made under, such Documentary Letter of Credit, in
each case, for any period then ending for which such fee shall not theretofore
have been paid.
SECTION 3.3.2. Letter of Credit Fees. The Borrowers agree to pay to the
Fronting Bank the fees relating to Letters of Credit in accordance with the Fee
Letter and such customary fees currently paid by the Borrowers on the Effective
Date for each Letter of Credit for the period from and including the date of
issuance of such Letter of Credit to (but not including) the date upon which
such Letter of Credit expires; provided, that the Foreign Borrower shall be
obligated to pay such fees only on those Letters of Credit issued for its
account.
SECTION 3.3.3. Fee Letter. The U.S. Borrower agrees to pay to
Scotiabank, for its own account, such fees in the amounts and on the dates set
forth in the Fee Letter.
SECTION 3.3.4. Commitment Fee. The U.S. Borrower agrees to pay to the
Administrative Agent, for the pro rata account of each Lender determined in
accordance with each Lender's Percentage, for the period commencing on the
Effective Date and continuing through the Commitment Termination Date, a
commitment fee on the sum of the average daily unused portion of the Commitment
Amount at the rates per annum determined by reference to the Rating Level in
effect from time to time as set forth below; (provided, however, that no change
in the commitment fee rate shall be effective until three Business Days after
the date on which the
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Administrative Agent receives evidence reasonably satisfactory to it from Group
or the U.S. Borrower that a new Rating Level is in effect):
<TABLE>
<CAPTION>
Commitment
Rating Level Fee Rate
------------ --------
<S> <C>
Level 1 0.065%
Level 2 0.075%
Level 3 0.100%
Level 4 0.125%
Level 5 0.200%
</TABLE>
In the event that at any time no Rating Level shall be in effect, the applicable
rate per annum for purposes of determining the commitment fees provided for
under this Section shall be 0.200%. The fee payable under this Section shall be
payable by the U.S. Borrower in arrears on each Quarterly Payment Date,
commencing on the first such date after the Effective Date, and on the
Commitment Termination Date for any period then ending for which such fee shall
not theretofore have been paid.
The amount of any Loans made and Letters of Credit issued by the
Fronting Bank and not funded by the other Lenders will constitute usage of the
Commitment Amount for purposes of calculating the commitment fee payable to
Lenders (other than the Fronting Bank) pursuant to this Section.
SECTION 3.4. Guaranty. The U.S. Borrower shall guaranty the Obligations
of the Foreign Borrower and each other L/C Party as set forth below.
SECTION 3.4.1. Guaranty. The U.S. Borrower hereby absolutely,
unconditionally and irrevocably
(a) guarantees (referred to as its "Guaranty") the full and
punctual payment when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise, of all
Obligations of each of its Subsidiaries (and/or divisions thereof),
including the Foreign Borrower for whom a Letter of Credit has been
issued (collectively referred to as the "L/C Parties"), whether for
principal, interest, fees, expenses or otherwise (including all such
amounts which would become due but for the operation of the automatic
stay under Section 362(a) of the United States Bankruptcy Code, 11
U.S.C. 'SS'362(a), and the operation of Sections 502(b) and 506(b) of
the United States Bankruptcy Code, 11 U.S.C. 'SS'502(b) and
'SS'506(b)); and
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(b) indemnifies and holds harmless each Lender, the Fronting Bank
and each Agent, and their respective successors, transferees and assigns
(collectively referred to as the "Lender Parties") for any and all costs
and expenses (including reasonable attorney's fees and expenses)
incurred by such Lender Party in enforcing any rights under this Section
3.4.1.
This Guaranty constitutes a guaranty of payment when due and not of collection,
and the U.S. Borrower specifically agrees that it shall not be necessary or
required that any Lender Party exercise any right, assert any claim or demand or
enforce any remedy whatsoever against any L/C Party or any other Obligor (or any
other Person) before or as a condition to the obligations of the U.S. Borrower
hereunder.
SECTION 3.4.2. Acceleration of Guaranty. The U.S. Borrower agrees that,
in the event of the dissolution or insolvency of the Foreign Borrower or the
dissolution (other than to the extent permitted by the U.S. Credit Agreement) or
insolvency of any other L/C Party, Obligor, or the U.S. Borrower, or the
inability or failure of any Obligor, any L/C Party or the U.S. Borrower to pay
debts as they become due, or an assignment by any Obligor, any L/C Party or the
U.S. Borrower for the benefit of creditors, or the commencement of any case or
proceeding in respect of any of the foregoing Persons under any bankruptcy,
insolvency or similar laws, and with respect to any involuntary case or
proceeding, such case or proceeding remains undismissed for a period of 30 days;
and if any such event shall occur at a time when any of the Obligations of any
L/C Party and each other Obligor may not then be due and payable, the U.S.
Borrower will pay to the Administrative Agent (for the account of the Lender
Parties) forthwith the full amount which would be payable hereunder by the U.S.
Borrower if all such Obligations were then due and payable.
SECTION 3.4.3. Guarantee Absolute, etc. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Foreign Borrower, each other L/C Party and each other Obligor have been paid in
full, all obligations of the U.S. Borrower hereunder shall have been paid in
full and all Commitments shall have terminated. The U.S. Borrower guarantees
that the Obligations of the Foreign Borrower, each other L/C Party and each
other Obligor and their respective Subsidiaries will be paid strictly in
accordance with the terms of this Agreement and each other Loan Document under
which they arise, regardless of any law, regulation or order now or hereafter in
effect in any jurisdiction affecting any of such terms or the rights of any
Lender Party with respect thereto.
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The liability of the U.S. Borrower under this Guaranty shall be absolute,
unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of this
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party
(i) to assert any claim or demand or to enforce any right or
remedy against the Foreign Borrower, any other L/C Party, any
other Obligor or any other Person (including any other guarantor)
under the provisions of this Agreement, any Note, any other Loan
Document or otherwise, or
(ii) to exercise any right or remedy against any other
guarantor of any Obligations of the Foreign Borrower, any other
L/C Party or any other Obligor;
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations of the Foreign
Borrower, any other L/C Party or any other Obligor, or any other
extension, compromise or renewal of any Obligation of the Foreign
Borrower, any other L/C Party or any other Obligor;
(d) any reduction, limitation, impairment or termination of the
Obligations of the Foreign Borrower, any other L/C Party or any other
Obligor for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and shall not be subject to (and
the U.S. Borrower hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting the
Obligations of the Foreign Borrower, any other L/C Party, any other
Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of this
Agreement, any Note or any other Loan Document;
(f) any amendment to or waiver or release or addition of, or
consent to departure from, any other guaranty, held by any Lender Party
securing any of the Obligations of the Foreign Borrower, any other L/C
Party or any other Obligor; or
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(g) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Foreign
Borrower, any other L/C Party, any other Obligor, any surety or any
guarantor.
SECTION 3.4.4. Reinstatement, etc. The U.S. Borrower agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party, upon the
insolvency, bankruptcy or reorganization of the Foreign Borrower, any other L/C
Party, any other Obligor or otherwise, all as though such payment had not been
made.
SECTION 3.4.5. Waiver, etc. The U.S. Borrower hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Foreign Borrower, any other L/C Party or any other Obligor
and this Guaranty and any requirement that any Agent or any other Lender Party
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Foreign Borrower, any other L/C Party, any other Obligor or any other Person
(including any other guarantor) or entity or any collateral securing the
Obligations of the Foreign Borrower, any other L/C Party or any other Obligor,
as the case may be.
SECTION 3.4.6. Postponement of Subrogation, etc. The U.S. Borrower will
not exercise any rights which it may acquire by way of rights of subrogation
under this Guaranty, by any payment made hereunder or otherwise, until the prior
payment, in full and in cash, of all Obligations of the Foreign Borrower, each
other L/C Party and each other Obligor. Any amount paid to the U.S. Borrower on
account of any such subrogation rights prior to the payment in full of all
Obligations of the Foreign Borrower, each other L/C Party and each other Obligor
shall be held in trust for the benefit of the Lender Parties and shall
immediately be paid to the Administrative Agent and credited and applied against
the Obligations of the Foreign Borrower, each other L/C Party and each other
Obligor, whether matured or unmatured, in accordance with the terms of this
Agreement; provided, however, that if
(a) the U.S. Borrower has made payment to the Lender Parties of
all or any part of the Obligations of the Foreign Borrower, any other
L/C Party or any other Obligor; and
(b) all Obligations of the Foreign Borrower, each other L/C Party
and each other Obligor have been paid in full and all Commitments have
been permanently terminated;
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each Lender Party agrees that, at the U.S. Borrower's request, the
Administrative Agent, on behalf of the Lender Parties, will execute and deliver
to the U.S. Borrower appropriate documents (without recourse and without
representation or warranty) necessary to evidence the transfer by subrogation to
the U.S. Borrower of an interest in the Obligations of the Foreign Borrower,
each other L/C Party and each other Obligor resulting from such payment by the
U.S. Borrower. In furtherance of the foregoing, for so long as any Obligations
or Commitments remain outstanding, the U.S. Borrower shall refrain from taking
any action or commencing any proceeding against the Foreign Borrower, any other
L/C Party or any other Obligor (or its successors or assigns, whether in
connection with a bankruptcy proceeding or otherwise) to recover any amounts in
the respect of payments made under this Guaranty to any Lender Party.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance Requests. Either Borrower or any wholly-owned
Subsidiary of the U.S. Borrower (or any of their respective divisions) may
request, from time to time on or prior to the Commitment Termination Date, by
delivering to the Administrative Agent and the Fronting Bank an Issuance Request
(such request being, in either Borrower's sole discretion, either delivered (by
telex, teletransmission or otherwise) in the form attached hereto as Exhibit B
or, in the case of any Documentary Letter of Credit, in accordance with the
terms of the Tradexpress Agreement) on or before 3:00 p.m., Applicable Time on
the Business Day on which a Documentary Letter of Credit is to be issued or on
not less than three nor more than ten Business Day's in advance of the Business
Day on which a Standby Letter of Credit is to be issued, that the Fronting Bank
issue either
(a) an irrevocable sight documentary letter of credit in such
form as may be requested by such Borrower or such Subsidiary and
approved by the Fronting Bank (each a "Documentary Letter of Credit"),
or
(b) an irrevocable standby irrevocable letter of credit in such
form as may be requested by such Borrower or such Subsidiary and
approved by the Fronting Bank (each a "Standby Letter of Credit"),
in each case to facilitate such Borrower's and (in the case of the U.S.
Borrower, its Subsidiaries') worldwide sourcing of merchandise. Each Letter of
Credit shall by its terms:
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(i) be issued in a Stated Amount which does not exceed (or
would not exceed) the then Letter of Credit Availability;
(ii) be stated to expire on a date (its "Stated Expiry Date")
no later than 180 days from its date of issuance (it being
acknowledged and agreed by the Borrowers, the Fronting Bank and
the Lenders that the Stated Expiry Date for a Documentary Letter
of Credit may be a date that is up to 179 days subsequent to the
Commitment Termination Date; provided, however, that no Standby
Letter of Credit may have a Stated Expiry date subsequent to the
Commitment Termination Date); and
(iii) on or prior to its Stated Expiry Date:
(A) terminate immediately upon notice to the Fronting
Bank thereof from the beneficiary thereunder that all
obligations covered thereby have been terminated, paid, or
otherwise satisfied in full, and
(B) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Fronting Bank thereof
that the obligations covered thereby have been paid or
otherwise satisfied in part.
So long as no Default has occurred and is continuing, by delivery to the
Fronting Bank and the Administrative Agent of an Issuance Request (such request
being, in either Borrower's sole discretion, either delivered (by telex,
teletransmission or otherwise) in accordance with the terms of the Tradexpress
Agreement or in the form attached hereto as Exhibit B) on or before 3:00 p.m.,
Applicable Time, (1) in the case of any Documentary Letter of Credit, on the
Stated Expiry Date thereof and (2) in the case of any Standby Letter of Credit,
on the third day prior to the Stated Expiry Date thereof, each Borrower may on
or prior to the then existing Commitment Termination Date request the Fronting
Bank to extend the Stated Expiry Date of such Letter of Credit for an additional
period not to exceed (x) in the case of a Documentary Letter of Credit, the
earlier of 180 days from its date of extension and 179 days after the Commitment
Termination Date and (y) in the case of a Standby Letter of Credit, the earlier
of 180 days from its date of extension and the Commitment Termination Date.
Notwithstanding any other provision in this Agreement to the contrary, the
Fronting Bank may in its discretion refuse to issue any Letter of Credit if such
issuance would, in the Fronting Bank's reasonable determination, contravene any
sanctions, laws or regulations of any State of the United States or any Federal
body or authority of the United States (including but not limited to the
regulations of the Federal Reserve Bank) or the laws, regulations
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or sanctions of any other applicable jurisdiction or authority or if, in the
Fronting Bank's reasonable determination, any of the above-mentioned laws,
regulations or sanctions would affect the Fronting Bank's ability to perform its
obligations with respect to any such Letter of Credit if issued.
SECTION 4.2. Issuances and Extensions. On the terms and subject to the
conditions of this Agreement (including Section 4.1 and Article VI), the
Fronting Bank shall issue Letters of Credit, and extend the Stated Expiry Dates
of outstanding Letters of Credit, in accordance with the Issuance Requests made
therefor. The Fronting Bank will make available the original of each Letter of
Credit which it issues in accordance with the Issuance Request therefor to the
beneficiary thereof (and, at the request of a Lender, will provide such Lender
on a monthly basis with a schedule of the outstanding Letters of Credit as of
the last day of the prior month) and will notify the beneficiary under any
Letter of Credit of any extension of the Stated Expiry Date thereof.
SECTION 4.3. Destruction of Goods, etc. Neither the Fronting Bank nor
its agents or correspondents shall be responsible for the negligence or
fraudulence of any beneficiary of a Letter of Credit, for the existence, nature,
condition, description, value, quality or quantity of the Goods, for the
packing, shipment, export, import, handling, storage or delivery thereof, or for
the safety or preservation thereof at any time, and neither the Fronting Bank
nor its agents or correspondents shall be liable for any loss resulting from the
total or partial destruction of or damage to or deterioration or fall in value
of the Goods, or from the delay in arrival or failure to arrive of either the
Goods or of any of the documents relating thereto, or from the inadequacy or
invalidity of any document or insurance, or from the default or insolvency of
any insurer, carrier or other Person issuing any document with respect to the
Goods, or from failure to give or delay in giving notice of arrival of the Goods
or any other notice, or from any error in or misinterpretation of or default or
delay in the sending, transmission, arrival or delivery of any message, whether
in writing or not, by post, telegraph, cable, wireless or otherwise, and the
obligations hereunder of each Borrower to the Fronting Bank shall not be in any
way lessened or affected if any Draft or document accepted, paid or acted upon
by the Fronting Bank or its agents or correspondents does not bear a reference
or sufficient reference to a Documentary Letter of Credit or if no note thereof
is made on a Documentary Letter of Credit.
SECTION 4.4. Other Lenders' Participation. Each Letter of Credit issued
pursuant to Section 4.2 shall, effective upon its issuance and without further
action, be issued on behalf of all Lenders (including the Fronting Bank thereof)
according to their
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respective Percentages. Each Lender shall, to the extent of its Percentage, be
deemed irrevocably to have participated in the issuance of such Letter of Credit
and shall be responsible to reimburse promptly the Fronting Bank thereof for
Reimbursement Obligations which have not been converted into a Loan on the
Disbursement Date pursuant to the terms of this Agreement or reimbursed by the
Borrowers in accordance with Section 4.5, or which have been converted into a
Loan on the Disbursement Date pursuant to the terms of this Agreement or
reimbursed by the Borrowers but must be returned, restored or disgorged by the
Fronting Bank for any reason, and each Lender shall, to the extent of its
Percentage, be entitled to receive from the Administrative Agent a ratable
portion of the letter of credit fees received by the Administrative Agent
pursuant to Section 3.3.1, with respect to each Letter of Credit. In the event
that either Borrower shall fail to reimburse the Fronting Bank, or if for any
reason Loans shall not be made to fund any Reimbursement Obligation, in each
case as provided in this Agreement and in an amount equal to the Disbursement
amount, or in the event the Fronting Bank must for any reason return or disgorge
such reimbursement, the Fronting Bank shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Fronting Bank,
whether or not any Default shall have occurred and be continuing, an amount
equal to its respective participation in same day or immediately available funds
at the office of the Fronting Bank specified in such notice not later than 11:00
a.m., New York City time, on the Business Day after the date notified by the
Fronting Bank. In the event that any Lender fails to make available to the
Fronting Bank the amount of such Lender's participation in such Letter of Credit
as provided herein, the Fronting Bank shall be entitled to recover such amount
on demand from such Lender together with interest at the Federal Funds Rate from
the date such amount is due through (but excluding) the date such payment is
made (together with such other compensatory amounts as may be required to be
paid by such Lender to the Administrative Agent pursuant to the Rules for
Interbank Compensation of the council on International Banking or the
Clearinghouse Compensation Committee, as the case may be, as in effect from time
to time). Nothing in this Section shall be deemed to prejudice the right of any
Lender to recover from the Fronting Bank any amounts made available by such
Lender to the Fronting Bank pursuant to this Section in the event that it is
determined by a court of competent jurisdiction that the payment with respect to
a Letter of Credit by the Fronting Bank in respect of which payment was made by
such Lender constituted gross negligence or wilful misconduct on the part of the
Fronting Bank. The Fronting Bank shall distribute to each other Lender which has
paid all amounts payable by it under this Section with respect to any Letter of
Credit issued by the Fronting Bank such other Lender's Percentage of all
payments received by the
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Fronting Bank from the Borrowers in reimbursement of drawings honored by the
Fronting Bank under such Letter of Credit when such payments are received.
SECTION 4.5. Disbursements. The Fronting Bank will notify the
applicable Borrower and the Administrative Agent promptly of the presentment for
payment of any Letter of Credit, together with notice of the date (a
"Disbursement Date") such payment shall be made. Subject to the terms and
provisions of such Letter of Credit, and the delivery to the Fronting Bank of
all drafts, certificates, documents and/or instruments required as a condition
to making a Disbursement under such Letter of Credit, the Fronting Bank shall
make such payment to the beneficiary (or its designee) of such Letter of Credit.
If and to the extent that Loans are not made to fund a Reimbursement Obligation
pursuant to Section 2.3, then the Borrowers will reimburse the Fronting Bank
within one Business Day following the Disbursement Date for all amounts which
the Fronting Bank has disbursed under the Letter of Credit; provided, that the
Foreign Borrower shall only be obligated to reimburse the Fronting Bank for
disbursements under Letters of Credit issued for its account.
SECTION 4.6. Reimbursement; Outstanding Letters, etc.
(a) Each Borrower's obligation (a "Reimbursement Obligation") under
Section 4.5 to reimburse the Fronting Bank with respect to each Disbursement
(including fees and interest thereon payable pursuant to Section 3.2.2 and
Section 3.3.1), and each Lender's obligation to make participation payments
pursuant to Section 4.4 in each Disbursement, shall be absolute, unconditional
and irrevocable and shall not be reduced by any event or occurrence including,
without limitation,
(i) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any Letter of Credit or any document submitted by any
party in connection with the application for and issuance of a Letter of
Credit, even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the form, validity, sufficiency, accuracy, genuineness
or legal effect of any instrument transferring or assigning or
purporting to transfer or assign a Letter of Credit or the rights or
benefits thereunder or the proceeds thereof in whole or in part, which
may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
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(iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise;
(v) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit;
(vi) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations in respect of any
Letter of Credit or any other amendment or waiver of or any consent to
departure from any Letter of Credit;
(vii) the existence of any claim, set-off, defense or other right
that either Borrower may have at any time against any beneficiary or any
transferee of a Letter of Credit (or any Persons for whom any such
beneficiary or any such transferee may be acting), the Fronting Bank or
any other Person, whether in connection with the transactions
contemplated by the applicable Letter of Credit or any unrelated
transaction;
(viii) payment by the Fronting Bank under a Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of such Letter of Credit;
(ix) any release or amendment or waiver of or consent to
departure from any guaranty, for all or any of the Obligations in
respect of the applicable Letter of Credit; or
(x) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge
of, either Borrower or a guarantor.
The obligations of each Borrower and the Lenders hereunder shall remain in full
force and effect and shall apply to any alteration to or extension of the
expiration date of any Letter of Credit or any Letter of Credit issued to
replace, extend or alter any Letter of Credit during the term of this Agreement.
None of the foregoing shall affect, impair or prevent the vesting of any of the
rights or powers granted to the Fronting Bank or any Lender hereunder. In
furtherance and extension and not in limitation or derogation of any of the
foregoing, any action taken or omitted to be taken by the Fronting Bank in good
faith (and not constituting gross negligence or willful misconduct) shall be
binding upon each Borrower, each Obligor and each such Lender,
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and shall not put the Fronting Bank under any resulting liability to either
Borrower, any Obligor or any such Lender, as the case may be.
(b) The applicable Borrower shall pay to the Fronting Bank an amount
equal to the then Stated Amount and all unpaid fees in respect of (i) any
Letter of Credit outstanding under this Agreement upon any termination of this
Agreement and (ii) any Letter of Credit which is affected by, or becomes the
subject matter of, any order, judgment, injunction or other such determination
(an "Order") or any petition or other application for any Order by either
Borrower or any other party, restricting payment by the Fronting Bank under and
in accordance with such Letter of Credit or extending the Fronting Bank's or any
Lender's liability under such Letter of Credit beyond the expiration date stated
therein, or if not stated therein, which would otherwise apply to such Letter of
Credit. Payment in respect of each such Letter of Credit described in (i) and
(ii) in this clause shall be due forthwith upon demand and in Dollars.
(c) The Fronting Bank hereby agrees that it will, with respect to
each Letter of Credit subjected to any such demand for payment under the
preceding clause (b), upon the later of:
(i) the date on which any final and non-appealable order,
judgment or other such determination has been rendered or issued either
terminating any applicable Order or permanently enjoining the Fronting
Bank from paying under such Letter; and
(ii) the earlier of (x) the date on which either the original
counterpart of such Letter of Credit is returned to the Fronting Bank
for cancellation or the Fronting Bank is released by the beneficiary
thereof from any further obligations in respect of such Letter of
Credit, and (y) the expiry of such Letter of Credit;
pay to the applicable Borrower an amount in Dollars equal to any excess of the
amount received by the Fronting Bank pursuant to clause (b) above in respect of
such Letter of Credit (the "Received Amount") over the equivalent in Dollars of
the total of amounts applied to reimburse the Fronting Bank for amounts paid by
it under such Letter of Credit, if any (the Fronting Bank having the right to so
appropriate such funds), together with an additional amount in Dollars computed
by applying to the amount of such excess from time to time a per annum rate
equal to 3% less than the Alternate Base Rate. Such additional amount shall be
calculated daily on the basis of a 360 day year for the actual number of days
elapsed from and including the date of payment to the Fronting Bank of the
Received Amount to (but not including) the date of return to the applicable
Borrower of the excess.
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SECTION 4.7. Deemed Disbursements. Upon (i) the occurrence of any
Commitment Termination Event of the type described in clause (c) of the
definition of "Commitment Termination Event", (ii) the occurrence and during the
continuation of any event or condition specified in clause (e) of Section 6.01
of the U.S. Credit Agreement, or (iii) the occurrence and during the continuance
of any other Event of Default,
(a) an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit
shall, without demand upon or notice to either Borrower, be deemed to
have been paid or disbursed by the Fronting Bank under such Letters of
Credit (notwithstanding that such amount may not in fact have been so
paid or disbursed); and
(b) upon notification by the Fronting Bank to the Administrative
Agent and the U.S. Borrower of its obligations under this Section, the
Borrowers shall be immediately obligated to reimburse the Fronting Bank
the amount deemed to have been so paid or disbursed by the Fronting
Bank; provided, that the Foreign Borrower shall only be obligated to
reimburse the Fronting Bank for amounts deemed to have been disbursed
under Letters of Credit issued for its account.
Any amounts so received by the Fronting Bank from the Borrowers pursuant to this
Section shall be held as collateral security for the repayment of such
Borrower's Obligations in connection with the Letters of Credit issued by the
Fronting Bank. At any time when such Letters of Credit shall terminate and all
Obligations of the Fronting Bank are either terminated or paid or reimbursed to
the Fronting Bank in full, the Obligations of the Borrowers under this Section
shall be reduced accordingly (subject, however, to reinstatement in the event
any payment in respect of such Letters of Credit is recovered in any manner from
the Fronting Bank), and the Fronting Bank will return to the applicable Borrower
the excess, if any, of
(c) the aggregate amount deposited by the Borrowers with the
Fronting Bank and not theretofore applied by the Fronting Bank to any
Reimbursement Obligation
over
(d) the aggregate amount of all Reimbursement Obligations to the
Fronting Bank pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or waived, the
Fronting Bank shall return to the applicable Borrower
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all amounts then on deposit with the Fronting Bank pursuant to this Section
together with an additional amount in dollars computed by applying to the amount
so returned to the applicable Borrower from time to time a per annum rate equal
to 3% less than the Alternate Base Rate. Such additional amount shall be
calculated daily on the basis of a 360 day year for the actual number of days
elapsed from and including the date of payment to the Fronting Bank by the
applicable Borrower to (but not including) the date of return to the applicable
Borrower of such amounts.
SECTION 4.8. Nature of Reimbursement Obligations. The Borrowers shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Any action, inaction or omission taken or suffered by
the Fronting Bank or any of the Fronting Bank's correspondents under or in
connection with a Letter of Credit or any Draft made under any Documentary
Letter of Credit or any document relating thereto, if in good faith and in
conformity with foreign or domestic laws, regulations or customs applicable
thereto shall be binding upon the Borrowers and shall not place the Fronting
Bank or any of its correspondents under any resulting liability to the
Borrowers. Without limiting the generality of the foregoing, the Fronting Bank
and its correspondents may receive, accept or pay as complying with the terms of
a Letter of Credit, any Draft under any Documentary Letter of Credit, otherwise
in order which may be signed by, or issued to, the administrator or any executor
of, or the trustee in bankruptcy of, or the receiver for any property of, or
other Person or entity acting as the representative or in the place of, such
beneficiary or its successors and assigns. The Borrowers covenant that they will
not take any steps, issue any instructions to the Fronting Bank or any of its
correspondents or institute any proceedings intended to derogate from the right
or ability of the Fronting Bank or its correspondents to honor and pay any Draft
or Drafts. Without in any way limiting the provisions of Section 4.6, and
notwithstanding anything to the contrary contained in this Agreement or in any
other Loan Document, each Borrower irrevocably acknowledges and agrees that it
is unconditionally liable for all Reimbursement Obligations with respect to each
Disbursement (including fees and interest thereon) under each Letter of Credit
issued for its account, regardless (in the case of the U.S. Borrower) of whether
such Letter of Credit was issued in respect of the sourcing or other corporate
requirements or needs of the U.S. Borrower or any Subsidiary of the U.S.
Borrower, or otherwise.
SECTION 4.9. Existing Letters of Credit. The Existing Letters of
Credit, and the amount and payment date of fees on Letters of Credit (including
such Existing Letters of Credit deemed to be Documentary Letters of Credit
hereunder), shall be
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governed by this Agreement. Simultaneously with the effectiveness of this
Agreement pursuant to Section 11.8, the Existing Credit Agreement shall be
superseded in its entirety by this Agreement, except to the extent of any
provisions of the Existing Credit Agreement which by their express terms survive
termination of the Existing Credit Agreement.
ARTICLE V
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 5.1. LIBO Rate Lending Unlawful. If any Lender shall determine
(which determination shall, upon notice thereof to the U.S. Borrower, be
conclusive and binding on the Borrowers) that the introduction of or any change
in or in the interpretation of any law makes it unlawful, or any central bank or
other governmental authority asserts that it is unlawful, for such Lender to
make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate
Loan, the obligations of the Lenders to make, continue, maintain or convert into
any such Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the U.S. Borrower that the circumstances causing such
suspension no longer exist, and all LIBO Rate Loans shall automatically convert
into Base Rate Loans at the end of the then current Interest Periods with
respect thereto or sooner, if required by such law or assertion.
SECTION 5.2. Deposits Unavailable. If any Lender shall have determined
that
(a) Dollar deposits in the relevant amount and for the relevant
Interest Period are not available to it in its relevant market; or
(b) by reason of circumstances affecting such Lender's relevant
market, adequate means do not exist for ascertaining the interest rate
applicable hereunder to LIBO Rate Loans,
then, upon notice from such Lender to the U.S. Borrower and the Administrative
Agent, the obligations of the Lenders under Section 2.3 and Section 2.4 to make
or continue any Loans as, or to convert any Loans into, LIBO Rate Loans shall
forthwith be suspended until such Lender shall notify the U.S. Borrower and the
Administrative Agent that the circumstances causing such suspension no longer
exist.
SECTION 5.3. Increased LIBO Rate Loan Costs, etc. The Borrowers agree to
reimburse each Lender for any increase in the cost to such Lender of, or any
reduction in the amount of any sum
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receivable by such Lender in respect of, making or continuing (or of its
obligation to make or continue) any Loans as, or of converting (or of its
obligation to convert) any Loans into, LIBO Rate Loans. Each Lender shall
promptly notify the U.S. Borrower and the Administrative Agent in writing of the
occurrence of any such event, such notice to state, in reasonable detail, the
reasons therefor and the additional amount required fully to compensate such
lender for such increased cost or reduced amount. Such additional amounts shall
be payable by the U.S. Borrower directly to such Lender within five Business
Days of its receipt of such notice, and such notice shall, in the absence of
manifest error, be conclusive and binding on the U.S. Borrower.
SECTION 5.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a LIBO
Rate Loan, but excluding the loss of any anticipated or expected profits in
respect of such LIBO Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any LIBO Rate Loans on a date other than the scheduled last
day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance
with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into, LIBO
Rate Loans in accordance with the Continuation/ Conversion Notice
therefor,
then, upon the written notice of such Lender to the U.S. Borrower and the
Administrative Agent, the U.S. Borrower shall, within five Business Days of its
receipt thereof, pay directly to such Lender such amount as will (in the
reasonable determination of such Lender) reimburse such Lender for such loss or
expense. Such written notice (which shall include calculations in reasonable
detail) shall, in the absence of manifest error, be conclusive and binding on
the U.S. Borrower.
SECTION 5.5. Increased Capital Costs, etc. If the implementation of or,
after the date hereof, the introduction or any change in the interpretation of,
or any change in its application to the Borrowers, the Fronting Bank and/or the
Lenders of, any law or any regulation or guideline issued by any central bank or
other governmental authority (whether or not having the force of law), including
any eurocurrency or other reserve or special deposit requirement or any tax
(other than tax
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which is on a Lender's general net or gross income or in respect of a Lender's
franchise taxes) or any capital requirement, has, due to a Lender's or the
Fronting Bank's compliance, the effect, directly or indirectly, of (i)
increasing the cost to such Lender or Fronting Bank of performing its
obligations hereunder or under any Letter of Credit or Loan; (ii) reducing any
amount received or receivable by such Lender or Fronting Bank or its effective
return hereunder or in respect of any Letter of Credit or Loan or on its
capital; or (iii) causing such Lender or Fronting Bank to make any payment or to
forgo any return based on any amount received or receivable by such Lender or
Fronting Bank hereunder or in respect of any Letter of Credit or Loan, then upon
demand from time to time the U.S. Borrower shall pay such amount as shall
compensate such Lender or Fronting Bank for any such cost, reduction, payment or
foregone return upon receipt of the certificate referred to in the last sentence
of this paragraph. The Borrowers shall further indemnify the Fronting Bank for
all costs, losses and expenses incurred by the Fronting Bank in connection with
any Letter of Credit and agrees that the Fronting Bank shall have no liability
to the Borrowers for any reason in respect of any Letter of Credit other than on
account of the Fronting Bank's gross negligence or wilful misconduct. Any
certificate of the Fronting Bank or any Lender in respect of the foregoing will
be conclusive and binding upon the Borrowers, except for manifest error, and
shall set forth a determination of the amounts owing to the Fronting Bank or
such Lender in good faith using any reasonable averaging and attribution
methods. Anything in this Agreement or any Loan Document to the contrary
notwithstanding, no Lender or Fronting Bank shall be indemnified for, exculpated
from, or relieved from liability, under this Agreement or any Loan Document, for
any act or omission constituting gross negligence or wilful misconduct.
SECTION 5.6. Taxes. (a) Each payment made by each Borrower under this
Agreement shall be made free and clear of, and without deduction for, any
present or future withholding or other taxes imposed on such payments by or on
behalf of any government or any political subdivision or agency thereof or
therein, except for any income, franchise and other taxes imposed on the Lender
(which for purposes of this Section 5.6 shall include any branch, affiliate or
international banking facility created by a Lender to make or maintain a LIBO
Rate Loan pursuant to Section 2.5) by the jurisdiction under the laws of which
such Lender is organized or any political subdivision or agency thereof or by
the jurisdiction of such Lender's branch or lending office or principal place of
business (all such non-excluded taxes being hereinafter referred to as "Taxes").
Whenever any Taxes are payable by either Borrower with respect to any payments
hereunder, such Borrower shall promptly furnish to the Administrative Agent for
the account of the applicable Lender official receipts (to the extent that the
relevant governmental
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authority delivers such receipts) evidencing payment of any such Taxes so
withheld or deducted.
(b) Each Lender that is not a "United States person" (as such term
is defined in Section 7701(a)(3) of the Internal Revenue Code of 1986) shall
submit to the U.S. Borrower on or before the Effective Date (or, in the case of
a Person that becomes a Lender after the Effective Date by assignment or
pursuant to Section 2.5 promptly upon such assignment or funding) two duly
completed and signed copies of either (1) Form 1001 of the United States
Internal Revenue Service entitling such Lender to a complete exemption from
withholding on all amounts to be received by such Lender pursuant to this
Agreement or (2) Form 4224 of the United States Internal Revenue Service
relating to all amounts to be received by such Lender pursuant to this
Agreement. Each such Lender shall, from time to time after submitting either
such form, submit to the U.S. Borrower and the Administrative Agent such
additional duly completed and signed copies of one or the other such forms (or
such successor forms or other documents as shall be adopted from time to time by
the relevant United States taxing authorities) as may be (1) reasonably
requested in writing by the U.S. Borrower or the Administrative Agent and (2)
appropriate under then current United States law or regulations to avoid United
States withholding taxes on payments in respect of any amounts to be received by
such Lender pursuant to this Agreement. Upon the reasonable request of the U.S.
Borrower or the Administrative Agent, each Lender that has not provided the
forms or other documents, as provided above, on the basis of being a "United
States person" shall submit to the U.S. Borrower and the Administrative Agent a
certificate to the effect that it is such a "United States person".
(c) If any Lender which is not a "United States person" determines
that it is unable to submit to the U.S. Borrower and the Administrative Agent
any form or certificate that such Lender is requested to submit pursuant to the
preceding paragraph, or that it is required to withdraw or cancel any such form
or certificate, or that any such form or certificate previously submitted has
otherwise become ineffective or inaccurate, such Lender shall promptly notify
the U.S. Borrower and the Administrative Agent of such fact.
(d) The Borrowers shall not be required to pay any additional
amount in respect of Taxes to any Lender if and only to the extent that (A) such
Lender is subject to such Taxes on the Effective Date (or in the case of a
Person that became a Lender after the Effective Date by assignment or pursuant
to Section 2.5 on the date of such assignment or funding) or would be subject to
such Taxes on such date if a payment under this Agreement has been received by
it on such date; (B) such Lender
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becomes subject to such Taxes subsequent to the date referred to in clause (A)
above (or in the case of a Lender which is not a "United States person", the
first date on which it delivers the appropriate form or certificate to the U.S.
Borrower as referred to in clause (b) of this Section) as a result of a change
in the circumstances of such Lender (other than a change in applicable law),
including a change in the residence, place of incorporation or principal place
of business of the Lender, a change in the branch or lending office of the
Lender participating in the transactions set forth herein or as a result of the
sale by the Lender of participating interests in such Lender's creditor
position(s) hereunder; or (C) such Taxes would not have been incurred but for
the failure of such Lender to file with the appropriate tax authorities and/or
provide to the U.S. Borrower any form or certificate that it was required so to
do pursuant to clause (b) of this Section, unless the Lender is not entitled to
provide such form or certificate as a result of a change in applicable law after
the Effective Date (or in the case of a Person that became a Lender after the
Effective Date by assignment or pursuant to Section 2.5 the date of such
assignment or funding).
(e) Within thirty (30) days after the written reasonable request of
the U.S. Borrower, each Lender shall execute and deliver to the U.S. Borrower
such certificates, forms or other documents which can be furnished consistent
with the facts and which are reasonably necessary to assist the U.S. Borrower in
applying for refunds of Taxes paid by the U.S. Borrower hereunder or making
payment of Taxes hereunder; provided, however, that no Lender shall be required
to furnish to the U.S. Borrower any financial information with respect to itself
or other information which it considers confidential.
(f) The U.S. Borrower shall have the right to require any Lender
which is not a "United States person" to which the U.S. Borrower is required to
make additional payments pursuant to Section 5.6 hereof on account of Taxes (or
would, upon payment to such Lender of an amount hereunder, be so required) to
assign such Lender's total Loans and Commitments to one or more banks or
financial institutions identified by the U.S. Borrower and acceptable to the
Administrative Agent at a purchase price equal to the then outstanding amount of
all principal, interest, fees and other amounts then owed to such Lender.
SECTION 5.7. Payments, Computations, etc. Unless otherwise expressly
provided herein (including as set forth in Section 2.3 and Section 4.5), all
payments by the Borrowers pursuant to this Agreement, the Notes or any other
Loan Document shall be made by the Borrowers to the Administrative Agent for the
account of the Lenders entitled to receive such payment. All such payments
required to be made to the Administrative Agent shall be made,
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without setoff, deduction or counterclaim, not later than 11:00 a.m., Applicable
Time, on the date due, in same day or immediately available funds, to such
account as the Administrative Agent shall specify from time to time by notice to
the U.S. Borrower. To the extent the Administrative Agent receives such funds
prior to 12:00 noon, Applicable Time, the Administrative Agent shall promptly
remit in same day funds to each Lender its share, if any, of such payments
received by the Administrative Agent for the account of such Lender. All
interest and fees shall be computed on the basis of the actual number of days
(including the first day but excluding the last day) occurring during the period
for which such interest or fee is payable over a year comprised of 360 days.
Whenever any payment to be made shall otherwise be due on a day which is not a
Business Day in New York, such payment shall (except as otherwise required by
clause (b) of the definition of the term "Interest Period") be made on the next
succeeding Business Day and such extension of time shall be included in
computing interest and fees, if any, in connection with such payment.
SECTION 5.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Letter of Credit or Loan in excess of its
Percentage of payments then or therewith obtained by all Lenders, such Lender
shall purchase from the other Lenders such participations in Letters of Credit
or Loans, as the case may be, as shall be necessary to cause such purchasing
Lender to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase shall
be rescinded and each Lender which has sold a participation to the purchasing
Lender shall repay to the purchasing Lender the purchase price to the ratable
extent of such recovery together with an amount equal to such selling Lender's
ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. Each Borrower agrees that any Lender
so purchasing a participation from another Lender pursuant to this Section may,
to the fullest extent permitted by law, exercise all its rights of payment
(including pursuant to Section 5.9) with respect to such
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participation as fully as if such Lender were the direct creditor of such
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives a secured claim
in lieu of a setoff to which this Section applies, such Lender shall, to the
extent practicable, exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this Section to
share in the benefits of any recovery on such secured claim.
SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any
event or condition described in clause (e) of Section 6.01 of the U.S. Credit
Agreement or, with the consent of the Required Lenders, upon the occurrence of
any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due) any and all
balances, credits, deposits, accounts or moneys of the applicable Borrower then
or thereafter maintained with or otherwise held by such Lender; provided,
however, that any such appropriation and application shall be subject to the
provisions of Section 5.8. Each Lender agrees promptly to notify the U.S.
Borrower and the Administrative Agent after any such setoff and application made
by such Lender; provided, however, that the failure to give such notice shall
not affect the validity of such setoff and application. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff under applicable law or otherwise) which such
Lender may have.
SECTION 5.10. Use of Proceeds. Each Borrower shall apply the proceeds of
each Credit Extension in accordance with the fifth recital.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Initial Credit Extension. The amendment and restatement of
the Existing Credit Agreement on the terms set forth in this Agreement and the
obligations of the Lenders to make any Credit Extension and the Fronting Bank to
issue any Letters of Credit shall be subject to the delivery to the Managing
Agents of this Agreement duly executed and delivered by each Lender, each Agent,
each Borrower and Group, and the prior or concurrent satisfaction of each of the
conditions precedent set forth below in this Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Managing Agents shall have received
from each Borrower originally executed copies of a
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certificate, each dated the date of the Effective Date, of its Secretary or
Assistant Secretary as to
(a) resolutions of its Board of Directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
and
(b) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 6.1.2. Delivery of Notes. Each Lender shall have received its
Notes duly executed and delivered by each Borrower.
SECTION 6.1.3. Guarantees. The Managing Agents shall have received
originally executed counterparts for each Lender of (a) the Group Guaranty,
dated as of the date hereof, duly executed by an Authorized Officer of Group and
(b) the Subsidiary Guaranty, dated as of the date hereof, duly executed by an
Authorized Officer of each Domestic Subsidiary that is a party thereto.
SECTION 6.1.4. Delivery of Form 1001 or 4224. The Administrative Agent
shall have received two executed copies of either Internal Revenue Service Form
1001 or Form 4224, as applicable, from each non-U.S. Lender.
SECTION 6.1.5. Certificates as to No Default, etc. No default shall have
occurred in the performance of any affirmative or negative covenants contained
in the U.S. Credit Agreement, none of the events described in clauses (a), (b),
(d), (e), (f), (g), (h), (i) or (j) of Section 6.01 of the U.S. Credit Agreement
shall have occurred, and no Event of Default shall have occurred or would occur
under the U.S. Credit Agreement or would result from the execution and delivery
of, or the performance by the Borrowers of their obligations under, this
Agreement or the issuance of any Letter of Credit or the making of any Loan, and
the Managing Agents shall have received originally executed certificates for
each Lender dated the Effective Date from an Authorized Officer of the U.S.
Borrower certifying as to the above.
SECTION 6.1.6. No Material Adverse Change. Since January 4, 1997, there
shall have been no material adverse change in the business, condition (financial
or otherwise), operations,
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performance, properties or prospects of (i) the U.S. Borrower or (ii) Group and
its Subsidiaries, taken as a whole.
SECTION 6.1.7. Tradexpress Agreement. The Administrative Agent shall
have received the completed Tradexpress Agreements, in each case duly executed
and delivered by the Borrower party thereto and the Fronting Bank.
SECTION 6.1.8. U.S. Credit Agreement. Prior to or concurrently with the
Effective Date, the U.S. Borrower shall have executed and delivered the U.S.
Credit Agreement. The U.S. Credit Agreement shall be in full force and effect.
SECTION 6.1.9. Opinions of Counsel. The Managing Agents shall have
received opinions, dated the Effective Date and addressed to the Agents and all
Lenders, from (i) Skadden, Arps, Slate, Meagher & Flom LLP, New York counsel to
the Obligors, substantially in the form of Exhibit G hereto, (ii) Stanley P.
Silverstein, General Counsel for the U.S. Borrower, substantially in the form of
Exhibit H hereto and (iii) Thompson & Patterson, Barbados counsel to the Foreign
Borrower, substantially in the form of Exhibit I hereto.
SECTION 6.2. All Credit Extensions. The obligation of each Lender or
the Fronting Bank to make any Credit Extension on any date other than a Funding
Date shall be subject to the satisfaction of each of the conditions precedent
set forth in this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both before
and after giving effect to any Credit Extension the following statements shall
be true and correct:
(a) no event or circumstances has occurred and is continuing, or
would result from the making of such Credit Extension, which constitutes
a Default, or which when considered by itself or together with other
past or then existing events or circumstances, constitutes or would
constitute a material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or
prospects of the U.S. Borrower or of Group and its Subsidiaries taken as
a whole;
(b) no event of default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an event
of default shall have occurred (unless otherwise waived by the Required
Lenders) in the performance of any affirmative and negative covenants
contained in Sections 5.01, 5.02 or 5.03 of the U.S. Credit Agreement
and regardless of whether such U.S. Credit Agreement is terminated,
unless in connection with such termination a
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replacement credit facility which the Required Lenders hereunder have
approved is entered into in which case, the affirmative and negative
covenants in such facility shall become the subject of this clause;
(c) none of the events described in clauses (a), (b), (d), (e),
(f), (g), (h), (i) or (j) of Section 6.01 of the U.S. Credit Agreement
(without giving effect to any termination of the U.S. Credit Agreement,
unless in connection with such termination a replacement credit facility
to which the Required Lenders hereunder have approved, in which case the
analogous provisions of such replacement credit facility shall become
the subject of this clause), shall have occurred (unless, in the case of
other than such clause (e), otherwise waived by the Required Lenders);
and
(d) the representations and warranties set forth in Article VII,
Article III of the Subsidiary Guaranty and Article III of the Group
Guaranty shall, in each case, be true and correct with the same effect
as if then made (unless stated to relate solely to an earlier date, in
which case such representations and warranties shall be true and correct
as of such earlier date).
SECTION 6.2.2. Credit Request. To the extent that Loans are made in
accordance with clause (b) of Section 2.3 or a Borrower requests that the
Fronting Bank issue a Documentary Letter of Credit other than by means of
notification in accordance with the terms of the Tradexpress Agreement or a
Standby Letter of Credit, the Administrative Agent shall have received a
Borrowing Request or Issuance Request, as the case may be, for such Credit
Extension, executed and delivered by the applicable Borrower. Each of the
delivery (or deemed delivery pursuant to the terms of this Agreement) of a
Borrowing Request or an Issuance Request and the acceptance by either Borrower
of the proceeds of the Borrowing or the issuance of the Letter of Credit, or the
making of a Loan upon a Disbursement, as applicable, shall constitute a
representation and warranty by the Borrowers that on the date of such Credit
Extension (both immediately before and after giving effect to such Credit
Extension and the application of the proceeds thereof) or the issuance of the
Letter of Credit, as applicable, the statements made in Section 6.2.1 are in
each case true and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of Group or any of its Subsidiaries
shall be satisfactory in form and substance to the Managing Agents; the Managing
Agents shall have received all information, approvals, opinions, documents or
instruments as the Managing Agents may reasonably request.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Fronting Bank, the Lenders and the Agents to
enter into this Agreement and to make Loans and issue Letters of Credit
hereunder, each of the U.S. Borrower and Group represents and warrants unto each
Agent, each Lender and the Fronting Bank, as set forth in this Article VII.
SECTION 7.1. Organization, etc. Group and each of its Subsidiaries is a
corporation or limited liability company, as the case may be, validly organized
and existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, is duly qualified to do business and is in good
standing as a foreign corporation or foreign entity, as applicable, in each
jurisdiction where the nature of its business requires such qualification,
except where the failure to so qualify would not have a Material Adverse Effect
(as defined in the U.S. Credit Agreement), and each Obligor has full power and
authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document to which it is a party and to own and hold
under lease its property and to conduct its business substantially as currently
conducted by it.
SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance (i) by the Borrowers and Group of this Agreement, the
Notes and each other Loan Document executed or to be executed by it, and (ii) by
each other Obligor of each Loan Document executed and delivered by it, are, in
each case, within such Obligor's corporate (or other, as applicable) powers,
have been duly authorized by all necessary corporate (or other, as applicable)
action, and do not
(a) contravene such Obligor's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting such
Obligor; or
(c) result in, or require the creation or imposition of, any Lien
on any of such Obligor's properties.
SECTION 7.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by either Borrower, Group or any other Obligor of
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this Agreement, the Notes or any other Loan Document to which it is a party.
Neither Group nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrowers and each other Obligor
will, on the due execution and delivery thereof, constitute, the legal, valid
and binding obligations of such Borrower or such Obligor enforceable in
accordance with their respective terms, except as the enforceability thereof may
be limited by bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors rights generally and by general equity
principles.
SECTION 7.5. No Material Adverse Change. Since January 4, 1997, there
has been no material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of (i) the U.S.
Borrower or (ii) Group and its Subsidiaries, taken a whole.
SECTION 7.6. Litigation, etc. There is no action, suit, investigation or
proceeding affecting any Obligor or any of its Subsidiaries, including any
Environmental Action, pending or threatened before any court, governmental
agency or arbitrator that (i) purports to affect the legality, validity or
enforceability of this Agreement or any other Loan Document or the consummation
of the transactions contemplated hereby or (ii) is or would be reasonably likely
to materially adversely affect the business, condition (financial or otherwise),
operations, performance, properties or prospects of the U.S. Borrower or Group
and its Subsidiaries, taken as a whole.
SECTION 7.7. Regulations G, U and X. Neither Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION 7.8. Accuracy of Information. All factual information
heretofore or contemporaneously furnished by or on behalf of either Borrower or
Group in writing to any Agent or any Lender for purposes of or in connection
with this Agreement or any transaction contemplated hereby is, and all other
such
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factual information hereafter furnished by or on behalf of either Borrower
to any Agent or any Lender will be, true and accurate in every material respect
on the date as of which such information is dated or certified and as of the
date of execution and delivery of this Agreement by such Agent and such Lender,
and such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading. The parties acknowledge and agree that nothing contained in this
Section shall constitute a representation or warranty by either Borrower or
Group as to the future financial performance or the results of operations of
either Borrower or Group; provided, however, that any projections delivered
pursuant to this Agreement have been (and will be) prepared on the basis of the
assumptions accompanying them, and such projections and assumptions, as of the
date of preparation thereof and as of the date hereof, are reasonable and
represent the U.S. Borrower's or Group's good faith estimate of its future
financial performance.
SECTION 7.9. U.S. Credit Agreement Representations and Warranties. As
to all representations and warranties contained in Article IV of the U.S. Credit
Agreement and each Loan Document (as such term is defined by the U.S. Credit
Agreement) insofar as applicable to the Borrowers, Group or any other Obligor,
the properties of the Borrowers, Group or any other Obligor or the obligations
of the Borrowers, Group or any other Obligor under the documents executed and
delivered in connection with the U.S. Credit Agreement, each such representation
and warranty set forth in such Article (insofar as so applicable) and all other
terms of the U.S. Credit Agreement and each Loan Document (as such term is
defined by the U.S. Credit Agreement) to which reference is made therein,
together with all related definitions and ancillary provisions, are hereby
incorporated into this Agreement by reference with respect to each Borrower,
Group or any other Obligor as though specifically set forth in this Section 7.9.
ARTICLE VIII
COVENANTS
SECTION 8.1. Covenants. Each of the U.S. Borrower and Group agrees with
each Agent, each Lender and the Fronting Bank that, until all Commitments have
terminated and all Obligations have been paid and performed in full, the U.S.
Borrower and Group will perform, and will cause each of their respective
Subsidiaries to perform, the obligations set forth in this Section 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices, etc. Unless the
information set forth below is otherwise
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delivered to a Lender under the terms of the U.S. Credit Agreement, Group will
furnish, or will cause to be furnished, to each Lender and each Agent copies of
the financial statements, reports, notices and information required pursuant to
clause (j) of Section 5.01 of the U.S. Credit Agreement.
SECTION 8.1.2. Future Subsidiaries of Group. Group covenants and agrees
that, upon any Person becoming a Subsidiary after the Effective Date, Group
shall cause such Person to become party to the Subsidiary Guaranty if such
Person is required to deliver a guaranty pursuant to clause (k) of Section 5.01
of the U.S. Credit Agreement (without giving effect to any waiver of such
Section's requirements unless consented to by the Required Lenders).
SECTION 8.1.3. U.S. Credit Agreement Covenants. Each of the U.S.
Borrower and Group will comply with and be bound by, and will cause each of the
Subsidiaries to comply with and be bound by, all of the agreements, covenants
and obligations contained in Article V of the U.S. Credit Agreement. Each such
agreement, covenant and obligation contained in such Sections and all other
terms of the U.S. Credit Agreement and the documents executed in connection
therewith to which reference is made therein, together with all related
definitions and ancillary provisions is hereby incorporated into this Agreement
by reference as though specifically set forth in this Section 8.1.3, and each
such agreement, covenant and obligation shall, for purposes hereof, survive the
termination of the U.S. Credit Agreement.
SECTION 8.1.4. Default Notice. The U.S. Borrower will furnish, or will
cause to be furnished, to each Lender as soon as possible and in any event
within two Business Days after the occurrence of each Default a statement of its
chief financial officer setting forth details of such Default and the action
that the U.S. Borrower has taken and proposes to take with respect thereto.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. Non-Payment of Obligations. Either Borrower shall
default in the payment or prepayment when due of (i) any principal of or
interest on any Loan, (ii) any Reimbursement Obligation, or (iii) any fee or of
any other Obligation, and in each case such default in payment or prepayment
shall continue
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unremedied for more than three Business Days from the date such payment or
prepayment was due.
SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
either Borrower or any other Obligor made or deemed to be made hereunder or in
any other Loan Document executed by it (including any certificates delivered
pursuant to Article VI) is or shall be incorrect when made or deemed made in any
material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
The U.S. Borrower or Group shall default in the due performance and observance
of any of its obligations under Sections 8.1.2 or 8.1.4, or any Obligor shall
default in the due performance or observance of any of its obligations under any
other covenant in a Loan Document which is impossible to remedy.
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations.
Either Borrower or any other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of 30
days (a) after notice thereof shall have been given to the U.S. Borrower by any
Agent or any Lender or (b) after any officer of either Borrower obtains
knowledge thereof.
SECTION 9.1.5. Default Under U.S. Credit Agreement. Any Event of
Default under (and as defined in) the U.S. Credit Agreement or any replacement
credit facility shall have occurred whether or not such Event of Default is
waived by the lenders under the U.S. Credit Agreement, or an amendment of the
U.S. Credit Agreement is entered into with the effect of waiving or curing such
Event of Default.
SECTION 9.1.6. Bankruptcy, Insolvency, etc. Any event or condition
described in clause (e) of Section 6.01 of the U.S. Credit Agreement (or similar
provision of any replacement credit facility) shall have occurred and be
continuing.
SECTION 9.1.7. Termination, etc. of Loan Documents. Any Loan Document
shall (except in accordance with its terms), in whole or in part, terminate,
cease to be effective or cease to be the legally valid, binding and enforceable
obligation of the Obligor that is a party thereto; or either Borrower (including
the U.S. Borrower with respect to its Guaranty set forth in Section 3.4) or any
other Obligor shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability (except as aforesaid).
SECTION 9.2. Action Upon Bankruptcy. If any Event of Default described
in Section 9.1.6 shall occur, the Commitments
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(if not theretofore terminated) shall automatically terminate and the
outstanding principal amount of all outstanding Loans and all other Obligations
shall automatically be and become immediately due and payable, without notice or
demand.
SECTION 9.3. Action Upon Other Event of Default. If any Event of
Default (other than any Event of Default described in Section 9.1.6) shall occur
for any reason, whether voluntary or involuntary, and be continuing, the
Administrative Agent, upon the direction of the Required Lenders, shall by
notice to the U.S. Borrower declare all or any portion of the outstanding
principal amount of the Loans and other Obligations in respect of the Loans or
otherwise to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans and
other Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
ARTICLE X
THE AGENTS
SECTION 10.1. Actions. Each Lender hereby appoints Scotiabank as its
Administrative Agent and Citibank as its Documentation Agent under and for
purposes of this Agreement, the Notes and each other Loan Document. Each Lender
authorizes each Agent to act on behalf of such Lender under this Agreement, the
Notes and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by such Agent
(with respect to which the such Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of such Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) each Agent,
pro rata according to such Lender's Percentage, from and against any and all
liabilities, obligations, losses, damages, claims, costs or expenses of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against, such Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which such Agent is not reimbursed by the Borrowers;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, claims, costs or expenses
which are determined by a court of competent jurisdiction in a final proceeding
to
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have resulted from such Agent's gross negligence or wilful misconduct. Each
Agent shall not be required to take any action hereunder, under the Notes or
under any other Loan Document, or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of any Agent shall be
or become, in such Agent's determination, inadequate, such Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
SECTION 10.2. Copies, etc. Each Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to such Agent
by the Borrowers pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by a Borrower). Each Agent will distribute to each
Lender each document or instrument received for its account and copies of all
other communications received by such Agent from the Borrowers for distribution
to the Lenders by such Agent in accordance with the terms of this Agreement.
SECTION 10.3. Exculpation. Neither any Agent nor any of its affiliates,
directors, officers, employees or agents shall be liable to any Lender for any
action taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for its own wilful
misconduct or gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability, validity or due
execution of this Agreement or any other Loan Document, nor for the creation,
perfection or priority of any Liens (if any) purported to be created by any of
the Loan Documents, or the validity, genuineness, enforceability, existence,
value or sufficiency of collateral security (if any), nor to make any inquiry
respecting the performance by either Borrower of its obligations hereunder or
under any other Loan Document. Any such inquiry which may be made by any Agent
shall not obligate it to make any further inquiry or to take any action. Each
Agent shall be entitled to rely upon advice of counsel concerning legal matters
and upon any notice, consent, certificate, statement or writing which such Agent
believes to be genuine and to have been presented by a proper Person.
SECTION 10.4. Successor. Each Agent may resign as such at any time upon
at least 30 days' prior notice to the U.S. Borrower and all Lenders. If such
Agent at any time shall resign, the Required Lenders may appoint another Lender
as a successor Agent which shall thereupon become an Agent in the capacity of
the resigning Agent hereunder. If no successor Agent shall have been so
appointed by the Required Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving notice of resignation, then the
retiring Agent may, on
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behalf of the Lenders, appoint a successor Agent, which shall be one of the
Lenders or a commercial banking institution organized under the laws of the U.S.
(or any State thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as an Agent hereunder by a successor
Agent, such successor Agent shall be entitled to receive from the retiring Agent
such documents of transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with all rights,
powers, privileges and duties of the retiring Agent, and the retiring Agent
shall be discharged from its duties and obligations under this Agreement. After
any retiring Agent's resignation hereunder as an Agent, the provisions of
(a) this Article X shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was an Agent under this
Agreement; and
(b) Section 11.3 and Section 11.4 shall continue to inure to its
benefit.
SECTION 10.5. Loans Made or Letters of Credit Issued by Scotiabank and
Loans made by Citibank. Each of Scotiabank and Citibank shall have the same
rights and powers with respect to (x) the Loans made by it or any of its
affiliates, (y) the Notes held by it or any of its affiliates, and (z) its
participating interests in the Letters of Credit as any other Lender and may
exercise the same as if it were not an Agent. Each of Scotiabank, Citibank and
their respective affiliates may accept deposits from, lend money to, and
generally engage in any kind of business with the U.S. Borrower or any
Subsidiary or affiliate of the U.S. Borrower as if Scotiabank or Citibank were
not Agents hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of each Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitment.
Each Lender also acknowledges that it will, independently of each Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrowers and the Required Lenders; provided, however, that no such
amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of "Required
Lenders", increase the Commitment Amount or (except as otherwise
contemplated by this Agreement) the Percentage of any Lender, reduce any
fees described in Article III, release any guarantor under the
Subsidiary Guaranty or the Group Guaranty, or extend any Commitment
Termination Date shall be made without the consent of each Lender;
(c) extend the due date for, or reduce the amount of, (i) any
scheduled repayment or prepayment of principal of or interest on or fees
payable in respect of any Loan (or reduce the principal amount of or
rate of interest on or fees payable in respect of any Loan) shall be
made without the consent of the holder of that Note evidencing such
Loan, or (ii) any Reimbursement Obligation shall be made without the
consent of the Lender to whom such Reimbursement Obligation is owed;
(d) affect adversely the interests, rights or obligations of the
Fronting Bank in its capacity as the Fronting Bank shall be made without
the consent of the Fronting Bank;
(e) affect adversely the interests, rights or obligations of the
Documentation Agent in its capacity as the Documentation Agent shall be
made without the consent of the Documentation Agent; or
(f) affect adversely the interests, rights or obligations of the
Administrative Agent in its capacity as the Administrative Agent shall
be made without consent of the Administrative Agent.
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No failure or delay on the part of any Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
either Borrower in any case shall entitle it to any notice or demand in similar
or other circumstances. No waiver or approval by any Agent or any Lender under
this Agreement or any other Loan Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent transactions. No
waiver or approval hereunder shall require any similar or dissimilar waiver or
approval thereafter to be granted hereunder.
SECTION 11.2. Notices. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by facsimile and addressed, delivered or transmitted to such party at
its address, or facsimile number set forth below its signature hereto or set
forth in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or if properly
addressed and sent by pre-paid courier service, shall be deemed given when
received; any notice, if transmitted by facsimile, shall be deemed given when
transmitted.
SECTION 11.3. Payment of Costs and Expenses. The U.S. Borrower agrees
to pay on demand all reasonable expenses of the Agents (including the reasonable
fees and out-of-pocket expenses of counsel to the Agents and of local counsel,
if any, who may be retained by counsel to the Agents) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated, and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Each Borrower covenants to pay on demand all reasonable costs and expenses of
the Agents, the Fronting Bank and the Lenders incurred in the enforcement of any
Agent's, the Fronting Bank's or any Lender's rights under this Agreement and any
Loan Document (including the reasonable fees and expenses of counsel for such
Agent, the Fronting Bank and such Lender with respect thereto)
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and, further, covenants that it will indemnify the Agents, the Fronting Bank and
the Lenders on demand against all loss or damage to such Persons arising out of
the issuance of or other action taken by such Persons in connection with any
Letter of Credit or Loan including the costs relating to any legal process
instituted by any party restraining or seeking to restrain the Fronting Bank
from accepting or paying any Letter of Credit or Draft. Each Borrower also
agrees that neither any Agent, the Fronting Bank nor any Lender shall have any
liability to it for any reason in respect of the issuance of any Letter of
Credit or Loan other than on account of such Agent's, Fronting Bank's or
Lender's gross negligence or wilful misconduct. All payments to be made to such
Agent, the Fronting Bank and such Lender hereunder shall, subject to Section
5.6, be made for value on the date due and free of any withholding tax or levy,
other than taxes imposed on the net income of such Agent, the Fronting Bank or
such Lender, and each Borrower covenants that such taxes or levies, other than
as excepted, shall be paid by such Borrower. The provisions of this paragraph
will survive payment in full hereunder.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
each Borrower hereby indemnifies, exonerates and holds each Agent, the Fronting
Bank and each Lender and each of their respective affiliates, officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to the
action for which indemnification hereunder is sought), including the reasonable
fees and expenses of counsel for such Agent, the Fronting Bank and such Lender
with respect thereto (collectively, the "Indemnified Liabilities"), incurred by
the Indemnified Parties or any of them as a result of, or arising out of, or
relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or the use
of any Letter of Credit; or
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties (including any
action brought by or on behalf of the Borrower as the result of any
determination by the Required Lenders pursuant to Article VI not to make
any Credit Extension);
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the
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relevant Indemnified Party's gross negligence or wilful misconduct.
SECTION 11.5. Survival. The obligations of each Borrower under Sections
5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the obligations of the Lenders under
Section 10.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrowers in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or such Loan Document or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by each Borrower and each Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of each Borrower and each Lender (or notice thereof
satisfactory to the Agents) shall have been received by the Agents and notice
thereof shall have been given by the Agents to the U.S. Borrower and each
Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter hereof
and supersede any prior agreements, written or oral, with respect thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the
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parties hereto and their respective successors and assigns; provided, however,
that:
(a) neither Borrower may assign or transfer its rights or
obligations hereunder without the prior written consent of the Agents
and all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this Section
11.11.
SECTION 11.11.1. Assignments. Any Lender,
(a) with the written consent of the U.S. Borrower (which consent
shall not be unreasonably delayed or withheld), the Fronting Bank and
the Administrative Agent may at any time assign and delegate to one or
more commercial banks or other financial institutions; and
(b) with the consent of the Fronting Bank, and notice to the U.S.
Borrower and the Administrative Agent, but without the consent of the
U.S. Borrower or the Administrative Agent, may assign and delegate to
any other Lender or any Lender (as defined in the U.S. Credit
Agreement),
(each Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred to
as an "Assignee Lender"), all or a fraction of such Lender's total Loans and
Commitments in a minimum amount of $10,000,000 of Loans and Commitments (other
than in the case of an assignment to any other Lender or any Affiliate of a
Lender or an assignment of the remaining Loans and Commitments of such assignor
Lender), that neither Borrower shall be required to pay an amount under Section
5.6 that is greater than the amount which it would have been required to pay had
no assignment been made and provided, however, that, the Borrowers and the
Administrative Agent shall be entitled to continue to deal solely and directly
with such Lender in connection with the interests so assigned and delegated to
an Assignee Lender until
(c) written notice of such assignment and delegation, together
with payment instructions, addresses and related information with
respect to such Assignee Lender, shall have been given to the U.S.
Borrower and the Administrative Agent by such Lender and such Assignee
Lender,
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(d) such Assignee Lender shall have executed and delivered to the
U.S. Borrower and the Administrative Agent a Lender Assignment
Agreement, accepted by the Administrative Agent, and
(e) the processing fees described below shall have been paid.
From and after the date that the Administrative Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be deemed
automatically to have become a party hereto and to the extent that rights and
obligations hereunder have been assigned and delegated to such Assignee Lender
in connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and (y)
the assignor Lender, to the extent that rights and obligations hereunder have
been assigned and delegated by it in connection with such Lender Assignment
Agreement, shall be released from its obligations hereunder and under the other
Loan Documents. Within five Business Days after its receipt of notice that the
Administrative Agent has received an executed Lender Assignment Agreement with
respect to the assignment of Loans, the Borrowers shall execute and deliver to
the Administrative Agent (for delivery to the relevant Assignee Lender) new
Notes evidencing such Assignee Lender's assigned Loans and Commitments and, if
the assignor Lender has Loans and Commitments hereunder, replacement Notes in
the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (such Notes to be in exchange for, but not in payment of, those
Notes then held by such assignor Lender). Each such Note shall be dated the date
of the predecessor Notes. The assignor Lender shall mark the predecessor Notes
"exchanged" and deliver them to the U.S. Borrower. Accrued interest on that part
of the predecessor Notes evidenced by the new Notes, and accrued fees, shall be
paid as provided in the Lender Assignment Agreement. Accrued interest on that
part of the predecessor Notes evidenced by the replacement Notes shall be paid
to the assignor Lender. Accrued interest and accrued fees shall be paid at the
same time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Administrative Agent upon delivery of any Lender Assignment Agreement in the
amount of $3,500. Any attempted assignment and delegation not made in accordance
with this Section 11.11.1 shall be null and void. Nothing in this Section shall
prevent or prohibit any Lender from pledging its rights (but not its obligations
to make Loans and to issue or participate in Letters of Credit) under this
Agreement and/or its Loans and/or Notes hereunder to a Federal Reserve Bank in
support of borrowing made by such Lender from such Federal Reserve Bank.
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SECTION 11.11.2. Participations. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "Participant") participating interests (or a
sub-participating interest, in the case of a Lender's participating interest in
a Letter of Credit) in any of the Loans, Commitments, or other interests of such
Lender hereunder; provided, however, that
(a) no participation or sub-participation contemplated in this
Section 11.11 shall relieve such Lender from its Commitments or its
other obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) the Borrowers and the Administrative Agent shall continue to
deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and each of the
other Loan Documents,
(d) no Participant, unless such Participant is an affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of
Section 11.1, and
(e) neither Borrower shall be required to pay any amount under
Section 5.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
SECTION 11.11.3. Fronting Bank Assignments. In the event that S&P,
Moody's or Thompson's BankWatch (or InsuranceWatch Ratings Service, in the case
of Lenders that are insurance companies (or Best's Insurance Reports, if such
insurance company is not rated by InsuranceWatch Ratings Service)) shall, after
the date that any Lender becomes a Lender, downgrade the long-term certificate
of deposit ratings of such Lender, and the resulting ratings shall be below
BBB-, Baa3 and B (or BB, in the case of Lender that is an insurance company (or
B, in the case of an insurance company not rated by InsuranceWatch Ratings
Service)), then each of the Fronting Bank and the U.S. Borrower shall have the
individual right, but not the obligation, upon notice to such Lender, to replace
(or, in the case of a request by the Fronting Bank, to request the U.S. Borrower
to use its reasonable efforts to replace) such Lender with an Assignee Lender
(in accordance
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with and subject to the restrictions contained in Section 11.11.1), and such
affected Lender hereby agrees to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 11.11.1)
all of its interests, rights and obligations in respect of its Commitment, Loans
and other Obligations owing to it, together with the obligations of such
affected Lender hereunder, to such Assignee Lender; provided, however, that (i)
no such assignment shall conflict with any law, rule and regulation or order of
any governmental authority and (ii) such Assignee Lender shall pay to such
affected Lender in immediately available funds on the date of such assignment
the principal of and interest accrued to the date of payment on the Loans made
by such Lender hereunder and all other amounts accrued for such Lender's account
or owed to it hereunder.
SECTION 11.12. Other Transactions. Nothing contained herein shall
preclude any Agent, the Fronting Lender or any other Lender from engaging in any
transaction, in addition to those contemplated by this Agreement or any other
Loan Document, with the Borrowers or any of their affiliates in which such
Borrower or such affiliate is not restricted hereby from engaging with any other
Person.
SECTION 11.13. Forum Selection and Consent to Jurisdiction. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE
LENDERS, GROUP OR THE BORROWERS SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK. THE
PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK LOCATED IN NEW YORK COUNTY, NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREE TO BE
BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. THE
FOREIGN BORROWER HEREBY IRREVOCABLY APPOINTS THE U.S. BORROWER (IN SUCH
CAPACITY, THE "PROCESS AGENT"), WITH AN OFFICE ON THE DATE HEREOF AT 90 PARK
AVENUE, NEW YORK, NEW YORK 10016, UNITED STATES, AS ITS AGENT TO RECEIVE, ON THE
FOREIGN BORROWER'S BEHALF AND ON BEHALF OF THE FOREIGN BORROWER'S PROPERTY,
SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING
OR DELIVERING A COPY OF SUCH PROCESS TO THE FOREIGN BORROWER IN CARE OF THE
PROCESS AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND THE FOREIGN BORROWER
HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH
SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE, EACH
-67-
<PAGE>
<PAGE>
BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED
MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. EACH BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE
TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED
TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. TO THE EXTENT THAT EITHER BORROWER HAS OR HEREAFTER MAY
ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN
AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, SUCH
BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS
UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
SECTION 11.14. Waiver of Jury Trial. THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF THE AGENTS, THE LENDERS, THE FRONTING BANK, GROUP OR THE BORROWERS.
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND GROUP AND EACH BORROWER
ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS, THE
FRONTING BANK AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER
LOAN DOCUMENT.
SECTION 11.15. UCP; etc. (a) The Uniform Customs and Practice for
Documentary Credits as most recently published by the International Chamber of
Commerce (the "UCP") shall in all respects apply to each Letter of Credit issued
hereunder and shall be deemed for such purpose to be a part hereof as if fully
incorporated herein. In the event of any conflict between the UCP and the
governing law of the Agreement, the UCP shall prevail to the extent necessary to
remove the conflict.
(b) In the event of any issuance of a Letter of Credit for which either
Borrower may apply from time to time hereafter, or, of any extension of the
maturity or time for presentation of any Draft, or, of any renewal, extension or
increase in the amount of a Letter of Credit or any other modifications of its
terms, in each case with the consent or at the request of the U.S. Borrower, the
terms of the Agreement shall continue in force and apply to the Letter of Credit
so issued, or, to a Letter of Credit so renewed, extended, increased or
otherwise modified, or, to any, Draft, document or property covered thereby and
to any action taken by the Fronting Bank or its agents or correspondents
-68-
<PAGE>
<PAGE>
in accordance with such issuance, renewal, extension, increase or other
modification.
SECTION 11.16. Usury Restraint. The provisions of this Agreement shall
be subject to any applicable law, regulation, order, rule or direction (a "Usury
Restraint") which prohibits or restricts the charging, receipt or retention of
interest or other amounts at the rates and amounts set forth herein (the "Stated
Rate") in excess (the "Excess") of the maximum rates or amount (the "Maximum
Rate") stipulated in the Usury Restraint. The provisions of this Agreement shall
not require the payment or permit the collection of interest in excess of the
Maximum Rate from time to time. If the Lenders comply (whether or not required
to do so at law) with such Usury Restraint then, to the extent permitted by law,
a subsequent reduction in the Stated Rate below the Maximum Rate shall be deemed
not to reduce the Stated Rate below the Maximum Rate until the total amount of
interest and other amounts earned and retained, measured by a dollar amount,
equals the amount of interest and other amounts which would have been earned and
retained hereunder, inclusive of the Excess, measured by a dollar amount, if the
Stated Rate had not been held at the Maximum Rate or any amount had not been
refunded to the Borrower.
SECTION 11.17. Judgment Currency. The Obligations of the Borrowers,
Group and each other Obligor in respect of any sum due to any Lender, the
Fronting Bank or the Administrative Agent hereunder, under the Notes or under or
in respect of any other Loan Document shall, notwithstanding any judgment in a
currency (the "Judgment Currency") other than Dollars, be discharged only to the
extent that on the Business Day following receipt by such Lender, the Fronting
Bank or the Administrative Agent of any sum adjudged to be so due in the
Judgment Currency, such Lender, the Fronting Bank or the Administrative Agent,
in accordance with normal banking procedures, purchases Dollars with the
Judgment Currency. If the amount of Dollars so purchased is less than the sum
originally due to such Lender, the Fronting Bank or the Administrative Agent,
each Borrower and Group agrees as a separate obligation and notwithstanding any
such judgment, to indemnify each Lender, the Fronting Bank and the
Administrative Agent, as the case may be, against such loss.
-69-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
WARNACO INC.
By /s/ WILLIAM S. FINKELSTEIN
----------------------------------
Title:
Address: 90 Park Avenue
New York, New York 10016
Facsimile No.: 212-687-0480
Attention: Chief Financial Officer
General Counsel
WARNACO (HK) LTD.
By /s/ WILLIAM S. FINKELSTEIN
----------------------------------
Title:
Address: 2A, Jing Hin Industrial
Bldg.
5 Wang Kee Street
Kowloon Bay, Kowloon
Hong Kong
Facsimile No.: 852-2755-2265
Attention: Director of Finance
THE WARNACO GROUP, INC.
By /s/ WILLIAM S. FINKELSTEIN
----------------------------------
Title:
Address: 90 Park Avenue
New York, New York 10016
Facsimile No.: 212-687-0480
Attention: Chief Financial Officer
General Counsel
S-1
<PAGE>
<PAGE>
THE BANK OF NOVA SCOTIA, as
Administrative Agent
By: /s/ JOHN HOPMANS
---------------------------------
Title:
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: John Hopmans
CITIBANK, N.A., as
Documentation Agent
By: /s/ ROBERT D. WETRUN
---------------------------------
Title: Attorney-in-Fact
Address: 399 Park Avenue
New York, New York 10043
Facsimile No.: 212-793-7585
Attention: Mark Merlino
S-2
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
8.8888888889% THE BANK OF NOVA SCOTIA
By: /s/ JOHN HOPMANS
---------------------------------
Title:
Domestic
Office: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: John Hopmans
LIBOR
Office: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: John Hopmans
S-3
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
8.8888888889% CITIBANK, N.A.
By: /s/ ROBERT D. WETRUS
---------------------------------
Title: Attorney-in-Fact
Domestic
Office: 399 Park Avenue
New York, New York 10043
Facsimile No.: 212-793-7585
Attention: Mark Merlino
LIBOR
Office: 399 Park Avenue
New York, New York 10043
Facsimile No.: 212-793-7585
Attention: Mark Merlino
S-4
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% THE BANK OF NEW YORK
By: /s/ ELIZA ADAMS
---------------------------------
Title: Vice President
Domestic
Office: One Wall Street
New York, New York 10286
Facsimile No.: 212-635-1480
Attention: Eliza Adams
LIBOR
Office: One Wall Street
New York, New York 10286
Facsimile No.: 212-635-1480
Attention: Eliza Adams
S-5
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% COMMERZBANK AG, NEW YORK BRANCH
By: /s/ CARL H. JACKSON
---------------------------------
Name: Carl H. Jackson
Title: Vice President
By: /s/ PETER T. DOYLE
---------------------------------
Name: Peter T. Doyle
Title: Assistant Treasurer
Domestic
Office: 2 World Financial Center
New York, New York 10281
Facsimile No.: 212-266-7235
Attention: Bob Donohue
LIBOR
Office: 2 World Financial Center
New York, New York 10281
Facsimile No.: 212-266-7235
Attention: Bob Donohue
S-6
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% THE DAI-ICHI KANGYO BANK, LIMITED
By: /s/ TINA BRUCCULERI
---------------------------------
Title: Vice President
Domestic
Office: One World Trade Center
New York, New York 10048
Facsimile No.: 212-912-1879
Attention: Tina Brucculeri
LIBOR
Office: One World Trade Center
New York, New York 10048
Facsimile No.: 212-912-1879
Attention: Tina Brucculeri
S-7
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% FIRST UNION NATIONAL BANK
By:
---------------------------------
Title: Vice President
Domestic
Office: 190 River Road
2nd Floor
Summit, New Jersey 07901
Facsimile No.: 908-598-03085
Attention: Robert Doherty
LIBOR
Office: 190 River Road
2nd Floor
Summit, New Jersey 07091
Facsimile No.: 908-598-0385
Attention: Robert Doherty
S-8
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% FLEET BANK, N.A.
By: /s/ ELIZABETH ALLEN
---------------------------------
Title: Vice President
Domestic
Office: 1185 Avenue of the Americas
2nd Floor
New York, New York 10036
Facsimile No.: 212-819-4105
Attention: Elizabeth Allen
LIBOR
Office: 1185 Avenue of the Americas
2nd Floor
New York, New York 10036
Facsimile No.: 212-819-4108
Attention: Nancy Mejias
S-9
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
6.1111111111% SOCIETE GENERALE
By: /s/ SEDARE CORADIN
---------------------------------
Title: Vice President
Domestic
Office: 1221 Avenue of the Americas
New York, New York 10020
Facsimile No.: 212-278-7430
Attention: Sedare Coradin
LIBOR
Office: 1221 Avenue of the Americas
New York, New York 10020
Facsimile No.: 212-278-7430
Attention: Sedare Coradin
S-10
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
4.4444444444% GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ PEGGY ERLENKOTTER
---------------------------------
Title: Duly Authorized Secretary
Domestic
Office: 201 High Ridge Road
Stamford, Connecticut 06927
Facsimile No.: 203-357-6443/6573
Attention: Pat Evans
LIBOR
Office: 201 High Ridge Road
Stamford, Connecticut 06927
Facsimile No.: 203-357-6443/6573
Attention: Pat Evans
S-11
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
4.4444444444% NATIONSBANK, N.A.
By: /s/ J. TIMOTHY MARTIN
----------------------------------
Name: J. Timothy Martin
Title: Senior Vice President
Domestic
Office: 101 North Tryon Street
15th Floor
NC1-001-15-003
Charlotte, North Carolina 28255
Facsimile No.: 704-386-8694
Attention: Dawn Long
LIBOR
Office: 101 North Tryon Street
15th Floor
NC1-001-15-003
Facsimile No.: 704-386-8694
Attention: Dawn Long
S-12
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
3.0555555555% UNION BANK OF CALIFORNIA, N.A.
By: /s/ DENTON FOWLES
---------------------------------
Title: Vice President
By: /s/ LEONARDO R. FERNANDEZ, JR.
---------------------------------
Title: Credit Officer
Domestic
Office: 446 South Figueroa Street
16th Floor
Los Angeles, California 90071
Facsimile No.: 213-236-7636
Attention: Leonardo R. Fernandez, Jr.
LIBOR
Office: 446 South Figueroa Street
16th Floor
Los Angeles, California 90071
Facsimile No.: 213-236-7636
Attention: Leonardo R. Fernandez
S-13
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
3.0555555555% BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By:
---------------------------------
Title:
Domestic
Office: 1251 Avenue of the Americas
12th Floor
New York, New York 10020-1104
Facsimile No.: 212-782-4358
Attention: Jim Brown, VP
LIBOR
Office: 1251 Avenue of the Americas
12th Floor
New York, New York 10020-1104
Facsimile No.: 212-782-6441
Attention: Joan Sanderman
S-14
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% BANKBOSTON, N.A.
By:
---------------------------------
Title: Director
Domestic
Office: 100 Federal Street
Boston, Massachusetts 02110
Facsimile No.: 617-434-0637
Attention: Susan Santos
LIBOR
Office: 100 Federal Street
Boston, Massachusetts 02110
Facsimile No.: 617-434-0637
Attention: Susan Santos
S-15
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% CORESTATES BANK, N.A.
By: /s/ IRENE ROSEN MARKS
---------------------------------
Title: Vice President
Domestic
Office: Commercial Loan Accounting
FC 1-3-17-70
15th and Market, CTSQ Bldg.
Philadelphia, PA 19101
Facsimile No.: 215-973-2045
Attention: Joy Ditre
LIBOR
Office: Commercial Loan Accounting
FC 1-3-17-70
15th and Market, CTSQ Bldg.
Philadelphia, PA 19101
Facsimile No.: 215-973-2045
Attention: Joy Ditre
S-16
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% CREDIT ITALIANO
By: /s/ HARMON P. BUTLER
---------------------------------
Name: Harmon P. Butler
Title: First Vice President &
Deputy Manager
By: /s/ PIERLUIGI MAINARDI
---------------------------------
Name: Pierluigi Mainardi
Title: Assistant Vice President
Domestic
Office: 375 Park Avenue
New York, New York 10152
Facsimile No.: 212-546-9675
Attention: Harmon P. Butler
LIBOR
Office: 375 Park Avenue
New York, New York 10152
Facsimile No.: 212-546-9675
Attention: Harmon P. Butler
S-17
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% THE FUJI BANK, LIMITED,
NEW YORK BRANCH
By: /s/ RAYMOND VENTURA
---------------------------------
Title: Vice President and Manager
Domestic
Office: 2 World Trade Center
New York, New York 10048
Facsimile No.: 212-912-0516
Attention: Chigusa Tada
LIBOR
Office: 2 World Trade Center
New York, New York 10048
Facsimile No.: 212-912-0516
Attention: Chigusa Tada
S-18
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% THE INDUSTRIAL BANK OF JAPAN
By: /s/ KENNETH BIEGEN
---------------------------------
Title:
Domestic
Office: New York Branch
1251 Avenue of the Americas
New York, New York 10020
Facsimile No.: 212-282-4480
Attention: Atsushi Kawai
LIBOR
Office: New York Branch
1251 Avenueof the Americas
New York, New York 10020
Facsimile No.: 212-282-4480
Attention: Atsushi Kawai
S-19
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% KREDIETBANK, N.V.
By: /s/ ARMEN KAROZICHIAN
---------------------------------
Name: Armen Karozichian
Title: Vice President
Domestic
Office: 125 W. 55th Street
New York, New York 10019
Facsimile No.: 212-541-0793
Attention: Armen Karozichian
LIBOR
Office: 125 W. 55th Street
New York, New York 10019
Facsimile No.: 212-541-0793
Attention: Armen Karozichian
S-20
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% MARINE MIDLAND BANK
By: /s/ PAUL J. DECHAGAS
---------------------------------
Title: Vice President
Domestic
Office: 1 Marine Midland Center
Buffalo, New York 14240
Facsimile No.: 716-841-2067
Attention: Patti M. Michalek
LIBOR
Office: 1 Marine Midland Center
Buffalo, New York 14240
Facsimile No.: 716-841-2067
Attention: Patti M. Michalek
S-21
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% MERITA BANK LTD. - NEW YORK BRANCH
By:
---------------------------------
Title: Vice President
By:
---------------------------------
Title: Vice President
Domestic
Office: 437 Madison Avenue
New York, New York 10022
Facsimile No.: 212-421-4420
Attention: Thelma Dongallo
LIBOR
Office: 437 Madison Avenue
New York, New York 10022
Facsimile No.: 212-421-4420
Attention: Thelma Dongallo
S-22
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By: /s/ JAMES E. CONDON
------------------------------------
Name: James E. Condon
Title: Vice President
Domestic
Office: Loan Department
60 Wall Street
New York, New York 10260-0060
Facsimile No.: 302-634-1852
Attention: Bernadette A. Dorsey,
Associate
LIBOR
Office: Loan Department
60 Wall Street
New York, New York 10260-0060
Facsimile No.: 302-634-1852
Attention: Bernadette A. Dorsey,
Associate
S-23
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% THE SANWA BANK, LIMITED,
NEW YORK BRANCH
By: /s/ PAUL JUDICKE
---------------------------------
Title: Vice President
Domestic
Office: 55 East 52nd Street
New York, New York 10055
Facsimile No.: 212-754-1304
Attention: Paul Judicke
LIBOR
Office: 55 East 52nd Street
New York, New York 10055
Facsimile No.: 212-754-2368
Attention: Renko Hara
S-24
<PAGE>
<PAGE>
PERCENTAGE LENDERS
- ---------- -------
2.7777777778% WACHOVIA BANK, N.A.
By: /s/ J. BARWIS
---------------------------------
Title: Vice President
Domestic
Office: 191 Peachtree Street
Atlanta, Georgia 30303
Facsimile No.: 404-332-6898
Attention: James Barwis
LIBOR
Office: 191 Peachtree Street
Atlanta, Georgia 30303
Facsimile No.: 404-332-6898
Attention: James Barwis
- ------
100%
S-25
<PAGE>
<PAGE>
FIRST AMENDMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of October 14, 1997
(this "First Amendment"), among WARNACO INC. (the "U.S. Borrower"), WARNACO (HK)
LTD. (the "Foreign Borrower"; together with the U.S. Borrower, the "Borrowers"),
THE WARNACO GROUP, INC. ("Group"), the various financial institutions listed on
the signature pages hereto (the "Lenders"), CITIBANK, N.A., as documentation
agent (the "Documentation Agent") for the Lenders and THE BANK OF NOVA SCOTIA,
as agent (the "Administrative Agent"; together with the Documentation Agent, the
"Agents") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrowers, Group, the Lenders and the Agents are parties to
a Second Amended and Restated Credit Agreement, dated as of August 12, 1997 (as
amended or otherwise modified to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrowers and Group have requested that the Lenders amend
and waive certain provisions of the Existing Credit Agreement in certain
respects as set forth below; and
WHEREAS, the Lenders have agreed, subject to the terms and conditions
hereinafter set forth, to amend and waive such provisions of the Existing Credit
Agreement in certain respects as provided below (the Existing Credit Agreement,
as so amended and waived by this First Amendment, being referred to as the
"Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. Terms for which meanings are provided
in the Existing Credit Agreement are, unless otherwise defined herein or the
context otherwise requires, used in this First Amendment with such meanings.
<PAGE>
<PAGE>
PART II
AMENDMENTS AND WAIVERS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First Amendment
Effective Date, the Existing Credit Agreement is hereby amended and certain
provisions of the Existing Credit Agreement are hereby waived in accordance with
the terms of this Part II; except as so amended or waived, the Existing Credit
Agreement shall continue in full force and effect.
SUBPART 2.1. Section 1.1 of the Existing Credit Agreement is hereby
amended by inserting the following definitions in such Section in the
appropriate alphabetical sequence:
"Amendment No. 1" means the First Amendment, dated as of October
14, 1997, to this Agreement among the Borrowers, Group, the Lenders
parties thereto, the Documentation Agent and the Administrative Agent.
"First Amendment Effective Date" is defined in
Subpart 3.1 of Amendment No. 1.
"USCA Letter Waiver" means the first Letter Waiver to
the U.S. Credit Agreement, dated as October 14, 1997, a copy
of which is annexed to Amendment No. 1 as Exhibit A.
SUBPART 2.2. Section 1.1 of the Existing Credit Agreement is hereby
further amended by amending the definition of "U.S. Credit Agreement" in its
entirety to read as follows:
""U.S. Credit Agreement" means the Credit Agreement, dated as of
August 12, 1997, among the U.S. Borrower, Group, the initial lenders
named therein, Scotiabank and Citibank, as managing agents, Citibank, as
documentation agent, and Scotiabank, as administrative agent,
competitive bid agent, swing line bank and an issuing bank, as in effect
on the Effective Date and as modified by USCA Letter Waiver, and as
further amended, restated or waived from time to time with the consent
of the Required Lenders hereunder solely for purposes of this Agreement,
and regardless of whether such U.S. Credit Agreement is terminated,
unless in connection with such termination a replacement credit facility
satisfactory to the Required Lenders hereunder is entered into, in which
case the affirmative and negative covenants in such facility shall
become the subject of this Agreement."
SUBPART 2.3. Waiver of Guaranty Delivery. The requirements
contained in Section 8.1.2 of the Existing Credit Agreement are
hereby waived, but only to the same extent and upon the same
-2-
<PAGE>
<PAGE>
terms that the requirements under Section 5.01(k) of the U.S. Credit Agreement
have been waived under USCA Letter Waiver by the Required Lenders under (and as
defined in) the U.S. Credit Agreement.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. First Amendment Effective Date. This First Amendment (and
the amendments and waivers contained herein) shall become effective, and shall
thereafter be referred to as "Amendment No. 1", on the date (the "First
Amendment Effective Date") when all of the conditions set forth in this Subpart
3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Administrative Agent shall
have received counterparts of this First Amendment, duly executed and delivered
on behalf of the Borrowers, Group and the Required Lenders. Each Lender's
execution and delivery of this First Amendment shall also constitute such
Lender's approval to the form and substance of USCA Letter Waiver.
SUBPART 3.1.2. U.S. Credit Agreement. The Administrative
Agent shall have received evidence satisfactory to it that USCA
Letter Waiver in the form attached as Exhibit A hereto has become
effective pursuant to the terms thereof.
SUBPART 3.1.3. Affirmation and Consent. The Administrative Agent shall
have received an Affirmation and Consent, substantially in the form of Exhibit B
hereto, duly executed and delivered by Group and each Domestic Subsidiary.
SUBPART 3.1.4. Legal Details, etc. All documents executed or submitted
pursuant hereto shall be satisfactory in form and substance to the
Administrative Agent and its counsel. The Administrative Agent and its counsel
shall have received all information and such counterpart originals or such
certified or other copies or such materials, as the Administrative Agent or its
counsel may reasonably request, and all legal matters incident to the
transactions contemplated by this First Amendment shall be satisfactory to the
Administrative Agent and its counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this First Amendment to any
Part or Subpart are, unless otherwise specified
-3-
<PAGE>
<PAGE>
or otherwise required by the context, to such Part or Subpart of this First
Amendment.
SUBPART 4.2. Loan Document Pursuant to Existing Credit Agreement. This
First Amendment is a Loan Document executed pursuant to the Existing Credit
Agreement and shall be construed, administered and applied in accordance with
all of the terms and provisions of the Existing Credit Agreement.
SUBPART 4.3. Representations and Warranties. The Borrower hereby
represents and warrants that both before and after giving effect to this First
Amendment, the statements contained in Section 6.2.1 of the Existing Credit
Agreement are true and correct in all material respects.
SUBPART 4.4. Successors and Assigns. This First Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SUBPART 4.5. Counterparts. This First Amendment may be executed by the
parties hereto in several counterparts, each of which when executed and
delivered shall be deemed to be an original and all of which shall constitute
together but one and the same agreement.
SUBPART 4.6. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By /s/ STANLEY SILVERSTEIN
-----------------------------
Title:
WARNACO (HK) LTD.
By /s/ STANLEY SILVERSTEIN
-----------------------------
Title:
THE WARNACO GROUP, INC.
By /s/ STANLEY SILVERSTEIN
-----------------------------
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
_______________________________
[NAME OF INSTITUTION]
By_____________________________
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By /s/
_____________________________
Title: Senior Relationship
Manager
CITIBANK, N.A., as Documentation
Agent and as Lender
By /s/
_____________________________
Title: Attorney-in-Fact
_______________________________
[NAME OF INSTITUTION]
By_____________________________
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By _____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By _____________________________
Title:
UNION BANK OF CALIFORNIA, N.A.
_______________________________
[NAME OF INSTITUTION]
By /s/ LEONARDO R. FERNANDEZ
_____________________________
Title: Credit Officer
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
THE BANK OF NEW YORK
_______________________________
[NAME OF INSTITUTION]
By /s/ ELIZA S. ADAMS
_____________________________
Name: Eliza S. Adams
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
BANK OF TOKYO-MITSUBISHI
TRUST CO
_______________________________
[NAME OF INSTITUTION]
By /s/ JIM BROWN
_____________________________
Name: Jim Brown
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
______________________________
BANKBOSTON, N.A.
By /s/
_____________________________
Title: Director
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
COMMERZBANK AG, New York and/or
Grand Cayman Branches
By /s/ ROBERT J. DONOHUE
_____________________________
Name: Robert J. Donohue
Title: Vice President
By /s/ PETER T. DOYLE
_____________________________
Name: Peter T. Doyle
Title: Assistant Treasurer
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
CORESTATES BANK, N.A.
_______________________________
[NAME OF INSTITUTION]
By /s/ IRENE ROSEN MARKS
_____________________________
Name: Irene Rosen Marks
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
CREDITO ITALIANO
By /s/
______________________________
Title: First Vice President
& Deputy Manager
By /s/
______________________________
Title: First Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
THE DAI-ICHI KANGYO BANK, LIMITED
By /s/
_____________________________
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By_____________________________
Title:
FIRST UNION NATIONAL BANK
_______________________________
[NAME OF INSTITUTION]
By /s/ RICHARD
_____________________________
Title: Senior Portfolio
Manager
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
FLEET BANK, N.A.
_______________________________
[NAME OF INSTITUTION]
By /s/ JOSEPH J.
_____________________________
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
THE FUJI BANK, LIMITED
NEW YORK BRANCH
By /s/ RAYMOND VENTURA
_____________________________
Title: Vice President
& Manager
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
THE INDUSTRIAL BANK OF JAPAN, INC.
NEW YORK BRANCH
By /s/ J. KENNETH BIEGEN
_____________________________
Name: J. Kenneth Biegen
Title: Senior Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
MARINE MIDLAND BANK
_______________________________
[NAME OF INSTITUTION]
By /s/ A. D. COLLINS
_____________________________
Name: A. D. Collins
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
MERITA BANK LTD.
_______________________________
By /s/
_____________________________
Title: Vice President
By /s/
_____________________________
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
_______________________________
[NAME OF INSTITUTION]
By /s/ JAMES E. CONDON
_____________________________
Name: James E. Condon
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
NATIONSBANK, N.A.
_______________________________
[NAME OF INSTITUTION]
By /s/ DAVID H. DINKINS
_____________________________
Name: David H. Dinkins
Title: Vice President
-5-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
THE SANWA BANK LIMITED
_______________________________
[NAME OF INSTITUTION]
By /s/
_____________________________
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
SOCIETE GENERALE
_______________________________
[NAME OF INSTITUTION]
By /s/ SEDARE CORADIN
_____________________________
Title: Vice President
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<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed by their respective officers as of the day and year first above
written.
WARNACO INC.
By_____________________________
Title:
WARNACO (HK) LTD.
By_____________________________
Title:
THE WARNACO GROUP, INC.
By_____________________________
Title:
THE BANK OF NOVA SCOTIA,
as Administrative Agent
and as Lender
By_____________________________
Title:
CITIBANK, N.A., as Documentation
Agent and as Lender
By ____________________________
Title:
WACHOVIA BANK, N.A.
_______________________________
[NAME OF INSTITUTION]
By /s/ J. BARWIS
_____________________________
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<PAGE>
<PAGE>
License - Chaps - Sportswear
AMENDED AND RESTATED LICENSE AGREEMENT, dated as of January 1,
1996 by and between Polo Ralph Lauren, L.P. "Licensor"), with a place of
business at 650 Madison Avenue, New York, New York 10022, and Warnaco Inc., with
a place of business at 90 Park Avenue, New York, New York 10016.
1. Definitions. As used herein, the term:
1.1. "License" shall mean the exclusive right to use the
Trademark in connection with the manufacture and sale of Licensed Products in
the Territory.
1.2. "Licensed Products" shall mean "Chaps Licensed Products",
which term shall mean (1) high quality men's sportswear with the exception of
(a) skiing or swimming items, and (b) heavy outerwear items commonly found in
outerwear departments, and (2) high quality men's dress furnishings consisting
of and limited to dress shirts and ties, with the exception of (a) formalwear
shirts, ties or accessories, all bearing the trademark "CHAPS by RALPH LAUREN"
or the CHAPS logo, as set forth on Exhibit A hereto. As used in this paragraph
1.2(A), the term "high quality men's sportswear" shall include a broad range of
such sportswear (other than as expressly excepted herein), including but not
limited to knit and woven shirts, jean and other casual bottoms and shorts,
sweaters, jackets and casual vests (but not tailored vests), hats and caps, all
in a broad range of materials, fabrications and constructions.
1.3. "Licensor" shall mean Polo Ralph Lauren, L.P., a limited
partnership organized under the laws of the State of Delaware.
1.4. "Licensee" shall mean Warnaco Inc., a corporation organized
under the laws of the State of Delaware.
1.5. "Territory" shall mean the United States of America, its
territories and possessions, including Puerto Rico.
1.6. "Trademark" shall mean the trademarks "Chaps by Ralph
Lauren" and/or the Chaps logo, as set forth on Exhibit A attached hereto, and
where the content so indicates, each of them. Licensor shall have the sole right
to determine which Trademark shall be used in connection with each particular
Licensed Product.
<PAGE>
<PAGE>
2. Grant of License.
2.1. Subject to the terms and provisions hereof, Licensor hereby
grants to Licensee and Licensee hereby accepts the License. Except as provided
in paragraph 17.4 hereof, Licensor shall neither use nor authorize third parties
to use the Trademarks in connection with the manufacture and sale and/or
importation of Licensed Products in the Territory during the term of this
Agreement without Licensee's prior approval. To the extent it is legally
permissible to do so, no license is granted hereunder for the manufacture, sale
or distribution of Licensed Products to be used for publicity purposes, other
than publicity of Licensed Products, in combination sales, as premiums or
giveaways, or to be disposed of under or in connection with similar methods of
merchandising such license being specifically reserved for Licensor.
2.2. It is understood and agreed that the License applies solely
to the use of the Trademarks on and in connection with the Licensed Products,
and that (i) no use of any other trademark of Licensor (including any other
trademark that uses the name "Ralph Lauren") or of any of Licensor's related
companies (as such term is defined in the Lanham Act), and (ii) no use of the
Trademarks on any other products, is authorized or permitted. Licensor reserves
the right to use, and to grant to any other licensee the right to use, the
Trademarks, whether within or outside the Territory, in connection with any and
all products and services, other than Licensed Products within the Territory.
Licensee understands and agrees that Licensor may itself manufacture or
authorize third parties to manufacture in the Territory, Licensed Products for
ultimate sale outside of the Territory.
2.3. Licensee shall not itself use or permit or authorize another
person or entity in its control to use the words "Chaps", "Polo" "Ralph" or
"Ralph Lauren" as part of a corporate name or tradename without the express
written consent of Licensor and Licensee shall not permit or authorize use of
the Trademarks in such a way so as to give the impression that the names,
"Polo", "Ralph Lauren," or the Trademarks, or any modifications thereof, are the
property of Licensee.
2.4. Licensee shall not sublicense any of the rights granted
hereunder without first obtaining Licensor's prior written consent in connection
therewith, which consent may be withheld by Licensor in its sole discretion.
2.5. Licensee shall not, directly or indirectly manufacture,
distribute, sell or advertise during the term of this Agreement, any items which
are comparable and/or competitive with Licensed
-2-
<PAGE>
<PAGE>
Products which bear the name or are associated with the name of any fashion
apparel designer other than those names which are presently owned or under
license by Licensee without first notifying Licensor in writing.
2.6. Licensor represents and warrants that it has full right,
power and authority to enter into this Agreement, to perform all of its
obligations hereunder and to consummate all of the transactions contemplated
herein.
2.7. Licensee represents and warrants that it has full right,
power and authority to enter into this Agreement, to perform all of its
obligations hereunder, and to consummate all of the transactions contemplated
herein.
2.8. Licensee recognizes that there are many uncertainties in the
business contemplated by this Agreement. Licensee agrees and acknowledges that
other than those representations explicitly contained in this Agreement, if any,
no representations, warranties or guaranties of any kind have been made to
Licensee, either by Licensor or its affiliates, or by anyone acting on their
behalf. Without limitation, no representations concerning the value of the
Licensed Products or the prospects for the level of their sales or profits have
been made and Licensee has made its own independent business evaluation in
deciding to manufacture and distribute the Licensed Products on the terms set
forth herein.
3. Design Standards and Prestige of Licensed Products.
3.1. Licensee acknowledges that it has entered into a design
services agreement ("Design Agreement"), of even date herewith, with Polo Ralph
Lauren Enterprises, L.P. (the "Design Partnership"), which provides for the
furnishing to Licensee by the Design Partnership of design concepts and other
professional services so as to enable Licensee to manufacture or cause to be
manufactured the Licensed Products in conformity with the established prestige
and goodwill of the Trademarks. Licensee shall manufacture, or cause to be
manufactured, and sell only such Licensed Products as are made in accordance
with the design and other information approved under, and in all other respects
in strict conformity with the terms of, the Design Agreement.
3.2. Licensee acknowledges that the Trademarks have established
prestige and goodwill and are well recognized in the minds of the public, and
that it is of great importance to each party that in the manufacture and sale of
various lines of Licensor's products, including the Licensed Products, the high
standards and reputation that Licensor and Ralph Lauren have
-3-
<PAGE>
<PAGE>
established be maintained. Accordingly, all items of Licensed Products
manufactured or caused to be manufactured by Licensee hereunder shall be of high
quality workmanship with strict adherence to all details and characteristics
embodied in the designs furnished pursuant to the Design Agreement. Licensee
shall supply Licensor with samples of the Licensed Products (including, if
Licensor so requests, samples of labeling and packaging used in connection
therewith) prior to production and from time to time during production, and
shall, at all times during the term hereof, upon Licensor's request, make its
manufacturing facilities available to Licensor, and shall use its best efforts
to make available each subcontractor's manufacturing facilities, for inspection
by Licensor's representatives during usual working hours. No sales of miscuts or
damaged merchandise shall contain any labels or other identification bearing the
Trademarks without Licensor's prior written approval, but sales of all products
of Licensor's or the Design Partnership's design shall nonetheless be subject to
royalty payment pursuant to paragraph 6 hereof.
3.3. In the event that any Licensed Product is, in the judgment
of Licensor, not being manufactured, distributed or sold with first quality
workmanship or in strict adherence to all details and characteristics furnished
pursuant to the Design Agreement, Licensor shall notify Licensee thereof in
writing and Licensee shall promptly repair or change such Licensed Product to
conform thereto. If a Licensed Product as repaired or changed does not strictly
conform after Licensor's request and such strict conformity cannot be obtained
after at least one (1) resubmission, the Trademarks shall be promptly removed
from the item, at the option of Licensor, in which event the item may be sold by
Licensee, provided such miscut or damaged item does not contain any labels or
other identification bearing the Trademark without Licensor's prior approval.
Notwithstanding anything in this paragraph 3.3 to the contrary, sales of all
products of Licensor's or the Design Partnership's design, whether or not
bearing the Trademark, shall nonetheless be subject to royalty payments pursuant
to paragraph 6 hereof.
3.4. At the request of Licensor, Licensee shall cause to be
placed on all Licensed Products appropriate notice designating Licensor or the
Design Partnership as the copyright or design patent owner thereof, as the case
may be. The manner of presentation of said notices shall be determined by
Licensor.
4. Marketing.
4.1. Any use of the License by any division, subsidiary or
affiliate of Licensee must be approved in writing by Licensor.
-4-
<PAGE>
<PAGE>
The Licensed Products shall be sold by Licensee only to those specialty shops,
department stores and other retail outlets which deal in products similar in
quality and prestige to products bearing the Trademarks, whose operations are
consistent with the quality and prestige of the Trademarks and only to those
customers expressly approved by Licensor. Licensee's approved account list is
attached hereto as and made a part hereof. Prior to the opening of each selling
season (and whenever Licensee wishes to sell Licensed Products to a customer not
previously approved by Licensor), Licensee shall submit a written list of its
proposed customers to Licensor for Licensor's written approval, which shall be
given or withheld in Licensor's sole discretion based on considerations of the
quality and prestige of the Trademarks. In addition, Licensee shall have the
right to sell Licensed Products at outlet stores owned or controlled by
Licensee; provided, however, that (i) Licensee shall only sell overruns and
irregular Licensed Products at such outlet stores and shall not produce any
Licensed Products for such sales and (ii) the "net sales price" pursuant to
paragraph 6.2 with respect to all such sales shall be the actual price paid by
consumers at such outlet stores, less sales tax. Licensee shall not market or
promote or seek customers for the Licensed Products outside of the Territory and
Licensee shall not establish a branch, wholly owned subsidiary, distribution or
warehouse with inventories of Licensed Products outside of the Territory.
Licensee shall not without Licensor's prior written approval sell any Licensed
Products bearing the Trademark to any third party which, directly or indirectly,
sells or proposes to sell such Licensed Products outside the Territory. Licensee
shall use its best efforts to prevent any such resale outside the Territory and
shall, immediately upon learning or receiving notice from Licensor that a
customer is selling Licensed Products outside the Territory, cease all sales and
deliveries to such customer.
4.2. Licensee shall maintain the high standards of the Trademarks
and the Licensed Products, in all advertising, packaging and promotion of the
Licensed Products. Licensee shall not employ or otherwise release any of such
advertising or packaging or other business materials relating to any Licensed
Products or bearing the Trademarks, unless and until Licensee shall have made a
request, in writing, for approval by Licensor. Licensor may, with respect to any
advertising, promotional, packaging or business materials submitted by Licensee
make such suggestions as Licensor deems necessary or appropriate, or disapprove,
in either event by notice to Licensee. Any approval granted hereunder shall be
limited to use during the seasonal collection of Licensed Products to which such
advertising relates and shall be further limited to the use (e.g. TV or print)
for which approval by Licensor was granted. Licensee shall, at the
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option of Licensor, include on its business materials an indication of the
relationship of the parties hereto in a form approved by Licensor.
4.3. Licensee shall use its best efforts to assure that all
cooperative advertising, whereby Licensee provides a customer with a
contribution toward the cost of an advertisement for Licensed Products, whether
Licensee's contribution be in the form of an actual monetary contribution, a
credit or otherwise, shall be subject to prior approval of Licensor under the
same terms and conditions as apply to advertising and promotional materials
prepared by or to be used by Licensee pursuant to paragraph 4.2 hereof;
provided, however, that in the event that Licensee is not as a matter of
practice given an opportunity to review the cooperative advertising due to time
constraints, then Licensee shall notify Licensor, in advance, of those customers
with whom it does cooperative Licensed Product advertising and/or promotion, and
Licensee at Licensor's request shall notify the named customer of the terms of
this Agreement which pertain to the said advertising or promotional materials.
4.4. Licensee shall maintain the high standards of the Trademarks
in all packaging, advertising and promotion of the Licensed Products and shall
exercise its best efforts to safeguard the established prestige and goodwill of
the name "Ralph Lauren" and the Ralph Lauren image, at the same level of
prestige and goodwill as heretofore maintained. "Image" as used herein refers
primarily to quality and style of packaging, advertising and promotion, creation
and introduction of new products, type of outlets with reference to quality of
service provided by retail outlets and quality of presentation of Licensed
Products in retail outlets. Licensee shall take all necessary steps, and all
steps reasonably requested by Licensor, to prevent or avoid any misuse of the
Trademarks by any of its customers, contractors or other resources.
4.5. During each year of this Agreement, Licensee shall expend
for the production and placement of national, institutional and media
advertising of Licensed Products ("Institutional Advertising"), as designated by
Licensor, an amount that is not less than percent ( %) of the aggregate
net sales price (as defined in paragraph 6.2 hereof) of Licensed Products sold
in that year. Licensee shall deliver to Licensor within sixty (60) days after
the end of each year hereof an accounting statement in respect of amounts
expended by Licensee on advertising for the prior year. Each such accounting
statement shall be signed, and certified as correct, by a duly authorized
officer of Licensee. Prior to each year hereof, Licensee shall submit Licensee's
advertising budget for the
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upcoming year, based on the aggregate net sales price of Licensed Products
during the year then ending and on sales projected for the upcoming year. The
advertising expenditures for such upcoming year will initially be made based
upon such budget. If the actual aggregate advertising expenditures are less than
percent ( %) of the actual aggregate net sales price for such year, such
shortage shall be expended in the next following year in addition to the amount
otherwise to be expended in such next following year. Licensee shall place such
portions of Licensee's advertising budget as Licensor may request with such
advertising agencies or advertising carriers as may be designated by Licensor
for promotional campaigns of Licensed Products.
4.6. To the extent permitted by applicable law Licensor may from
time to time, and in writing, promulgate rules and regulations to Licensee
relating to the manner of use of the Trademarks. Licensee shall comply with such
reasonable rules and regulations.
4.7. Upon Licensor's request, Licensee agrees to make available
for purchase and to sell at its customary price, and on its customary credit and
payment terms all lines and styles of Licensed Products to retail stores in the
Territory bearing as a tradename a trademark of Licensor or its affiliates and
to any stores or facilities operated or owned by Licensor and its affiliates,
which are authorized to sell the Licensed Products within such retail stores.
Notwithstanding anything to the contrary contained herein, in the event that any
such Licensed Products are not so made available by Licensee to such stores,
such Licensed Products may be made available to such stores by Licensor (or its
affiliates or other licensees).
4.8. Intentionally Omitted.
4.9. In consideration of the License granted herein, in the event
Licensor elects to offer Licensed Products for sale in mail-order catalogs or
other direct-to-consumer sales devices, such as telemarketing ("Catalog Sales"),
Licensee shall sell and timely ship Licensed Products to Licensor or its
affiliate for such purposes, to the extent of its requirements, at a price equal
to % less than the regular wholesale price therefor. All such sales shall be
separately reported by Licensee in its accounting statements pursuant to
paragraph 6.2 hereof, and such sales shall not be subject to the advertising
obligations set forth herein, but shall be subject to the royalty obligations
set forth herein and to the compensation obligations set forth in the Design
Agreement, and such sales shall be included within the renewal volumes set forth
in paragraph 8 hereof.
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4.10. In consideration of the License granted herein, in the
event Licensor elects to offer Licensed Products for sale in outlet stores owned
by Licensor or its affiliates or operated under license from Licensor or its
affiliates ("Outlet Stores"), Licensee shall sell and timely ship Licensed
Products to Outlet Stores for such purposes, to the extent of their
requirements, at a price equal to % less than the regular wholesale price
therefor. All such sales shall be separately reported by Licensee in its
accounting statements pursuant to paragraph 6.2 hereof, and such sales shall not
be subject to the advertising obligations set forth herein, but shall be subject
to the royalty obligations set forth herein and to the compensation obligations
set forth in the Design Agreement, and such sales shall be included within the
renewal volumes set forth in paragraph 8 hereof.
5. Trademark Protection.
5.1. All uses of the Trademarks by Licensee, including, without
limitation, use in any business documents, invoices, stationery, advertising,
promotions, labels, packaging and otherwise shall require Licensor's prior
written consent in accordance with paragraph 4.2 hereof.
5.2. All uses of the Trademarks by Licensee in advertising,
promotions, labels and packaging shall bear the notation "Chaps by Ralph
Lauren", as the case may be, and shall include at Licensor's option, a notice to
the effect that the Trademarks are used by Licensee for the account and benefit
of Licensor. The use of the Trademarks pursuant to this Agreement shall be for
the benefit of Licensor and shall not vest in Licensee any title to or right or
presumptive right to continue such use. For the purposes of trademark
registration, sales by Licensee shall be deemed to have been made by Licensor.
5.3 Licensee shall cooperate fully and in good faith with
Licensor for the purpose of securing and preserving Licensor's rights in and to
the Trademarks. Nothing contained in this Agreement shall be construed as an
assignment or grant to Licensee of any right, title or interest in or to the
Trademark, or any of Licensor's other trademarks, it being understood that all
rights relating thereto are reserved by Licensor, except for the License
hereunder to Licensee of the right to use and utilize the Trademarks only as
specifically and expressly provided herein. Licensee shall not file or prosecute
a trademark or service mark application or applications to register the
Trademarks, for Licensed Products or otherwise.
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5.4. Licensee shall not, during the term of this Agreement or
thereafter, (a) attack Licensor's title or rights in and to the Trademarks in
any jurisdiction or attack the validity of this License or the Trademarks or (b)
contest the fact that Licensee's rights under this Agreement (i) are solely
those of a licensee, manufacturer and distributor and (ii) subject to the
provisions of paragraph 10 hereof, cease upon termination of this Agreement. The
provisions of this paragraph 5.4 shall survive the termination of this
Agreement.
5.5. All right, title and interest in and to all samples,
sketches, designs, artwork, logos and other materials furnished by or to
Licensor or the Design Partnership, whether created by Licensor, the Design
Partnership or Licensee, are hereby assigned in perpetuity to, and shall be the
sole property of, Licensor and/or the Design Partnership as the case may be.
Licensee shall assist Licensor to the extent necessary in the protection of or
the procurement of any protection of Licensor's rights to the Trademarks, and
Licensor, if Licensor so desires, may, at Licensor's expense, commence or
prosecute any claims or suits in Licensor's own name or in the name of Licensee
or join Licensee as a party thereto. Licensee shall promptly notify Licensor in
writing of any uses which may be infringements or imitations by others of the
Trademarks on articles similar to those covered by this Agreement which may come
to Licensee's attention. Licensor shall have the sole right to determine whether
or not any action shall be taken on account of any such infringements or
imitations. Licensee shall not institute any suit or take any action on account
of such infringements or imitations without first obtaining Licensor's written
consent so to do, but in the event such consent is given, Licensee shall bear
the costs of such suit or action. Any recovery in any such action by Licensee
shall be applied first to reimbursing Licensee for the actual out-of-pocket
costs thereof (including reasonable attorneys' fees) and the balance, if any,
shall be divided equally between Licensee and Licensor.
6. Royalties.
6.1. Licensee shall pay to Licensor minimum royalties for each
year during the term of this Agreement, as compensation for the License granted
hereunder for the use of the Trademarks in the manufacture and sale, and/or
importation and sale, of Licensed Products in the Territory. The minimum royalty
for each year shall be as follows:
Year 1 (1996) $
Year 2 $
Year 3 $
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Year 4 $
Year 5 $
Year 6 $
Minimum royalties for each year shall be paid on a quarterly basis, on the last
day of each month following the end of each calendar quarter during the term
hereof (e.g., April 30 for the quarter ending March 31), commencing with the
first quarterly payment to be made on April 30, 1996. The amount of earned
royalties paid, pursuant to paragraph 6.2 hereof, with respect to sales of
Licensed Products in each calendar quarter, shall be deducted from the minimum
royalty payment due for such quarter, it being the parties' intent that Licensee
shall pay Licensor an amount equal to the greater of (i) aggregate minimum
royalties for each year of the initial term or (ii) aggregate earned royalties
for each year of the initial term. However, no credit shall be permitted against
minimum royalties payable in any year on account of actual or minimum royalties
paid in any other year, and minimum royalties shall not be returnable. For each
year during any renewal term of this Agreement, minimum royalties shall be an
amount equal to % of the aggregate earned royalties accrued with respect to
the sale of all Licensed Products during the immediately preceding year;
provided, however, that (i) the minimum royalty in each year shall in no event
be less than the minimum royalty due for the immediately preceding year and (ii)
the minimum royalty in each year shall in no event be less than $ . For
the purposes of this Agreement, the term "year" shall mean a period of twelve
(12) months commencing on each January l during the term hereof.
6.2. Licensee shall pay to Licensor earned royalties based on the
net sales price of all Licensed Products manufactured or imported and sold by
Licensee hereunder. Earned royalties shall equal percent
( %) of the net sales price of all Licensed Products sold under this
Agreement, including, without limitation, any sales made pursuant to the terms
of paragraphs 3.2 and 10 hereof; provided, however, that (i) the earned royalty
rate with respect to sales of Licensed Products on or before December 31, 1996
shall be percent ( %) and (ii) the earned royalty payable to Licensor on
Licensed Product design "close-outs", which were sold at least percent
( %) below Licensee's regular selling price shall be percent ( %)
of the net sales price of such Licensed Products. Licensee shall prepare or
cause to be prepared statements of operations for each month during the term
hereof, which shall be furnished to Licensor together with the earned royalties
due for each such month on the last day of the following month (e.g., July 31
for month of June). In addition, Licensee shall provide Licensor, for
informational purposes only, with a monthly
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statement reflecting retail sales of Licensed Products by account for each
month, within five (5) days after the end of such month. The term "net sales
price" shall mean the gross sales price to retailers who are not affiliates of
Licensee or, with respect to Licensed Products that are not sold directly or
indirectly to retailers, other ultimate consumers (as in the case of
accommodation sales by Licensee to its employees), of all sales of Licensed
Products under this Agreement, less trade discounts and allowances and
merchandise returns. No other deductions shall be taken. Any merchandise returns
shall be credited in the three (3) month period in which the returns are
actually made. Any excess of earned royalties, determined under this paragraph
6.2 over the minimum royalties provided in paragraph 6.1 hereof, shall be
remitted to Licensor within forty-five (45) days after the end of each such
three (3) month period. For purposes of this Agreement, affiliates of Licensee
shall mean all persons and business entities, whether corporations,
partnerships, joint ventures or otherwise, which now or hereafter control, or
are owned or controlled, directly or indirectly by Licensee, or are under common
control with Licensee. It is the intention of the parties that royalties will be
based on the bona fide wholesale prices at which Licensee sells Licensed
Products to independent retailers in arms' length transactions. In the event
Licensee shall sell Licensed Products to its affiliates, royalties shall be
calculated on the basis of such a bona fide wholesale price irrespective of
Licensee's internal accounting treatment of such sale. Licensee shall identify
separately in the statements of operations provided to Licensor pursuant to
paragraph 7 hereof, all sales to affiliates. Compensation for design services is
provided for separately in the Design Agreement.
6.3. If the payment of any installment of royalties is delayed
for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date on which the same became due pursuant to
paragraphs 6.1 or 6.2 hereof at the lower of the highest rate permitted by law
in New York and the prime rate of interest in effect from time to time at
Chemical Bank, New York, Hew York, or its successor.
6.4. Provided that (a) no event of default under this Agreement
has occurred and no default under this Agreement then exists and (b) this
Agreement and the License are then in full force and effect, and (c) Licensee
cooperates with Licensor, The Polo/Lauren Company ("PLC") and their licensees in
connection with the manufacture and sale of Chaps Licensed Products in Canada,
Licensor shall pay to Licensee an amount equal to ( %) percent of
net royalties paid to Licensor with respect to sales of Chaps Licensed Products
made in Canada by any licensee of Licensor (or PLC), other than Licensee.
Licensee's
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cooperation under clause (c) of the foregoing sentence shall consist of, but
shall not be limited to, the sharing of designs and information with respect to
suppliers and contractors in connection with Chaps Licensed Products. Payments
of royalties by Licensor to Licensee, if any, pursuant to this paragraph 6.4.
shall be made within thirty (30) days after Licensor's receipt thereof from its
foreign Licensee, if any, and shall be accompanied by a statement of the foreign
license payments received by Licensor (or PLC) pursuant to which the payment to
Licensee is being made.
6.5. The obligation of Licensee to pay royalties hereunder shall
be absolute notwithstanding any claim which Licensee may assert against Licensor
or the Design Partnership. Licensee shall not have the right to set-off,
compensate or make any deduction from such royalty payments for any reason
whatsoever.
7. Accounting.
7.1. Licensee shall at all times keep an accurate account of all
operations within the scope of this Agreement and shall render a full statement
of such operations in writing to Licensor in accordance with paragraph 6.2
hereof. Such statements shall account separately for each different product
category and shall include all aggregate gross sales, trade discounts,
merchandise returns, sales of miscuts and damaged merchandise and net sales
price of all sales for the previous three (3) month period. Such statements
shall be in sufficient detail to be audited from the books of Licensee. Once
annually, which may be in connection with the regular annual audit of Licensee's
books, Licensee shall furnish an annual statement of the aggregate gross sales,
trade discounts, merchandise returns and net sales price of all Licensed
Products made by Licensee certified by an officer of Licensee. Each financial
statement furnished by Licensee shall be certified by the chief financial
officer of Licensee or a certified public accountant, who may be in the employ
of Licensee. The books of account of Licensee with respect to such sales shall
be available for inspection and audit by Licensor or its agent at all reasonable
times, but such audit shall not be made more than once in each year and shall be
made by Licensor at its own expense; provided, however, that if there is an
error in favor of Licensee in excess of percent ( %) of royalties in
computing such royalties, all expenses in connection with such inspection and
audit shall be borne by Licensee.
7.2. At least once annually and no later than 90 days after the
close of Licensee's fiscal year, Licensee will furnish to Licensor, a profit and
loss statement and balance sheet covering Licensee's fiscal year both of which
shall be certified by the
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independent auditor for Licensee. All financial statements required to be
furnished herein shall be prepared in accordance with generally accepted
accounting principles and any officer's certificate relative thereto shall state
that such statements are true, complete and correct in all material respects and
present fairly the financial position of Licensee as of the respective date of
the balance sheets and the results of operations for the respective periods
covered.
8. Term, Solicitation of Employees.
8.1. The term of this Agreement shall commence on the date hereof
and shall terminate on December 31, 2001; provided, however, that if no Event of
Default shall have occurred and not been cured or waived, and Licensee has
achieved the Minimum Renewal Volume (as such term is hereinafter defined) for
the period January 1, 2000 to December 31, 2000, Licensee shall have the option,
upon providing notice to Licensor on or before April 1, 2001, to renew this
Agreement for an additional three (3) year period (the "Renewal Term") so as to
expire on December 31, 2004, on the terms and conditions herein except that
there will be no further right to renewal. The minimum aggregate net sales price
which Licensee must achieve in connection with sales of Licensed Products during
the period from January 1, 2000 to December 31, 2000 (the "Minimum Renewal
Volume") in order to be entitled to renew this Agreement for a second term as
hereinabove provided shall be $ . In the event either Licensor or
Licensee elects not to renew or extend the term hereof for any reason, it is
expressly understood that only the licensee whose licensed term covers the
period subsequent to the expiration of this Agreement shall be entitled to
receive designs for Licensed Products intended to be sold after the expiration
of the term hereof, and to make presentations of the Licensed Products during
the market period for which the related shipping period would occur after the
expiration or termination of this Agreement. Without limiting the generality of
the foregoing, in the event the term hereof is not renewed or extended, the last
season for which Licensee shall be entitled to receive designs and to
manufacture and sell Licensed Products shall be the Cruise/Holiday 2001 season,
and Licensor shall be entitled to undertake, directly or through a successor
licensee, all activities associated with the design, manufacture and sale of the
Spring 2002 season.
8.2. Each of Licensor and Licensee agrees that during the term of
this Agreement and for a one (1) year period following the expiration or
termination of this Agreement, it shall refrain from soliciting for employment
in any capacity any person while such person is in the employ of the other.
However, nothing
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shall prevent either Licensor or Licensee from employing (i) any person whose
employment with the other has terminated or (ii) any person who has, without
being solicited, sought employment by the other.
9. Default; Change of Control.
9.1. Each of the following shall constitute an event of default
("Event of Default") hereunder:
(i) Any installment of royalty payments is not paid when
due and such default continues for more than ten (10) days after
notice thereof;
(ii) Licensee shall fail to timely present for sale to the
trade a broadly representative and fair collection of each
seasonal collection of Licensed Products designed by the Design
Partnership under the Design Agreement or Licensee shall fail to
timely ship to its customers a material portion of the orders of
Licensed Products it has accepted;
(iii) Licensee defaults in performing any of the other
terms of this Agreement and continues in such default for a
period of thirty (30) days after notice thereof (unless the
default cannot be cured within such thirty (30) day period and
Licensee shall have commenced to cure the default and proceeds
diligently thereafter to cure);
(iv) Licensee fails within ten (10) days after written
notice that payment is overdue to pay the amount due for any
Licensed Products or materials, trim, fabrics, packaging or
services relating to Licensed Products purchased by Licensee from
Licensor or any agent or licensee of Licensor or any other
supplier of such items;
(v) If Licensee shall use the Trademarks in an
unauthorized or improper manner and/or if Licensee shall make an
unauthorized disclosure of confidential information or materials
given or loaned to Company by Licensor, and/or the Design
Partnership;
(vi) Licensee institutes proceedings seeking relief under
a bankruptcy act or any similar law, or consents to entry of any
order for relief against it in any bankruptcy or insolvency
proceeding or similar proceeding, or files a petition for or
consent or answer consenting to reorganization or other relief
under any bankruptcy act or other similar law, or consents to the
filing against it of
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any petition for the appointment of a receiver, liquidator,
assignee, trustee, custodian, sequestrator (or other similar
official) of it or of any substantial part of its property, or a
proceeding seeking such an appointment shall have been commenced
without Licensee's consent and shall continue undismissed for
sixty (60) days or an order providing for such an appointment
shall have been entered, or makes an assignment for the benefit
of creditors, or admits in writing its inability to pay its debts
as they become due or fails to pay its debts as they become due,
or takes any action in furtherance of the foregoing;
(vii) Licensee transfers or agrees to transfer
substantially all of its assets;
(viii) The calling of a meeting of creditors, appointment
of a committee of creditors or liquidating agents, or offering a
composition or extension to creditors by, for or of Licensee;
(ix) There shall be a change in control of Licensee;
(x) An event of default occurs under the Design Agreement
or any other license agreement entered into between Licensor and
Licensee or design agreement between Licensee and the Design
Partnership; or
(xi) The Design Agreement is terminated for any reason
whatsoever.
9.2. If any Event of Default other than the Event of Default
described in paragraphs 9.1 (v), (vi), (vii) or (viii) shall occur, Licensor
shall have the right, exercisable in its sole discretion, to terminate this
Agreement and the License upon ten (10) days' written notice to Licensee of its
intention to do so, and upon the expiration of such ten (10) day period, this
Agreement and the License shall terminate and come to an end. If the Event of
Default described in paragraphs 9.1 (v), (vi), (vii) or (viii) shall occur, this
Agreement and the License shall thereupon forthwith terminate and come to an end
without any need for notice to Licensee. Any termination of this Agreement shall
be without prejudice to any remedy of Licensor for the recovery of any monies
then due it under this Agreement or in respect to any antecedent breach of this
Agreement, and without prejudice to any other right of Licensor including,
without limitation, damages for breach to the extent that the same may be
recoverable and Licensee agrees to reimburse Licensor for any costs and expenses
(including attorneys' fees) incurred by Licensor in enforcing its rights
hereunder. No assignee for the benefit of
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creditors, receiver, liquidator, sequestrator, trustee in bankruptcy, sheriff or
any other officer of the court or official charged with taking over custody of
Licensee's assets or business shall have any right to continue the performance
of this Agreement. For purposes of paragraph 9.1(ix) the term "change in control
of Licensee" shall not include (i) the sale or disposition of all or
substantially all of the voting stock or assets of The Warnaco Group, Inc. or
Warnaco Inc. or any successor thereto to (x) one or more subsidiaries or
affiliates of The Warnaco Group, Inc. or Warnaco Inc.; or (y) any other entity
controlled by The Warnaco Group, Inc. or Warnaco Inc. or its affiliates or any
successor thereto; nor (ii) a public offering, sale to underwriters or private
placement of capital stock by The Warnaco Group, Inc. or Warnaco Inc. or any
successor thereto or any acquisitions by any such company through merger,
purchase of assets or otherwise effected in whole or in part by issuance or
reissuance of such company's shares of capital stock.
9.3. During the term of this Agreement, Licensee shall not (i)
merge or consolidate with or into any other corporation, or (ii) directly or
indirectly sell or otherwise dispose of all or of a substantial portion of its
business or assets or (iii) suffer a change of control in its management without
prior written notice to Licensor. Licensor will discuss the occurrence of any of
the events described in (i), (ii) or (iii) above with Licensee at Licensee's
request, and in the event of any change in the persons having principal
authority to act for Licensee with respect to this Agreement Licensee shall
notify Licensor in advance of any such change and shall consult in good faith
with Licensor regarding the hiring of a suitable replacement.
10. Disposal of Stock Upon Termination or Expiration.
10.1. Within ten (10) days following the termination of this
Agreement for any reason whatsoever including the expiration of the term hereof,
Licensee shall furnish to Licensor a certificate of Licensee listing its
inventories of Licensed Products (which defined term for purposes of this
paragraph 10.1 shall include, but shall not be limited to, all fabrics, trim and
packaging which are used in connection with the manufacture and marketing of
Licensed Products) on hand, in transit, on order, or in process of being
manufactured wherever situated. Licensor shall have the right to conduct a
physical inventory of Licensed Products in Licensee's possession or under
Licensee's control. Licensor or Licensor's designee shall have the option (but
not the obligation) to purchase from Licensee all or any part of Licensee's then
existing inventory of Licensed Products upon the following terms and conditions:
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(i) Licensor shall notify Licensee of its or its
designee's intention to exercise the foregoing option within 30
days of delivery of the certificate referred to above and shall
specify the items of Licensed Products to be purchased.
(ii) The price for Licensed Products manufactured by or on
behalf of Licensee which are on hand, in transit, or in process
shall be Licensee's standard cost (the actual manufacturing cost)
for each such Licensed Product. The price for all other Licensed
Products which are not manufactured by Licensee shall be
Licensee's landed costs therefor. Landed costs for the purposes
hereof means the F.O.B. price of the Licensed Products together
with customs, duties, and brokerage, freight and insurance.
(iii) Licensee shall deliver the Licensed Products
purchased within fifteen (15) days of receipt of the notice
referred to in clause (i) above. Payment of the purchase price
for the Licensed Products so purchased by Licensor or its
designee shall be payable upon delivery thereof, provided that
Licensor shall be entitled to deduct from such purchase price any
amounts owed it by Licensee. It is not intended by the operation
of this provision or paragraph 6.5 that Licensor be entitled to
double payment of royalties or any other amounts owed by Licensee
hereunder.
10.2. In the event Licensor chooses not to exercise the option
referred to in paragraph 10.1 hereof with respect to all or any portion of
Licensed Products, for a period of one hundred and twenty (120) days after
termination of this Agreement for any reason whatsoever, except on account of
breach of the provisions of paragraphs 3, 4 or 6 hereof, Licensee may dispose of
such Licensed Products which are on hand or in the process of being manufactured
at the time of termination of this Agreement, provided Licensee fully complies
with the provisions of this Agreement, including specifically those contained in
paragraphs 3 and 4 hereof in connection with such disposal. Notwithstanding
anything to the contrary contained herein, in the event that upon the expiration
or termination of the term hereof for any reason Licensee is in default because
it has not rendered to Licensor all accounting statements then due, and paid (i)
all royalties and other amounts then due to Licensor, (ii) all compensation then
due to the Design Partnership under the Design Agreement and (iii) all amounts
then due to any affiliate of or supplier to Licensor or its affiliates
(collectively, "Payments"), Licensee shall have no right whatsoever to dispose
of any inventory of Licensed Products in any manner. In addition, if during any
disposal period Licensee fails timely to render any accounting
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statements or to make all Payments when due, Licensee's disposal rights
hereunder shall immediately terminate without notice.
11. Effect of Termination.
It is understood and agreed that except for the License to use
the Trademarks only as specifically provided for in this Agreement, Licensee
shall have no right, title or interest in or to the Trademarks. Upon and after
the termination of this License, all right, title and interest in and to any and
all designs, design patents, artwork, and other materials depicting or relating
to the Licensed Products, and all rights granted to Licensee hereunder, together
with any interest in and to the Trademarks which Licensee may acquire, shall
forthwith and without further act or instrument be assigned to and revert to
Licensor. In addition, Licensee will execute any instruments requested by
Licensor which are necessary to accomplish or confirm the foregoing. Any such
assignment, transfer or conveyance shall be without consideration other than the
mutual agreements contained herein. Upon notice of termination Licensor shall be
free to license to others the right to use the Trademarks in connection with the
manufacture and sale of the Licensed Products covered hereby, and Licensee will
refrain from further use of the Trademarks or any further reference to them,
direct or indirect, or any other trademark, trade name or logo that is
confusingly similar to the Trademarks, or associated with the Trademarks in any
way, in connection with the manufacture, sale or distribution of Licensee's
products, except as specifically provided in paragraph 10 hereof. It is
expressly understood that under no circumstances shall Licensee be entitled,
directly or indirectly, to any form of compensation or indemnity from Licensor,
the Design Partnership or their affiliates as a consequence of the termination
of this Agreement, whether as a result of the passage of time, or as the result
of any other cause of termination referred to in this Agreement. Without
limiting the generality of the foregoing, by its execution of the present
Agreement, Licensee hereby waives any claim which it has or which it may have in
the future against Licensor, the Design Partnership or their affiliates, arising
from any alleged goodwill created by Licensee for the benefit of any or all of
the said parties or from the alleged creation or increase of a market for
Licensed Products.
11.2 Remedies. Licensee acknowledges and admits that there would
be no adequate remedy at law for its failure (except as otherwise provided in
paragraph 10 hereof) to cease the manufacture or sale of the Licensed Products
covered by this Agreement at the termination of the License, and Licensee agrees
that in the event of such failure Licensor shall be entitled to
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equitable relief by the way of temporary and permanent injunction and such other
and further relief as any court with jurisdiction may deem just and proper.
12. Liaison.
Licensee shall appoint a high level managerial person who shall
devote a substantial portion of his time to the production, merchandising,
distribution and promotion of the Licensed Product lines. Such person shall act
as liaison between Licensee and Licensor.
13. Indemnity.
13.1. Subject to the exclusions set forth in paragraph 7.1 of the
Design Agreement, Licensee shall indemnify and save and hold Licensor, the
Design Partnership, Polo Ralph Lauren Corporation and Ralph Lauren,
individually, and their assignees, directors, officers, servants, agents and
employees harmless of and from any and all liability, claims, causes of action,
suits, damages and expenses, (including reasonable attorneys' fees and expenses
in actions involving third parties or between the parties hereto), which they,
or any of them, are or become liable for, or may incur, or be compelled to pay
by reason of any acts, whether of omission or commission, that may be committed
or suffered by Licensee or any of its servants, agents or employees in
connection with Licensee's performance of this Agreement, in connection with
Licensed Products manufactured by or on behalf of Licensee or otherwise in
connection with Licensee's business, including without limitation, (i)
Licensee's use of Licensee's own designs which were submitted for approval
pursuant to the Design Agreement, and (ii) the unauthorized sale by Licensee of
Licensed Products outside the Territory.
13.2. Licensee shall carry product and general liability
insurance with limits of liability of not less than $ per occurrence
and $ per person and Licensor, the Design Partnership, Polo Ralph
Lauren Corporation and Ralph Lauren, individually, and their directors,
officers, servants, agents and employees shall be named therein as insureds as
their interests may appear. Licensee shall, promptly after the signing of this
Agreement, deliver to Licensor a certificate of such insurance from the
insurance carrier which sets forth the scope of coverage and the limits of
liability and further provides that the policy may not be cancelled or amended
without at least thirty (30) days' prior written notice to Licensor.
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14. Disclosure.
Licensor and Licensee, and their affiliates, employees,
attorneys, bankers and accountants shall hold in confidence and not use or
disclose, except as permitted by this Agreement, (i) confidential information of
the other or (ii) the terms of this Agreement, except upon consent of the other
or pursuant to, or as may be required by law, or in connection with regulatory
or administrative proceedings and only then with reasonable advance notice of
such disclosure to the other. Licensee shall take all reasonable precautions to
protect the secrecy of the materials, samples, sketches, designs, artwork,
logos, and other materials used pursuant to this Agreement prior to the
commercial distribution or the showing of samples for sale, and shall not sell
any merchandise employing or adapted from any of said designs, sketches,
artwork, logos, and other materials or their use except under the Trademarks.
All press releases and other public announcements shall be subject to the prior
approval of Licensor. Every request for a statement, release or other inquiry
shall be sent in writing whenever practicable to the advertising/publicity
director of Licensor for handling.
15. Showroom.
Licensee, at its sole cost and expense, shall continue to
maintain, operate and staff a showroom at 90 Park Avenue, New York, New York or
at such suitable location as Licensor shall consent to for the exclusive
presentation and sale of the Licensed Products. The showroom shall be
maintained, operated, staffed and decorated in a manner consistent with that of
Licensee's existing showrooms established for the presentation and sale of
Licensor's products. Licensor shall have a right of approval with respect to the
design and layout of the showroom and all expenses incurred with respect to the
design, construction, operation and maintenance of such showroom shall be borne
by Licensee.
16. Key Personnel.
16.1. At all times during the term hereof, Licensee shall employ
a divisional President, approved in advance by Licensor (such approval not to be
unreasonably withheld), whose sole responsibility shall be to manage all of
Licensee's operations pursuant to this Agreement. Such individual shall report
to the President of Licensee.
16.2. Intentionally Omitted.
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17. Miscellaneous.
17.1. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been properly given or
sent (i) on the date when such notice, request, consent or communication is
personally delivered and acknowledged, or (ii) five (5) days after the same was
sent, if sent by certified or registered mail or (iii) one (1) day after the
same was sent, if sent by overnight courier delivery, as follows:
(a) if to Licensee, addressed as follows:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: President
with a copy to:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: General Counsel
(b) if to Licensor, addressed as follows:
Polo Ralph Lauren, L.P.
650 Madison Avenue
New York, New York 10022
Attention: President
with a copy to:
Victor Cohen, Esq.
Eighth Floor
650 Madison Avenue
New York, New York 10022
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
17.2. Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers, and no party hereto
shall have any power to obligate or bind any other party hereto in any manner
whatsoever, except as otherwise provided for herein.
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17.3. None of the terms hereof can be waived or modified except
by an express agreement in writing signed by the party to be charged. The
failure of any party hereto to enforce, or the delay by any party in enforcing,
any of its rights hereunder shall not be deemed a continuing waiver or a
modification thereof and any party may, within the time provided by applicable
law, commence appropriate legal proceedings to enforce any and all of such
rights. All rights and remedies provided for herein shall be cumulative and in
addition to any other rights or remedies such parties may have at law or in
equity. Any party hereto may employ any of the remedies available to it with
respect to any of its rights hereunder without prejudice to the use by it in the
future of any other remedy with respect to any of such rights. No person, firm
or corporation, other than the parties hereto and the Design Partnership, shall
be deemed to have acquired any rights by reason of anything contained in this
Agreement.
17.4. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties hereto. Licensor
may assign all of its rights, duties and obligations hereunder to any entity to
which the Trademarks or the right to use the Trademarks has been transferred,
subject to Licensee's rights hereunder. The rights granted to Licensee hereunder
are unique and personal in nature, and neither this Agreement nor the License
may be assigned by Licensee without Licensor's prior written consent. Any
attempt by Licensee to transfer any of its rights or obligations under this
Agreement, whether by assignment, sublicense or otherwise, without having
received the prior written consent of Licensor shall constitute an Event of
Default, but shall otherwise be null and void. Licensee may employ
subcontractors for the manufacture of Licensed Products; provided, however,
that: (i) the supervision of production of Licensed Products shall remain under
the control of Licensee, (ii) Licensee shall maintain appropriate quality
controls, (iii) such subcontractors shall comply with the quality standards set
forth herein, (iv) such subcontractors shall comply with other requirements of
Licensor consistent with the terms of this Agreement, including, but not limited
to, the execution by subcontractor of the Trademark and Design Protection
Agreement attached hereto and made a part hereof; (v) once each quarter and upon
the expiration or termination of this Agreement, Licensee shall provide Licensor
with a complete list setting forth the full name and address of each
subcontractor it uses in connection with the manufacture of Licensed Products,
together with a complete list of Licensed Products (and/or components thereof)
manufactured by each such subcontractor; and (vi) Licensee, upon request from
Licensor, shall cease placing orders for Licensed Products with any such
subcontractor.
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17.5. Licensee shall comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the operations
of Licensee contemplated hereby, including, without limitation, as they relate
to the manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that Licensor may have approved such item or conduct.
17.6. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, applicable to contracts made and
to be wholly performed therein without regard to its conflicts of law rules.
17.7. If any dispute between the parties leads to litigation, the
parties agree that the courts of the State of New York in the City of New York,
or the federal courts in that City, shall have the exclusive jurisdiction and
venue over such litigation. All parties consent to personal jurisdiction in the
State of New York, and agree to accept service of process outside of the State
of New York as if service had been made in that state. Any claim by Licensee
arising hereunder shall be asserted by Licensee exclusively against Licensor,
and Licensee shall not have nor claim to have any recourse for any such claim
against any general or limited partner of Licensor.
17.8. The provisions hereof are severable, and if any provision
shall be held invalid or unenforceable in whole or in part in any jurisdiction,
then such invalidity or unenforceability shall affect only such provision, or
part thereof in such jurisdiction and shall not in any manner affect such
provision in any other jurisdiction, or any other provision in this Agreement in
any jurisdiction. To the extent legally permissible, an arrangement which
reflects the original intent of the parties shall be substituted for such
invalid or unenforceable provision. As of the effective date hereof, this
agreement supercedes the agreement dated as of January 1, 1995 between Licensee
and Licensor, but neither Licensee nor Licensor waives any rights arising under
such prior agreement. Licensee shall not be required to seek Licensor's approval
with respect to any Licensed Products or other materials approved by Licensor
pursuant to the prior agreement solely as a result of the execution of this
Agreement.
17.9. The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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17.10. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused the same to be executed by a duly authorized officer as of
the day and year first above written.
POLO RALPH LAUREN, L.P.
By: Polo Ralph Lauren Corporation,
General Partner
By:
________________________________
WARNACO INC.
By:
________________________________
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Design - Chaps/Ralph - Sportswear
AMENDED AND RESTATED DESIGN SERVICES AGREEMENT effective as of
January 1, 1996, by and between Polo Ralph Lauren Enterprises, L.P. (the "Design
Partnership"), with a place of business at 650 Madison Avenue, New York, New
York 10022 and Warnaco Inc. (the "Company") with a place of business at 90 Park
Avenue, New York, New York 10016.
Ralph Lauren ("Lauren") is an internationally famous designer who
has been twice inducted into the Coty Hall of Fame for his design of men's and
women's fashions, is the recipient of the CFDA Lifetime Achievement Award, and
is a creator of original designs for cosmetics, jewelry, home furnishings and
other products.
Polo Ralph Lauren, L.P., a Delaware limited partnership ("Polo"),
holds the right and interest in and to certain trademarks and trade names, as
same may be used in connection with the manufacture and sale of Licensed
Products, as hereinafter defined, and on even date herewith, the Company has
obtained the right to use the trademarks ("Trademarks") in connection with the
Licensed Products, pursuant to a license agreement ("License Agreement") of even
date herewith by and between the Company and Polo.
The value of the Trademarks are largely derived from the
reputation, skill and design talents of Lauren, and Lauren, directly and through
his designees, provides design services through the Design Partnership.
The Company desires to obtain the services of the Design
Partnership in connection with the creation and design of the Licensed Products.
The Company desires, in order to exploit the rights granted to it
under the License Agreement, to engage and retain the Design Partnership to
create and provide to the Company the designs for its line of Licensed Products.
The Design Partnership is willing to furnish such designs and render such
services on the basis hereinafter set forth. As used herein, the term "Licensed
Products" shall mean high quality men's sportswear with the exception of (i)
skiing or swimming items, and (ii) heavy outerwear items commonly found in
outerwear departments, bearing the Trademarks.
In consideration of the foregoing premises and of the mutual
promises and covenants herein contained, the parties hereto, intending to be
legally bound, hereby agree as follows:
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2
1. Designs; Assistance.
1.1 At any time or from time to time the Company may provide the
Design Partnership with a list or lists setting forth those Licensed Products
for which the Company shall require designing.
1.2 At any time or from time to time, or within a reasonable
period following receipt by the Design Partnership of the aforesaid list or
lists, the Design Partnership shall provide the Company with a program of
suggested, broad design themes and concepts with respect to the design of the
Licensed Products ("Design Concepts") which shall be embodied in verbal and/or
written descriptions of design themes and concepts and such other detailed
designs and sketches therefor, as the Design Partnership deems appropriate. The
Design Partnership shall have full discretion with respect to the manner in
which the Design Concepts shall be formulated and presented by the Design
Partnership to the Company. The Company and the Design Partnership shall confer
on Design Concepts and shall make such modifications as are required to meet the
Design Partnership's approval.
1.3 The Design Partnership may engage such employees, agents and
consultants operating under the Design Partnership's creative supervision and
control as it may deem necessary and appropriate.
1.4 From time to time while this Agreement is in effect, the
Design Partnership may (a) develop or modify and implement designs from the
Design Concepts or other designs furnished by the Design Partnership or (b)
develop and implement new designs.
1.5 If the Company wishes to prepare a design for any or all of
its lines of Licensed Products, it shall submit to the Design Partnership for
its approval the Company's proposed design therefor. By written notice to the
Company, the Design Partnership may approve any of the designs so furnished,
with such modifications as it shall deem appropriate, or the Design Partnership
may, in its sole discretion, disapprove any or all of the designs.
1.6 The Company understands that all or portions of the Design
Concepts may be furnished to the Company through or in cooperation with other
entities to which the Design Partnership has provided design services. The
Company upon its prior authorization shall pay all costs, including shipping and
handling charges, for fabric swatches or mill chips, sketches, specifications,
paper sample patterns and product samples furnished to the Company by the Design
Partnership or such other entities.
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3
1.7 The Company shall submit to the Design Partnership for its
review and approval, the Company's proposed media advertising (other than
cooperative advertising) relating to each Licensed Product or Licensed Product
line. All layouts proposed by the Company for cooperative advertising shall
similarly be subject to the Design Partnership's review and approval, which
shall not be unreasonably withheld. The Design Partnership may, with respect to
such advertising make such suggestions as it may deem necessary or appropriate,
or disapprove, in either event by notice to the Company.
1.8 All patents and copyrights on designs of the Licensed
Products shall be applied for by the Design Partnership or its designee, at the
Design Partnership's discretion and expense and shall designate the Design
Partnership or its designee as the patent or copyright owner, as the case may
be, therefor.
1.9 Company acknowledges that the Licensed Products contain
elements which in concept, execution and/or presentation are unique. Company
agrees that it will not, during the term of the Agreement, use any designs used
in the Licensed Products or any designs submitted or modified by the Design
Partnership or any designs which are comparable and/or competitive with Licensed
Products and which may be identified as the Design Partnership designs.
2. Design Legends; Copyright Notice and License.
2.1 All designs, sketches, artwork, logos and other materials of
Licensed Products and the use of such designs, artwork, sketches, logos and
other materials created by the Design Partnership, or created by or for the
Company and reviewed and approved by the Design Partnership, or developed by or
for the Company from Design Concepts or subsequent design concepts furnished or
approved by the Design Partnership (all of which shall hereinafter constitute
Design Concepts), shall be the property of the Design Partnership and shall be
subject to the provisions of this paragraph 2.
2.2 All right, title and interest in and to the samples,
sketches, design, artwork, logos and other materials furnished by or to Company
or submitted to the Design Partnership, whether created by the Design
Partnership or Company, are hereby assigned to and shall be the sole property of
the Design Partnership. The Company shall cause to be placed on all Licensed
Products appropriate notice designating the Design Partnership as the copyright
or design patent owner thereof, as the case may be. The manner of presentation
of said notices shall be reviewed and approved by the Design Partnership prior
to use thereof by the Company.
2.3 The Design Partnership hereby grants to the Company the
exclusive right, license and privilege ("License") to
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4
use the designs furnished hereunder and all copyrights, if any, and patents, if
any therein; provided, however, that the License is limited to use in connection
with Licensed Products manufactured and sold, or imported and sold, pursuant to
the License Agreement and only for the seasonal collection for which such Design
Concepts are approved. All other rights in and to the designs furnished
hereunder, including without limitation all rights to use such designs in
connection with products other than Licensed Products (as defined in the License
Agreement) and in territories other than the Territory (as defined in the
License Agreement) are expressly reserved by the Design Partnership. The License
shall continue only for such period as this Agreement shall be effective. The
Design Partnership shall execute and deliver to the Company all documents and
instruments necessary to perfect or evidence the License. Upon termination of
this Agreement, for any reason whatsoever, any and all of the Company's right,
title and interest in and to the License shall forthwith and without further act
or instrument be assigned to, revert to and be the sole and exclusive property
of the Design Partnership, and the Company shall have no further or continuing
right or interest therein, except the limited right to complete the manufacture
of and sell Licensed Products during the Disposal Period, as set forth in
paragraph 6.3 hereof. In addition, the Company shall thereupon (i) execute and
deliver to the Design Partnership all documents and instruments necessary to
perfect or evidence such reversion, (ii) refrain from further use of any of the
Design Concepts and (iii) refrain from manufacturing, selling or distributing
any products (whether or not they bear the Trademarks) which are confusingly
similar to or derived from the Licensed Products or Design Concepts.
2.4 Company shall not sublicense any of the rights granted
hereunder without first obtaining the Design Partnership's prior written consent
in connection therewith, which consent may be withheld by the Design Partnership
in its sole discretion.
2.5 The Design Partnership represents and warrants to the Company
that it has full right, power and authority to enter into this Agreement, to
perform all of its obligations hereunder and to consummate all of the
transactions contemplated herein.
2.6 The Company represents and warrants to the Design Partnership
that the Company has full right, power and authority to enter into this
Agreement, to perform all of its obligations hereunder and to consummate all the
transactions contemplated herein.
3. Licensed Products.
3.1 The Company shall obtain the written approval of the Design
Partnership, of all Licensed Products to be manufactured or caused to be
manufactured by the Company, by submitting a Prototype, as hereinafter defined,
of each different
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5
design or model of a Licensed Product, including, but not limited to, the type
and quality of materials, colors and workmanship to be used in connection
therewith, prior to any commercial production thereof. In the event that the
Design Partnership rejects a particular Prototype or Prototypes, the Design
Partnership shall so notify the Company and shall in certain cases where the
Design Partnership desires to include the prototype in the collection, provide
the Company with suggestions for modifying the particular Prototype or
Prototypes which the Design Partnership is rejecting. The Company shall promptly
correct said Prototype or Prototypes, resubmit said Prototype or Prototypes to
the Design Partnership and seek the Design Partnership's approval under the same
terms and conditions as set forth herein with respect to the first submission of
Prototypes. As used herein, the term "Prototype" shall mean any and all models,
or actual samples, of Licensed Products; and the term "Final Prototype" shall
mean the actual final sample of a Licensed Product from which the first
commercial production thereof will be made and which has been approved by the
Design Partnership prior to the first commercial production thereof pursuant to
this paragraph 3.
3.2 The written approval of the Design Partnership of the
Prototypes for each seasonal collection shall be evidenced by a written list,
signed on behalf of the Design Partnership, setting forth those Prototypes which
have been approved for inclusion in such collection. Prototypes so approved
shall be deemed Final Prototypes in respect of such collection. Approval of any
and all Prototypes as Final Prototypes shall be in the sole discretion of the
Design Partnership. The Company shall present for sale, through the showing of
each seasonal collection of the trade, all Final Prototypes so approved in
respect of such collection.
3.3 The Licensed Products thereafter manufactured and sold by the
Company shall strictly adhere, in all respects, including, without limitation,
with respect to materials, color, workmanship, designs, dimensions, styling,
detail and quality, to the Final Prototypes approved by the Design Partnership.
3.4 In the event that any Licensed Product is, in the judgment of
the Design Partnership, not being manufactured or sold in strict adherence to
the materials, color, workmanship, designs, dimensions, styling detail and
quality, embodied in the Final Prototypes, or is otherwise not in accordance
with the Final Prototypes, the Design Partnership shall notify the Company
thereof in writing and the Company shall promptly repair or change such Licensed
Product to conform strictly thereto. If any item of Licensed Product as repaired
or changed does not strictly conform to the Final Prototypes and such strict
conformity cannot be obtained after at least one (1) resubmission, the
Trademarks shall be promptly removed from the item, at the option of the Design
Partnership, in which event the item may be sold by the Company, provided it is
in no way identified as a Licensed
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6
Product. Notwithstanding anything in this paragraph 3.4 to the contrary, sales
of all products using the Design Concepts, whether or not bearing the
Trademarks, shall be subject to compensation payments pursuant to paragraph 4
hereof.
3.5 The Design Partnership and its duly authorized representative
shall have the right, upon reasonable notice during normal business hours, to
inspect all facilities utilized by the Company (and its contractors and
suppliers) in connection with the preparation of Prototypes and the manufacture,
sale, storage or distribution of Licensed Products pursuant thereto and to
examine Licensed Products in process of manufacture and when offered for sale
within the Company's operations. The Company hereby consents to the Design
Partnership's examination of Licensed Products held by its customers for resale
provided the Company has such right of examination. The Company shall take all
necessary steps, and all steps reasonably requested by the Design Partnership,
to prevent or avoid any misuse of the licensed designs by any of its customers,
contractors or other resources.
3.6 The Company shall comply with all laws, rules regulations and
requirements of any governmental body which may be applicable to the
manufacture, distribution, sale or promotion of Licensed Products. The Company
shall advise the Design Partnership to the extent any Final Prototype does not
comply with any such law, rule, regulation or requirement.
3.7 The Company shall upon request make its personnel, and shall
use its best efforts to make the personnel of any of its contractors, suppliers
and other resources, available by appointment during normal business hours for
consultation with the Design Partnership. The Company shall make available to
the Design Partnership, upon reasonable notice, marketing plans, reports and
information which the Company may have with respect to Licensed Products.
3.8 The Company may employ subcontractors for the manufacture of
Licensed Products, provided that (a) Company shall have obtained prior written
approval from the Design Partnership, (b) Company maintains appropriate quality
controls, (c) such subcontractors shall comply with the quality requirements of
the Agreement, and (d) such subcontractors shall execute a copy and comply with
the Trademark and Design Agreement attached hereto and made a part hereof.
3.9 The Company shall include within each seasonal collection of
Licensed Products a fully representative assortment of designs therefor
designated by the Design Partnership for inclusion therein. Notwithstanding
anything to the contrary contained herein or in the License Agreement, in the
event the Company chooses not to or is unable to include within a seasonal
collection of Licensed Products a particular Licensed Product which the Design
Partnership has designed or designated for
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7
inclusion in such collection, the Design Partnership shall be entitled to
authorize third parties to manufacture such Licensed Product(s) on behalf of the
Company and the Company shall display, present and sell such Licensed Product(s)
in its showroom for Licensed Products.
4. Compensation; Accounting.
4.1 As compensation for the designs and services rendered
hereunder, the Company shall pay minimum compensation to the Design Partnership
each year during the term of this Agreement. The minimum compensation to the
Design Partnership in connection with the manufacture and sale and importation
and sale of Licensed Products for each year shall be as follows:
Year 1 (1996) $
Year 2 $
Year 3 $
Year 4 $
Year 5 $
Year 6 $
Minimum compensation for each year shall be paid on a quarterly basis, on the
last day of each month following the end of each calendar quarter during the
term hereof (e.g., April 30 for the quarter ending March 31), commencing with
the first quarterly payment to be made on April 30, 1996. The amount of earned
compensation paid, pursuant to paragraph 4.2 hereof, with respect to sales of
Licensed Products in each calendar quarter, shall be deducted from the minimum
compensation payment due for such quarter, it being the parties' intent that the
Company shall pay the Design Partnership an amount equal to the greater of (i)
aggregate minimum compensation for each year of the initial term or (ii)
aggregate earned compensation for each year of the initial term. However, no
credit shall be permitted against minimum compensation payable in any year on
account of actual or minimum compensation paid in any other year, and minimum
compensation shall not be returnable. For each year during any renewal term of
this Agreement, minimum compensation shall be an amount equal to % of the
aggregate earned compensation accrued with respect to the sale of all Licensed
Products during the immediately preceding year; provided, however, that (i) the
minimum compensation in each year shall in no event be less than the minimum
compensation due for the immediately preceding year and (ii) the minimum
compensation in each year shall in no event be less than $ . For the
purposes of this Agreement, the term "year" shall mean a period of twelve (12)
months commencing on each January 1 during the term hereof.
4.2 The Company shall pay to the Design Partnership earned
compensation based on the net sales price of Licensed Products manufactured or
imported and sold by the Company hereunder. Earned compensation shall equal
percent ( %) of the net sales price of all Licensed Products
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8
sold under this Agreement, including, without limitation, sales made pursuant to
paragraphs 3.4 and 6.3 hereof; provided, however, that (i) the earned
compensation rate with respect to sales of Licensed Products on or before
December 31, 1996 shall be percent ( %) and (ii) earned compensation
payable to the Design Partnership on Licensed Product design "close-outs",
which were sold at least percent ( %) below Company's regular selling
price shall be percent ( %) of the net sales of such Licensed Products.
The Company shall prepare or cause to be prepared statements of operations for
each month during the term hereof, which shall be furnished to the Design
Partnership together with the earned compensation due for each such month on
the last day of the following month (e.g., July 31 for month of June). The
term "net sales price" shall mean the gross sales price to retailers who are
not affiliates of the Company or, with respect to Licensed Products that are not
sold directly or indirectly to retailers, other ultimate consumers (as in the
case of accommodation sales by Licensee to its employees), of all sales of
Licensed Products under this Agreement, less trade discounts and allowances
and merchandise returns. No other deductions shall be taken. Any merchandise
returns shall be credited in the three (3) month period in which the returns
are actually made. For purposes of this Agreement, affiliates of the Company
shall mean all persons and business entities, whether corporations,
partnerships, joint ventures or otherwise, which now or hereafter control,
or are owned or controlled, directly or indirectly by the Company, or are
under common control with the Company. It is the intention of the parties that
compensation payments will be based on bona fide wholesale prices at which the
Company sells Licensed Products to independent retailers in arms' length
transactions. In the event the Company shall sell Licensed Products to its
affiliates, compensation payments shall be calculated on the basis of such a
bona fide wholesale price irrespective of the Company's internal accounting
treatment of such sale. The Company shall identify separately in the statements
of operations provided to the Design Partnership pursuant to paragraph 4.6
hereof, all sales to its affiliates.
4.3 The Company shall reimburse the Design Partnership for all
its travel and promotion expenses incurred by the Design Partnership or Polo in
the performance of the Design Partnership's duties under this Agreement, such
amounts to include first class travel and hotel accommodations. Amounts payable
to the Design Partnership pursuant to this paragraph shall become due and
payable monthly within thirty (30) days of the date of mailing of the invoices,
accompanied by corresponding receipts, for such costs incurred during the
preceding month.
4.4 If the payment of any installment of compensation is delayed
for any reason, interest shall accrue on the unpaid principal amount of such
installment from and after the date on which the same became due pursuant to
paragraphs 4.1 or 4.2 hereof at the lower of the highest rate permitted by law
in
<PAGE>
<PAGE>
9
New York and the prime rate of interest in effect from time to time at Chemical
Bank, New York, New York or its successor.
4.5 Provided that (a) no event of default under this Agreement
has occurred and no default under this Agreement then exists and (b) this
Agreement and the License are then in full force and effect, and (c) Company
cooperates with the Design Partnership, The Polo/Lauren Company, L.P. ("PLC")
and their licensees in connection with the manufacture and sale of Chaps
Licensed Products in Canada, the Design Partnership shall pay to the Company an
amount equal to ( %) percent of net compensation paid to the Design
Partnership with respect to sales of Chaps Licensed Products made in Canada by
any licensee of the Design Partnership, other than the Company. Company's
cooperation under clause (c) of the foregoing sentence shall consist of, but
shall not be limited to, the sharing of designs and information with respect to
suppliers and contractors in connection with Chaps Licensed Products. Payments
by the Design Partnership to the Company, if any, pursuant to this paragraph
4.5, shall be made within thirty (30) days after the Design Partnership's
receipt thereof from its foreign licensee, if any, and shall be accompanied by a
statement of the foreign license payments received by the Design Partnership
pursuant to which the payment to the Company is being made.
4.6 The Company shall at all times keep an accurate account of
all operations within the scope of this Agreement and shall render a full
statement of such operations in writing to the Design Partnership in accordance
with paragraph 4.1 hereof. Such statements shall account separately for each
different product category and shall include all aggregate gross sales, trade
discounts, merchandise returns, sales of miscuts and damaged merchandise and net
sales price of all sales for the preceding three (3) month period. Such
statements shall be in sufficient detail to be audited from the books of the
Company. Once annually, which may be in connection with the regular annual audit
of the Company's books, the Company shall furnish an annual statement of the
aggregate gross sales, trade and prompt payment discounts, merchandise returns
and net sales price of all Licensed Products made or sold by the Company,
certified by Company's independent accountant. Each quarterly financial
statement furnished by Company shall be certified by the chief financial officer
of the Company or a certified public accountant who may be in the employ of the
Company. The books of account of the Company with respect to such sales shall be
available for inspection and audit by the Design Partnership or its agent at all
reasonable times during the Company's usual working hours, but such audit shall
be made only upon reasonable notice to Licensee, shall not be made more than
once in each year and shall be made by the Design Partnership at its own
expense; provided, however, that if there shall have been an error in favor of
the Company in excess of percent ( %) in computing compensation for the
period audited, all reasonable expenses in connection with such inspection and
audit shall be borne by the Company.
<PAGE>
<PAGE>
10
4.7 The obligation of the Company to pay compensation hereunder
shall be absolute notwithstanding any claim which the Company may assert against
Polo or the Design Partnership. The Company shall not have the right to set-off,
compensate or make any deduction from such compensation payments for any reason
whatsoever.
5. Death or Incapacity of Lauren.
The Design Partnership shall perform its obligations hereunder
notwithstanding any death or incapacity of Lauren and the Company shall accept
the services of the Design Partnership.
6. Term and Termination.
6.1 Unless sooner terminated in accordance with the terms and
provisions hereof, this Agreement shall continue in effect for so long as the
License Agreement is in effect and shall terminate upon the termination of the
License Agreement.
6.2 Each of the following shall constitute an event of default
("Event of Default") hereunder: (i) any compensation is not paid when due and
such default continues for more than ten (10) days after notice thereof; (ii)
the Company shall fail to timely present for sale to the trade a broadly
representative and fair collection of each seasonal collection of Licensed
Products designed by the Design Partnership or the Company shall fail to timely
ship a material portion of the orders of Licensed Products it has accepted;
(iii) the Company shall use the designs in an unauthorized or improper manner
and/or Company shall make an unauthorized disclosure of confidential information
or materials given or loaned to Company by the Design Partnership or Polo; or
(iv) the Company defaults in performing any of the other terms of this Agreement
and continues in such default for a period of thirty (30) days after notice
thereof (unless the default cannot be cured within such thirty (30) day period
and the Company shall have commenced to cure the default and proceeds diligently
thereafter to cure within a reasonable time); (v) an event of default shall
occur under the License Agreement or any other design agreement entered into
between the Company and the Design Partnership or license agreement between the
Company and Polo; or (vi) the License Agreement shall be terminated for any
reason whatsoever. If any Event of Default other than that described in
paragraph 6.2(vi) shall occur, the Design Partnership shall have the right,
exercisable in its sole discretion, to terminate this Agreement upon ten (10)
days' written notice to the Company of its intention to do so. Upon the
expiration of such ten (10) day period, this Agreement shall terminate and come
to an end and, subject to paragraph 6.3 hereof, all rights of the Company in and
to the designs furnished or used hereunder and all copyrights and designs
patents therein and their contemplated use shall terminate. If the Event of
Default described in paragraph 6.2(vi) shall occur, this Agreement and the
License shall thereupon forthwith terminate and come to an end without any need
<PAGE>
<PAGE>
11
for notice to the Company. Termination of this Agreement shall be without
prejudice to any remedy of the Design Partnership for the recovery of any monies
then due to it under this Agreement or in respect to any antecedent breach of
this Agreement, and without prejudice to any other right of the Design
Partnership, including without limitation, damages for breach to the extent that
the same may be recoverable.
6.3 In the event Polo chooses not to exercise the option referred
to in paragraph 10.1 of the License Agreement with respect to all or any portion
of the Licensed Products (as therein defined), the Company may dispose of
Licensed Products, to the extent permitted by and in the manner set forth in
paragraph 10.2 of the License Agreement. Such sales shall be subject to the
payment of earned compensation pursuant to paragraph 4.2 hereof. Upon the
conclusion of the disposal period all rights and interests in and to the designs
furnished or used hereunder and design patents therein and all copyrights
licensed hereby shall belong to and be the property of the Design Partnership,
and the Company shall have no further or continuing right or interest therein.
6.4 The Company acknowledges and admits that there would be no
adequate remedy at law for its failure to cease the manufacture or sale of
Licensed Products at the termination of this Agreement, by expiration or
otherwise, and the Company agrees that in the event of such failure, the Design
Partnership shall be entitled to relief by way of temporary or permanent
injunction and such other and further relief as any court with jurisdiction may
deem proper.
6.5 It is expressly understood that under no circumstances shall
the Company be entitled, directly or indirectly, to any form of compensation or
indemnity from the Design Partnership, Lauren, Polo or their affiliates as a
consequence to the termination of this Agreement, whether as a result of the
passage of time, or as the result of any other cause of termination referred to
in this Agreement. Without limiting the generality of the foregoing, by its
execution of the present Agreement, the Company hereby waives any claim which it
has or which it may have in the future against the Design Partnership, Lauren,
Polo, Polo Ralph Lauren Corporation or their affiliates, arising from any
alleged goodwill created by the Company for the benefit of any or all of the
said parties or from the alleged creation or increase of a market for Licensed
Products.
7. Indemnity.
7.1 The Company shall indemnify and save and hold the Design
Partnership, Lauren, Polo, and Polo Ralph Lauren Corporation, and their
assignees, directors, officers, servants, agents and employees harmless of and
from any and all liability, claims, causes of action, suits, damages and
expenses (including
<PAGE>
<PAGE>
12
reasonable attorney's fees and expenses in actions involving third parties or
between the parties hereto), which he or they are or become liable for, or may
incur, or be compelled to pay by reason of any acts, whether of omission or
commission, that may be committed or suffered by the Company or any of its
directors, officers, servants, agents or employees in connection with the
Company's performance of this Agreement, in connection with Licensed Products
manufactured by or on behalf of the Company or otherwise in connection with the
Company's business; provided, however, that the Company shall not be responsible
for any liability, claims, causes of action, suits, damages or expenses incurred
or suffered by the Design Partnership, Lauren, Polo, Polo Ralph Lauren
Corporation and their directors, officers, servants, agents and employees in
connection with any suit or proceeding for infringement of another's design
patent, trademark, copyright or other proprietary rights brought against them as
a result of the Company's use of the Trademarks, or the Design Concepts
furnished by the Design Partnership hereunder, in accordance with the terms of
this Agreement.
8. Disclosure.
The Design Partnership and the Company, and their affiliates,
employees, attorneys, bankers and accountants, shall hold in confidence and not
use or disclose, except as permitted by this Agreement, (i) confidential
information of the other or (ii) the terms of this Agreement, except upon
consent of the other or pursuant to, or as may be required by law, or in
connection with regulatory or administrative proceedings and only then with
reasonable advance notice of such disclosure to the other. Licensee shall take
all reasonable precautions to protect the secrecy of the materials, samples,
sketches, designs, artwork, logos and other materials used pursuant to this
Agreement prior to the commercial distribution or the showing of samples for
sale and shall not sell any merchandise employing or adapted from any of said
designs, sketches, artwork, logos, and other materials or their use except under
the Trademarks.
9. Miscellaneous.
9.1 All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been properly given or
sent (i) on the date when such notice, request, consent or communication is
personally delivered and acknowledged, or (ii) five (5) days after the same was
sent, if sent by certified or registered mail or (iii) one (1) day after the
same was sent, if sent by overnight courier delivery, as follows:
(a) if to the Company, addressed as follows:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
<PAGE>
<PAGE>
13
Attention: President
with a copy to:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: General Counsel
(b) if to the Design Partnership, addressed as follows:
Polo Ralph Lauren Enterprises, L.P.
650 Madison Avenue
New York, New York 10022
Attention: President
with a copy to:
Victor Cohen, Esq.
Eighth Floor
650 Madison Avenue
New York, New York 10022
Anyone entitled to notice hereunder may change the address to which notices or
other communications are to be sent to it by notice given in the manner
contemplated hereby.
9.2 Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers, and neither the
Design Partnership nor the Company shall have any power to obligate or bind the
other in any manner whatsoever, except as otherwise provided for herein.
9.3 None of the terms hereof can be waived or modified except by
an express agreement in writing signed by the party to be charged. The failure
of any party hereto to enforce, or the delay by any party in enforcing, any of
its rights hereunder shall not be deemed a continuing waiver or a modification
thereof and any party may, within the time provided by applicable law, commence
appropriate legal proceedings to enforce any and all of such rights. All rights
and remedies provided for herein shall be cumulative and in addition to any
other rights or remedies such parties may have at law or in equity. Any party
hereto may employ any of the remedies available to it with respect to any of its
rights hereunder without prejudice to the use by it in the future of any other
remedy with respect to any of such rights. No person, firm or corporation, other
than the parties hereto and Polo, shall be deemed to have acquired any rights by
reason of anything contained in this Agreement.
9.4 The Design Partnership may assign its right to receive
compensation under this Agreement and, in addition, this
<PAGE>
<PAGE>
14
Agreement may be assigned by the Design Partnership to a corporation,
partnership or joint venture, or any other such entity, to which the right to
own or use the Trademarks has been assigned, or to an affiliate of any such
entity, subject to the Company's rights hereunder. The Company may not assign
its rights and obligations under this Agreement without the prior written
consent of the Design Partnership.
9.5 The Company will comply with all laws, rules, regulations and
requirements of any governmental body which may be applicable to the operations
of the Company contemplated hereby, including, without limitation, as they
relate to the manufacture, distribution, sale or promotion of Licensed Products,
notwithstanding the fact that the Design Partnership may have approved such item
or conduct.
9.6 This Agreement shall be binding upon and inure to the benefit
of the successors, heirs and permitted assigns of the parties hereto.
9.7 This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, applicable to contracts made and
to be wholly performed therein without regard to its conflicts of law rules.
9.8 If any dispute between the parties leads to litigation, the
parties agree that the courts of the State of New York in the City of New York,
or the federal courts in that City, shall have the exclusive jurisdiction and
venue over such litigation. All parties consent to personal jurisdiction in the
State of New York, and agree to accept service of process outside of the State
of New York as if service had been made in that state. Any claim by the Company
arising hereunder shall be asserted by the Company exclusively against the
Design Partnership, and the Company shall not have nor claim to have any
recourse for any such claim against any general or limited partner of the Design
Partnership.
9.9 In the event of a breach or threatened breach of this
Agreement by the Company, the Design Partnership shall have the right, without
the necessity of proving any actual damages, to obtain temporary or permanent
injunctive or mandatory relief in a court of competent jurisdiction, it being
the intention of-the parties that this Agreement be specifically enforced to the
maximum extent permitted by law.
9.10 Provisions of this Agreement are severable, and if any
provision shall be held invalid or unenforceable in whole or in part in any
jurisdiction, then such invalidity or unenforceability shall affect only such
provision, or part thereof, in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction, or any other provision in this
Agreement in any jurisdiction. To the extent legally permissible, an arrangement
which reflects the original intent of
<PAGE>
<PAGE>
15
the parties shall be substituted for such invalid or unenforceable provision. As
of the effective date hereof, this agreement supersedes the agreement dated as
of July 1, 1995 between the Company and the Design Partnership, but neither the
Company nor the Design Partnership waives any rights arising under such prior
agreement. The Company shall not be required to seek the Design Partnership's
approval with respect to any Licensed Products or other materials approved by
the Design Partnership pursuant to the prior agreement solely as a result of the
execution of this Agreement.
9.11 The paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.12 This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement or caused the same to be executed by a duly authorized officer as of
the day and year first above written.
POLO RALPH LAUREN ENTERPRISES, L.P.
By: Polo Ralph Lauren Corporation,
General Partner
By:
______________________________
WARNACO INC.
By:
______________________________
<PAGE>
<PAGE>
EXHIBIT 11.1
THE WARNACO GROUP, INC.
CALCULATION OF INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------ ------------------------
OCTOBER 4, OCTOBER 5, OCTOBER 4, OCTOBER 5,
1997 1996 1997 1996
---------- ---------- ---------- ----------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net income (loss).............................. $32,081 $5,811 $67,362 $(32,454)
------- ------ ------- --------
------- ------ ------- --------
Weighted average number of shares outstanding
during the period:
Shares outstanding during the period...... 50,130,376 49,729,964 49,770,781 49,421,416
Restricted shares issued during the
period.................................. -- -- 68,939 88,015
Shares issued due to exercise of
options................................. 92,863 24,038 184,346 85,496
Add: common equivalent shares using the
treasury stock method................... 5,157,242 3,889,143 4,969,650 4,180,441
Less: treasury stock...................... (750,912) (286,600) (683,175) (286,600)
---------- ---------- ---------- ----------
Weighted average number of shares.............. 54,629,569 53,356,545 54,310,541 53,488,768
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share........................... $0.59 $0.11 $1.24 $(0.61)
----- ----- ----- -------
----- ----- ----- -------
</TABLE>
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE FINANCIAL STATEMENTS OF THE WARNACO GROUP, INC. FOR THE NINE
MONTHS ENDED OCTOBER 4, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-START> JAN-04-1997
<PERIOD-END> OCT-04-1997
<CASH> 11,685
<SECURITIES> 0
<RECEIVABLES> 279,085
<ALLOWANCES> 7,121
<INVENTORY> 530,751
<CURRENT-ASSETS> 855,895
<PP&E> 235,119
<DEPRECIATION> 100,069
<TOTAL-ASSETS> 1,383,489
<CURRENT-LIABILITIES> 287,983
<BONDS> 561,172
0
0
<COMMON> 580
<OTHER-SE> 522,392
<TOTAL-LIABILITY-AND-EQUITY> 1,383,489
<SALES> 875,143
<TOTAL-REVENUES> 875,143
<CGS> 559,093
<TOTAL-COSTS> 559,093
<OTHER-EXPENSES> 174,719
<LOSS-PROVISION> 682
<INTEREST-EXPENSE> 31,999
<INCOME-PRETAX> 108,650
<INCOME-TAX> 41,288
<INCOME-CONTINUING> 67,362
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,362
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.24
</TABLE>
