Exhibit 99.2
POST-PETITION LOAN AND SECURITY AGREEMENT
Dated as of December 29, 1999
Among
THE FINANCIAL INSTITUTIONS NAMED HEREIN
AS THE LENDERS
and
BANK OF AMERICA, N.A.
AS THE AGENT
and
FRUIT OF THE LOOM, INC.
AS THE BORROWER
and
FRUIT OF THE LOOM, LTD.
and certain of the
DOMESTIC SUBSIDIARIES OF FRUIT OF THE LOOM, INC.
AS GUARANTORS
TABLE OF CONTENTS
Section PAGE
------- ----
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT................................................................2
1.1 Definitions.....................................................................................2
1.2 Accounting Terms...............................................................................28
1.3 Interpretive Provisions........................................................................28
ARTICLE 2 LOANS AND LETTERS OF CREDIT....................................................................29
2.1 Total Facility.................................................................................29
2.2 Revolving Loans................................................................................29
2.3 Term Loan......................................................................................36
2.4 Letters of Credit..............................................................................36
2.5 Bank Products..................................................................................43
ARTICLE 3 INTEREST AND FEES..............................................................................43
3.1 Interest.......................................................................................43
3.2 Continuation and Conversion Elections..........................................................44
3.3 Maximum Interest Rate..........................................................................45
3.4 Facility Fee...................................................................................46
3.5 Unused Line Fee................................................................................46
3.6 Letter of Credit Fee...........................................................................46
3.7 Syndication Fee................................................................................46
3.8 Administration Fee.............................................................................46
ARTICLE 4 PAYMENTS AND PREPAYMENTS.......................................................................47
4.1 Revolving Loans................................................................................47
4.2 Termination of Facility........................................................................47
4.3 Repayment of the Term Loan.....................................................................47
4.4 Voluntary Prepayments of the Term Loan.........................................................47
4.5 Mandatory Prepayments of the Loans.............................................................47
4.6 Payments by the Borrower.......................................................................48
4.7 Payments as Revolving Loans....................................................................49
4.8 Apportionment, Application and Reversal of Payments............................................49
4.9 Indemnity for Returned Payments................................................................50
4.10 Agent's and Lenders'Books and Records; Monthly Statements......................................50
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY.........................................................51
5.1 Taxes..........................................................................................51
5.2 Illegality.....................................................................................52
5.3 Increased Costs and Reduction of Return........................................................52
i
Section PAGE
------- ----
5.4 Funding Losses.................................................................................53
5.5 Inability to Determine Rates...................................................................53
5.6 Certificates of Lenders........................................................................53
5.7 Survival.......................................................................................54
5.8 Change of Office...............................................................................54
ARTICLE 6 COLLATERAL.....................................................................................54
6.1 Grant of Security Interest.....................................................................54
6.2 Perfection and Protection of Security Interest.................................................55
6.3 Location of Collateral.........................................................................56
6.4 Title to, Liens on, and Sale and Use of Collateral.............................................57
6.5 Appraisals.....................................................................................57
6.6 Access and Examination; Confidentiality; Consent to Advertising................................57
6.7 Collateral Reporting...........................................................................58
6.8 Accounts.......................................................................................59
6.9 Collection of Accounts; Payments...............................................................60
6.10 Inventory; Records.............................................................................61
6.11 Equipment......................................................................................61
6.12 Assigned Contracts.............................................................................62
6.13 Documents, Instruments, and Chattel Paper......................................................63
6.14 Right to Cure..................................................................................63
6.15 Power of Attorney..............................................................................63
6.16 The Agent's and Lenders'Rights, Duties and Liabilities.........................................64
6.17 Site Visits, Observations and Testing..........................................................64
6.18 Security Interest in Collateral................................................................65
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES..............................................65
7.1 Books and Records..............................................................................65
7.2 Financial Information..........................................................................66
7.3 Notices to the Lenders.........................................................................68
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS.........................................................70
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........71
8.2 Validity and Priority of Security Interest.....................................................71
8.3 Organization and Qualification.................................................................71
8.4 Corporate Name; Prior Transactions.............................................................71
8.5 Subsidiaries and Affiliates....................................................................71
8.6 Financial Statements and Projections...........................................................72
8.7 Capitalization.................................................................................72
8.8 Debt...........................................................................................72
8.9 Distributions..................................................................................72
ii
Section PAGE
------- ----
8.10 Title to Property..............................................................................72
8.11 Real Estate; Leases............................................................................73
8.12 Proprietary Rights.............................................................................73
8.13 Trade Names....................................................................................73
8.14 Litigation.....................................................................................73
8.15 Restrictive Agreements.........................................................................73
8.16 Labor Disputes.................................................................................73
8.17 Environmental Laws.............................................................................74
8.18 No Violation of Law............................................................................75
8.19 No Default.....................................................................................75
8.20 ERISA Compliance...............................................................................75
8.21 Taxes..........................................................................................75
8.22 Regulated Entities.............................................................................75
8.23 Use of Proceeds; Margin Regulations............................................................76
8.24 Copyrights, Patents, Trademarks and Licenses, etc..............................................76
8.25 Year 2000 Compliance...........................................................................76
8.26 Full Disclosure................................................................................76
8.27 Material Agreements............................................................................76
8.28 Bank Accounts..................................................................................77
8.29 Governmental Authorization.....................................................................77
8.30 Guarantors.....................................................................................77
8.31 The Orders.....................................................................................77
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................77
9.1 Taxes and Other Obligations....................................................................77
9.2 Corporate Existence and Good Standing..........................................................78
9.3 Compliance with Law and Agreements; Maintenance of Licenses....................................78
9.4 Maintenance of Property........................................................................78
9.5 Insurance......................................................................................78
9.6 Condemnation...................................................................................79
9.7 Environmental Laws.............................................................................80
9.8 Compliance with ERISA..........................................................................81
9.9 Mergers, Consolidations or Sales...............................................................81
9.10 Distributions; Capital Change; Restricted Investments..........................................81
9.11 Transactions Affecting Collateral or Obligations...............................................81
9.12 Guaranties.....................................................................................81
9.13 Debt...........................................................................................81
9.14 Prepayment.....................................................................................82
9.15 Transactions with Affiliates...................................................................82
9.16 Investment Banking and Finder's Fees...........................................................82
9.17 Intentionally omitted..........................................................................82
9.18 Business Conducted.............................................................................82
9.19 Liens and Reclamation Claims...................................................................82
9.20 Sale and Leaseback Transactions................................................................82
iii
Section PAGE
------- ----
9.21 New Subsidiaries...............................................................................83
9.22 Fiscal Year....................................................................................83
9.23 Capital Expenditures...........................................................................83
9.24 Intentionally Omitted..........................................................................83
9.25 EBITDAR........................................................................................83
9.26 Use of Proceeds................................................................................84
9.27 Further Assurances.............................................................................84
9.28 Chapter 11 Claims..............................................................................84
9.29 Orders; Payment of Claims......................................................................84
ARTICLE 10 CONDITIONS OF LENDING..........................................................................85
10.1 Conditions Precedent to Making of Loans on the Closing Date....................................85
10.2 Conditions Precedent to Each Loan..............................................................87
ARTICLE 11 DEFAULT; REMEDIES..............................................................................88
11.1 Events of Default..............................................................................88
11.2 Remedies.......................................................................................91
ARTICLE 12 TERM AND TERMINATION...........................................................................93
12.1 Term and Termination...........................................................................93
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS....................................94
13.1 Amendments and Waivers.........................................................................94
13.2 Assignments; Participations....................................................................95
ARTICLE 14 THE AGENT......................................................................................97
14.1 Appointment and Authorization..................................................................97
14.2 Delegation of Duties...........................................................................97
14.3 Liability of Agent.............................................................................97
14.4 Reliance by Agent..............................................................................98
14.5 Notice of Default..............................................................................98
14.6 Credit Decision................................................................................98
14.7 Indemnification................................................................................99
14.8 Agent in Individual Capacity...................................................................99
14.9 Successor Agent................................................................................99
14.10 Withholding Tax................................................................................97
14.11 Co-Agents.....................................................................................101
14.12 Collateral Matters............................................................................101
14.13 Restrictions on Actions by Lenders; Sharing of Payments.......................................102
14.14 Agency for Perfection.........................................................................103
iv
Section PAGE
------- ----
14.15 Payments by Agent to Lenders..................................................................103
14.16 Concerning the Collateral and the Related Loan Documents......................................103
14.17 Field Audit and Examination Reports; Disclaimer by Lenders....................................104
14.18 Relation Among Lenders........................................................................104
ARTICLE 15 MISCELLANEOUS.................................................................................104
15.1 No Waivers; Cumulative Remedies...............................................................104
15.2 Severability..................................................................................105
15.3 Governing Law; Choice of Forum; Service of Process............................................105
15.4 WAIVER OF JURY TRIAL..........................................................................106
15.5 Survival of Representations and Warranties....................................................106
15.6 Other Security and Guaranties.................................................................106
15.7 Fees and Expenses.............................................................................106
15.8 Notices.......................................................................................107
15.9 Waiver of Notices.............................................................................108
15.10 Binding Effect................................................................................108
15.11 Indemnity of the Agent and the Lenders by the Borrower and each Guarantor.....................109
15.12 Limitation of Liability.......................................................................109
15.13 Final Agreement...............................................................................110
15.14 Counterparts..................................................................................110
15.15 Captions......................................................................................110
15.16 Right of Setoff...............................................................................110
15.17 Joint and Several Liability...................................................................110
15.18 Waivers and Releases..........................................................................111
v
EXHIBITS AND SCHEDULES
EXHIBIT A - TERM NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - NOTICE OF BORROWING
EXHIBIT E - NOTICE OF CONVERSION/CONTINUATION
EXHIBIT F - INTERIM ORDER
EXHIBIT G - FINAL ORDER
EXHIBIT H - FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
SCHEDULE 1.1 - COMMITMENTS
SCHEDULE 1.2 - CONTRACTS
SCHEDULE 6.3 - LOCATIONS
SCHEDULE 8.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 8.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.8 - DEBT
SCHEDULE 8.11 - REAL ESTATE; LEASES
SCHEDULE 8.12 - PROPRIETARY RIGHTS
SCHEDULE 8.13 - TRADE NAMES
SCHEDULE 8.14 - LITIGATION
SCHEDULE 8.16 - LABOR DISPUTES
SCHEDULE 8.17 - ENVIRONMENTAL LAW
SCHEDULE 8.20 - ERISA COMPLIANCE
SCHEDULE 8.27 - MATERIAL AGREEMENTS
SCHEDULE 8.28 - BANK ACCOUNTS
i
SCHEDULE 8.30 - INACTIVE DOMESTIC SUBSIDIARIES
SCHEDULE 9.15 - TRANSACTIONS WITH AFFILIATES
SCHEDULE 11.1(p) - IRB properties; IRb claimants
2
POST-PETITION LOAN AND SECURITY AGREEMENT
Post-Petition Loan and Security Agreement, dated as of December 29,
1999, among the financial institutions listed on Schedule 1.1 hereto (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a "Lender" and collectively as
the "Lenders"), Bank of America, N.A. with an office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, as agent for the Lenders (in its capacity as
agent, the "Agent"), Fruit of the Loom, Inc., a Delaware corporation, with
offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the
"Borrower"), and certain of the Domestic Subsidiaries of the Borrower and Fruit
of the Loom, Ltd., a Cayman Islands corporation (collectively, the
"Guarantors"), each of which is a debtor and debtor-in-possession in a case
pending under chapter 11 of the Bankruptcy Code (the cases of the Borrowers
each, a "Bankruptcy Case" and, collectively the "Bankruptcy Cases").
W I T N E S S E T H:
WHEREAS, on December 29, 1999, the Borrower and the Guarantors filed
voluntary petitions with the Bankruptcy Court initiating the Bankruptcy Cases;
WHEREAS, the Borrower and the Guarantors have continued in the
possession of their respective assets and in the management of their respective
businesses as debtors-in-possession pursuant to sections 1107 and 1108 of the
Bankruptcy Code;
WHEREAS, the Borrower and the Guarantors have requested the Lenders to
make available to the Borrower a revolving line of credit for loans and letters
of credit in an amount not to exceed $475,000,000 and to make a term loan to the
Borrower in the aggregate principal amount of $150,000,000, which extensions of
credit the Borrower will use for the working capital needs and general business
purposes of the Borrower and the Guarantors and for other purposes not
prohibited by the terms hereof;
WHEREAS, to provide security for the repayment of the loans and letters
of credit made available pursuant hereto and payment of the other obligations of
the Borrower and the Guarantors under the Loan Documents, the Borrower and the
Guarantors have agreed to provide the Agent and the Lenders with the following:
(a) with respect to the obligations of the Borrower and the
Guarantors hereunder and under the other Loan Documents, an allowed
administrative expense claim in each of the Bankruptcy Cases pursuant
to section 364(c)(1) of the Bankruptcy Code having priority over all
administrative expenses of the kind specified in sections 503(b),
507(b) and 546(c) of the Bankruptcy Code;
(b) upon and after the entry of the Interim Order pursuant to
Section 364(d)(1) of the Bankruptcy Code, a first priority, senior,
priming, perfected Lien upon all right, title and interest of the
Borrower and the Guarantors in, to and under all property of any kind
(other than Avoidance Recoveries) owned by any or all of the Borrower
and the
1
Guarantors that on the Petition Date is subject to a Lien securing any
obligations other than the Obligations; and
(c) pursuant to Section 364(c)(2) of the Bankruptcy Code, a
first priority, perfected Lien upon all right, title and interest of
the Borrower and the Guarantors in, to and under all Collateral that is
not otherwise encumbered on the Petition Date by a validly perfected
Lien;
WHEREAS, all of the claims and Liens granted in the Bankruptcy Cases to
the Agent and the Lenders shall be subject to the Carve-Out to the extent
provided in SECTION 6.18(c);
WHEREAS, the Lenders have agreed to make available to the Borrower a
revolving credit facility and term loan upon the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lenders, the Agent, and the
Borrower and Guarantors hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 DEFINITIONS. As used herein:
"ACCOUNTS" means all of the Borrower's and the Guarantors' now
owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
"ACCOUNT DEBTOR" means each Person obligated in any way on or
in connection with an Account.
"ACH TRANSACTIONS" means any cash management or related
services including the automatic clearing house transfer of funds by the Bank
for the account of the Borrower pursuant to agreement or overdrafts.
"ADEQUATE PROTECTION ORDER" shall mean the Order regarding use
of cash collateral and adequate protection with respect to the Pre-Petition
Secured Indebtedness.
"ADJUSTED NET EARNINGS FROM OPERATIONS" means, with respect to
any fiscal period of the Borrower, the Borrower's and the Guarantors' net income
on a consolidated basis after provision for income taxes for such fiscal period,
as determined in accordance with GAAP and reported on the Financial Statements
for such period, excluding any and all of the following included in such net
income: (a) gain or loss arising from the sale of any capital assets, business
unit or line of business; (b) gain arising from any write-up in the book value
of any asset; (c) loss
2
arising from any write-down of Fixed Assets and severance costs in connection
with plant closings; (d) earnings or losses of any Person, substantially all
the assets of which have been acquired by the Borrower or any Guarantor in
any manner, to the extent realized by such other Person prior to the date of
acquisition; (e) earnings of any Person to which assets of the Borrower or
any Guarantor shall have been sold, transferred or disposed of, or into which
the Borrower or any Guarantor shall have been merged, or which has been a
party with the Borrower or any Guarantor to any consolidation or other form
of reorganization, prior to the date of such transaction; (f) gain or loss
arising from the acquisition of debt or equity securities of the Borrower or
any Guarantor or from cancellation or forgiveness of Debt; and (g) gain or
loss arising from any extraordinary item, as determined in accordance with
GAAP.
"ADMINISTRATION FEE" has the meaning specified in Section 3.8.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, five percent
(5%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
"AGENT" means the Bank, solely in its capacity as agent for
the Lenders, and any successor agent.
"AGENT ADVANCES" has the meaning specified in SECTION 2.2(i).
"AGENT'S LIENS" means the Liens in the Collateral granted to
the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this
Agreement and the other Loan Documents.
"AGENT-RELATED PERSONS" means the Agent, together with its
Affiliates, and the officers, directors, employees, agents and attorneys-in-fact
of the Agent and such Affiliates.
"AGGREGATE REVOLVER OUTSTANDINGS" means, at any date of
determination: the sum of (a) the unpaid balance of Revolving Loans; (b) without
duplication of the amount referred to in clause (a), the aggregate amount of
Pending Revolving Loans; (c) one hundred percent (100%) of the aggregate undrawn
face amount of all outstanding Letters of Credit; and (d) the aggregate amount
of any unpaid reimbursement obligations in respect of Letters of Credit.
"AGREEMENT" means this Loan and Security Agreement.
"ANNIVERSARY DATE" means each anniversary of the Closing Date.
"APPLICABLE MARGIN" means
(i) with respect to Base Rate Loans and all other Obligations
(other than LIBOR Rate Loans), 1.00% per annum; and
3
(ii) with respect to LIBOR Loans, 2.50% per annum.
"ASSIGNED CONTRACTS" means, collectively, all of the Borrower's
and the Guarantors' rights and remedies under, and all moneys and claims for
money due or to become due to the Borrower or any Guarantor under those
contracts set forth on SCHEDULE 1.2, and any other material contracts, and
any and all amendments, supplements, extensions, and renewals thereof
including all rights and claims of the Borrower or any Guarantor now or
hereafter existing: (i) under any insurance, indemnities, warranties, and
guarantees provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for breach or
default under or in connection with any of the foregoing contracts ; (iii) to
all other amounts from time to time paid or payable under or in connection
with any of the foregoing agreements; or (iv) to exercise or enforce any and
all covenants, remedies, powers and privileges thereunder.
"ASSIGNEE" has the meaning specified in SECTION 13.2(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in
SECTION 13.2(a).
"ATTORNEY COSTS" means and includes all reasonable fees,
expenses and disbursements of any law firm or other counsel engaged by the
Agent, the reasonably allocated non-duplicative costs of internal legal services
of the Agent and the reasonable expenses of internal counsel to the Agent.
"AVAILABILITY" means, at any time, (a) the Borrowing Base MINUS
(b) the Aggregate Revolver Outstandings.
"AVOIDANCE RECOVERIES" means recoveries by the Borrower or any
Guarantor as a result of preferences, fraudulent conveyances and other avoidance
powers or claims arising under Sections 544, 546, 547, 548, 549, 550 or 553 of
the Bankruptcy Code, other than any such recovery with respect to the
Securitization Arrangement.
"BANK" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"BANK PRODUCTS" means any one or more of the following types
of services or facilities extended to the Borrower by the Bank or any affiliate
of the Bank in reliance on the Bank's agreement to indemnify such affiliate: (i)
credit cards; (ii) ACH Transactions; and (iii) Hedge Agreements.
"BANK PRODUCT RESERVES" means all reserves which the Agent
from time to time establishes in its reasonable discretion for the Bank Products
then outstanding.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. ss. 101 ET SEQ.).
"BANKRUPTCY COURT" means the United States Bankruptcy Court
for the District of Delaware, or any other court having jurisdiction over the
Bankruptcy Cases from time to time,
4
including, without limitation, the United States District Court for the
District of Delaware if and to the extent it withdraws the reference with
respect to the Bankruptcy Cases, any part thereof, or any matter or
proceeding therein.
"BASE RATE" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by the Bank in
Charlotte, North Carolina as its "prime rate" (the "prime rate" being a rate
set by the Bank based upon various factors including the Bank's costs and
desired return, general economic conditions and other factors, and is used as
a reference point for pricing some loans, which may be priced at, above, or
below such announced rate). Any change in the prime rate announced by the
Bank shall take effect at the opening of business on the day specified in the
public announcement of such change. Each Interest Rate based upon the Base
Rate shall be adjusted simultaneously with any change in the Base Rate.
"BASE RATE LOANS" means, collectively, the Base Rate Revolving
Loans and the Base Rate Term Loans.
"BASE RATE REVOLVING LOAN" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"BASE RATE TERM LOAN" means any portion of the Term Loan
during any period in which such portion bears interest based on the Base Rate.
"BLOCKED ACCOUNT AGREEMENT" means an agreement among the
Borrower, the Agent and a Clearing Bank, in form and substance reasonably
satisfactory to the Agent, concerning the collection of payments which represent
the proceeds of Accounts or of any other Collateral, which agreements may
consist of existing blocked account agreements with Agent, amended to refer to
this Agreement.
"BORROWING" means a borrowing hereunder consisting of
Revolving Loans or the Term Loan made on the same day by the Lenders to the
Borrower or by Bank in the case of a Borrowing funded by Non-Ratable Loans or by
the Agent in the case of a Borrowing consisting of an Agent Advance, or the
issuance of Letters of Credit hereunder.
"BORROWING BASE" means, at any time, an amount equal to (a) the
lesser of (i) the Maximum Revolver Amount or (ii) the sum of (A) eighty-five
percent (85%) of the Net Amount of Eligible Accounts; plus (B) sixty-five
percent (65%) of the book value of Eligible Inventory consisting of finished
goods (valued at the lower of FIFO cost or market); plus (C) fifty percent
(50%) of the book value of Eligible Inventory consisting of raw materials and
work-in-process (valued at the lower of FIFO cost or market); MINUS (b) the
sum of (i) the Bank Product Reserves, (ii) reserves for unpaid professional
fees and expenses for two months set forth in the Fee Budget (including one
statutory committee approved in the Bankruptcy Cases), and (iii) all other
reserves which the Agent deems necessary in the exercise of its reasonable
credit judgment to maintain with respect to the Borrower's account after
giving notice thereof to the Borrower, including reserves for any amounts
which the Agent or any Lender may be obligated to pay in the future for the
account of the Borrower or any Guarantor. For purposes of calculating
Availability, Revolving Loans shall be deemed to be advanced, first, against
Eligible Accounts
5
and, second, against Eligible Inventory. Aggregate Revolving Loans advanced
against Eligible Inventory shall not exceed $375,000,000.
"BORROWING BASE CERTIFICATE" means a certificate by a
Responsible Officer of the Borrower, substantially in the form of EXHIBIT B
(or another form reasonably acceptable to the Agent) setting forth the
calculation of the Borrowing Base, including a calculation of each component
thereof, all in such detail as shall be reasonably satisfactory to the Agent.
All calculations of the Borrowing Base in connection with the preparation of
any Borrowing Base Certificate shall originally be made by the Borrower and
certified to the Agent; provided, that the Agent shall have the right to
review and adjust, in the exercise of its reasonable credit judgment, any
such calculation after giving notice thereof to the Borrower, (1) to reflect
its reasonable estimate of declines in value of any of the Collateral
described therein, and (2) to the extent that such calculation is not in
accordance with this Agreement.
"BUSINESS DAY" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Chicago, Illinois or Charlotte, North
Carolina are required or permitted to be closed, and (b) with respect to all
notices, determinations, fundings and payments in connection with the LIBOR
Rate or LIBOR Rate Loans, any day that is a Business Day pursuant to CLAUSE
(a) above and that is also a day on which trading in Dollars is carried on by
and between banks in the London interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CAPITAL EXPENDITURES" means all payments made in respect of
the cost of any fixed asset or improvement, or replacement, substitution, or
addition thereto, which has a useful life of more than one year, including,
without limitation, those costs arising in connection with the direct or
indirect acquisition of such asset by way of increased product or service
charges or in connection with a Capital Lease, but excluding payments made
with respect to the Synthetic Lease.
"CAPITAL LEASE" means any lease of property by the Borrower or
any Guarantor which, in accordance with GAAP, should be reflected as a
capital lease on the balance sheet of Borrower or such Guarantor.
"CARVE-OUT" has the meaning set forth in SECTION 6.18(c).
"CARVE-OUT EVENT" has the meaning set forth in SECTION 6.18(c).
"CHANGE OF CONTROL" means any of the following: (a) any Person
or group of Persons (within the meaning of the Securities and Exchange Act of
1934, as amended) shall have acquired beneficial ownership (within the
meaning of Rule 13d-3 promulgated by the Securities and Exchange Commission
under the Securities and Exchange Act of 1934, as amended) of 50.1% or more
of the issued and outstanding shares of capital stock of Parent having the
right to
6
vote for the election of directors of Parent under ordinary circumstances;
(b) any Person or group of Persons (as defined above) shall have acquired
beneficial ownership (as defined above) of 40% or more of the outstanding
capital stock of Parent and shall direct the management or policies of Parent
or Borrower; (c) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Parent (together with any new directors whose election by the
board of directors of Parent or whose nomination for election by the
Stockholders of Parent was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; and (d) Parent ceases to own and
control all of the economic and voting rights associated with all of the
outstanding capital stock of Borrower other than convertible preferred stock
of the Borrower outstanding as of the date hereof.
"CLEARING BANK" means the Bank, Bank One or any other banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"CLOSING DATE" means the first Business Day on which the
Conditions in Section 10 have been met.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute, and regulations promulgated
thereunder.
"COLLATERAL" has the meaning specified in SECTION 6.1.
"COMMITMENT" means, at any time with respect to a Lender, the
principal amount set forth beside such Lender's name under the heading
"COMMITMENT" on Schedule 1.1 hereto or on the signature page of the
Assignment and Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of SECTION 13.2, as such
Commitment may be adjusted from time to time in accordance with the
provisions of SECTION 13.2, and "COMMITMENTS" means, collectively, the
aggregate amount of the commitments of all of the Lenders.
"CONTAMINANT" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or
petroleum-derived substance or waste, asbestos in any form or condition,
polychlorinated biphenyls ("PCBs"), or any constituent of any such substance
or waste, other than insignificant amounts of such substances maintained or
used in compliance with the Environmental Laws.
"CREDIT SUPPORT" has the meaning specified in SECTION 2.4(a).
"DEBT" means, without duplication, all liabilities, obligations
and indebtedness of the Borrower or any Guarantor to any Person, of any kind
or nature, now or hereafter owing, arising, due or payable, howsoever
evidenced, created, incurred, acquired or owing, whether primary, secondary,
direct, contingent, fixed or otherwise, and including, without in any way
limiting the generality of the foregoing: (i) the Borrower's and each
Guarantor's liabilities and
7
obligations to trade creditors; (ii) all Obligations; (iii) all obligations
and liabilities of any Person secured by any Lien on the Borrower's or any
Guarantor's property, even though the Borrower or such Guarantor shall not
have assumed or become liable for the payment thereof; PROVIDED, HOWEVER,
that all such obligations and liabilities which are limited in recourse to
such property shall be included in Debt only to the extent of the book value
of such property as would be shown on a balance sheet of the Borrower or the
applicable Guarantor prepared in accordance with GAAP as of the date of such
valuation; (iv) all obligations or liabilities created or arising under any
Capital Lease or conditional sale or other title retention agreement with
respect to property used or acquired by the Borrower, even if the rights and
remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; PROVIDED, HOWEVER, that all such obligations
and liabilities which are limited in recourse to such property shall be
included in Debt only to the extent of the book value of such property as
would be shown on a balance sheet of the Borrower or the applicable Guarantor
prepared in accordance with GAAP as of any date of determination; (v) all
obligations of the Borrower or any Guarantor under any synthetic lease,
including the Synthetic Lease (and regardless of whether such amounts would
be classified as debt in accordance with GAAP); and (vi) without duplication,
all obligations and liabilities under Guaranties.
"DEBT FOR BORROWED MONEY" means, as to any Person, Debt for
borrowed money or as evidenced by notes, bonds, debentures or similar
evidences of any such Debt of such Person, the deferred and unpaid purchase
price of any property or business (other than trade accounts payable incurred
in the ordinary course of business and constituting current liabilities), all
obligations under Capital Leases and all obligations under synthetic leases,
including the Synthetic Lease.
"DEFAULT" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"DEFAULTED ACCOUNT" means an Account: (a) as to which any
payment, or part thereof, remains unpaid for more than sixty (60) days from
the original due date for such payment or remains unpaid for more than thirty
(30) days from the due date for such Account if the due date for such Account
was thirty-one (31) to one hundred eighty (180) days after the original
invoice date, (b) with regard to the Account Debtor of which a matured or
unmatured Event of Bankruptcy has occurred or (c) which has been written off
as uncollectible by the Borrower or the applicable Guarantor or which,
consistent with the credit and collection policies of the Borrower should be
written off as uncollectible.
"DEFAULTING LENDER" has the meaning specified in SECTION
2.2(g)(ii).
"DEFAULT RATE" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate PLUS
(b) two percent (2%) per annum. Each Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate. In addition,
with respect to Letters of Credit, the Default Rate shall mean an increase in
the Letter of Credit Fee by two (2) percentage points.
8
"DISTRIBUTION" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in
respect of capital stock (or any options or warrants for such stock) of such
corporation, other than distributions in capital stock (or any options or
warrants for such stock) of the same class; or (b) the redemption or other
acquisition by such corporation of any capital stock (or any options or
warrants for such stock) of such corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"DOLLAR" and "$" means dollars in the lawful currency of the
United States.
"DOMESTIC SUBSIDIARIES" has the meaning specified in Section
8.30.
"EBITDAR" means, with respect to any fiscal period of the
Borrower and the Guarantors, Adjusted Net Earnings from Operations, PLUS, to
the extent deducted in the determination of Adjusted Net Earnings from
Operations for that fiscal period, interest expenses, Federal, state, local
and foreign income taxes for such period, depreciation, amortization and
Restructuring Expenses.
"ELIGIBLE ACCOUNT" means an Account owned by the Borrower or
any Subsidiary Guarantor that the Agent in the exercise of its reasonable
commercial discretion determines to be an Eligible Account; provided,
however, that notwithstanding any other provision of this definition
(including, without limitation, the general guidance provided by clause (p)
below) or this Agreement to the contrary, the decision as to whether any
Account Debtor is creditworthy and the extent to which (if at all) an Account
of such Account Debtor may be included among Eligible Accounts shall be made
by the Agent and, when the Agent is so directed, the Majority Lenders in the
exercise of the Agent's and the Majority Lenders' reasonable commercial
judgment. Without limiting the discretion of the Agent to establish other
criteria of eligibility, at any time of determination thereof, an Eligible
Account shall be limited to the unpaid portion (valued in Dollars) of the Net
Amount of Eligible Accounts, net of limits and deductions provided for by the
Agent in its reasonable commercial judgment. Also without limiting the
discretion of the Agent to establish other criteria of eligibility, Eligible
Accounts shall, unless the Agent in its reasonable commercial discretion
determines to the contrary, include an Account:
(a) which represents a BONA FIDE obligation resulting from a
sale of goods and services in the ordinary course of business of the Borrower
or a Subsidiary Guarantor, such business to be the apparel and textile
business and businesses reasonably related thereto;
(b) which is an "account" as defined in the Uniform Commercial
Code as in effect in such jurisdiction;
(c) that is not of an Account Debtor with regard to which a
matured or unmatured Event of Bankruptcy has occurred;
(d) as to which no more than 50% of the unpaid balance of all
the Accounts owed by such Account Debtor are, at any time, Defaulted
Accounts; PROVIDED, HOWEVER, this
9
clause (d) shall not apply if the aggregate unpaid balance of all Accounts
owed by such Account Debtor does not exceed $100,000;
(e) except as provided in (d) above, is not a Defaulted Account;
(f) with regard to which the representations, warranties,
covenants, and agreements contained in Section 6.8 are true and correct;
(g) the granting of Agent's Lien does not contravene or
conflict with any law, rule or regulation or any contractual or other
restriction, limitation or encumbrance;
(h) which is denominated and payable only in Dollars or
Canadian Dollars;
(i) which arises under a contract that has been duly authorized
and that, together with such Account, is in full force and effect and
constitutes the legal, valid and binding obligation of the Account Debtor of
such Account enforceable against such Account Debtor in accordance with its
terms and is not subject to a reduction, cancellation, rebate or refund or
any dispute, offset, counterclaim or defense whatsoever (except the discharge
in bankruptcy of such Account Debtor prior to the occurrence thereof);
(j) which, together with the contract related thereto, conforms
in all material respects with any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating
to usury, truth in lending, fair credit billing, fair credit reporting, equal
credit opportunity, fair debt collection practices and privacy) and with
respect to which no party to the contract related thereto is in violation of
any such law, rule or regulation in any material respect if such violation
would impair the collectability of such Account;
(k) which arises under a contract (i) the performance of which
has been completed by the Borrower or the applicable Subsidiary Guarantor and
by all other parties thereto and accepted by the Account Debtor, to the
extent of the amount of the related Account, (ii) which has been invoiced by
the Borrower or the applicable Subsidiary Guarantor and (iii) which requires
such Account to be paid in full within thirty (30) days or less of the
original billing date therefor; PROVIDED, HOWEVER, that with respect to this
clause (iii), an Account, the contract with respect to which requires such
Account to be paid in full within not less than thirty one (31) days nor more
than one hundred eighty (180) days shall also be an Eligible Account, if,
when the unpaid balance of such Account is added to the aggregate unpaid
balance of all other Eligible Accounts payable in full within not less than
thirty one (31) days nor more than one hundred eighty (180) days, the
aggregate unpaid balance of all such Eligible Accounts does not exceed
fifteen percent (15%) of the aggregate unpaid principal balance of all
Eligible Accounts;
(l) as to which the Agent's first priority Lien has been
perfected under the applicable UCC or Bankruptcy Court order;
(m) the Account Debtor of which is not a government or a
governmental subdivision or agency, unless all rights of the Borrower or the
applicable Subsidiary Guarantor with respect to such account have been
assigned to the Agent for the ratable benefit of the Lenders and the Agent on
terms acceptable to the Agent pursuant to the Assignment of Claims
10
Act of 1940, as amended, or except as otherwise provided in this clause (m),
the perfection or enforceability of Agent's lien and Agent's right to obtain
direct payment of the Account is not governed by any statute other than the
UCC;
(n) which does not represent a progress billing (as hereinafter
defined) or as to which the Borrower or the applicable Subsidiary Guarantor
has extended the time for payment without the consent of the Agent; for the
purposes hereof "progress billing" means any invoice for goods sold or leased
or services rendered under a contract pursuant to which the Account Debtor's
obligation to pay such invoice is conditioned upon the Borrower's or the
applicable Subsidiary Guarantor's completion of any further performance under
the contract;
(o) not more than fifty percent (50%) of the aggregate Dollar
amount of outstanding Accounts owed at such time by the Account Debtor
thereon is classified as ineligible under the other criteria set forth herein
or otherwise established by the Agent;
(p) the Account is not owing by an Account Debtor whose
Accounts owing to the Borrower and the Subsidiary Guarantors in the aggregate
exceed in the aggregate the credit limit determined by Agent in its
reasonable commercial judgment, but only to the extent such Accounts exceed
such limit;
(q) neither the Borrower nor the applicable Subsidiary
Guarantor is indebted to the Account Debtor in any way, and the Account is
not subject to any right of setoff or recoupment by the Account Debtor,
unless the Account Debtor has entered into an agreement reasonably acceptable
to the Agent to waive setoff rights; or if the Account Debtor thereon has
disputed liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the extent of such
indebtedness, setoff, recoupment, dispute, or claim;
(r) the Account is not one which represents a sale on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval,
consignment, or other repurchase or return basis;
(s) the Account is not one which is evidenced by a promissory
note or other instrument or by chattel paper;
(t) the Agent believes, in the exercise of its reasonable
commercial judgment, that there is no impairment of the prospect of
collection of such Account or likelihood that the Account may not be paid by
reason of the Account Debtor's financial inability to pay;
(u) that is owing by an Account Debtor that is organized under
the laws of, and has its headquarters in, the United States or Canada or any
state or province thereof, excluding the province of Newfoundland and the
Northwest Territories and the Territory of Nunavut; and
(v) if the Account Debtor is located in any state requiring the
filing of a Notice of Business Activities Report or similar report in order
to permit the Borrower or the applicable Account Debtor to seek judicial
enforcement in such State of payment of such
11
Account, the Borrower or the applicable Account Debtor has qualified to do
business in such state or has filed a Notice of Business Activities Report or
equivalent report for the then current year.
If any Account at any time ceases to be an Eligible Account, then such
Account shall promptly be excluded from the calculation of Eligible Accounts.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank, commercial
finance company or other asset based lender, having total assets in excess of
$1,000,000,000; (b) any Lender listed on the signature page of this
Agreement; (c) any Affiliate of any Lender; and (d) if an Event of Default
has occurred and is continuing, any Person reasonably acceptable to the
Agent; provided that any Person which has contested any of Agent's Liens
shall not be an Eligible Assignee.
"ELIGIBLE INVENTORY" means Inventory, valued at the lower of
cost (on a first-in, first-out basis) or market, which the Agent, in its
reasonable discretion, determines to meet all of the following requirements:
(a) such Inventory is owned by the Borrower or one of the
Guarantors,
(b) such Inventory is subject to the Agent's Liens, which are
perfected as to such Inventory, and is subject to no other Lien whatsoever
(other than the Liens described in CLAUSE (D) of the definition of Permitted
Liens provided that such Permitted Liens (i) are junior in priority to the
Agent's Liens and (ii) do not impair directly or indirectly the ability of
the Agent to realize on or obtain the full benefit of the Collateral),
(c) such Inventory consists of finished goods, work-in-process,
or raw materials,
(d) such Inventory does not consist of supplies or shipping and
packing materials but may, in Agent's reasonable commercial judgment, include
shrink wrap and other packaging for finished goods,
(e) such Inventory is in good condition, not unmerchantable,
and meets all standards imposed by any Governmental Authority having
regulatory authority over such goods, their use or sale,
(f) such Inventory is currently either usable or salable, at
prices approximating at least cost, in the normal course of the Borrower's or
the applicable Guarantor's business, and is not slow moving or stale,
(g) such Inventory is not obsolete or repossessed or used goods
taken in trade,
(h) such Inventory is located within the United States or
Canada (and not in-transit from vendors or suppliers),
(i) if such Inventory is located in a public warehouse or in
possession of a bailee or in a facility leased by the Borrower or any
Guarantor, the warehouseman, or the bailee,
12
or the lessor has delivered to the Agent, if requested by the Agent, a
subordination agreement in form and substance satisfactory to the Agent,
(j) if such Inventory contains or bears any Proprietary Rights
licensed to the Borrower or any Guarantor by any Person, the Agent shall be
satisfied that it may sell or otherwise dispose of such Inventory in
accordance with ARTICLE 11 without infringing on the rights of the licensor
of such Proprietary Rights or violating any contract with such licensor (and
without payment of any royalties) and, if the Agent deems it necessary, the
Borrower or the applicable Guarantor shall deliver to the Agent a consent or
sublicense agreement from such licensor in form and substance acceptable to
the Agent, and
(k) such Inventory is not determined by the Agent in its
reasonable discretion, to be ineligible for any other reason.
If any Inventory at any time ceases to be Eligible Inventory,
such Inventory shall promptly be excluded from the calculation of Eligible
Inventory.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"EQUIPMENT" means all of the Borrower's and each Guarantor's
now owned and hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except
Inventory), including motor vehicles with respect to which a certificate of
title has been issued, aircraft, dies, tools, jigs, and office equipment, as
well as all of such types of property leased by the Borrower or any Guarantor
and all of the Borrower's and each Guarantor's rights and interests with
respect thereto under such leases (including, without limitation, options to
purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies
used or to be used in connection therewith, and all substitutes for any of
the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located. For purposes
of the definition of "Fixed Assets" as such term is used in the definition of
"Adjusted Net Earnings from Operations," the term "Equipment" shall also
include the items set forth above that are owned by Subsidiaries of the
Borrower and the Guarantors.
13
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code
for purposes of provisions relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a
Pension Plan, (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a
Multi-employer Plan is in reorganization, (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination under
Section 4041 or 4041A of ERISA, or the commencement of proceedings by the
PBGC to terminate a Pension Plan or Multi-employer Plan, (e) the occurrence
of an event or condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Pension Plan or Multi-employer
Plan, or (f) the imposition of any liability under Title IV of ERISA, other
than for PBGC premiums due but not delinquent under Section 4007 of ERISA,
upon the Borrower or any ERISA Affiliate.
"EVENT OF BANKRUPTCY" shall be deemed to have occurred with
respect to an Account Debtor if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Account Debtor, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up, or
composition or readjustment of debts of such Account Debtor, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for such Account Debtor or all or any substantial part of its assets, or
any similar action with respect to such Account Debtor under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, and such case or proceeding shall continue undismissed,
or unstayed and in effect, for a period of sixty (60) consecutive days; or an
order for relief in respect of such Account Debtor shall be entered in an
involuntary case under the federal bankruptcy laws or other similar laws now
or hereafter in effect; or
(b) such Account Debtor shall commence a voluntary case or
other proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) for, such Account Debtor or for any substantial part of its
property, or shall make any general assignment for the benefit of creditors,
or shall fail to, or admit in writing its inability to, pay its debts
generally as they become due, or, if a corporation or similar entity, its
board of directors shall vote to implement any of the foregoing.
14
"EVENT OF DEFAULT" has the meaning specified in SECTION 11.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FACILITY FEE" has the meaning specified in SECTION 3.4.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day; PROVIDED that (a) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next
succeeding Business Day, and (b) if no such rate is so published on such next
succeeding Business Day, the Federal Funds Rate for such day shall be the
average rate charged to the Bank on such day on such transactions as
determined by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"FEE BUDGET" means the amount set forth for professional fees
and disbursements expected to be incurred by the Borrower and the Guarantors
and one statutory committee in the Bankruptcy Cases as set forth in the
Projections.
"FINAL ORDER" has the meaning specified in SECTION 10.2(e).
"FINANCIAL STATEMENTS" means, according to the context in which
it is used, the financial statements referred to in SECTION 8.6 or any other
financial statements required to be given to the Lenders pursuant to this
Agreement.
"FISCAL MONTH" means any fiscal period ending on January 29,
2000, February 26, 2000, April 29, 2000, May 27, 2000, July 29, 2000, August
26, 2000, October 28, 2000, November 25, 2000, January 27, 2001, February 24,
2001, April 28, 2001 and May 26, 2001.
"FISCAL QUARTER" means any fiscal period ending on April 1,
2000, July 1, 2000, September 30, 2000, March 31, 2001 and June 30, 2001.
"FISCAL YEAR" means the Borrower's fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrower will end on
January 1, 2000.
"FIXED ASSETS" means the Equipment and Real Estate of the
Borrower, the Guarantors and, for purposes of the definition of "Adjusted Net
Earnings from Operations" only, their Subsidiaries.
15
"FOREIGN SUBSIDIARIES" means all subsidiaries of Borrower or
Parent other than Domestic Subsidiaries.
"FUNDING DATE" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and
practices set forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified
Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of comparable
stature and authority within the U.S. accounting profession), which are
applicable to the circumstances as of the Closing Date.
"GENERAL INTANGIBLES" means all of the Borrower's and each
Guarantor's now owned or hereafter acquired general intangibles, choses in
action and causes of action and all other intangible personal property of the
Borrower and each Guarantor of every kind and nature (other than Accounts),
including, without limitation, all contract rights, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks,
trade names, trade secrets, goodwill, copyrights, computer software, customer
lists, registrations, licenses, franchises, tax refund claims, any funds
which may become due to the Borrower or any Guarantor in connection with the
termination of any Plan or other employee benefit plan or any rights thereto
and any other amounts payable to the Borrower or any Guarantor from any Plan
or other employee benefit plan, rights and claims against carriers and
shippers, rights to indemnification, business interruption insurance and
proceeds thereof, property, casualty or any similar type of insurance and any
proceeds thereof, proceeds of insurance covering the lives of key employees
on which the Borrower or any Guarantor is beneficiary, and any letter of
credit, guarantee, claim, security interest or other security held by or
granted to the Borrower or the applicable Guarantor.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTY" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or
assure, or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the
"guaranteed obligations"), or assure or in effect assure the holder of the
guaranteed obligations against loss in respect thereof, including any such
obligations incurred through an agreement, contingent or otherwise: (a) to
purchase the guaranteed obligations or any property constituting security
therefor; (b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other balance
sheet condition; or (c) to lease property or to purchase any debt or equity
securities or other property or services.
"HEDGE AGREEMENT" means any and all transactions, agreements or
documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or
16
equity swap, cap, floor, collar, forward foreign exchange transaction,
currency swap, cross currency rate swap, currency option, or any combination
of, or option with respect to, these or similar transactions, for the purpose
of hedging the Borrower's exposure to fluctuations in interest or exchange
rates, loan, credit exchange, security or currency valuations or commodity
prices.
"INTERCOMPANY ACCOUNTS" means all assets and liabilities,
however arising, which are due to the Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by the Borrower
with any Affiliate of the Borrower, other than any Guarantor.
"INTEREST PERIOD" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan,
and ending on the date one, two, three or six months thereafter as selected
by the Borrower in its Notice of Borrowing, in the form attached hereto as
EXHIBIT D, or Notice of Continuation/Conversion, in the form attached hereto
as EXHIBIT E, provided that:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to
carry such Interest Period into another calendar month, in which event
such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
and
(iii) no Interest Period shall extend beyond the Stated
Termination Date.
"INTEREST RATE" means each or any of the interest rates,
including the Default Rate, set forth in SECTION 3.1.
"INTERIM ORDER" has the meaning specified in SECTION 10.1(k).
"INVENTORY" means all of the Borrower's and each Guarantor's
now owned and hereafter acquired inventory, goods and merchandise, wherever
located, to be furnished under any contract of service or held for sale or
lease, all returned goods, raw materials, work-in-process, other materials
and supplies of any kind, nature or description which are used or consumed in
the Borrower's or the applicable Guarantor's business or used in connection
with the packing, shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents of title or
other documents representing them.
"INVESTMENT PROPERTY" means all of the Borrower's and each
Guarantor's right title and interest in and to any and all: (a) securities
whether certificated or uncertificated; (b)
17
securities entitlements; (c) securities accounts; (d) commodity contracts; or
(e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LATEST PROJECTIONS" means: (a) on the Closing Date, the
Projections and (b) thereafter, the projections most recently received by the
Agent pursuant to SECTION 7.2(f).
"LENDER" and "LENDERS" have the meanings specified in the
introductory paragraph hereof and shall include the Agent to the extent of
any Agent Advance outstanding and the Bank to the extent of any Non-Ratable
Loan outstanding; PROVIDED that no such Agent Advance or Non-Ratable Loan
shall be taken into account in determining any Lender's Pro Rata Share.
"LETTER OF CREDIT" has the meaning specified in SECTION 2.4.
"LETTER OF CREDIT FEE" has the meaning specified in SECTION
3.6.
"LETTER OF CREDIT ISSUER" means the Bank, any affiliate of the
Bank or up to two other Lenders (reasonably acceptable to the Agent and the
Borrower) that issue Letters of Credit pursuant to this Agreement.
"LIBOR INTEREST PAYMENT DATE" means, with respect to a LIBOR
Rate Loan, the last day of each Interest Period applicable to such Loan.
"LIBOR RATE" means, for any Interest Period, with respect to
LIBOR Rate Loans, the rate of interest per annum determined pursuant to the
following formula:
LIBOR Rate = Offshore Base Rate
----------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"OFFSHORE BASE RATE" means the rate per annum appearing
on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately
11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period for a term comparable to such
Interest Period. If for any reason such rate is not available,
the Offshore Base Rate shall be, for any Interest Period, the
rate per annum appearing on Reuters Screen LIBO Page as the
London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period; PROVIDED, HOWEVER, if more than one
rate is specified on Reuters Screen LIBO Page, the applicable
rate shall be the arithmetic mean
18
of all such rates. If for any reason none of the foregoing rates
is available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by Agent as the rate of
interest at which dollar deposits in the approximate amount of
the LIBOR Rate Loan comprising part of such Borrowing would be
offered by the Bank's London Branch to major banks in the
offshore dollar market at their request at or about 11:00 a.m.
(London time) two Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period.
"EURODOLLAR RESERVE PERCENTAGE" means, for any day during
any Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on
such day applicable to member banks under regulations issued
from time to time by the Federal Reserve Board for determining
the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"). The Offshore Rate for each outstanding LIBOR Rate
Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"LIBOR RATE LOANS" means, collectively, the LIBOR Revolving
Loans and the LIBOR Term Loans.
"LIBOR REVOLVING LOAN" means a Revolving Loan during any period
in which it bears interest based on the LIBOR Rate.
"LIBOR TERM LOAN" means any portion of the Term Loan during any
period in which such portion bears interest based on the LIBOR Rate.
"LIEN" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising
from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, agreement, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security
purposes; (b) to the extent not included under CLAUSE (a), any reservation,
exception, encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance affecting
property; and (c) any contingent or other agreement to provide any of the
foregoing.
"LOAN ACCOUNT" means the loan account of the Borrower, which
account shall be maintained by the Agent.
"LOAN DOCUMENTS" means this Agreement, the Term Loan Notes, the
Patent and Trademark Agreements, the Mortgages (if reasonably requested by
Agent), the Parent Guaranty,
19
Subsidiary Guaranties, and any other agreements, instruments, and documents
heretofore, now or hereafter evidencing, securing, guaranteeing or otherwise
relating to the Obligations, the Collateral, or any other aspect of the
transactions contemplated by this Agreement other than the Pre-Petition
Secured Indebtedness.
"LOANS" means, collectively, all loans and advances provided
for in ARTICLE 2.
"MAJORITY LENDERS" means at any date of determination Lenders
whose Pro Rata Shares aggregate more than 66 2/3% as such percentage is
determined under the definition of Pro Rata Share set forth herein.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrower and the
Guarantors taken as a whole or the Collateral; (b) a material impairment of
the ability of the Borrower or any Guarantor to perform under any Loan
Document to which it is a party and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Borrower or any Guarantor of any Loan Document to
which it is a party.
"MAXIMUM REVOLVER AMOUNT" means $475,000,000.
"MORTGAGES" means and includes mortgages, deeds of trust, deeds
to secure debt, assignments and other instruments, if any, executed and
delivered by the Borrower or any Guarantor to or for the benefit of the Agent
by which the Agent, on behalf of the Lenders, acquires a Lien on the Real
Estate or a collateral assignment of the Borrower's or any Guarantor's
interest under leases of Real Estate, and all amendments, modifications and
supplements thereto.
"MULTI-EMPLOYER PLAN" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by the
Borrower or any ERISA Affiliate.
"NET AMOUNT OF ELIGIBLE ACCOUNTS" means, at any time, the gross
amount of Eligible Accounts less sales, excise or similar taxes, and less
returns, discounts, claims, credits accrued rebates and other allowances,
offsets, deductions, counterclaims, disputes and other defenses of any nature
at any time issued, owing, granted, outstanding, available or claimed.
"NON-RATABLE LOAN" and "NON-RATABLE LOANS" have the meanings
specified in SECTION 2.2(h).
"NOTICE OF BORROWING" has the meaning specified in SECTION
2.2(b).
"NOTICE OF CONVERSION/CONTINUATION" has the meaning specified
in SECTION 3.2(b).
20
"OBLIGATIONS" means all present and future loans, advances,
liabilities, obligations, covenants, duties, and debts owing by the Borrower
or any Guarantor to the Agent and/or any Lender, arising under or pursuant to
this Agreement or any of the other Loan Documents, whether or not evidenced
by any note, or other instrument or document, whether arising from an
extension of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or indirect, absolute
or contingent, due or to become due, primary or secondary, as principal or
guarantor, and including all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees and any other sums chargeable to the Borrower or
any Guarantor hereunder or under any of the other Loan Documents, all of
which shall constitute Superpriority Claims in the Bankruptcy Cases and be
secured with the priority provided herein, subject only to the Carve-Out.
"Obligations" includes, without limitation, (a) all debts, liabilities, and
obligations now or hereafter arising from or in connection with the Letters
of Credit and (b) all debts, liabilities and obligations now or hereafter
arising from or in connection with Bank Products.
"OTHER COLLATERAL" means all Collateral other than Term
Collateral.
"OTHER TAXES" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Documents.
"PARENT" means Fruit of the Loom, Ltd., a Cayman Islands
corporation.
"PARTICIPANT" means any Person who shall have been granted the
right by any Lender to participate in the financing provided by such Lender
under this Agreement, and who shall have entered into a participation
agreement in form and substance satisfactory to such Lender.
"PATENT AND TRADEMARK AGREEMENTS" means the Patent Security
Agreement and the Trademark Security Agreement, executed and delivered by the
Borrower and each Guarantor to the Agent to evidence and perfect, to the
extent possible, the Agent's security interest in the Borrower's and each
Guarantor's present and future patents, trademarks, and related licenses and
rights, for the benefit of the Agent and the Lenders.
"PAYMENT ACCOUNT" means each bank account established pursuant
to SECTION 6.9, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or
the Borrower or any Guarantor, as the Agent may determine, on terms
reasonably acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"PENDING REVOLVING LOANS" means, at any time, the aggregate
principal amount of all Revolving Loans requested in any Notice of Borrowing
received by the Agent which have not yet been advanced.
21
"PENSION PLAN" means a pension plan (as defined in Section 3(2)
of ERISA) subject to Title IV of ERISA which the Borrower or any Guarantor
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multi-employer Plan has made contributions
at any time during the immediately preceding five (5) plan years.
"PERMITTED LIENS" means:
(a) Liens for taxes not delinquent or statutory Liens for taxes
in an amount not to exceed $1,000,000 provided that the payment of such taxes
which are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves
have been established on Borrower's or the applicable Guarantor's books and
records and a stay of enforcement of any such Lien is in effect;
(b) the Agent's Liens;
(c) Liens consisting of deposits made in the ordinary course of
business in connection with, or to secure payment of, obligations under
worker's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts
(other than for the repayment of borrowed money) or to secure indemnity,
performance or other similar bonds for the performance of bids, tenders or
contracts (other than for the repayment of borrowed money) or to secure
statutory obligations (other than liens arising under ERISA or Environmental
Liens) or surety or appeal bonds, or to secure indemnity, performance or
other similar bonds;
(d) Liens securing the claims or demands of materialmen,
mechanics, carriers, warehousemen, landlords and other like Persons with
respect to Inventory or other assets in the United States, PROVIDED that if
any such Lien arises from the nonpayment of such claims or demand when due,
such claims or demands do not exceed $1,000,000 in the aggregate;
(e) Liens on Inventory not located in the United States;
(f) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; PROVIDED that they do not in the aggregate
materially detract from the value of the Real Estate or materially interfere
with its use in the ordinary conduct of the Borrower's or the applicable
Guarantor's business;
(g) Liens arising from judgments and attachments in connection
with court proceedings provided that the attachment or enforcement of such
Liens would not result in an Event of Default hereunder and such Liens are
being contested in good faith by appropriate proceedings, adequate reserves
have been set aside and no material Property is subject to a material risk of
loss or forfeiture and the claims in respect of such Liens are fully covered
by insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
22
(h) Liens securing Pre-Petition Secured Indebtedness that are
subordinated to the Agent's Lien hereunder;
(i) Capital Leases and purchase money security interests
consisting of Liens on Equipment and Fixtures in effect on the Closing Date;
and
(j) Negative pledges by Foreign Subsidiaries with respect to
the assets of Foreign Subsidiaries located outside of the United States.
"PERSON" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity, and shall include, without limitation, the definition set forth in
SECTION 101(44) of the Bankruptcy Code.
"PETITION DATE" means the date on which the Borrower's and
Guarantors' voluntary petitions for relief under chapter 11 of the Bankruptcy
Code are filed with the Bankruptcy Court.
"PLAN" means an employee benefit plan (as defined in Section
3(3) of ERISA) which the Borrower or any Guarantor sponsors or maintains or
to which the Borrower or any Guarantor makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"PRE-PETITION PAYMENT" shall mean a payment (by way of adequate
protection or otherwise) of principal or interest or otherwise on account of
any pre-petition Debt or trade payables arising from the purchase of
Inventory not otherwise permitted to be paid under this Agreement; PROVIDED
that the return to vendors of defective, damaged or non-conforming Inventory
or negotiated returns for credit shall not constitute Pre-Petition Payments.
"PRE-PETITION SECURED INDEBTEDNESS" means some or all of the
Debt arising under (a) the Indenture dated as of March 15, 1981, relating to
some or all of the 7% Debentures due March 15, 2011 issued by Northwest
Industries, Inc. ("Northwest") and assumed by Fruit of the Loom, Inc., as
successor in interest to Northwest; (b) the Indenture dated as of November
30, 1993, relating to 6-1/2% Notes due November 30, 2003 issued by Fruit of
the Loom, Inc.; (c) the Indenture dated as of November 30, 1993 relating to
7-3/8% Debentures due November 30, 2023 issued by Fruit of the Loom, Inc.;
(d) the Credit Agreement dated March 24, 1999 among ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as
borrower, the lenders party thereto, Nationsbank, N.A., as administrative
agent, Credit Suisse First Boston, as syndication agent to the lenders party
thereto, guaranteed by the Guaranty of Payment dated March 24, 1999 made by
Borrowers in favor of Nationsbank, N.A., as administrative agent for the
lenders, for the benefit of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇; (e) the Credit Agreement dated as
of September 19, 1997 among Fruit of the Loom, Inc., as borrower, the
guarantors thereunder, the lenders party thereto, Nationsbank, N.A., as
administrative agent for the lenders, Bankers Trust Company, as syndication
agent, The Chase Manhattan Bank and The Bank of Nova Scotia, as
co-documentation agents, and The Bank of New York, as L/C agent, as amended;
and (f) any obligations under the Synthetic Lease and the related Lease
Guaranty dated as of September 30, 1994 by Fruit of the Loom, Inc. and
certain of its Subsidiaries in favor of
23
The Chase Manhattan Bank (as successor to Chemical Bank), not in its
individual capacity except as expressly stated therein, but solely as owner
trustee, as lessor under the Credit Suisse First Boston Advantage Lease
Financing. The Agent and the Lenders hereby acknowledge that, notwithstanding
the use of the word "secured" in this definition, the Borrower and the
Guarantors reserve and retain certain of their legal and equitable rights,
including rights under the Bankruptcy Code, to assert that certain of the
Pre-Petition Secured Indebtedness is or may not be secured by some, all or
any of the Collateral.
"PRO RATA SHARE" means, with respect to a Lender, a fraction
(expressed as a percentage), the numerator of which is the amount of such
Lender's Commitment and the denominator of which is the sum of the amounts of
all of the Lenders' Commitments, or if no Commitments are outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Obligations owed to such Lender and the denominator of which is the aggregate
amount of the Obligations owed to the Lenders, in each case giving effect to
a Lender's participation in Non-Ratable Loans and Agent Advances.
"PROJECTIONS" means projections delivered to Agent prior to the
Closing Date dated December 9, 1999, and countersigned by the Agent and the
Borrower setting forth projected EBITDAR for the period from the Closing Date
through January 1, 2001 by Fiscal Month and Capital Expenditures by Fiscal
Quarter. For purposes of calculating EBITDAR for each Fiscal Month from
December 30, 2000 through June 30, 2001, the projected amounts shall be the
same as those amounts set forth in the Projections for the corresponding
Fiscal Months in Fiscal Year 2000.
"PROPRIETARY RIGHTS" means all of the Borrower's and each
Guarantor's now owned and hereafter arising or acquired: licenses,
franchises, permits, patents, patent rights, copyrights, works which are the
subject matter of copyrights, trademarks, service marks, trade names, trade
styles, patent, trademark and service ▇▇▇▇ applications, and all licenses and
rights related to any of the foregoing, including those patents, trademarks,
service marks, trade names and copyrights set forth on SCHEDULE 8.12 hereto,
and all other rights under any of the foregoing, all extensions, renewals,
reissues, divisions, continuations, and continuations-in-part of any of the
foregoing, and all rights to ▇▇▇ for past, present and future infringement of
any of the foregoing.
"REAL ESTATE" means all of the Borrower's and each Guarantor's
now or hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of
the Borrower's and each Guarantor's now or hereafter owned or leased
interests in the improvements and emblements thereon, the fixtures attached
thereto and the easements appurtenant thereto. For purposes of the definition
of "Fixed Assets," as such term is used in the definition of "Adjusted Net
Earnings from Operations," the term "Real Estate" shall include real property
owned or leased by Subsidiaries of the Borrower and the Guarantors.
"RELEASE" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of
a Contaminant into the indoor or outdoor environment or into or out of any
Real Estate or other property, including the movement of
24
Contaminants through or in the air, soil, surface water, groundwater or Real
Estate or other property.
"REPORTABLE EVENT" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REORGANIZATION PLAN" means a plan of reorganization filed in
any of the Bankruptcy Cases.
"REQUIRED LENDERS" means at any time Lenders whose Pro Rata
Shares aggregate more than 51% as such percentage is determined under the
definition of Pro Rata Share set forth herein.
"REQUIREMENT OF LAW" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or
binding upon the Person or any of its property or to which the Person or any
of its property is subject.
"RESPONSIBLE OFFICER" means the chief executive officer, the
president or any senior vice president of the Borrower, or any other officer
having substantially the same authority and responsibility; or, with respect to
compliance with financial covenants and the preparation of the Borrowing Base
Certificate, the chief financial officer, the treasurer or the assistant
treasurer of the Borrower, or any other officer having substantially the same
authority and responsibility.
"RESTRICTED INVESTMENT" means, as to the Borrower and each
Guarantor, any acquisition of property by the Borrower or the applicable
Guarantor in exchange for cash or other property, whether in the form of an
acquisition of stock, debt, or other indebtedness or obligation, or the
purchase or acquisition of any other property, or a loan, advance, capital
contribution, or subscription, except the following: (a) acquisitions of
Equipment to be used in the business of the Borrower or any Guarantor so long
as the acquisition costs thereof constitute Capital Expenditures permitted
hereunder; (b) acquisitions of Inventory in the ordinary course of business
of the Borrower or any Guarantor; (c) acquisitions of current assets acquired
in the ordinary course of business of the Borrower or any Guarantor; (d)
direct obligations of the United States of America, or any agency thereof, or
obligations guaranteed by the United States of America, PROVIDED that such
obligations mature within one year from the date of acquisition thereof; (e)
acquisitions of certificates of deposit maturing within one year from the
date of acquisition, bankers' acceptances, Eurodollar bank deposits, or
overnight bank deposits, in each case issued by, created by, or with a bank
or trust company organized under the laws of the United States of America or
any state thereof having capital and surplus aggregating at least
$100,000,000; (f) acquisitions of commercial paper given a rating of "A2" or
better by Standard & Poor's Corporation or "P2" or better by ▇▇▇▇▇'▇
Investors Service, Inc. and maturing not more than 90 days from the date of
creation thereof; and (g) Hedge Agreements.
25
"RESTRUCTURING EXPENSES" means, as to the Borrower and the
Guarantors, legal, accounting, consulting and investment banking fees and
expenses set forth in the Projections and retention payments, stay bonuses
and related nonrecurring expenses incurred in connection with the Bankruptcy
Cases and approved by an order in the Bankruptcy Cases which is not appealed.
Write-downs of assets are expressly excluded from "Restructuring Expenses".
"REVOLVING LOANS" has the meaning specified in SECTION 2.2 and
includes each Agent Advance and Non-Ratable Loan.
"SECURITIZATION ARRANGEMENT" means the securitization
arrangement evidenced by an Amended and Restated Purchase and Contribution
Agreement dated as of October 29, 1999 by and among Union Underwear Company,
Inc., Salem Sportswear Corporation, and Pro Playor, Inc., as the originators,
and FTL Receivables Company, as purchaser, and the Loan and Security
Agreement among FTL Receivables Company, Bank of America, N.A., as agent,
Banc of America Securities LLC, as the Syndication Agent, Lead Arranger and
Sole Book Runner and certain lenders named therein.
"SETTLEMENT" AND "SETTLEMENT DATE" have the meanings specified
in SECTION 2.2(j)(i).
"STATED TERMINATION DATE" means June 30, 2001.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than fifty percent (50%) of the voting stock or other
equity interests (in the case of Persons other than corporations), is owned
or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a "Subsidiary" refer to a
Subsidiary of the Borrower.
"SUPERPRIORITY CLAIM" shall mean, in relation to the Borrower
and each Guarantor, a claim against the Borrower or such Guarantor in such
Person's Bankruptcy Case which is an administrative expense claim authorized
and established by the Bankruptcy Court pursuant to sections 364(c) and
507(b) of the Bankruptcy Code and having priority over any or all
administrative expenses of the kind specified in sections 503(b), 507(b) and
546(c) of the Bankruptcy Code.
"SYNDICATION FEE" has the meaning specified in Section 3.7.
"SYNTHETIC LEASE" means the CSFB Advantage Lease (Tax Ownership
Operating Lease Agreement), dated as of September 30, 1994, between The Chase
Manhattan Bank (successor-in-interest to Chemical Bank), as Owner Trustee and
Lessor, and Union Underwear Company, Inc. and certain of its subsidiaries, as
Lessees, together with any lease supplements thereto, as such lease may from
time to time be supplemented, amended or modified in accordance with the
terms thereof.
"TAXES" means 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
26
Lender and the Agent, such taxes (including income taxes or franchise taxes)
as are imposed on or measured by the Agent's or each Lender's net income in
any jurisdiction (whether federal, state or local and including any political
subdivision thereof) under the laws of which such Lender or the Agent, as the
case may be, is organized or maintains a lending office.
"TERM COLLATERAL" means Equipment, Real Estate, Proprietary
Rights, General Intangibles, and capital stock, partnership, membership
interests and other equity interests in Borrower's or Parent's Foreign
Subsidiaries.
"TERM LOAN" has the meaning specified in SECTION 2.3(a).
"TERM LOAN NOTE" and "TERM LOAN NOTES" have the meanings
specified in SECTION 2.3(c).
"TERMINATION DATE" means the earliest to occur of:
(i) the Stated Termination Date;
(ii) the date the Total Facility is terminated either by the
Borrower pursuant to SECTION 4.2 or by the Majority Lenders pursuant to
SECTION 11.2;
(iii) the date that is thirty (30) days after commencement of
the first of the Bankruptcy Cases if the Final Order has not been
entered on or prior to that date;
(iv) the date of substantial consummation (as defined in
Section 1101 of the Bankruptcy Code, which shall be no later than the
effective date) of a Plan of Reorganization which is confirmed pursuant
to an order of the Bankruptcy Court in any of the Reorganization Cases.
"TOTAL FACILITY" has the meaning specified in SECTION 2.1.
"UCC" means the Uniform Commercial Code (or any successor
statute), as in effect from time to time, of the State of Illinois or of any
other state the laws of which are required as a result thereof to be applied in
connection with the issue of perfection of security interests.
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current
value of that Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"UNUSED LETTER OF CREDIT SUBFACILITY" means an amount equal to
$175,000,000, MINUS the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit, PLUS, without duplication, (b) the aggregate
unpaid reimbursement obligations with respect to all Letters of Credit.
"UNUSED LINE FEE" has the meaning specified in SECTION 3.5.
27
1.2 ACCOUNTING TERMS. Any accounting term used in this Agreement
shall have, unless otherwise specifically provided herein, the meaning
customarily given in accordance with GAAP, and all financial computations
hereunder shall be computed, unless otherwise specifically provided herein,
in accordance with GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial Statements.
1.3 INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including," the
words "to" and "until" each mean "to but excluding" and the word "through" means
"to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Agent, the
Borrower and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Agent's or Lenders' involvement in their preparation.
28
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 TOTAL FACILITY. Subject to all of the terms and conditions of
this Agreement, the Lenders severally agree to make available a total credit
facility of up to $625,000,000 (the "Total Facility") for the Borrower's use
from time to time during the term of this Agreement. The Total Facility shall
be composed of: (a) a revolving line of credit consisting of Revolving Loans
and Letters of Credit up to the Borrowing Base, as described in SECTIONS 2.2
and 2.4; and (b) the Term Loan described in SECTION 2.3.
2.2 REVOLVING LOANS.
(a) AMOUNTS. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE 10, each Lender severally, but not jointly,
agrees, upon the Borrower's request from time to time on any Business Day
during the period from the Closing Date to the Termination Date, to make
revolving loans (the "Revolving Loans") to the Borrower in amounts not to
exceed (except for the Bank with respect to Non-Ratable Loans and except for
the Agent with respect to Agent Advances) such Lender's Pro Rata Share of the
Borrowing Base. The Lenders, however, in their unanimous discretion, may
elect to make Revolving Loans or issue or arrange to have issued Letters of
Credit in excess of the Availability on one or more occasions, but if they do
so, neither the Agent nor the Lenders shall be deemed thereby to have changed
the limits of the Borrowing Base or to be obligated to exceed such limits on
any other occasion. If the Aggregate Revolver Outstandings exceed the
Borrowing Base, the Lenders may refuse to make or otherwise restrict the
making of Revolving Loans as the Lenders determine until such excess has been
eliminated, subject to the Agent's authority, in its sole discretion, to make
Agent Advances pursuant to the terms of SECTION 2.2(i).
(b) PROCEDURE FOR BORROWING. (1) Each Borrowing shall be made
upon the Borrower's irrevocable written notice delivered to the Agent by
courier, telecopy or facsimile in the form of a notice of borrowing ("Notice
of Borrowing") together with a Borrowing Base Certificate reflecting
sufficient Availability, which must be received by the Agent prior to noon
(Chicago time) (i) three Business Days prior to the requested Funding Date,
in the case of LIBOR Rate Loans and (ii) no later than noon on the requested
Funding Date, in the case of Base Rate Loans, specifying:
(A) the amount of the Borrowing;
(B) the requested Funding Date, which shall be a Business Day;
(C) whether the Revolving Loans requested are to be Base Rate
Revolving Loans or LIBOR Revolving Loans (and if not specified, it shall be
deemed a request for a Base Rate Revolving Loan); and
(D) the duration of the Interest Period if the requested
Revolving Loans are to be LIBOR Revolving Loans. If the Notice of Borrowing
fails to specify
29
the duration of the Interest Period for any Borrowing comprised of LIBOR Rate
Loans, such Interest Period shall be one month;
PROVIDED, HOWEVER, that with respect to the Borrowing to be made on the
Closing Date, such Borrowings will consist of Base Rate Revolving Loans only.
(2) With respect to any request for Base Rate Revolving
Loans, in lieu of delivering the above-described Notice of Borrowing the
Borrower may give the Agent telephonic notice of such request by the required
time, with such telephonic notice to be confirmed in writing (by courier,
telecopy or facsimile) within 24 hours of the giving of such notice but the
Agent at all times shall be entitled to rely on such telephonic notice in
making such Revolving Loans, regardless of whether any such confirmation is
received by Agent.
(3) The Borrower shall have no right to request a LIBOR Rate
Loan while a Default or Event of Default has occurred and is continuing.
(c) RELIANCE UPON AUTHORITY. The Borrower shall deliver to the
Agent, prior to the Closing Date, a writing setting forth the account of the
Borrower to which the Agent is authorized to transfer the proceeds of the
Revolving Loans requested pursuant to this SECTION 2.2. which account shall
be reasonably satisfactory to the Agent. The Agent shall be entitled to rely
conclusively on any person's request for Revolving Loans on behalf of the
Borrower, the proceeds of which are to be transferred to the account
specified by the Borrower pursuant to the immediately preceding sentence,
until the Agent receives written notice from the Borrower that the proceeds
of the Revolving Loans are to be sent to a different account. The Agent shall
have no duty to verify the identity of any individual representing himself or
herself as a person authorized by the Borrower to make such requests on its
behalf.
(d) NO LIABILITY. The Agent shall not incur any liability to the
Borrower as a result of acting upon any notice referred to in SECTIONS 2.2(b)
and (c), which notice the Agent believes in good faith to have been given by
an officer or other person duly authorized by the Borrower to request
Revolving Loans on its behalf or for otherwise acting in good faith under
this SECTION 2.2, and the crediting of Revolving Loans to the Borrower's
deposit account, as the Borrower shall direct, shall conclusively establish
the obligation of the Borrower to repay such Revolving Loans as provided
herein.
(e) NOTICE IRREVOCABLE. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to SECTION 2.2(b) shall be irrevocable
and the Borrower shall be bound to borrow the funds requested therein in
accordance therewith.
(f) AGENT'S ELECTION. Promptly after receipt of a Notice of
Borrowing (or telephonic notice in lieu thereof) pursuant to SECTION 2.2(b),
the Agent shall elect, in its discretion, (i) to have the terms of SECTION
2.2(g) apply to such requested Borrowing, or (ii) to request the Bank to make
a Non-Ratable Loan pursuant to the terms of SECTION 2.2(h) in the amount of
the requested Borrowing; PROVIDED, HOWEVER, that if the Bank declines in its
sole discretion to make a Non-Ratable Loan pursuant to SECTION 2.2(h), the
Agent shall elect to have the terms of SECTION 2.2(g) apply to such requested
Borrowing.
30
(g) MAKING OF REVOLVING LOANS.
(i) In the event that the Agent shall elect to have the
terms of this SECTION 2.2(g) apply to a requested Borrowing as described in
SECTION 2.2(f), then promptly after receipt of a Notice of Borrowing or
telephonic notice pursuant to SECTION 2.2(b), the Agent shall notify the
Lenders by telecopy, telephone or other similar form of transmission, of the
requested Borrowing. Each Lender shall make the amount of such Lender's Pro
Rata Share of the requested Borrowing available to the Agent in immediately
available funds, to such account of the Agent as the Agent may designate, not
later than noon (Chicago time) on the Funding Date applicable thereto. After
the Agent's receipt of the proceeds of such Revolving Loans, the Agent shall
make the proceeds of such Revolving Loans available to the Borrower on the
applicable Funding Date by transferring same day funds equal to the proceeds
of such Revolving Loans received by the Agent to the account of the Borrower,
designated in writing by the Borrower and reasonably acceptable to the Agent;
PROVIDED, HOWEVER, that the amount of Revolving Loans so made on any date
shall in no event exceed the Availability on such date.
(ii) Unless the Agent receives notice from a Lender on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that
such Lender will not make available as and when required hereunder to the
Agent for the account of the Borrower the amount of that Lender's Pro Rata
Share of the Borrowing, the Agent may assume that each Lender has made such
amount available to the Agent in immediately available funds on the Funding
Date and the Agent may (but shall not be so required), in reliance upon such
assumption, make available to the Borrower on such date a corresponding
amount. If and to the extent any Lender shall not have made its full amount
available to the Agent in immediately available funds and the Agent in such
circumstances has made available to the Borrower such amount, that Lender
shall on the Business Day following such Funding Date make such amount
available to the Agent, together with interest at the Federal Funds Rate for
each day during such period. A notice by the Agent submitted to any Lender
with respect to amounts owing under this subsection shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
the Agent shall constitute such Lender's Revolving Loan for all purposes of
this Agreement. If such amount is not made available to the Agent on the
Business Day following the Funding Date, the Agent will notify the Borrower
of such failure to fund and, upon demand by the Agent, the Borrower shall pay
such amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the Interest Rate applicable at the time to the Revolving
Loans comprising such Borrowing. The failure of any Lender to make any
Revolving Loan on any Funding Date (any such Lender, prior to the cure of
such failure, being hereinafter referred to as a "Defaulting Lender") shall
not relieve any other Lender of any obligation hereunder to make a Revolving
Loan on such Funding Date, but no Lender shall be responsible for the failure
of any other Lender to make the Revolving Loan to be made by such other
Lender on any Funding Date.
(iii) The Agent shall not be obligated to transfer to a
Defaulting Lender any payments made by Borrower to the Agent for the
Defaulting Lender's benefit; nor shall a Defaulting Lender be entitled to the
sharing of any payments hereunder. Amounts payable to a Defaulting Lender
shall instead be paid to or retained by the Agent. The Agent may hold and, in
31
its discretion, re-lend to Borrower the amount of all such payments received
or retained by it for the account of such Defaulting Lender. Any amounts so
re-lent to the Borrower shall bear interest at the rate applicable to Base
Rate Revolving Loans and for all other purposes of this Agreement shall be
treated as if they were Revolving Loans, PROVIDED, HOWEVER, that for purposes
of voting or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be deemed not to be
a "Lender". Until a Defaulting Lender cures its failure to fund its Pro Rata
Share of any Borrowing (A) such Defaulting Lender shall not be entitled to
any portion of the Unused Line Fee and (B) the Unused Line Fee shall accrue
in favor of the Lenders which have funded their respective Pro Rata Shares of
such requested Borrowing and shall be allocated among such performing Lenders
ratably based upon their relative Commitments. This Section shall remain
effective with respect to such Lender until such time as the Defaulting
Lender shall no longer be in default of any of its obligations under this
Agreement. The terms of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or excuse the
performance by the Borrower of its duties and obligations hereunder.
(iv) At Borrower's request, the Agent or an Eligible
Assignee reasonably acceptable to the Agent and the Borrower shall have the
right (but not the obligation) to purchase from any Defaulting Lender, and
each Defaulting Lender shall, upon such request, sell and assign to the Agent
or such Eligible Assignee, all of the Defaulting Lender's outstanding
Commitments hereunder. Such sale shall be consummated promptly after Agent
has arranged for a purchase by Agent or an Eligible Assignee pursuant to an
Assignment and Acceptance, and at a price equal to the outstanding principal
balance of the Defaulting Lender's Loans, plus accrued interest and fees,
without premium or discount.
(h) MAKING OF NON-RATABLE LOANS.
(i) In the event the Agent shall elect, with the consent of
the Bank, to have the terms of this SECTION 2.2(h) apply to a requested
Borrowing as described in SECTION 2.2(f), the Bank shall make a Revolving
Loan in the amount of such Borrowing (any such Revolving Loan made solely by
the Bank pursuant to this SECTION 2.2(h) being referred to as a "Non-Ratable
Loan" and such Revolving Loans being referred to collectively as "Non-Ratable
Loans") available to the Borrower on the Funding Date applicable thereto by
transferring same day funds to an account of the Borrower, designated in
writing by the Borrower and reasonably acceptable to the Agent. Each
Non-Ratable Loan shall be subject to all the terms and conditions applicable
to other Revolving Loans except that all payments thereon shall be payable to
the Bank solely for its own account (and for the account of the holder of any
participation interest with respect to such Revolving Loan). The Agent shall
not request the Bank to make any Non-Ratable Loan if (A) the Agent shall have
received written notice from any Lender that one or more of the applicable
conditions precedent set forth in ARTICLE 10 will not be satisfied on the
requested Funding Date for the applicable Borrowing, or (B) the requested
Borrowing would exceed the Availability on such Funding Date. The Agent shall
not otherwise be required to determine whether the applicable conditions
precedent set forth in ARTICLE 10 have been satisfied or the requested
Borrowing would exceed the Availability on the Funding Date applicable
thereto prior to making, in its sole discretion, any Non-Ratable Loan.
32
(ii) The Non-Ratable Loans shall be secured by the Agent's
Liens in and to the Collateral, shall constitute Revolving Loans and
Obligations hereunder, and shall bear interest at the rates applicable to the
Revolving Loans from time to time.
(i) AGENT ADVANCES.
(i) Subject to the limitations set forth in the provisos
contained in this SECTION 2.2(i), the Agent is hereby authorized by the
Borrower and the Lenders, from time to time in the Agent's sole discretion,
(A) after the occurrence and during the continuance of a Default or an Event
of Default, or (B) at any time that any of the other applicable conditions
precedent set forth in ARTICLE 10 have not been satisfied, to make Base Rate
Revolving Loans to the Borrower on behalf of the Lenders which the Agent, in
its reasonable business judgment, deems necessary or desirable (1) to
preserve or protect the Collateral, or any portion thereof, (2) to enhance
the likelihood of, or maximize the amount of, repayment of the Loans and
other Obligations, or (3) to pay any other amount chargeable to the Borrower
pursuant to the terms of this Agreement, including costs, fees and expenses
as described in SECTION 15.7 (any of the advances described in this SECTION
2.2(i) being hereinafter referred to as "Agent Advances"); PROVIDED, that the
Required Lenders may at any time revoke the Agent's authorization contained
in this SECTION 2.2(i) to make Agent Advances, any such revocation to be in
writing and to become effective prospectively upon the Agent's receipt
thereof;
(ii) The Agent Advances shall be repayable on demand and
secured by the Agent's Liens in and to the Collateral, shall constitute
Revolving Loans and Obligations hereunder, and shall bear interest at the
rate applicable to Base Rate Revolving Loans from time to time. The Agent
shall notify each Lender in writing of each such Agent Advance.
(j) SETTLEMENT. It is agreed that each Lender's funded portion of
the Revolving Loans is intended by the Lenders to be equal at all times to
such Lender's Pro Rata Share of the outstanding Revolving Loans.
Notwithstanding such agreement, the Agent, the Bank, and the other Lenders
agree (which agreement shall not be for the benefit of or enforceable by the
Borrower) that in order to facilitate the administration of this Agreement
and the other Loan Documents, settlement among them as to the Revolving
Loans, the Non-Ratable Loans and the Agent Advances shall take place on a
periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement ("Settlement") with
the Lenders on at least a weekly basis, or on a more frequent basis if so
determined by the Agent, (A) on behalf of the Bank, with respect to each
outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent
Advance, and (C) with respect to collections received, in each case, by
notifying the Lenders of such requested Settlement by telecopy, telephone or
other similar form of transmission, of such requested Settlement, no later
than 1:00 p.m. (Chicago time) on the date of such requested Settlement (the
"Settlement Date"). Each Lender (other than the Bank, in the case of
Non-Ratable Loans and the Agent in the case of Agent Advances) shall make the
amount of such Lender's Pro Rata Share of the outstanding principal amount of
the Non-Ratable Loans and Agent Advances with respect to which Settlement is
requested available to the Agent, to such account of the Agent as the Agent
may designate, not later than 2:00 p.m. (Chicago time),
33
on the Settlement Date applicable thereto, which may occur before or after
the occurrence or during the continuation of a Default or an Event of Default
and whether or not the applicable conditions precedent set forth in ARTICLE
10 have then been satisfied. Such amounts made available to the Agent shall
be applied against the amounts of the applicable Non-Ratable Loan or Agent
Advance and, together with the portion of such Non-Ratable Loan or Agent
Advance representing the Bank's Pro Rata Share thereof, shall constitute
Revolving Loans of such Lenders. If any such amount is not made available to
the Agent by any Lender on the Settlement Date applicable thereto, the Agent
shall (A) on behalf of the Bank, with respect to each outstanding Non-Ratable
Loan, and (B) for itself, with respect to each Agent Advance be entitled to
recover such amount on demand from such Lender together with interest thereon
at the Federal Funds Rate for the first three (3) days from and after the
Settlement Date and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(ii) Notwithstanding the foregoing, not more than one (1)
Business Day after demand is made by the Agent (whether before or after the
occurrence of a Default or an Event of Default and regardless of whether the
Agent has requested a Settlement with respect to a Non-Ratable Loan or Agent
Advance), each other Lender (A) shall irrevocably and unconditionally
purchase and receive from the Bank or the Agent, as applicable, without
recourse or warranty, an undivided interest and participation in such
Non-Ratable Loan or Agent Advance equal to such Lender's Pro Rata Share of
such Non-Ratable Loan or Agent Advance and (B) if Settlement has not
previously occurred with respect to such Non-Ratable Loans or Agent Advances,
upon demand by Bank or Agent, as applicable, shall pay to Bank or Agent, as
applicable, as the purchase price of such participation an amount equal to
one-hundred percent (100%) of such Lender's Pro Rata Share of such
Non-Ratable Loans or Agent Advances. If such amount is not in fact made
available to the Agent by any Lender, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest thereon at the
Federal Funds Rate for the first three (3) days from and after such demand
and thereafter at the Interest Rate then applicable to Base Rate Revolving
Loans.
(iii) From and after the date, if any, on which any Lender
purchases an undivided interest and participation in any Non-Ratable Loan or
Agent Advance pursuant to CLAUSE (ii) preceding, the Agent shall promptly
distribute to such Lender, such Lender's Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received by the Agent
in respect of such Non-Ratable Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the extent no
Agent Advances are outstanding, may pay over to the Bank any payments
received by the Agent, which in accordance with the terms of this Agreement
would be applied to the reduction of the Revolving Loans, for application to
the Bank's Revolving Loans including Non-Ratable Loans. If, as of any
Settlement Date, collections received since the then immediately preceding
Settlement Date have been applied to the Bank's Revolving Loans (other than
to Non-Ratable Loans or Agent Advances in which such Lender has not yet
funded its purchase of a participation pursuant to SECTION 2.2(j)(ii) above),
as provided for in the previous sentence, the Bank shall pay to the Agent for
the accounts of the Lenders, to be applied to the outstanding Revolving Loans
of such Lenders, an amount such that each Lender shall, upon receipt of such
amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving
Loans. During the period between
34
Settlement Dates, the Bank with respect to Non-Ratable Loans, the Agent with
respect to Agent Advances, and each Lender with respect to the Revolving
Loans other than Non-Ratable Loans and Agent Advances, shall be entitled to
interest at the applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by the Bank, the Agent and the
other Lenders.
(k) NOTATION. The Agent shall record on its books the principal
amount of the Revolving Loans owing to each Lender, including the Non-Ratable
Loans owing to the Bank, and the Agent Advances owing to the Agent, from time
to time. In addition, each Lender is authorized, at such Lender's option, to
note the date and amount of each payment or prepayment of principal of such
Lender's Revolving Loans in its books and records, including computer
records, such books and records constituting presumptive evidence, absent
manifest error, of the accuracy of the information contained therein.
(l) LENDERS' FAILURE TO PERFORM. All Revolving Loans (other than
Non-Ratable Loans and Agent Advances) shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender
to perform its obligation to make any Revolving Loans hereunder, nor shall
any Commitment of any Lender be increased or decreased as a result of any
failure by any other Lender to perform its obligation to make any Revolving
Loans hereunder, (ii) no failure by any Lender to perform its obligation to
make any Revolving Loans hereunder shall excuse any other Lender from its
obligation to make any Revolving Loans hereunder, and (iii) the obligations
of each Lender hereunder shall be several, not joint and several.
(m) To provide for payment of all out-of-pocket expenses and fees
payable to the Agent pursuant to Article 3 of this Agreement (for
distribution by it as provided therein) on the Closing Date and all
obligations of the Borrower and the Guarantors under the Pre-Petition Secured
Indebtedness and permitted to be paid under the Adequate Protection Order,
the Borrower hereby shall make Borrowings from the Lenders (consisting of
Loans in amounts determined in accordance with their respective Pro Rata
Shares of the Commitments) on the date the Interim Order is entered by the
Bankruptcy Court, in such amount as is necessary to effect the payment of
such obligations with respect to the Pre-Petition Secured Indebtedness
permitted to be paid under the Adequate Protection Order. The Borrower hereby
irrevocably instructs and authorizes the Lenders to make such Loans available
to the Borrower on such date by applying the proceeds of such Loans in full
to payment of such expenses, fees and obligations (in accordance with payment
instructions given by the intended recipient in the case of such obligations
under the Pre-Petition Secured Indebtedness), and the Lenders hereby agree,
on the terms and subject to the conditions of this Agreement, to make such
Loans to the Borrower on such date for such purposes, without need to
delivery of a Notice of Borrowing. The Borrower acknowledges that it shall
have no right to receive any funds from the Lenders on account of the Loans
to be made by them under this provision otherwise than through application of
the proceeds of such Loans as expressly provided for in this provision, and
the Lenders will be deemed to have made such Loans to the Borrower by
applying the proceeds thereof in accordance with this provision.
35
2.3 TERM LOAN.
(a) AMOUNT OF TERM LOAN. Each Lender severally agrees to make a term
loan (any such term loan being referred to as a "Term Loan" and such Term
Loans being referred to collectively as the "Term Loan") to the Borrower on
the Closing Date, upon the satisfaction of the conditions precedent set forth
in ARTICLE 10, in an amount equal to such Lender's Pro Rata Share of
$150,000,000. The Term Loan shall initially be Base Rate Term Loan.
(b) MAKING OF TERM LOAN. Each Lender shall make the amount of such
Lender's Term Loan available to the Agent in same day funds, to such account
of the Agent as the Agent may designate, not later than noon (Chicago time)
on the Closing Date. After the Agent's receipt of the proceeds of such Term
Loan, upon satisfaction of the conditions precedent set forth in ARTICLE 10,
the Agent shall make the proceeds of such Term Loan available to the Borrower
on such Funding Date by transferring same day funds equal to the proceeds of
such Term Loan received by the Agent to an account of the Borrower designated
in writing by the Borrower or as the Borrower shall otherwise instruct in
writing.
(c) TERM LOAN NOTES. The Borrower shall execute and deliver to the
Agent on behalf of each Lender, on the Closing Date, a promissory note,
substantially in the form of EXHIBIT A attached hereto and made a part hereof
(such promissory notes, together with any new notes issued pursuant to
SECTION 13.2(c) upon the assignment of any portion of any Lender's Term Loan,
being hereinafter referred to collectively as the "Term Loan Notes" and each
of such promissory notes being hereinafter referred to individually as a
"Term Loan Note"), to evidence such Lender's Term Loan, in an original
principal amount equal to the amount of such Lender's Pro Rata Share of
$150,000,000 and with other appropriate insertions. The Term Loan Notes
delivered to the Agent on behalf of each Lender shall be dated the Closing
Date and shall mature on the Stated Termination Date, and the entire
outstanding principal amount of the Term Loan shall be due and payable in
full on the Termination Date.
(d) NOTATION AND ENDORSEMENT. The Agent shall record on its books
the principal amount of the Term Loan owing to each Lender from time to time.
In addition, each Lender is authorized, at such Lender's option, to note the
date and amount of each payment or prepayment of principal of such Lender's
Term Loan in its books and records, such books and records constituting
rebuttably presumptive evidence, absent manifest error, of the accuracy of
the information contained therein. Prior to the transfer of a Term Loan Note,
the applicable Lender shall endorse on the reverse side thereof the
outstanding principal balance of the Term Loan evidenced thereby. Failure by
such Lender to make such notation or endorsement shall not affect the
obligations of the Borrower under such Term Loan Note or any of the other
Loan Documents.
2.4 LETTERS OF CREDIT.
(a) AGREEMENT TO ISSUE OR CAUSE TO ISSUE. Subject to the terms and
conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrower herein set forth, the Agent agrees (i) to cause
the Letter of Credit Issuer to issue for the account of the Borrower one or
more commercial/documentary and standby letters of credit
36
("Letter of Credit") and/or (ii) to provide credit support or other
enhancement to a Letter of Credit Issuer acceptable to Agent, which issue a
Letter of Credit for the account of the Borrower (any such credit support or
enhancement being herein referred to as a "Credit Support") in accordance
with this SECTION 2.4 from time to time during the term of this Agreement.
Those Lenders who are Letter of Credit Issuers shall provide to the Agent and
the Borrower weekly reports on the first Business Day of each week (or more
frequently if requested by the Agent or the Borrower) setting forth the
beneficiaries and amounts of all Letters of Credit issued during the
preceding week as well as cumulative totals of all Letters of Credit
outstanding and, on each Business Day, all draws on Letters of Credit issued
by such Letter of Credit Issuer on the prior Business Day. Only the Agent may
issue Letters of Credit at any time that the Unused Letter of Credit
Subfacility or Availability is less than $25,000,000.
(b) AMOUNTS; OUTSIDE EXPIRATION DATE. The Agent shall not have any
obligation to take steps to issue or cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit at any time if: (i) the
maximum face amount of the requested Letter of Credit is greater than the
Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn
amount of the requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof exceed
the Availability at such time; or (iii) such Letter of Credit has an
expiration date later than five (5) Business Days prior to the Stated
Termination Date or more than twelve (12) months from the date of issuance
for standby letters of credit (subject to standard "evergreen" provisions
providing for 30 days' notice of nonrenewal to beneficiaries) and 180 days
for documentary letters of credit.
(c) OTHER CONDITIONS. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in ARTICLE 10,
the obligation of the Agent to issue or to cause to be issued any Letter of
Credit or to provide Credit Support for any Letter of Credit is subject to
the following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Agent:
(1) The Borrower shall have delivered to the Letter of
Credit Issuer, at such times and in such manner as such Letter of Credit
Issuer may prescribe, an application in form and substance satisfactory to
such Letter of Credit Issuer and reasonably satisfactory to the Agent for the
issuance of the Letter of Credit and such other documents as may be required
pursuant to the terms thereof, and the form and terms of the proposed Letter
of Credit shall be reasonably satisfactory to the Agent and the Letter of
Credit Issuer; and
(2) As of the date of issuance, no order of any court,
arbitrator or Governmental Authority shall purport by its terms to enjoin or
restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit,
or request that the proposed Letter of Credit Issuer refrain from, the
issuance of letters of credit generally or the issuance of such Letters of
Credit.
37
(d) ISSUANCE OF LETTERS OF CREDIT.
(1) REQUEST FOR ISSUANCE. The Borrower shall give the Agent
three (3) Business Days prior written notice (or such lesser written or oral
notice as may be agreed upon by the Agent and the Borrower) of the Borrower's
request for the issuance of a Letter of Credit. Such notice shall be
irrevocable and shall specify the original face amount of the Letter of
Credit requested, the effective date (which date shall be a Business Day) of
issuance of such requested Letter of Credit, whether such Letter of Credit
may be drawn in a single or in partial draws, the date on which such
requested Letter of Credit is to expire (which date shall be a Business Day),
the purpose for which such Letter of Credit is to be issued, and the
beneficiary of the requested Letter of Credit. The Borrower shall attach to
such notice the proposed form of the Letter of Credit.
(2) RESPONSIBILITIES OF THE AGENT; ISSUANCE. The Agent shall
determine, as of the Business Day immediately preceding the requested
effective date of issuance of the Letter of Credit set forth in the notice
from the Borrower pursuant to SECTION 2.4(d)(1), (A) the amount of the
applicable Unused Letter of Credit Subfacility and (B) the Availability as of
such date. If (i) the undrawn amount of the requested Letter of Credit is not
greater than the Unused Letter of Credit Subfacility and (ii) the amount of
such requested Letter of Credit and all commissions, fees, and charges due
from the Borrower in connection with the opening thereof would not exceed the
Availability, the Agent shall, so long as the other conditions hereof are
met, cause the Letter of Credit Issuer to issue the requested Letter of
Credit on such requested effective date of issuance.
(3) NOTICE OF ISSUANCE. On each Settlement Date, the Agent
shall give notice to each Lender of the issuance of all Letters of Credit
issued since the last Settlement Date.
(4) NO EXTENSIONS OR AMENDMENT. The Agent shall not be
obligated to cause the Letter of Credit Issuer to extend or amend any Letter
of Credit issued pursuant hereto unless the requirements of this SECTION 2.4
are met as though a new Letter of Credit were being requested and issued.
With respect to any Letter of Credit which contains any "evergreen" or
automatic renewal provision, each Lender shall be deemed to have consented to
any such extension or renewal unless any such Lender shall have provided to
the Agent, not less than thirty-five (35) days prior to the last date on
which the applicable issuer can in accordance with the terms of the
applicable Letter of Credit decline to extend or renew such Letter of Credit,
written notice that it declines to consent to any such extension or renewal;
provided, that if all of the requirements of this SECTION 2.4 are met and no
Default or Event of Default exists, no Lender shall decline to consent to any
such extension or renewal.
(e) PAYMENTS PURSUANT TO LETTERS OF CREDIT.
(1) PAYMENT OF LETTER OF CREDIT OBLIGATIONS. The Borrower
agrees immediately upon demand to reimburse the Letter of Credit Issuer from
proceeds of Revolving Loans for any draw under any Letter of Credit and the
Agent for the account of the Lenders upon any payment pursuant to any Credit
Support, and to pay the Letter of Credit Issuer the amount of
38
all other obligations and other amounts payable to such Letter of Credit
Issuer under or in connection with any Letter of Credit immediately when due,
irrespective of any claim, setoff, defense or other right which the Borrower
may have at any time against such issuer or any other Person.
(2) REVOLVING LOANS TO SATISFY REIMBURSEMENT OBLIGATIONS.
Each drawing under any Letter of Credit shall constitute a request by the
Borrower to the Agent for a Borrowing of a Base Rate Revolving Loan in the
amount of such drawing. The Funding Date with respect to such borrowing shall
be the date of such drawing.
(f) PARTICIPATIONS.
(1) PURCHASE OF PARTICIPATIONS. Immediately upon issuance of
any Letter of Credit in accordance with SECTION 2.4(d), each Lender shall be
deemed to have irrevocably and unconditionally purchased and received without
recourse or warranty, an undivided interest and participation equal to such
Lender's Pro Rata Share of the face amount of such Letter of Credit or the
Credit Support provided through the Agent to the Letter of Credit Issuer, if
not the Agent, in connection with the issuance of such Letter of Credit
(including all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(2) SHARING OF REIMBURSEMENT OBLIGATION PAYMENTS. Whenever
the Agent receives a payment from the Borrower on account of reimbursement
obligations in respect of a Letter of Credit or Credit Support as to which
the Agent has previously received for the account of the Letter of Credit
Issuer thereof payment from a Lender pursuant to SECTION 2.4(e)(2), the Agent
shall promptly pay to such Lender such Lender's Pro Rata Share of such
payment from the Borrower in Dollars. Each such payment shall be made by the
Agent on the Business Day on which the Agent receives immediately available
funds paid to such Person pursuant to the immediately preceding sentence, if
received prior to 2:00 p.m. (Chicago time) on such Business Day and otherwise
on the next succeeding Business Day.
(3) DOCUMENTATION. Upon the request of any Lender, the Agent
shall furnish to such Lender copies of any Letter of Credit, Credit Support
for any Letter of Credit, reimbursement agreements executed in connection
therewith, applications for any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) OBLIGATIONS IRREVOCABLE. The obligations of each Lender
to make payments to the Agent with respect to any Letter of Credit or with
respect to their participation therein or with respect to any Credit Support
for any Letter of Credit or with respect to the Revolving Loans made as a
result of a drawing under a Letter of Credit and the obligations of the
Borrower for whose account the Letter of Credit or Credit Support was issued
to make payments to the Agent, for the account of the Lenders, shall be
irrevocable, not subject to any qualification or exception whatsoever ,
including any of the following circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
39
(ii) the existence of any claim, setoff, defense
or other right which the Borrower may have at any time against a beneficiary
named in a Letter of Credit or any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any Lender, the Agent, the
issuer of such Letter of Credit, or any other Person, whether in connection with
this Agreement, any Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying transactions between the
Borrower or any other Person and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents;
(v) the occurrence of any Default or Event of
Default; or
(vi) the failure of the Borrower to satisfy the
applicable conditions precedent set forth in ARTICLE 10.
(g) RECOVERY OR AVOIDANCE OF PAYMENTS. In the event any
payment by or on behalf of the Borrower received by the Agent with respect to
any Letter of Credit or Credit Support provided for any Letter of Credit and
distributed by the Agent to the Lenders on account of their respective
participations therein is thereafter set aside, avoided or recovered from the
Agent in connection with any receivership, liquidation or bankruptcy proceeding,
the Lenders shall, upon demand by the Agent, pay to the Agent their respective
Pro Rata Shares of such amount set aside, avoided or recovered, together with
interest at the rate required to be paid by the Agent upon the amount required
to be repaid by it.
(h) INDEMNIFICATION; EXONERATION; POWER OF ATTORNEY
(1) INDEMNIFICATION. In addition to amounts payable as
elsewhere provided in this SECTION 2.4, the Borrower hereby agrees to protect,
indemnify, pay and save the Lenders and the Agent harmless from and against any
and all claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) (collectively, "Costs") which
any Lender or the Agent (other than the Bank in its capacity as Letter of Credit
Issuer) may incur or be subject to as a consequence, direct or indirect, of the
issuance of any Letter of Credit or the provision of any Credit Support or
enhancement in connection therewith; provided that the Borrower shall not be
obligated to indemnify any Person for Costs resulting from the indemnitee's
gross negligence or willful misconduct. The agreement in this SECTION 2.4(i)(1)
shall survive payment of all Obligations. Nothing contained in this Agreement is
intended to limit the Borrower's rights, if any, with respect to the Letter of
Credit Issuer which arise as a result of the letter of credit application and
related documents executed by and between the Borrower and the Letter of Credit
Issuer.
40
(2) ASSUMPTION OF RISK BY THE BORROWER. As among the
Borrower, the Lenders, and the Agent, the Borrower assumes all risks of the acts
and omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lenders and the Agent shall not be responsible for: (A) the
form, validity, sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds thereof,
in whole or in part, which may prove to be invalid or ineffective for any
reason; (C) the failure of the beneficiary of any Letter of Credit to comply in
non-material respects with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they be in cipher; (E) errors in interpretation of technical terms; (F)
any loss or delay in the transmission or otherwise of any document required in
order to make a drawing under any Letter of Credit or of the proceeds thereof;
(G) the misapplication by the beneficiary of any Letter of Credit of the
proceeds of any drawing under such Letter of Credit; or (H) any consequences
arising from causes beyond the control of the Lenders or the Agent, including
any act or omission, whether rightful or wrongful, of any present or future DE
JURE or DE FACTO Governmental Authority. None of the foregoing shall affect,
impair or prevent the vesting of any rights or powers of the Agent or any Lender
under this SECTION 2.4(i).
(3) EXONERATION. In furtherance and extension, and not
in limitation, of the specific provisions set forth above, any action taken
or omitted by the Agent or any Lender under or in connection with any of the
Letters of Credit or any related certificates, if taken or omitted in good
faith, shall not put the Agent or any Lender under any resulting liability to
the Borrower or relieve the Borrower of any of its obligations hereunder to
any such Person. Nothing contained in this Agreement is intended to limit the
Borrower's rights, if any, with respect to the Letter of Credit Issuer which
arise as a result of the letter of credit application and related documents
executed by and between the Borrower and the Letter of Credit Issuer.
(4) INDEMNIFICATION BY LENDERS. The Lenders agree to
indemnify the Letter of Credit Issuer (to the extent not reimbursed by the
Borrower and without limiting the obligations of the Borrower hereunder) ratably
in accordance with their respective Pro Rata Shares, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including attorneys' fees) or disbursements of any kind and
nature whatsoever that may be imposed on, incurred by or asserted against the
Letter of Credit Issuer in any way relating to or arising out of any Letter of
Credit or the transactions contemplated thereby or any action taken or omitted
by the Letter of Credit Issuer under any Letter of Credit or any Loan Document
in connection therewith; PROVIDED that no Lender shall be liable for any of the
foregoing to the extent it arises from the gross negligence or willful
misconduct of the Person to be indemnified. Without limitation of the foregoing,
each Lender agrees to reimburse the Letter of Credit Issuer promptly upon demand
for its Pro Rata Share of any costs or expenses payable by the Borrower to the
Letter of Credit Issuer, to the extent that the Letter of Credit Issuer is not
41
promptly reimbursed for such costs and expenses by the Borrower. The agreement
contained in this section shall survive payment in full of all Obligations.
(5) POWER OF ATTORNEY. In connection with all Inventory
financed by Letters of Credit, the Borrower hereby appoints the Agent, or the
Agent's designee, as its attorney, with full power and authority: (a) to sign
and/or endorse the Borrower's name upon any warehouse or other receipts; (b) to
sign the Borrower's name on bills of lading and other negotiable and
non-negotiable documents; (c) so long as an Event of Default has occurred and is
continuing, to clear Inventory through customs in the Agent's or the Borrower's
name, and to sign and deliver to customs officials powers of attorney in the
Borrower's name for such purpose; (d) so long as an Event of Default has
occurred and is continuing, to complete in the Borrower's or the Agent's name,
any order, sale, or transaction, obtain the necessary documents in connection
therewith, and collect the proceeds thereof; and (e) so long as an Event of
Default has occurred and is continuing, to do such other acts and things as are
necessary in order to enable the Agent to obtain possession or control of the
Inventory and to obtain payment of the Obligations. Neither the Agent nor its
designee, as the Borrower's attorney, will be liable for any acts or omissions,
nor for any error of judgment or mistakes of fact or law. This power, being
coupled with an interest, is irrevocable until all Obligations have been paid
and satisfied.
(6) ACCOUNT PARTY. The Borrower hereby authorizes and
directs any Letter of Credit Issuer to name the Borrower as the "Account Party"
therein and to deliver to the Agent all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit, and to accept and rely upon the Agent's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(7) CONTROL OF INVENTORY. In connection with all Inventory
financed by Letters of Credit, the Borrower or the applicable Guarantor will, at
the Agent's request, instruct all suppliers, carriers, forwarders, customs
brokers, warehouses or others receiving or holding cash, checks, documents or
instruments in which the Agent holds a security interest to deliver them to the
Agent and/or subject to the Agent's order, and if they shall come into the
Borrower's or any Guarantor's possession, to deliver them, upon request, to the
Agent in their original form; provided that Agent shall not make such request
unless the same is necessary to maintain Agent's Lien or unless an Event of
Default has occurred and is continuing. The Borrower shall also, at the Agent's
request, designate the Agent as the consignee on all bills of lading and other
negotiable and non-negotiable documents.
(i) SUPPORTING LETTER OF CREDIT; CASH COLLATERAL. If,
notwithstanding the provisions of SECTION 2.4(b) and SECTION 12.1, any Letter of
Credit or Credit Support is outstanding upon the termination of this Agreement,
then upon such termination the Borrower shall deposit with the Agent, for the
ratable benefit of the Agent and the Lenders, with respect to each Letter of
Credit or Credit Support then outstanding, as the Majority Lenders, in their
discretion shall specify, either (A) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance reasonably satisfactory to the Agent,
issued by an issuer satisfactory to the Agent in an amount equal to the greatest
amount for which such Letter of Credit or such Credit Support may be drawn plus
any fees and expenses associated with such Letter of Credit or such
42
Credit Support, under which Supporting Letter of Credit the Agent is entitled
to draw amounts necessary to reimburse the Agent and the Lenders for payments
to be made by the Agent and the Lenders under such Letter of Credit or Credit
Support and any fees and expenses associated with such Letter of Credit or
Credit Support, or (B) cash in amounts necessary to reimburse the Agent and
the Lenders for payments made by the Agent or the Lenders under such Letter
of Credit or such Credit Support or under any credit support or enhancement
provided through the Agent with respect thereto and any fees and expenses
associated with such Letter of Credit. Such Supporting Letter of Credit or
deposit of cash shall be held by the Agent, for the ratable benefit of the
Agent and the Lenders, as security for, and to provide for the payment of,
the aggregate undrawn amount of such Letters of Credit or such Credit Support
remaining outstanding.
2.5 BANK PRODUCTS. The Borrower may request and the Bank may, in its sole
and absolute discretion, arrange for the Borrower to obtain from the Bank or the
Bank's Affiliates Bank Products although the Borrower is not required to do so.
The Borrower agrees to indemnify and hold the Bank and the Lenders harmless from
any and all costs and obligations now or hereafter incurred by or owing to any
other Person by the Bank or any of the Lenders or the Bank's Affiliates arising
from or related to such Bank Products; PROVIDED, HOWEVER, nothing contained
herein is intended to limit the Borrower's rights, if any, which arise as a
result of the execution of documents by and between the Borrower and the Bank
which relate to Bank Products. The agreement contained in this section shall
survive termination of the Agreement. The Borrower acknowledges and agrees that
the obtaining of Bank Products from the Bank or the Bank's Affiliates (a) is in
the sole and absolute discretion of the Bank or the Bank's Affiliates, and (b)
is subject to all rules and regulations of the Bank or the Bank's Affiliates.
ARTICLE 3
INTEREST AND FEES
3.1 INTEREST.
(a) INTEREST RATES. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate
or the LIBOR Rate and SECTIONS 3.1(a)(i) or (ii), as applicable, but not to
exceed the Maximum Rate described in SECTION 3.3. Subject to the provisions
of SECTION 3.2, any of the Loans may be converted into, or continued as, Base
Rate Loans or LIBOR Rate Loans in the manner provided in SECTION 3.2. If at
any time Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this Agreement
specifying the basis for determining the interest rate applicable thereto,
then those Loans shall be Base Rate Loans and shall bear interest at a rate
determined by reference to the Base Rate until notice to the contrary has
been given to the Agent in accordance with this Agreement and such notice has
become effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
43
(i) For all Base Rate Loans and other Obligations
(other than LIBOR Rate Loans) at a fluctuating per annum rate equal to the
Base Rate plus the Applicable Margin; and
(ii) For all LIBOR Loans at a per annum rate equal to
the LIBOR Rate PLUS the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in CLAUSE (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of 360 days and actual days
elapsed (which results in more interest being paid than if computed on the basis
of a 365-day year). Interest accrued on all Loans will be payable in arrears on
the first day of each month hereafter, each LIBOR Interest Payment Date and on
the Termination Date.
(b) DEFAULT RATE. If any Default or Event of Default occurs
and is continuing and the Agent or the Majority Lenders in their discretion so
elect, then, while any such Default or Event of Default is continuing, all of
the Obligations shall bear interest at the Default Rate applicable thereto.
3.2 CONTINUATION AND CONVERSION ELECTIONS.
(a) The Borrower may, upon irrevocable written notice to the
Agent in accordance with SECTION 3.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Loans to convert any such Loans (or any part thereof in an amount not
less than $10,000,000, or that is in an integral multiple of $1,000,000 in
excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $1,000,000 in excess thereof);
PROVIDED, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into, LIBOR
Rate Loans, as the case may be, shall terminate, and provided further that if
the notice shall fail to specify the duration of the Interest Period, such
Interest Period shall be one month.
(b) The Borrower shall deliver a notice of
conversion/continuation ("Notice of Continuation/Conversion") to be received by
the Agent not later than noon (Chicago time) at least three (3) Business Days in
advance of the Continuation/Conversion Date, if the Loans are to be converted
into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
44
(ii) the aggregate amount of Loans to be converted or
renewed;
(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Period,
PROVIDED, HOWEVER, the Borrower may not select an Interest Period with respect
to any portion of the Loans which extends beyond the Stated Termination Date.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, the Borrower has failed to select timely a new Interest
Period to be applicable to LIBOR Rate Loans or if any Default or Event of
Default then exists, the Borrower shall be deemed to have elected to convert
such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) The Agent will promptly notify each Lender of its receipt
of a Notice of Conversion/Continuation. All conversions and continuations shall
be made ratably according to the respective outstanding principal amounts of the
Loans with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of Default, the
Borrower may not elect to have a Loan converted into or continued as a LIBOR
Rate Loan.
(f) After giving effect to any conversion or continuation of
Loans, there may not be more than fifteen (15) different Interest Periods in
effect hereunder.
3.3 MAXIMUM INTEREST RATE. In no event shall any interest rate provided for
hereunder exceed the maximum rate legally chargeable by any Lender under
applicable law for such Lender with respect to loans of the type provided for
hereunder (the "Maximum Rate"). If, in any month, any interest rate, absent such
limitation, would have exceeded the Maximum Rate, then the interest rate for
that month shall be the Maximum Rate, and, if in future months, that interest
rate would otherwise be less than the Maximum Rate, then that interest rate
shall remain at the Maximum Rate until such time as the amount of interest paid
hereunder equals the amount of interest which would have been paid if the same
had not been limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or accrued under the
terms of this Agreement is less than the total amount of interest which would,
but for this SECTION 3.3, have been paid or accrued if the interest rate
otherwise set forth in this Agreement had at all times been in effect, then the
Borrower shall, to the extent permitted by applicable law, pay the Agent, for
the account of the Lenders, an amount equal to the excess of (a) the lesser of
(i) the amount of interest which would have been charged if the Maximum Rate
had, at all times, been in effect or (ii) the amount of interest which would
have accrued had the interest rate otherwise set forth in this Agreement, at all
times, been in effect over (b) the amount of interest actually paid or accrued
under this Agreement. In the event that a court of competent jurisdiction
determines that the Agent and/or any Lender has received interest and other
charges hereunder in excess of the Maximum Rate, such excess shall be deemed
received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse
45
order of maturity, and if there are no Obligations outstanding, the Agent
and/or such Lender shall refund to the Borrower such excess.
3.4 FACILITY FEE. The Borrower agrees to pay the Agent a facility fee (the
"Facility Fee") in the amount of $3,906,250, which Facility Fee shall be fully
earned on the Closing Date. The Agent, the Lenders and the Borrower agree that
the Facility Fee shall be financed by the Lenders as a Revolving Loan.
3.5 UNUSED LINE FEE. Until the Loans have been paid in full and this
Agreement terminated, the Borrower agrees to pay, on the first day of each month
and on the Termination Date, to the Agent, for the account of the Lenders, in
accordance with their respective Pro Rata Shares, an unused line fee (the
"Unused Line Fee") equal to one-half of one percent (0.50%) per annum times the
amount by which the Maximum Revolver Amount exceeded the sum of the average
daily outstanding amount of Revolving Loans and the average daily undrawn face
amount of outstanding Letters of Credit, during the immediately preceding month
or shorter period if calculated on the Termination Date. The Unused Line Fee
shall be computed on the basis of a 360-day year for the actual number of days
elapsed. All payments received by the Agent shall be deemed to be credited to
the Borrower's Loan Account immediately upon receipt for purposes of calculating
the Unused Line Fee pursuant to this SECTION 3.5.
3.6 LETTER OF CREDIT FEE. The Borrower agrees to pay to the Agent, for the
account of the Lenders, in accordance with their respective Pro Rata Shares, for
each Letter of Credit, a fee (the "Letter of Credit Fee") equal to two percent
(2.0%) per annum of the undrawn face amount of each Letter of Credit, PLUS all
reasonable out-of-pocket costs, fees and expenses incurred by the Agent in
connection with the application for, processing of, issuance of, or amendment to
any Letter of Credit, which costs, fees and expenses shall not include a
"fronting fee" if the Bank is the Letter of Credit Issuer. The Letter of Credit
Fee shall be payable monthly in arrears on the first day of each month following
any month in which a Letter of Credit was issued and/or in which a Letter of
Credit remains outstanding and on the Termination Date. The Letter of Credit Fee
shall be computed on the basis of a 360-day year for the actual number of days
elapsed.
3.7 SYNDICATION FEE. The Borrower agrees to pay the agent on the Closing
Date a syndication fee (the "Syndication Fee") in the amount of $6,250,000,
which Syndication Fee shall be fully earned on the Closing Date. The Agent, the
Lenders and the Borrower agree that the Syndication Fee shall be financed by the
Lenders as a Revolving Loan.
3.8 ADMINISTRATION FEE. The Borrower agrees to pay to the Agent an
administration fee (the "Administration Fee") in the amount of $250,000 on the
Closing Date and $125,000 on the first anniversary of the Closing Date. The
Agent, the Lenders and the Borrower agree that the Administration Fee shall be
financed by the Lenders as Revolving Loans.
46
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 REVOLVING LOANS. The Borrower shall repay the outstanding principal
balance of the Revolving Loans, plus all accrued but unpaid interest thereon, on
the Termination Date. The Borrower may prepay (without premium or penalty)
Revolving Loans at any time, and reborrow subject to the terms of this
Agreement; PROVIDED, HOWEVER, that with respect to any LIBOR Revolving Loans
prepaid by the Borrower prior to the expiration date of the Interest Period
applicable thereto, the Borrower shall pay to the Agent for account of the
Lenders the amounts described in SECTION 5.4. In addition, and without limiting
the generality of the foregoing, upon demand the Borrower shall pay to the
Agent, for account of the Lenders, the amount, without duplication, by which the
Aggregate Revolver Outstandings exceeds the Borrowing Base.
4.2 TERMINATION OF FACILITY. The Borrower may terminate this Agreement upon
at least thirty (30) Business Days' notice to the Agent and the Lenders, upon
(a) the payment in full of all outstanding Revolving Loans, together with
accrued interest thereon, and the cancellation and return of all outstanding
Letters of Credit, (b) the prepayment in full of the Term Loan, together with
accrued and unpaid interest thereon, (c) the payment of all unpaid expenses
reimbursable hereunder, (d) the payment in full in cash of all other Obligations
together with accrued and unpaid interest thereon, and (e) with respect to any
LIBOR Rate Loans prepaid in connection with such termination prior to the
expiration date of the Interest Period applicable thereto, the payment of the
amounts described in SECTION 5.4.
4.3 REPAYMENT OF THE TERM LOAN. The Borrower agrees to repay the principal
of the Term Loan to the Agent, for the account of the Lenders a single
installment on the Stated Termination Date unless sooner paid in full.
4.4 VOLUNTARY PREPAYMENTS OF THE TERM LOAN. The Borrower may prepay the
principal of the Term Loan in whole or in part, at any time and from time to
time without premium or penalty upon (a) at least five (5) Business Days' prior
written notice to the Agent and the Lenders, and (b) payment of, with respect to
any LIBOR Term Loan to be prepaid prior to the expiration date of the Interest
Period applicable thereto, the amounts described in SECTION 5.4. All voluntary
prepayments of the principal of the Term Loan shall be accompanied by the
payment of all accrued but unpaid interest on the Term Loan to the date of
prepayment. Amounts prepaid in respect of the Term Loan pursuant to this SECTION
4.4 may not be reborrowed.
4.5 MANDATORY PREPAYMENTS OF THE LOANS. The Borrower shall prepay the Term
Loan (or if the Term Loan has been paid, in full, the Borrower shall prepay the
Revolving Loans and the Maximum Revolver Amount shall be permanently reduced by
a corresponding amount) with the cash proceeds (net of reasonable and customary
commissions and closing fees, expenses and taxes payable as a result of such
sale or disposition, if any) from the sale or other disposition of Subsidiaries
of Borrower or any Guarantor, any assets of the Borrower or any Guarantor (other
than the sales or dispositions of Inventory in the ordinary course of business)
or any lines of business of the Borrower or any Guarantor, except that (subject
to the proviso set forth below):
47
(a) to the extent that all such proceeds from such sales or
other dispositions of Term Collateral do not exceed $10,000,000 in the
aggregate, such proceeds shall be applied to prepayment of the Revolving Loans
without reduction of the Maximum Revolver Amount;
(b) such proceeds from any such sale or other disposition that
include Accounts and Inventory, to the extent of Revolving Loans advanced
against such Accounts and Inventory, shall be applied to the prepayment of the
Revolving Loans without reduction of the Maximum Revolver Amount, and any such
excess proceeds of such Accounts and Inventory shall be treated as proceeds of
Other Collateral and applied in accordance with clause (c) below:
(c) except as provided in clause (b) above, 50% of such
proceeds from the sale or other disposition of Other Collateral shall be applied
to the prepayment of the Term Loan (or if the Term Loan has been paid in full,
50% to the prepayment of the Revolving Loans, with a corresponding permanent
reduction of the Maximum Revolver Amount) and 50% of such proceeds shall be
applied to the prepayment of the Revolving Loans without reduction of the
Maximum Revolver Amount;
PROVIDED, HOWEVER, that the aggregate amount of proceeds, such sales or other
dispositions of Collateral that may be applied to the Revolving Loans without
reduction of the Maximum Revolver Amount shall be limited to $50,000,000 under
clauses (a) and (c) above (including the $10,000,000 amount referred to in
clause (a) above) and any such proceeds in excess of $50,000,000 shall be
applied as a pre-payment of the Term Loan (or, if the Term Loan has been paid in
full, such excess shall be applied to the Revolving Loans with a corresponding
permanent reduction of the Maximum Revolver Amount). For purposes of determining
the application of proceeds from the sale of the common stock or other equity
interests of any Subsidiary of the Borrower (or any Guarantor) such sale shall
be treated as a sale of the underlying assets of the applicable Subsidiary. For
purposes of clause (b) above, Aggregate Revolver Outstandings shall be deemed to
have been advanced, first, against the Accounts and Inventory sold or otherwise
disposed of, as opposed to other Accounts and Inventory reflected in the
Borrowing Base as of the date of such sale or other disposition. If any LIBOR
Loan is prepaid prior to the expiration date of the Interest Period applicable
thereto, the Borrower shall pay to the Lenders the amounts described in Section
5.4.
4.6 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made
without set-off, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the Agent for the
account of the Lenders , at the account designated by the Agent and shall be
made in Dollars and in immediately available funds, no later than 2:00 p.m.
(Chicago time) on the date specified herein. Any payment received by the Agent
later than 2:00 p.m. (Chicago time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be
48
due on the following Business Day, and such extension of time shall in such
case be included in the computation of interest or fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower prior
to the date on which any payment is due to the Lenders that the Borrower will
not make such payment in full as and when required, the Agent may assume that
the Borrower has made such payment in full to the Agent on such date in
immediately available funds and the Agent may (but shall not be so required), in
reliance upon such assumption, distribute to each Lender on such due date an
amount equal to the amount then due such Lender. If and to the extent the
Borrower has not made such payment in full to the Agent, each Lender shall repay
to the Agent on demand such amount distributed to such Lender, together with
interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.7 PAYMENTS AS REVOLVING LOANS. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums and other sums payable hereunder,
including all reimbursement for expenses pursuant to SECTION 15.7, may, at the
option of the Agent, in its sole discretion, subject only to the terms of this
SECTION 4.7, be paid from the proceeds of Revolving Loans made hereunder,
whether made following a request by the Borrower pursuant to SECTION 2.2 or a
deemed request as provided in this SECTION 4.7. The Borrower hereby irrevocably
authorizes the Agent to charge the Loan Account for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit, fees, premiums and other sums payable hereunder, including reimbursing
expenses pursuant to SECTION 15.7, and agrees that all such amounts charged
shall constitute Revolving Loans (including Non-Ratable Loans and Agent
Advances) and that all such Revolving Loans so made shall be deemed to have been
requested by Borrower pursuant to SECTION 2.2.
4.8 APPORTIONMENT, APPLICATION AND REVERSAL OF PAYMENTS. Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders. All payments shall be remitted to the Agent and all
such payments not relating to principal or interest of specific Loans, or not
constituting payment of specific fees, and all proceeds of Accounts or other
Collateral received by the Agent, shall be applied, ratably, subject to SECTION
4.5 above, FIRST, to pay any fees, indemnities or expense reimbursements,
including any amounts relating to Bank Products then due to the Agent from the
Borrower; SECOND, to pay any reasonable fees or expense reimbursements then due
to the Lenders from the Borrower; THIRD, to pay interest due in respect of all
Revolving Loans, including Non-Ratable Loans and Agent Advances; FOURTH, to pay
or prepay principal of the Non-Ratable Loans and Agent Advances; FIFTH, to pay
or prepay principal of the Revolving Loans (other than Non-Ratable Loans and
Agent Advances) and unpaid reimbursement obligations in respect of Letters of
Credit; SIXTH, to pay or prepay principal of the Term Loan; and SEVENTH, to the
payment of any other Obligation including any amounts relating to Bank Products
due to the Agent or any Lender by the Borrower. Notwithstanding anything to the
contrary contained in this Agreement, unless so directed by the Borrower, or
unless an Event of Default has occurred and is continuing, neither the Agent nor
any Lender shall apply any payments which it receives to any LIBOR Revolving
Loan or LIBOR Term Loan, except (a) on
49
the expiration date of the Interest Period applicable to any such LIBOR Rate
Loan, or (b) in the event, and only to the extent, that there are no
outstanding Base Rate Revolving Loans or Base Rate Term Loans. The Agent
shall promptly distribute to each Lender, pursuant to the applicable wire
transfer instructions received from each Lender in writing, such funds as it
may be entitled to receive, subject to a Settlement delay as provided for in
SECTION 2.2(j). The Agent and the Lenders shall have the continuing and
exclusive right to apply and reverse and reapply any and all such proceeds
and payments to any portion of the Obligations.
4.9 INDEMNITY FOR RETURNED PAYMENTS. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, the
Agent or any Lender is for any reason compelled to surrender such payment or
proceeds to any Person because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, then the Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall
continue in full force as if such payment or proceeds had not been received
by the Agent or such Lender and the Borrower shall be liable to pay to the
Agent and the Lenders, and hereby does indemnify the Agent and the Lenders
and hold the Agent and the Lenders harmless for the amount of such payment or
proceeds surrendered. The provisions of this SECTION 4.9 shall be and remain
effective notwithstanding any contrary action which may have been taken by
the Agent or any Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Agent's and the Lenders' rights under this Agreement and shall be deemed
to have been conditioned upon such payment or application of proceeds having
become final and irrevocable. The provisions of this SECTION 4.9 shall
survive the termination of this Agreement.
4.10 AGENT'S AND LENDERS' BOOKS AND RECORDS; MONTHLY STATEMENTS. The
Borrower agrees that the Agent's and each Lender's books and records showing
the Obligations and the transactions pursuant to this Agreement and the other
Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof thereof absent
manifest error, irrespective of whether any Obligation is also evidenced by a
promissory note or other instrument. The Agent will provide to the Borrower a
monthly statement of Loans, payments, and other transactions pursuant to this
Agreement. Such statement shall be deemed correct, accurate, and binding on
the Borrower and an account stated (except for reversals and reapplications
of payments made as provided in SECTION 4.8 and corrections of errors
discovered by the Agent), unless the Borrower notifies the Agent in writing
to the contrary within thirty (30) days after such statement is rendered. In
the event a timely written notice of objections is given by the Borrower,
only the items to which exception is expressly made will be considered to be
disputed by the Borrower.
50
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 TAXES.
(a) Any and all payments by the Borrower to each Lender or
the Agent under this Agreement and any other Loan Document shall be made free
and clear of, and without deduction or withholding for any Taxes. In
addition, the Borrower shall pay all Other Taxes, unless any such penalty,
interest or addition to tax is the result of any failure of the applicable
Lender to file appropriate documentation in a timely manner.
(b) The Borrower agrees to indemnify and hold harmless each
Lender and the Agent for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section) paid by the Lender or the Agent and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted, unless any such penalty, interest or addition to tax is the
result of any failure of the applicable Lender to file appropriate
documentation in a timely manner. Payment under this indemnification shall be
made within 30 days after the date the Lender or the Agent makes written
demand therefor.
(c) If the Borrower shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section) such Lender or the Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions or
withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest is paid, all
additional amounts which the respective Lender specifies as necessary to
preserve the after-tax yield the Lender would have received if such Taxes or
Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Borrower of Taxes or Other Taxes, the Borrower shall furnish the Agent the
original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Agent.
51
(e) If the Borrower is required to pay additional amounts
to any Lender or the Agent pursuant to SUBSECTION (c) of this Section, then
such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office so
as to eliminate any such additional payment by the Borrower which may
thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.
5.2 ILLEGALITY.
(a) If any Lender determines that the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has
asserted that it is unlawful, for any Lender or its applicable lending office
to make LIBOR Rate Loans, then, on notice thereof by that Lender to the
Borrower through the Agent, any obligation of that Lender to make LIBOR Rate
Loans shall be suspended until the Lender notifies the Agent and the Borrower
that the circumstances giving rise to such determination no longer exist.
(b) If a Lender determines that it is unlawful to maintain
any LIBOR Rate Loan, the Borrower shall, upon its receipt of notice of such
fact and demand from such Lender (with a copy to the Agent), prepay in full
such LIBOR Rate Loans of that Lender then outstanding, together with interest
accrued thereon and amounts required under SECTION 5.4, either on the last
day of the Interest Period thereof, if the Lender may lawfully continue to
maintain such LIBOR Rate Loans to such day, or immediately, if the Lender may
not lawfully continue to maintain such LIBOR Rate Loans. If the Borrower is
required to so prepay any LIBOR Rate Loans, then concurrently with such
prepayment, the Borrower shall borrow from the affected Lender, in the amount
of such repayment, a Base Rate Loan.
5.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender determines that due to either (i) the
introduction of or any change in the interpretation of any law or regulation
or (ii) the compliance by that Lender 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 to such Lender of agreeing
to make or making, funding or maintaining any LIBOR Rate Loans, then the
Borrower shall be liable for, and shall from time to time, upon demand (with
a copy of such demand to be sent to the Agent), pay to the Agent for the
account of such Lender, additional amounts as are sufficient to compensate
such Lender for such increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any corporation
or other entity controlling such Lender with any Capital Adequacy Regulation,
affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation or other entity controlling such
Lender and (taking into consideration such Lender's or such corporation's or
other entity's policies with
52
respect to capital adequacy and such Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of
its Commitments, loans, credits or obligations under this Agreement, then,
upon demand of such Lender to the Borrower through the Agent, the Borrower
shall pay to such Lender, from time to time as specified by such Lender,
additional amounts sufficient to compensate such Lender for such increase.
5.4 FUNDING LOSSES. The Borrower shall reimburse each Lender and hold
each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of:
(a) the failure of the Borrower to make on a timely basis
any payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrower to borrow, continue or
convert a Loan after the Borrower has given (or is deemed to have given) a
Notice of Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loans on a day that is not the last
day of the relevant Interest Period;
including any such lost profit and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain its LIBOR
Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrower shall also pay any customary administrative
fees charged by any Lender in connection with the foregoing.
5.5 INABILITY TO DETERMINE RATES
If the Agent determines that for any reason adequate and
reasonable means do not exist for determining the LIBOR Rate for any
requested Interest Period with respect to a proposed LIBOR Rate Loan, or that
the LIBOR Rate for any requested Interest Period with respect to a proposed
LIBOR Rate Loan does not adequately and fairly reflect the cost to the
Lenders of funding such Loan, the Agent will promptly so notify the Borrower
and each Lender. Thereafter, the obligation of the Lenders to make or
maintain LIBOR Rate Loans hereunder shall be suspended until the Agent
revokes such notice in writing. Upon receipt of such notice, the Borrower may
revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Borrower does not revoke such Notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Borrower, in
the amount specified in the applicable notice submitted by the Borrower, but
such Loans shall be made, converted or continued as Base Rate Loans instead
of LIBOR Rate Loans.
5.6 CERTIFICATES OF LENDERS
Any Lender claiming reimbursement or compensation under this Article
5 shall deliver to the Borrower (with a copy to the Agent) a certificate
setting forth in reasonable detail the amount payable to such Lender
hereunder and such certificate shall be conclusive and binding on the
Borrower in the absence of manifest error.
53
5.7 SURVIVAL. The agreements and obligations of the Borrower in this
Article 5 shall survive the payment of all other Obligations.
5.8 CHANGE OF OFFICE. If any Lender exercises its rights under either of
Sections 5.2 or 5.3, such Lender agrees to take the actions described in
Section 5.1(e) to the extent practicable so as to avoid the restrictions set
forth in Section 5.2 or the increased costs set forth in Section 5.3.
ARTICLE 6
COLLATERAL
6.1 GRANT OF SECURITY INTEREST.
(a) As security for all Obligations, the Borrower and each
Guarantor hereby grant to the Agent, for the benefit of the Agent and the
Lenders, a continuing security interest in, lien on, assignment of and right
of set-off against, all of the following property and assets of the Borrower
and each Guarantor, whether now owned or existing or hereafter acquired or
arising, regardless of where located:
(i) all Accounts (including any credit
enhancement therefor);
(ii) all Inventory;
(iii) all contract rights, letters of credit,
Assigned Contracts, chattel paper, instruments, notes, documents, and
documents of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all Investment Property;
(vii) all money, cash, cash equivalents,
securities and other property of any kind of the Borrower or any Guarantor
held directly or indirectly by the Agent or any Lender;
(viii) all of the Borrower's and each Guarantor's
deposit accounts, credits, and balances with and other claims against the
Agent or any Lender or any of their Affiliates or any other financial
institution with which the Borrower or any Guarantor maintains deposits,
including any Payment Accounts;
(ix) all books, records and other property
related to or referring to any of the foregoing, including books, records,
account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of
the foregoing; and
54
(x) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but
not limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to all or any
of the foregoing.
All of the foregoing, together with the Real Estate, all of the capital stock
of Borrower, each Guarantor and all of their Subsidiaries (which shall be
pledged and delivered to Agent within fifteen (15) days after the Closing
Date) and all other property of the Borrower and each Guarantor in which the
Agent or any Lender may at any time be granted a Lien, is herein collectively
referred to as the "Collateral"; provided that Avoidance Recoveries are
expressly excluded from the Collateral; provided further, that the Borrower
and the Guarantors shall only be obligated to pledge 65% of the outstanding
capital stock of any Foreign Subsidiary if, within that fifteen-day period,
the Borrower demonstrates to Agent's reasonable satisfaction that the pledge
of two-thirds or more of the outstanding capital stock of that Foreign
Subsidiary would result in a material incremental income tax liability under
Section 956 of the Internal Revenue Code, as amended, taking into account all
relevant factors, including all net operating losses of the Parent or the
Borrower on a consolidated basis.
(b) If necessary to perfect or maintain Agent's Lien, as
determined by Agent, the Borrower and each Guarantor shall upon Agent's
request, execute and deliver to the Agent the Mortgage(s) on the Real Estate.
(c) All of the Obligations shall be secured by all of the
Collateral.
6.2 PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) The Borrower and each Guarantor shall, at their
expense, perform all steps reasonably requested by the Agent at any time to
perfect, maintain, protect, and enforce the Agent's Liens, including: (i)
executing, delivering and/or filing and recording of the Mortgage(s), the
Patent and Trademark Agreements, Pledge Agreements, Subsidiaries' share
certificates and stock powers, and executing and filing financing or
continuation statements, and amendments thereof, in form and substance
reasonably satisfactory to the Agent; (ii) delivering to the Agent the
originals of all instruments, documents, and chattel paper, and all other
Collateral of which the Agent determines it should have physical possession
in order to perfect and protect the Agent's security interest therein, duly
pledged, endorsed or assigned to the Agent without restriction, including all
instruments and chattel paper constituting proceeds of asset dispositions;
(iii) delivering to the Agent warehouse receipts covering any portion of the
Collateral located in warehouses and for which warehouse receipts are issued
and certificates of title covering any portion of the collateral for which
certificates of title have been issued; (iv) when an Event of Default exists,
transferring Inventory to warehouses or other locations designated by the
Agent; (v) placing notations on the Borrower's and the Guarantors' books of
account to disclose the Agent's security interest; (vi) delivering to the
Agent all letters of credit on which the Borrower or any Guarantor is named
beneficiary; and (vii) taking such other steps as are deemed necessary or
desirable by the Agent to maintain and protect the Agent's Liens. To the
extent permitted by applicable law, the Agent may file, without the
Borrower's or any Guarantor's signature, one or more financing statements
disclosing the Agent's Liens. The
55
Borrower and each Guarantor agree that a carbon, photographic, photostatic,
or other reproduction of this Agreement or of a financing statement is
sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Borrower's or any
Guarantor's agents or processors, then the Borrower or the applicable
Guarantor shall notify the Agent thereof and shall, at the request of Agent,
notify such Person of the Agent's security interest in such Collateral and
instruct such Person to hold all such Collateral for the Agent's account
subject to the Agent's instructions. If at any time any Collateral is located
in any operating facility of the Borrower or any Guarantor not owned by the
Borrower or the applicable Guarantor, then the Borrower or the applicable
Guarantor shall, at the request of the Agent, obtain written landlord lien
waivers or subordinations, in form and substance reasonably satisfactory to
the Agent, of all present and future Liens to which the owner or lessor of
such premises may be entitled to assert against the Collateral.
(c) From time to time, the Borrower and each Guarantor
shall, upon the Agent's request, execute and deliver confirmatory written
instruments pledging to the Agent, for the ratable benefit of the Agent and
the Lenders, the Collateral, but the failure to do so shall not affect or
limit any security interest or any other rights of the Agent or any Lender in
and to the Collateral. So long as this Agreement is in effect and until all
Obligations have been fully satisfied, the Agent's Liens shall continue in
full force and effect in all Collateral (whether or not deemed eligible for
the purpose of calculating the Availability or as the basis for any advance,
loan, extension of credit, or other financial accommodation).
6.3 LOCATION OF COLLATERAL. The Borrower and each Guarantor represents
and warrants to the Agent and the Lenders that: (a) SCHEDULE 6.3 is a correct
and complete list of the Borrower's and each Guarantor's chief executive
office, the location of its books and records, the locations of the
Collateral, and the locations of all of its other places of business; and (b)
SCHEDULE 6.3 correctly identifies any of such facilities and locations that
are not owned by the Borrower or the applicable Guarantor and sets forth the
names of the owners and lessors or sublessors of such facilities and
locations. The Borrower and each Guarantor agrees that it will not (i)
maintain any Collateral at any location other than those locations listed for
the Borrower and such Guarantor on SCHEDULE 6.3, (ii) otherwise change or add
to any of such locations, or (iii) change the location of its chief executive
office from the location identified in SCHEDULE 6.3, unless it gives the
Agent at least thirty (30) days' prior written notice thereof and executes
any and all financing statements and other documents that the Agent
reasonably requests in connection therewith. Without limiting the foregoing,
the Borrower and each Guarantor represents that all of its Eligible Inventory
(other than Inventory in transit) is, and covenants that all of its Eligible
Inventory will be, located either (a) on premises owned by the Borrower or
the applicable Guarantor, (b) on premises leased by the Borrower or the
applicable Guarantor, provided that the Agent has, if requested by the Agent,
received an executed landlord waiver from the landlord of such premises in
form and substance satisfactory to the Agent, or (c) in a warehouse or with a
bailee, provided that the Agent has, if requested by the Agent, received an
executed bailee letter from the applicable Person in form and substance
satisfactory to the Agent.
56
6.4 TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. The Borrower and
each Guarantor represent and warrant to the Agent and the Lenders and agree
with the Agent and the Lenders that: (a) all of the Collateral is and will
continue to be owned by the Borrower or the applicable Guarantor free and
clear of all Liens whatsoever, except for Permitted Liens; (b) the Agent's
Liens in the Collateral will not be subject to any prior Lien except for
those Liens identified in CLAUSES (c), (d) and (e) of the definition of
Permitted Liens; and (c) the Borrower or the applicable Guarantor will use,
store, and maintain the Collateral with all reasonable care and will use such
Collateral for lawful purposes only.
6.5 APPRAISALS. Whenever a Default or Event of Default exists, and at
such other times not more frequently than once a year as the Agent requests,
the Borrower and each Guarantor shall, at its expense and upon the Agent's
request, provide the Agent with appraisals or updates thereof of any or all
of the Collateral from an appraiser, and prepared on a basis, satisfactory to
the Agent, such appraisals and updates to include, without limitation,
information required by applicable law and regulation and by the internal
policies of the Lenders.
6.6 ACCESS AND EXAMINATION; CONFIDENTIALITY; CONSENT TO ADVERTISING.
(a) The Agent, accompanied by any Lender which so elects,
may at all reasonable times during regular business hours (and at any time
when a Default or Event of Default exists and is continuing) have reasonable
access to, examine, audit, make extracts from or copies of and inspect any or
all of the Borrower's and each Guarantor's records, files, and books of
account and the Collateral, and discuss the Borrower's and each Guarantor's
affairs with the Borrower's and such Guarantor's officers and management. The
Borrower and each Guarantor will deliver to the Agent any instrument
necessary for the Agent to obtain records from any service bureau maintaining
records for the Borrower or such Guarantor. The Agent may, and at the
direction of the Majority Lenders shall, at any time when a Default or Event
of Default exists, and at the Borrower's and the Guarantor's expense, make
copies of all of the Borrower's and each Guarantor's books and records, or
require the Borrower or the applicable Guarantor to deliver such copies to
the Agent. The Agent may, without expense to the Agent, use such of the
Borrower's and each Guarantor's respective personnel, supplies, and Real
Estate as may be reasonably necessary for maintaining or enforcing the
Agent's Liens. The Agent shall have the right, at any time, in the Agent's
name or in the name of a nominee of the Agent, to verify the validity, amount
or any other matter relating to the Accounts, Inventory, or other Collateral,
by mail, telephone, or otherwise.
(b) The Borrower and each Guarantor hereby consent that the
Agent and each Lender may issue standard tombstones with respect to the
transactions contemplated hereby without the Borrower's review and approval
and subject to the Borrower's prior review and approval, which shall not be
unreasonably withheld, may publish information describing the credit
accommodation entered into pursuant to this Agreement, including the name and
address of the Borrower and a general description of the Borrowers business
and may use the Borrower's name in advertising and other promotional material.
(c) Each Lender severally agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality
of all information identified as
57
"confidential" or "secret" by the Borrower and provided to the Agent or such
Lender by or on behalf of the Borrower, under this Agreement or any other
Loan Document, except to the extent that such information (i) was or becomes
generally available to the public other than as a result of disclosure by the
Agent or such Lender, or (ii) was or becomes available on a nonconfidential
basis from a source other than the Borrower or any Guarantor, provided that
such source is not bound by a confidentiality agreement with the Borrower
known to the Agent or such Lender; PROVIDED, HOWEVER, that the Agent and any
Lender may disclose such information (1) at the request or pursuant to any
requirement of any Governmental Authority to which the Agent or such Lender
is subject or in connection with an examination of the Agent or such Lender
by any such Governmental Authority; (2) pursuant to subpoena or other court
process; (3) when required to do so in accordance with the provisions of any
applicable Requirement of Law or any order of the Bankruptcy Court; (4) to
the extent reasonably required in connection with any litigation or
proceeding (including, but not limited to, any bankruptcy proceeding) to
which the Agent, any Lender or their respective Affiliates may be party; (5)
to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (6) to the Agent's or such
Lender's independent auditors, accountants, attorneys and other professional
advisors; (7) to any prospective Participant or Assignee under any Assignment
and Acceptance, actual or potential, provided that such prospective
Participant or Assignee agrees to keep such information confidential to the
same extent required of the Agent and the Lenders hereunder; (8) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party with the
Agent or such Lender, and (9) to its Affiliates.
6.7 COLLATERAL REPORTING. The Borrower shall provide the Agent with the
following documents at the following times in form reasonably satisfactory to
the Agent: (a) on a weekly basis, or more frequently if requested by the
Agent, a schedule of the Accounts created since the last such schedule and a
Borrowing Base Certificate; (b) on a monthly basis, by the twentieth (20th)
day of the following month, or more frequently if requested by the Agent, an
aging of the Accounts; (c) on a monthly basis, by the twentieth (20th) day of
the following month, a summary of professional fees and disbursements
incurred by the Borrower and the Guarantors and any statutory committee in
the Bankruptcy Cases, a comparison of those payments during the preceding
month to the Fee Budget for that month and a summary of all such fees and
expenses that remain unpaid; (d) on a monthly basis by the last day of the
following month (or more frequently if requested by the Agent), Inventory
reports by category and location, with additional detail showing additions to
and deletions from the Inventory, together with a reconciliation to the
Borrower's general ledger; (e) upon request, copies of invoices in connection
with the Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping and delivery documents in connection with
the Accounts and for Inventory and Equipment acquired by the Borrower or any
Guarantor, purchase orders and invoices; (f) upon request, a statement of the
balance of each of the Intercompany Accounts; (g) such other reports as to
the Collateral as the Agent shall reasonably request from time to time; and
(h) with the delivery of each of the foregoing, a certificate of the Borrower
executed by an officer thereof certifying as to the accuracy and completeness
of the foregoing. If the Borrower's or any Guarantor's records or reports of
the Collateral are prepared by an accounting service or other agent, the
Borrower and
58
such Guarantor hereby authorizes such service or agent to deliver such
records, reports, and related documents to the Agent, for distribution to the
Lenders.
6.8 ACCOUNTS.(a) The Borrower and each Guarantor hereby represent and
warrant to the Agent and the Lenders, with respect to the Accounts, that: (i)
each existing Account represents, and each future Account will represent, a
BONA FIDE sale or lease and delivery of goods by the Borrower or the
applicable Guarantor, or rendition of services by the Borrower or the
applicable Guarantor, in the ordinary course of the Borrower's or such
Guarantor's business; (ii) each existing Account is, and each future Account
will be, for a liquidated amount payable by the Account Debtor thereon on the
terms set forth in the invoice therefor or in the schedule thereof delivered
to the Agent, without any offset, deduction, defense, or counterclaim except
those known to the Borrower or the applicable Guarantor and disclosed to the
Agent and the Lenders pursuant to this Agreement; (iii) no payment will be
received with respect to any Account, and no credit, discount, or extension,
or agreement therefor will be granted on any Account, except as reported to
the Agent and the Lenders in accordance with this Agreement; (iv) each copy
of an invoice delivered to the Agent by the Borrower or the applicable
Guarantor will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) all goods described in any invoice representing
a sale of goods will have been delivered to the Account Debtor and all
services of the Borrower or the applicable Guarantor described in each
invoice will have been performed.
(b) Neither the Borrower nor any Guarantor shall re-date
any invoice or sale or make sales on extended dating beyond that customary in
the Borrower's or the applicable Guarantor's business or extend or modify any
Account. If the Borrower or any Guarantor becomes aware of any matter
adversely affecting the collectibility of any Account or the Account Debtor
therefor involving an amount greater than $1,000,000, including information
regarding the Account Debtor's creditworthiness, the Borrower will promptly
so advise the Agent.
(c) Neither the Borrower nor any Guarantor shall accept any
note or other instrument (except a check or other instrument for the
immediate payment of money) with respect to any Account without the Agent's
written consent which shall not be unreasonably withheld or delayed. If the
Agent consents to the acceptance of any such instrument, it shall be
considered as evidence of the Account and not payment thereof and the
Borrower or the applicable Guarantor will promptly deliver such instrument to
the Agent, endorsed by the Borrower or the applicable Guarantor to the Agent
in a manner satisfactory in form and substance to the Agent. Regardless of
the form of presentment, demand or notice of protest with respect thereto,
the Borrower or the applicable Guarantor shall remain liable thereon until
such instrument is paid in full.
(d) The Borrower shall notify the Agent promptly of all
disputes and claims in excess of $1,000,000 with any Account Debtor, and the
Borrower and each Guarantor agrees to settle, contest, or adjust such dispute
or claim at no expense to the Agent or any Lender. No discount, credit or
allowance shall be granted to any such Account Debtor without the Agent's
prior written consent, except for discounts, credits and allowances made or
given in the ordinary course of the Borrower's or the applicable Guarantor's
business when no Event of Default exists hereunder. The Borrower shall send
the Agent a copy of each credit memorandum in excess of
59
$1,000,000 as soon as issued. The Agent may at all times when an Event of
Default exists hereunder, settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms which the Agent or the Required
Lenders, as applicable, shall consider advisable and, in all cases, the Agent
will credit the Borrower's Loan Account with the net amounts received by the
Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to the Borrower
or any Guarantor when no Event of Default exists, then the Borrower or the
applicable Guarantor shall promptly determine the reason for such return and
shall issue a credit memorandum to the Account Debtor in the appropriate amount.
The Borrower shall immediately report to the Agent any return involving an
amount in excess of $500,000. Each such report shall indicate the reasons for
the returns and the locations and condition of the returned Inventory. In the
event any Account Debtor returns Inventory to the Borrower or any Guarantor when
an Event of Default exists, the Borrower or the applicable Guarantor, upon the
request of the Agent, shall: (i) hold the returned Inventory in trust for the
Agent; (ii) segregate all returned Inventory from all of its other property;
(iii) dispose of the returned Inventory solely according to the Agent's written
instructions; and (iv) not issue any credits or allowances with respect thereto
without the Agent's prior written consent. All returned Inventory shall be
subject to the Agent's Liens thereon. Whenever any Inventory is returned, the
related Account shall be deemed ineligible to the extent of the amount owing by
the Account Debtor with respect to such returned Inventory.
6.9 COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Agent notifies the Borrower to the contrary, the
Borrower and the Guarantors shall make collection of all Accounts and other
Collateral for the Agent, shall receive all payments as the Agent's trustee, and
shall immediately deliver all payments in their original form duly endorsed in
blank into a Payment Account established for the account of the Borrower and the
Guarantors at a Clearing Bank reasonably acceptable to the Agent, subject to a
Blocked Account Agreement. Within ten (10) days following the Closing Date, the
Borrower and each Guarantor shall establish a lock-box service for collections
of Accounts at a Clearing Bank reasonably acceptable to the Agent and subject to
a Blocked Account Agreement and other documentation reasonably acceptable to the
Agent. If such lock-box service is established, the Borrower and the applicable
Guarantor shall instruct all Account Debtors to make all payments directly to
the address established for such service. If, notwithstanding such instructions,
the Borrower or any Guarantor receives any proceeds of Accounts, it shall
receive such payments as the Agent's trustee, and shall immediately deliver such
payments to the Agent in their original form duly endorsed in blank or deposit
them into a Payment Account, as the Agent may direct. All collections received
in any lock-box or Payment Account or directly by the Borrower or any Guarantor
or the Agent, and all funds in any Payment Account or other account to which
such collections are deposited shall be subject to the Agent's sole control and
withdrawals by the Borrower and the Guarantors shall not be permitted. The Agent
or the Agent's designee may, at any time after the occurrence and during the
continuation of an Event of Default, notify Account Debtors that the Accounts
have been assigned to the Agent and of the Agent's security interest therein,
and may collect them directly and charge the collection costs and expenses to
the Loan Account as a Revolving Loan. So long as an Event of Default has
occurred and is continuing, the Borrower and each Guarantor, at the Agent's
request, shall execute and deliver to the Agent
60
such documents as the Agent shall require to grant the Agent access to any
post office box in which collections of Accounts are received.
(b) If sales of Inventory are made or services are rendered
for cash, the Borrower or the applicable Guarantor shall immediately deliver to
the Agent or deposit into a Payment Account the cash which the Borrower or such
Guarantor receives.
(c) All payments received by the Agent at a bank account
designated by it, will be the Agent's sole property for its benefit and the
benefit of the Lenders and will be credited to the Loan Account upon collection
of immediately available funds with respect thereto.
(d) In the event the Borrower repays all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Agent's receipt of payments on account of the Accounts or
proceeds of the other Collateral, such payment will be credited to the
Borrower's Loan Account upon receipt of immediately available funds by Agent.
6.10 INVENTORY; RECORDS. The Borrower and each Guarantor represent and
warrant to the Agent and the Lenders and agree with the Agent and the Lenders
that all of the Inventory owned by the Borrower and each Guarantor is and will
be held for sale or lease, or to be furnished in connection with the rendition
of services, in the ordinary course of the Borrower's or the applicable
Guarantor's business, and is and will be fit for such purposes. The Borrower and
each Guarantor will keep its Inventory in good and marketable condition, except
for damaged or defective goods arising in the ordinary course of the Borrower's
or the applicable Guarantor's business. Neither the Borrower nor any Guarantor
will, without the prior written consent of the Agent, acquire or accept any
Inventory on consignment or approval. The Borrower and each Guarantor agree that
all Inventory produced by the Borrower or such Guarantor in the United States of
America will be produced in accordance with the Federal Fair Labor Standards Act
of 1938, as amended, and all rules, regulations, and orders thereunder. The
Borrower and each Guarantor will conduct a physical count of the Inventory at
least once per Fiscal Year, and after and during the continuation of an Event of
Default, at such other times as the Agent requests. Neither the Borrower nor any
Guarantor will, without the Agent's written consent, sell any Inventory on a
▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on approval, consignment,
or other repurchase or return basis, other than Inventory sold pursuant to the
"Active Wear New Product Placement Program."
6.11 EQUIPMENT.(a) The Borrower and each Guarantor represent and warrant to
the Agent and the Lenders and agree with the Agent and the Lenders that all of
the Equipment owned by the Borrower and such Guarantor is and will be used or
held for use in the Borrower's or the applicable Guarantor's business, and is
and will be fit for such purposes. The Borrower and each Guarantor shall keep
and maintain its Equipment in good operating condition and repair (ordinary wear
and tear excepted) and shall make all necessary replacements thereof.
(b) The Borrower shall promptly inform the Agent of any
material additions to or deletions from the Equipment other than Capital
Expenditures set forth in the Projections.
61
Neither the Borrower nor any Guarantor shall permit any Equipment to become a
fixture with respect to real property or to become an accession with respect
to other personal property with respect to which real or personal property
the Agent does not have a Lien. Neither the Borrower nor any Guarantor will,
without the Agent's prior written consent, alter or remove any identifying
symbol or number on any of the Equipment constituting Collateral.
(c) Neither the Borrower nor any Guarantor shall, without the
Agent's prior written consent, sell, lease as a lessor, or otherwise dispose of
any of the Equipment, except in accordance with Section 9.9.
6.12 ASSIGNED CONTRACTS. The Borrower and the Guarantors shall fully perform
all of its obligations under each of the Assigned Contracts and shall enforce
all of their respective rights and remedies thereunder, in each case, as it
deems appropriate in its business judgment; PROVIDED, HOWEVER, that neither the
Borrower nor any Guarantor shall take any action or fail to take any action with
respect to its Assigned Contracts which would cause the termination of a
material Assigned Contract. Without limiting the generality of the foregoing,
the Borrower and each Guarantor shall take all action necessary or appropriate
to permit, and shall not take any action which would have any materially adverse
effect upon, the full enforcement of all indemnification rights under its
Assigned Contracts. The Borrower shall notify the Agent and the Lenders in
writing, promptly after the Borrower becomes aware thereof, of any event or fact
which could give rise to a material claim by it for indemnification under any of
its Assigned Contracts, and shall diligently pursue such right and report to the
Agent on all further developments with respect thereto. The Borrower and each
Guarantor shall deposit into the Payment Account or remit directly to the Agent
for application to the Obligations all amounts received by the Borrower or any
Guarantor as indemnification or otherwise pursuant to its Assigned Contracts. If
the Borrower or any Guarantor shall fail after the Agent's demand to pursue
diligently any right under its Assigned Contracts, or if an Event of Default
then exists, the Agent may, and at the direction of the Majority Lenders shall,
directly enforce such right in its own or the Borrower's or such Guarantor's
name and may enter into such settlements or other agreements with respect
thereto as the Agent or the Majority Lenders, as applicable, shall determine. In
any suit, proceeding or action brought by the Agent for the benefit of the
Lenders under any Assigned Contract for any sum owing thereunder or to enforce
any provision thereof, the Borrower and each Guarantor shall indemnify and hold
the Agent and Lenders harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaims, recoupment, or
reduction of liability whatsoever of the obligor thereunder arising out of a
breach by the Borrower or any Guarantor of any obligation thereunder or arising
out of any other agreement, indebtedness or liability at any time owing from the
Borrower or any Guarantor to or in favor of such obligor or its successors. All
such obligations of the Borrower and the Guarantors shall be and remain
enforceable only against the Borrower or the applicable Guarantor and shall not
be enforceable against the Agent or the Lenders. Notwithstanding any provision
hereof to the contrary, the Borrower and each Guarantor shall at all times
remain liable to observe and perform all of its duties and obligations under its
Assigned Contracts, and the Agent's or any Lender's exercise of any of their
respective rights with respect to the Collateral shall not release the Borrower
or any Guarantor from any of such duties and obligations. Neither the Agent nor
any Lender shall be obligated to perform or fulfill any of the Borrower's or any
Guarantor's duties or obligations under its Assigned Contracts or to make any
payment
62
thereunder, or to make any inquiry as to the nature or sufficiency of any
payment or property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any claim, or to
take any action to collect or enforce any performance, any payment of any
amounts, or any delivery of any property.
6.13 DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. The Borrower and each
Guarantor represent and warrant to the Agent and the Lenders that (a) all
documents, instruments, and chattel paper describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are and
will be complete, valid, and genuine, and (b) all goods evidenced by such
documents, instruments, and chattel paper are and will be owned by the Borrower
or one of the Guarantors, free and clear of all Liens other than Permitted
Liens.
6.14 RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of the
Borrower or any Guarantor hereunder or under any other Loan Document in order to
preserve, protect, maintain or enforce the Obligations, the Collateral or the
Agent's Liens therein, and which the Borrower or the applicable Guarantor fails
to pay or do, including payment of any judgment against the Borrower or any
Guarantor, any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord's or bailee's claim, and any other Lien upon or
with respect to the Collateral. All payments that the Agent makes under this
SECTION 6.14 and all out-of-pocket costs and expenses that the Agent pays or
incurs in connection with any action taken by it hereunder shall be charged to
the Borrower's Loan Account as a Revolving Loan. Any payment made or other
action taken by the Agent under this SECTION 6.14 shall be without prejudice to
any right to assert an Event of Default hereunder and to proceed thereafter as
herein provided.
6.15 POWER OF ATTORNEY. The Borrower and each Guarantor hereby appoint the
Agent and the Agent's designee as the Borrower's and such Guarantor's attorney,
with power: (a) to endorse the Borrower's and such Guarantor's name on any
checks, notes, acceptances, money orders, or other forms of payment or security
that come into the Agent's or any Lender's possession; (b) to sign the
Borrower's or such Guarantor's name on any invoice, ▇▇▇▇ of lading, warehouse
receipt or other document of title relating to any Collateral, on drafts against
customers, on assignments of Accounts, on notices of assignment, financing
statements and other public records and to file any such financing statements by
electronic means with or without a signature as authorized or required by
applicable law or filing procedure; (c) so long as any Event of Default has
occurred and is continuing, to notify the post office authorities to change the
address for delivery of the Borrower's or such Guarantor's mail to an address
designated by the Agent and to receive, open and dispose of all mail addressed
to the Borrower or any Guarantor; (d) to send requests for verification of
Accounts to customers or Account Debtors; (e) to clear Inventory through customs
in the Borrower's or such Guarantor's name, the Agent's name or the name of the
Agent's designee, and to sign and deliver to customs officials powers of
attorney in the Borrower's or such Guarantor's name for such purpose; and (f) to
do all things necessary to carry out this Agreement. The Borrower and each
Guarantor ratify and approve all acts of such attorney. None of the Lenders or
the Agent nor their attorneys will be liable for any acts or omissions or for
any error of judgment or mistake of fact or law except for their willful
misconduct. This power, being coupled with an interest, is irrevocable until
this Agreement has been terminated and the Obligations have been fully
satisfied.
63
6.16 THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES. The Borrower
and each Guarantor assume all responsibility and liability arising from or
relating to the use, sale or other disposition of the Collateral. The
Obligations shall not be affected by any failure of the Agent or any Lender to
take any steps to perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release the Borrower
or any Guarantor from any of the Obligations. Following the occurrence and
during the continuation of an Event of Default, the Agent may (but shall not be
required to), and at the direction of the Majority Lenders shall, without notice
to or consent from the Borrower or any Guarantor, ▇▇▇ upon or otherwise collect,
extend the time for payment of, modify or amend the terms of, compromise or
settle for cash, credit, or otherwise upon any terms, grant other indulgences,
extensions, renewals, compositions, or releases, and take or omit to take any
other action with respect to the Collateral, any security therefor, any
agreement relating thereto, any insurance applicable thereto, or any Person
liable directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrower or any
Guarantor for the Obligations or under this Agreement or any other agreement now
or hereafter existing between the Agent and/or any Lender and the Borrower.
6.17 SITE VISITS, OBSERVATIONS AND TESTING. The Agent and its
representatives will have the right at any reasonable time to enter and visit
the Real Estate and any other place where any property of the Borrower or any
Guarantor is located for the purposes of observing the Real Estate, taking and
removing soil or groundwater samples, and conducting tests on any part of the
Real Estate. The Agent is under no duty, however, to visit or observe the Real
Estate or to conduct tests, and any such acts by the Agent will be solely for
the purposes of protecting the Agent's Liens and preserving the Agent and the
Lenders' rights under this Agreement. No site visit, observation or testing by
the Agent and the Lenders will result in a waiver of any default of the Borrower
or any Guarantor or impose any liability on the Agent or the Lenders. In no
event will any site visit, observation or testing by the Agent be a
representation that hazardous substances are or are not present in, on or under
the Real Estate, or that there has been or will be compliance with any
Environmental Law. Neither the Borrower nor any other party is entitled to rely
on any site visit, observation or testing by the Agent. The Agent and the
Lenders owe no duty of care to protect the Borrower or any other party against,
or to inform the Borrower or any other party of, any hazardous substances or any
other adverse condition affecting the Real Estate. The Agent may in its
discretion disclose to the Borrower or any Guarantor or to any other party if so
required by law any report or findings made as a result of, or in connection
with, any site visit, observation or testing by the Agent; PROVIDED, HOWEVER,
that the Agent, prior to any such notification, shall notify the Borrower or the
applicable Guarantor of any information Agent intends to deliver to any
Governmental Authority. The Borrower and each Guarantor understand and agree
that the Agent makes no warranty or representation to the Borrower or any
Guarantor or any other party regarding the truth, accuracy or completeness of
any such report or findings that may be disclosed. The Borrower and each
Guarantor also understands that depending on the results of any site visit,
observation or testing by the Agent and disclosed to the Borrower or such
Guarantor, the Borrower or such Guarantor may have a legal obligation to notify
one or more environmental agencies of the results, that such reporting
requirements are site-specific, and are to be evaluated by the Borrower or the
applicable Guarantor without advice or assistance from the Agent. In each
instance, the Agent will give the Borrower or the applicable Guarantor
64
reasonable notice before entering the Real Estate or any other place the Agent
is permitted to enter under this SECTION 6.17. The Agent will make reasonable
efforts to avoid interfering with the Borrower's or the applicable Guarantor's
use of the Real Estate or any other property in exercising any rights provided
hereunder.
6.18 SECURITY INTEREST IN COLLATERAL.
(a) Effective on and after the date of the entry by the
Bankruptcy Court of the Interim Order, pursuant to sections 364(c)(2) and
364(d)(1) of the Bankruptcy Code, the grant of the security interest set forth
herein for the ratable benefit of the Lenders and the Agent shall be a first
priority priming security interest, senior to all other Liens, if any, on all of
the Borrower's and the Guarantors' right, title and interest in and to all of
the Collateral, and each of the Borrower and the Guarantors hereby covenant,
represent, and warrant that, upon entry of the Interim Order, pursuant to
Bankruptcy Code Section 364(d)(1), the Obligations of the Borrower and the
Guarantors shall at all times be secured by all of the Collateral.
(b) The Lien created under this SECTION 6.18 on the Collateral
in favor of the Agent (for its benefit and the ratable benefit of the Lenders
and the Agent) shall constitute a first priority Lien senior to all other Liens
in all property of the Borrower and the Guarantors.
(c) The Lien referred to in subsection (a) of this SECTION
6.18 shall be subject to (1) prior to the occurrence of a Carve-Out Event,
unpaid professional fees and disbursements incurred by the Borrower or any
Guarantor and one statutory committee approved in the Bankruptcy Cases and
approved under Sections 330 and 331 of the Bankruptcy Code; (2) after the
occurrence and during the pendency of a Carve-Out Event (as hereinafter
defined) has occurred and is continuing, the payment of allowed and unpaid
professional fees and disbursements incurred by the Borrower or any Guarantor
and one statutory committee appointed in the Bankruptcy Cases in an aggregate
amount not in excess of $5,000,000 and (3) the payment of fees pursuant to 28
U.S.C. Section 1930 (collectively, the "CARVE-Out") (it being understood that
the Superpriority Claim granted to the Agent and the Lenders as described
herein shall continue to be subject to the Carve-Out). The Carve-Out shall
not be reduced by success fees or percentage fees payable to financial or
restructuring advisors retained by the Borrower or one statutory committee
after approval of the Bankruptcy Court. The Lenders agree that so long as no
Event of Default has occurred and is continuing (a "CARVE-OUT EVENT"), the
Borrower shall, to the extent of permitted Borrowings hereunder, be permitted
to pay compensation and reimbursement of expenses incurred prior to a
Carve-Out Event and authorized to be paid under 11 U.S.C. Section 330 and 11
U.S.C. Section 331 or otherwise pursuant to an order of the Bankruptcy Court,
as the same may be due and payable, and the same shall not reduce the
Carve-Out.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 BOOKS AND RECORDS. The Borrower and each Guarantor shall, and shall
cause their Subsidiaries to, maintain, at all times, correct and complete books,
records and accounts in
65
which complete, correct and timely entries are made of its transactions in
accordance with GAAP applied consistently with the audited Financial
Statements required to be delivered pursuant to SECTION 7.2(a). The Borrower
and each Guarantor shall, and shall cause their Subsidiaries to, by means of
appropriate entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper provision for
depreciation and amortization of property and bad debts, all in accordance
with GAAP. The Borrower and each Guarantor shall, and shall cause their
Subsidiaries to, maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of (a) all
payments received and all credits and extensions granted with respect to the
Accounts; (b) the return, rejection, repossession, stoppage in transit, loss,
damage, or destruction of any Inventory; and (c) all other dealings affecting
the Collateral.
7.2 FINANCIAL INFORMATION. The Borrower and each Guarantor shall, and shall
cause their Subsidiaries to, promptly furnish to each Lender, all such financial
information as the Agent shall reasonably request. Without limiting the
foregoing, the Borrower and each Guarantor shall, and shall cause their
Subsidiaries to, furnish to the Agent, in sufficient copies for distribution by
the Agent to each Lender, in such detail as the Agent or the Lenders shall
request, the following:
(a) As soon as available, but in any event not later than one
hundred twenty (120) days after Fiscal Year 1999 and within one hundred five
(105) days after the close of each subsequent Fiscal Year, consolidated audited
balance sheets and statements of income and expense, cash flow and of
stockholders' equity for the Parent and its Subsidiaries and for Borrower and
its Subsidiaries for such Fiscal Year, and the accompanying notes thereto,
setting forth in each case in comparative form figures for the previous Fiscal
Year, all in reasonable detail, fairly presenting the financial position and the
results of operations of the Borrower, Parent and their respective consolidated
Subsidiaries as at the date thereof and for the Fiscal Year then ended, and
prepared in accordance with GAAP. Such statements shall be examined in
accordance with generally accepted auditing standards by and, in the case of
such statements performed on a consolidated basis, accompanied by a report
thereon unqualified in any respect of Ernst & Young, LLP or other independent
certified public accountants selected by the Parent and reasonably satisfactory
to the Agent. The Parent and the Borrower, simultaneously with retaining such
independent public accountants to conduct such annual audit, shall send a letter
to such accountants, with a copy to the Agent and the Lenders, notifying such
accountants that one of the primary purposes for retaining such accountants'
services and having audited financial statements prepared by them is for use by
the Agent and the Lenders. The Borrower and each Guarantor hereby authorize the
Agent to communicate directly with its certified public accountants and, by this
provision, authorize those accountants to disclose to the Agent any and all
financial statements and other supporting financial documents and schedules
relating to the Borrower and the Guarantors and to discuss directly with the
Agent the finances and affairs of the Borrower and the Guarantors.
(b) As soon as available, but in any event not later than
thirty (30) days after the end of each Fiscal Month, consolidated and
consolidating unaudited balance sheets of the Borrower and its consolidated
Subsidiaries as at the end of such Fiscal Month, and consolidated and
consolidating unaudited statements of income and expense and cash flow for the
Borrower
66
and its consolidated Subsidiaries for such Fiscal Month and for the period
from the beginning of the Fiscal Year to the end of such Fiscal Month, all in
reasonable detail, fairly presenting the financial position and results of
operations of the Borrower and its consolidated Subsidiaries as at the date
thereof and for such periods, and prepared in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to SECTION 7.2(a). Concurrently with the delivery of such financial
statements, the Borrower shall deliver to the Agent and Lenders a summary of
cash transfers during the preceding Fiscal Month between the Borrower and the
Guarantors, collectively, and the Foreign Subsidiaries, in form and substance
reasonably satisfactory to the Agent. The Borrower shall certify by a
certificate signed by a Responsible Officer that all such statements have
been prepared in accordance with GAAP and present fairly in all material
respects the Borrower's financial position as at the dates thereof and its
results of operations for the periods then ended, subject to normal year-end
adjustments.
(c) As soon as available, but in any event not later than
forty-five (45) days after the close of each Fiscal Quarter other than the
fourth quarter of a Fiscal Year, consolidated and consolidating unaudited
balance sheets of the Borrower and its consolidated Subsidiaries as at the end
of such Fiscal Quarter, and consolidated and consolidating unaudited statements
of income and expense and statement of cash flows for the Borrower and its
Subsidiaries for such Fiscal Quarter and for the period from the beginning of
the Fiscal Year to the end of such quarter, all in reasonable detail, fairly
presenting the financial position and results of operation of the Borrower and
its Subsidiaries as at the date thereof and for such periods, prepared in
accordance with GAAP consistent with the audited Financial Statements required
to be delivered pursuant to SECTION 7.2(a). The Borrower shall certify by a
certificate signed by a Responsible Officer that all such statements have been
prepared in accordance with GAAP and present fairly, subject to normal year-end
adjustments, the Borrower's financial position as at the dates thereof and its
results of operations for the periods then ended.
(d) With each of the audited Financial Statements delivered
pursuant to SECTION 7.2(a), a certificate of the independent certified public
accountants that examined such statement to the effect that they have reviewed
and are familiar with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to the financial
covenants set forth in Sections 9.23 and 9.25, except for those, if any,
described in reasonable detail in such certificate.
(e) With each of the annual audited Financial Statements
delivered pursuant to SECTION 7.2(a), and within forty-five (45) days after the
end of each Fiscal Quarter, a certificate of the chief financial officer of the
Borrower (i) setting forth in reasonable detail the calculations required to
establish that the Parent and its Subsidiaries were in compliance with the
covenants set forth in SECTIONS 9.23 and 9.25 during the period covered in such
Financial Statements and as at the end thereof, and (ii) stating that, except as
explained in reasonable detail in such certificate, (A) all of the
representations and warranties of the Borrower and the Guarantors contained in
this Agreement and the other Loan Documents are correct and complete in all
material respects as at the date of such certificate as if made at such time,
except for those that speak as of a particular date, (B) the Borrower and the
Guarantors are, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of Default
67
then exists or existed during the period covered by such Financial
Statements, (D) describing and analyzing in reasonable detail all material
trends, changes, and developments in each and all Financial Statements; and
(E) explaining the variances of the figures in the corresponding budgets and
prior Fiscal Year financial statements. If such certificate discloses that a
representation or warranty is not correct or complete, or that a covenant has
not been complied with, or that a Default or Event of Default existed or
exists, such certificate shall set forth what action the Borrower has taken
or proposes to take with respect thereto.
(f) No sooner than sixty (60) days and not less than fifteen
(15) days prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated and consolidating balance sheets, statements of
income and expenses and statements of cash flow) for the Borrower and its
Subsidiaries as at the end of and for each month of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of the
Borrower or any Guarantor.
(h) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by the Parent, the Borrower or any of its
Subsidiaries with the Securities and Exchange Commission under the Exchange Act,
and all material reports, notices, or statements sent or received by the
Borrower or any of its Subsidiaries to or from the holders of any equity
interests of the Borrower (other than routine non-material correspondence sent
by shareholders of the Borrower to the Borrower) or any such Subsidiary or of
any Debt for Borrowed Money of the Borrower or any of its Subsidiaries
registered under the Securities Act of 1933 or to or from the trustee under any
indenture under which the same is issued.
(i) As soon as available, but in any event not later than 15
days after the Borrower's or Parent's receipt thereof, a copy of all management
reports and management letters prepared for the Borrower or the Parent by any
independent certified public accountants of the Borrower.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which the Borrower or Parent
makes available to its shareholders.
(k) Promptly after filing with the IRS, a copy of each tax
return filed by the Borrower or the Parent or by any of its Subsidiaries.
(l) Such additional information as the Agent and/or any Lender
may from time to time reasonably request regarding the financial and business
affairs of the Parent, Borrower or any Subsidiary of either of them.
7.3 NOTICES TO THE LENDERS. The Borrower shall notify the Agent and the
Lenders in writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event
of Default;
68
(b) Immediately after becoming aware of the commencement by
the holder of any capital stock or Debt of the Parent, the Borrower or any
Subsidiary of any enforcement action because of any asserted default or
non-compliance;
(c) Immediately after becoming aware of any Material Adverse
Effect;
(d) Immediately after becoming aware of any pending or
threatened action, suit, or proceeding, by any Person, or any pending or
threatened investigation by a Governmental Authority, which could reasonably be
expected to have a Material Adverse Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting the Borrower or any of its Subsidiaries in a manner which
could reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting the
Borrower or any Guarantor which could reasonably be expected to have a Material
Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by the Borrower or any Guarantor of any Environmental Law which could reasonably
be expected to have a Material Adverse Effect or that any Governmental Authority
has asserted in writing that the Borrower or any Subsidiary is not in compliance
with any Environmental Law or is investigating the Borrower's or such
Subsidiary's compliance therewith;
(h) Immediately after receipt of any written notice that the
Borrower or any Subsidiary is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that the Borrower or any
Subsidiary is subject to investigation by any Governmental Authority evaluating
whether any remedial action is needed to respond to the Release or threatened
Release of any Contaminant which, in either case, is reasonably likely to give
rise to liability in excess of $500,000;
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of the Borrower or any
Subsidiary;
(j) Any change in the Borrower's or any Guarantor's name,
state of organization, or form of organization, trade names under which the
Borrower or Guarantor will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, in each case at least
thirty (30) days prior thereto;
(k) Within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred which could reasonably be expected to have a Material Adverse Effect,
and, when known, any action taken or threatened by the IRS, the DOL or the PBGC
with respect thereto;
69
(l) Upon request by Agent, or, in the event that such filing
reflects a significant change with respect to the matters covered thereby,
within three (3) Business Days after the filing thereof with the PBGC, the DOL
or the IRS, as applicable, copies of the following: (i) each annual report (form
5500 series), including Schedule B thereto, filed with the PBGC, the DOL or the
IRS with respect to each Plan, (ii) a copy of each funding waiver request filed
with the PBGC, the DOL or the IRS with respect to any Plan and all
communications received by the Borrower or any ERISA Affiliate from the PBGC,
the DOL or the IRS with respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the IRS, with respect to each
Plan of either the Borrower or any ERISA Affiliate;
(m) Upon request by Agent, copies of each actuarial report for
any Plan or Multi-employer Plan and annual report for any Multi-employer Plan;
and within three (3) Business Days after receipt thereof by the Borrower or any
ERISA Affiliate, copies of the following: (i) any notices of the PBGC's
intention to terminate a Pension Plan or to have a trustee appointed to
administer such Pension Plan; (ii) any favorable or unfavorable determination
letter from the IRS regarding the qualification of a Plan under Section 401(a)
of the Code; or (iii) any notice from a Multi-employer Plan regarding the
imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase the
Borrower's or any Guarantor's annual costs with respect thereto by an amount in
excess of $250,000 or the establishment of any new Plan or the commencement of
contributions to any Plan to which the Borrower or any ERISA Affiliate was not
previously contributing; or (ii) any failure by the Borrower, any Guarantor or
any ERISA Affiliate to make a required installment or any other required payment
under Section 412 of the Code on or before the due date for such installment or
payment; or
(o) Within three (3) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
the Borrower, or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
The Borrower and each Guarantor, jointly and severally, warrant and
represent to the Agent and the Lenders that except as hereafter disclosed to and
accepted by the Agent and the Majority Lenders in writing:
70
8.1 AUTHORIZATION, VALIDITY, AND ENFORCEABILITY OF THIS AGREEMENT AND THE
LOAN DOCUMENTS. In accordance with the Bankruptcy Code, the Borrower and each
Guarantor has the corporate power and authority to execute, deliver and perform
this Agreement and the other Loan Documents to which it is a party, to incur the
Obligations, and to grant to the Agent Liens upon and security interests in the
Collateral. In accordance with the Bankruptcy Code, the Borrower and each
Guarantor has taken all necessary corporate action to authorize its execution,
delivery, and performance of this Agreement and the other Loan Documents to
which it is a party. This Agreement and the other Loan Documents to which it is
a party have been duly executed and delivered by the Borrower and each
Guarantor, and constitute the legal, valid and binding obligations of the
Borrower and each Guarantor, enforceable against it in accordance with their
respective terms without defense, setoff or counterclaim. The Borrower's and
each Guarantor's execution, delivery, and performance of this Agreement and the
other Loan Documents to which it is a party do not and will not conflict with,
or constitute a violation or breach of, or constitute a default under, or result
in, or require the creation or imposition of any Lien upon the property of the
Parent or any of its Subsidiaries by reason of the terms of (a) any Requirement
of Law applicable to the Parent or any of its Subsidiaries, or (b) the
certificate or articles of incorporation or by-laws of the Parent or any of its
Subsidiaries.
8.2 VALIDITY AND PRIORITY OF SECURITY INTEREST. The provisions of this
Agreement, the Interim Order, and the other Loan Documents create legal and
valid Liens on all the Collateral in favor of the Agent, for the ratable benefit
of the Agent and the Lenders, and, upon entry of the Interim Order, such Liens
constitute perfected and continuing Liens on all the Collateral, having priority
over all other Liens on the Collateral, all as more fully provided herein.
8.3 ORGANIZATION AND QUALIFICATION. The Borrower and each Guarantor (a) is
duly incorporated and organized and validly existing in good standing under the
laws of the Cayman Islands, in the case of Parent, or the state of its
incorporation, (b) is qualified to do business as a foreign corporation and is
in good standing in the jurisdictions set forth on SCHEDULE 8.3 which are the
only jurisdictions in which qualification is necessary in order for it to own or
lease its property and conduct its business and (c) has all requisite power and
authority to conduct its business and to own its property.
8.4 CORPORATE NAME; PRIOR TRANSACTIONS. Except as set forth in SCHEDULE 8.4
hereto, the Borrower and each Guarantor has not, during the past five (5) years,
been known by or used any other corporate or fictitious name, or been a party to
any merger or consolidation, or acquired all or substantially all of the assets
of any Person, or acquired any of its property outside of the ordinary course of
business.
8.5 SUBSIDIARIES AND AFFILIATES. SCHEDULE 8.5 is a correct and complete
list of the name and relationship to the Parent of each and all of the Parent's
Subsidiaries and other Affiliates. Each Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of its state of
incorporation set forth on SCHEDULE 8.5, and (b) qualified to do business as a
foreign corporation and in good standing in each jurisdiction in which the
failure to so qualify or be in good standing could reasonably be expected to
have a material adverse effect on any such Subsidiary's business, operations,
prospects, property, or condition (financial
71
or otherwise) and (c) has all requisite power and authority to conduct its
business and own its property.
8.6 FINANCIAL STATEMENTS AND PROJECTIONS.
(a) The Borrower has delivered to the Agent and the Lenders
the audited balance sheet and related statements of income, retained earnings,
cash flows, and changes in stockholders equity for the Borrower and its
consolidated Subsidiaries as of January 2, 1999, and for the Fiscal Year then
ended, accompanied by the report thereon of the Borrower's independent certified
public accountants, Ernst & Young, LLP. The Borrower has also delivered to the
Agent and the Lenders the unaudited balance sheet and related statements of
income and cash flows for the Borrower and its consolidated Subsidiaries as of
October 2, 1999. Such financial statements are attached hereto as EXHIBIT C. All
such financial statements have been prepared in accordance with GAAP and present
accurately and fairly in all material respects the financial position of the
Borrower and its consolidated Subsidiaries as at the dates thereof and their
results of operations for the periods then ended.
(b) The Latest Projections when submitted to the Lenders as
required herein represent the Borrower's best estimate of the future financial
performance of the Borrower and its consolidated Subsidiaries for the periods
set forth therein. The Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Borrower believes are fair and
reasonable in light of current and reasonably foreseeable business conditions at
the time submitted to the Lender.
8.7 CAPITALIZATION. The Parent's authorized capital stock consists of
200,000,000 shares of Class A common stock, 100 shares of Class B common stock,
and 35,000 shares denominated as preferred shares, each with a par value of $.01
per share, of which, as of November 30, 1999, 66,931,450 shares of Class A
common and 4 shares of Class B common were validly issued and outstanding, fully
paid and non-assessable.
8.8 DEBT. After giving effect to the making of the Term Loan and the
Revolving Loans to be made on the Closing Date, the Parent and its Subsidiaries
have no Debt, except (a) the Obligations, (b) Debt described on SCHEDULE 8.8,
(c) trade payables and other contractual obligations arising in the ordinary
course of business, and (d) other Debt existing on the Closing Date and
reflected in the Financial Statements attached hereto as EXHIBIT C.
8.9 DISTRIBUTIONS. Since November 12, 1999, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of the Parent or any of its Subsidiaries.
8.10 TITLE TO PROPERTY. The Borrower and each Guarantor has good and
marketable title in fee simple or a valid leasehold interest to the Real Estate
identified on SCHEDULE 8.11 as owned or leased by the Borrower or the applicable
Guarantor, and the Borrower or the applicable Guarantor has good, indefeasible,
and merchantable title to all of its other property (including the assets
reflected on the latest Financial Statements delivered to the Agent and the
Lenders, except
72
as disposed of in the ordinary course of business since the date thereof),
free of all Liens except Permitted Liens.
8.11 REAL ESTATE; LEASES. SCHEDULE 8.11 sets forth, as of the Closing Date,
a correct and complete list of all Real Estate owned by the Borrower and each
Guarantor, all leases and subleases of real or personal property held by the
Borrower or any Guarantor as lessee or sublessee (other than leases of personal
property as to which the Borrower or any Guarantor is lessee or sublessee for
which the value of such personal property is less than $2,000,000), and all
leases and subleases of real or personal property held by the Borrower and each
Guarantor as lessor, or sublessor. Each of such leases and subleases is valid
and enforceable in accordance with its terms and is in full force and effect,
and no default by any party to any such lease or sublease exists.
8.12 PROPRIETARY RIGHTS. SCHEDULE 8.12 sets forth a correct and complete
list of all of the Borrower's and each Guarantor's Proprietary Rights. None of
the Proprietary Rights is subject to any licensing agreement or similar
arrangement except as set forth on SCHEDULE 8.12. To the best of the Borrower's
and each Guarantor's knowledge, none of the Proprietary Rights infringes on or
conflicts with any other Person's property, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The Proprietary Rights
described on SCHEDULE 8.12 constitute all of the property of such type necessary
to the current and anticipated future conduct of the Borrower's and each
Guarantor's business.
8.13 TRADE NAMES. All trade names or styles under which the Borrower or any
Guarantor will sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, are listed on SCHEDULE 8.13.
8.14 LITIGATION. Except as set forth on SCHEDULE 8.14, there is no pending,
or to the best of the Borrower's and each Guarantor's knowledge threatened,
action, suit, proceeding, or counterclaim by any Person, or to the best of the
Borrower's and each Guarantor's knowledge investigation by any Governmental
Authority, or any basis for any of the foregoing, which could reasonably be
expected to cause a Material Adverse Effect.
8.15 RESTRICTIVE AGREEMENTS. Neither the Borrower nor any Guarantor is a
party to any contract or agreement, or subject to any charter or other corporate
restriction, which affects its ability to execute, deliver, and perform the Loan
Documents and repay the Obligations or which could reasonably be expected to
cause a Material Adverse Effect.
8.16 LABOR DISPUTES. Except as set forth on SCHEDULE 8.16, as of the Closing
Date (a) there is no collective bargaining agreement or other labor contract
covering employees of the Borrower or any Guarantor, (b) no such collective
bargaining agreement or other labor contract is scheduled to expire during the
term of this Agreement, (c) no union or other labor organization is seeking to
organize, or to be recognized as, a collective bargaining unit of employees of
the Borrower or any Guarantor or for any similar purpose, and (d) there is no
pending or (to the best of the Borrower's or any Guarantor's knowledge)
threatened, strike, work stoppage, material unfair labor practice claim, or
other material labor dispute against or affecting the Borrower or any Guarantor
or their employees.
73
8.17 ENVIRONMENTAL LAWS. Except as otherwise disclosed on SCHEDULE 8.17 and
except to the extent that any of the following could not reasonably be
expected to have a Material Adverse Effect:
(a) The Borrower and its Subsidiaries have complied in all
material respects with all Environmental Laws and neither the Borrower nor any
Subsidiary nor any of its presently owned real property or presently conducted
operations, nor its previously owned real property or prior operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial action
arising from the Release or threatened Release of a Contaminant.
(b) The Borrower and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and all
such permits are in good standing and the Borrower and its Subsidiaries are in
compliance with all material terms and conditions of such permits.
(c) Neither the Borrower nor any of its Subsidiaries, nor, to
the best of the Borrower's knowledge, any of its predecessors in interest, has
in violation of applicable law stored, treated or disposed of any hazardous
waste.
(d) Neither the Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice indicating that
it is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.
(e) To the best of the Borrower's knowledge, none of the
present or past operations of the Borrower and its Subsidiaries is the subject
of any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) Neither the Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(g) Neither the Borrower nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property) imposing material obligations or
liabilities on the Borrower or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally
related claim.
(h) None of the products manufactured, distributed or sold by
the Borrower or any of its Subsidiaries contain asbestos containing material.
(i) No Environmental Lien has attached to the Real Estate.
74
8.18 NO VIOLATION OF LAW. Neither the Borrower nor any Guarantor is in
violation of any law, statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to have a Material
Adverse Effect.
8.19 NO DEFAULT. Neither the Borrower nor any Guarantor is in default with
respect to any note, indenture, loan agreement, mortgage, lease, deed, or other
agreement to which the Borrower or such Guarantor is a party or by which it is
bound, which default could reasonably be expected to have a Material Adverse
Effect.
8.20 ERISA COMPLIANCE. Except as specifically disclosed in SCHEDULE 8.20 and
except to the extent that any of the following could not reasonably be
expected to have a Material Adverse Effect:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrower, nothing has occurred which would cause the loss of such
qualification. The Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
the Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with respect to any Pension Plan
(other than premiums due and not delinquent under Section 4007 of ERISA); (iv)
neither the Borrower nor any ERISA Affiliate has any liability with respect to a
Multi-employer Plan; and (v) neither the Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
8.21 TAXES. Except for extensions which remain in full force and effect, the
Borrower and each Guarantor have filed all federal and other tax returns and
reports required to be filed, and, except to the extent prohibited by the filing
of the Bankruptcy Cases, have paid all federal and other taxes, assessments,
fees and other governmental charges levied or imposed upon them or their
properties, income or assets otherwise due and payable unless such unpaid taxes
and assessments would constitute a Permitted Lien.
8.22 REGULATED ENTITIES. None of the Borrower, any Person controlling the
Borrower, or any Guarantor, is an "Investment Company" within the meaning of the
Investment Company
75
Act of 1940. Neither the Borrower nor any Guarantor is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act,
the Interstate Commerce Act, any state public utilities code or law, or any
other federal or state statute or regulation limiting its ability to incur
indebtedness.
8.23 USE OF PROCEEDS; MARGIN REGULATIONS. Neither the Borrower nor any
Guarantor is engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
8.24 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. The Borrower and
each Guarantor owns or is licensed or otherwise has the right to use all of the
patents, trademarks, service marks, trade names, copyrights, contractual
franchises, licenses, rights of way, authorizations and other rights that are
reasonably necessary for the operation of its businesses, without conflict with
the rights of any other Person. To the best knowledge of the Borrower and each
Guarantor, no slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Borrower or any Guarantor infringes upon any rights held by any
other Person. No claim or litigation regarding any of the foregoing is pending
or, to the Borrower's or any Guarantor's knowledge, threatened, and no patent,
invention, device, application, principle or any statute, law, rule, regulation,
standard or code is pending or, to the knowledge of the Borrower or any
Guarantor, proposed, which, in either case, could reasonably be expected to have
a Material Adverse Effect.
8.25 YEAR 2000 COMPLIANCE. On the basis of a comprehensive review and
assessment undertaken by Borrower of Borrower's and each Guarantor's computers
and computer applications and inquiry made of Borrower's and each Guarantor's
material suppliers, vendors and customers, the Borrower and each Guarantor
reasonably believes that the "Year 2000 problem" (that is, the risk that
computers and computer applications used by any person may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) will not result in a Material
Adverse Effect.
8.26 FULL DISCLOSURE. None of the representations or warranties made by the
Borrower or any Guarantor in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of the Borrower or any Guarantor in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances under which they are made, not misleading as of the time when made
or delivered.
8.27 MATERIAL AGREEMENTS. SCHEDULE 8.27 hereto sets forth as of the Closing
Date all material agreements and contracts relating to Debt for Borrowed Money
of the Borrower or any Guarantor to which the Borrower or any of its
Subsidiaries is a party or is bound as of the Closing Date.
76
8.28 BANK ACCOUNTS. SCHEDULE 8.28 contains as of the Closing Date a complete
and accurate list of all bank accounts maintained by the Borrower and each
Guarantor with any bank or other financial institution.
8.29 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, the
Borrower or any Guarantor of this Agreement or any other Loan Document, except
the Bankruptcy Court and notices to creditors required by the Bankruptcy Code.
8.30 GUARANTORS. The Guarantors that are signatories hereto constitute all
of the Subsidiaries of the Borrower incorporated or organized under the laws of
any state in the United States of America ("Domestic Subsidiaries"), other than
FTL Receivables Company and those Domestic Subsidiaries listed on SCHEDULE 8.30
hereto, and Parent. The Subsidiaries listed on SCHEDULE 8.30 hereto are inactive
and have no material assets.
8.31 THE ORDERS. On the date of the making of the initial Loans or the
issuance of the initial Letters of Credit hereunder, whichever first occurs, the
Interim Order will have been entered and will not have been stayed, amended,
vacated, reversed or rescinded. On the date of the making of any subsequent Loan
or the subsequent issuance of any other Letter of Credit, the Interim Order or
the Final Order, as the case may be, shall have been entered and shall not have
been amended, stayed, vacated or rescinded. Upon the maturity (whether by
acceleration or otherwise) of any of the Obligations of the Borrower or any
Guarantor hereunder and under the other Loan Documents, the Lenders shall,
subject to the provisions of SECTION 11.2, be entitled to immediate payment of
such Obligations, and to enforce the remedies provided for hereunder, without
further application to or order by the Bankruptcy Court.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender that so long as any
of the Obligations remain outstanding or this Agreement is in effect:
9.1 TAXES AND OTHER OBLIGATIONS. Subject to the Bankruptcy Code, the
Borrower shall, and shall cause each of its Subsidiaries to, (a) file when due
all tax returns and other reports which it is required to file, except for
extensions filed in the ordinary course of business; (b) pay, or provide for the
payment, when due, of all taxes, fees, assessments and other governmental
charges against it or upon its property arising after the Petition Date, income
and franchises, make all required withholding and other tax deposits, and
establish adequate reserves for the payment of all such items, and provide to
the Agent and the Lenders, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (c) pay when due all Debt owed by it arising
after the Petition Date and all claims of materialmen, mechanics, carriers,
warehousemen, landlords, processors and other like Persons arising after the
Petition Date, and
77
all other indebtedness owed by it arising after the Petition Date and perform
and discharge in a timely manner all other obligations undertaken by it
arising after the Petition Date; PROVIDED, HOWEVER, so long as the Borrower
has notified the Agent in writing, neither the Borrower nor any of its
Subsidiaries need pay any tax, fee, assessment, or governmental charge, that
(i) it is contesting in good faith by appropriate proceedings diligently
pursued, (ii) the Borrower or its Subsidiary, as the case may be, has
established proper reserves for as provided in GAAP, and (iii) no Lien (other
than a Permitted Lien) results from such non-payment.
9.2 CORPORATE EXISTENCE AND GOOD STANDING. The Borrower and each Guarantor
shall maintain its corporate existence and its qualification and good standing
in all jurisdictions in which the failure to maintain such existence and
qualification or good standing could reasonably be expected to have a Material
Adverse Effect.
9.3 COMPLIANCE WITH LAW AND AGREEMENTS; MAINTENANCE OF LICENSES. The
Borrower and each Guarantor shall comply in all material respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business (including the Federal Fair Labor Standards Act and all
Environmental Laws). The Borrower shall, and shall cause each of its
Subsidiaries to, obtain and maintain all licenses, permits, franchises, and
governmental authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date. Neither the Borrower nor any
Guarantor shall modify, amend or alter its certificate or article of
incorporation other than in a manner which does not adversely affect the rights
of the Lenders or the Agent.
9.4 MAINTENANCE OF PROPERTY. The Borrower and each Guarantor shall maintain
all of its property necessary and useful in the conduct of its business, in good
operating condition and repair, ordinary wear and tear excepted.
9.5 INSURANCE.
(a) The Borrower and each Guarantor shall maintain with
financially sound and reputable insurers having a rating of at least AVII or
better by Best Rating Guide, insurance against loss or damage by fire with
extended coverage; theft, burglary, pilferage and loss in transit; public
liability and third party property damage; larceny, embezzlement or other
criminal liability; business interruption; public liability and third party
property damage; and such other hazards or of such other types as is customary
for Persons engaged in the same or similar business, in amounts and under
policies reasonably acceptable to the Agent and the Majority Lenders. Without
limiting the foregoing, the Borrower and each Guarantor shall also maintain
flood insurance, in the event of a designation of the area in which any Real
Estate covered by the Mortgages and any of the Equipment and Inventory located
on such Real Estate is located as "flood prone" or a "flood risk area,"
(hereinafter "SFHA") as defined by the Flood Disaster Protection Act of 1973, in
an amount to be reasonably determined by the Agent, and shall comply with the
additional requirements of the National Flood Insurance Program as set forth in
said Act. The Borrower and each Guarantor shall also maintain flood insurance
for its Inventory and Equipment which is, at any time, located in a SFHA.
78
(b) The Borrower and each Guarantor shall cause the Agent, for
the ratable benefit of the Agent and the Lenders, to be named as secured party
or mortgagee and sole loss payee or additional insured, in a manner acceptable
to the Agent. Each policy of insurance shall contain a clause or endorsement
requiring the insurer to give not less than thirty (30) days' prior written
notice to the Agent in the event of cancellation of the policy for any reason
whatsoever and a clause or endorsement stating that the interest of the Agent
shall not be impaired or invalidated by any act or neglect of the Borrower or
any Guarantor or the owner of any Real Estate for purposes more hazardous than
are permitted by such policy. All premiums for such insurance shall be paid by
the Borrower when due, and certificates of insurance and, if requested by the
Agent or any Lender, photocopies of the policies, shall be delivered to the
Agent, in each case in sufficient quantity for distribution by the Agent to each
of the Lenders. If the Borrower fails to procure such insurance or to pay the
premiums therefor when due, the Agent may, and at the direction of the Majority
Lenders shall, do so from the proceeds of Revolving Loans.
(c) The Borrower and each Guarantor shall promptly notify the
Agent and the Lenders of any loss, damage, or destruction to the Collateral in
excess of $1,000,000, whether or not covered by insurance. The Agent is hereby
authorized to collect all insurance proceeds in respect of Collateral directly
and to apply or remit them as follows:
(i) With respect to insurance proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Agent in the collection or handling
thereof, the Agent shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in SECTION 4.5.
(ii) With respect to insurance proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such proceeds
the reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds, in accordance with
SECTION 4.5, or at the option of the Required Lenders, Agent may permit or
require the Borrower or the applicable Guarantor to use such money, or any part
thereof, to replace, repair, restore or rebuild the relevant Fixed Assets in a
diligent and expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction; PROVIDED,
HOWEVER, that so long as there does not then exist any Default or Event of
Default, the Borrower or the applicable Guarantor shall be permitted to use
insurance proceeds relating to Collateral consisting of Fixed Assets (other than
such proceeds of Fixed Assets that are obsolete or consist of discontinued
facilities) in an aggregate amount not to exceed $15,000,000 with respect to any
occurrence, to replace, repair, restore or rebuild the relevant Fixed Assets, in
the manner set forth in this sentence; and PROVIDED, FURTHER, that the Borrower
or the applicable Guarantor first (i) provides the Agent and the Required
Lenders with plans and specifications for any such repair or restoration which
shall be reasonably satisfactory to the Agent and the Required Lenders and (ii)
demonstrates to the reasonable satisfaction of the Agent and the Required
Lenders that the funds available to it will be sufficient to complete such
project in the manner provided therein.
9.6 CONDEMNATION.(a) The Borrower and each Guarantor shall, immediately
upon learning of the institution of any proceeding for the condemnation or other
taking of any of its property, notify the Agent of the pendency of such
proceeding, and agrees that the Agent may
79
participate in any such proceeding, and the Borrower and each Guarantor from
time to time will deliver to the Agent all instruments reasonably requested
by the Agent to permit such participation.
(b) The Agent is hereby authorized to collect the
proceeds of any condemnation claim or award directly, and to apply or remit them
as follows:
(i) With respect to condemnation proceeds relating to
Collateral other than Fixed Assets, after deducting from such proceeds
the reasonable expenses, if any, incurred by the Agent in the collection or
handling thereof, the Agent shall apply such proceeds, ratably, to the reduction
of the Obligations in the order provided for in SECTION 4.5.
(ii) With respect to condemnation proceeds relating
to Collateral consisting of Fixed Assets, after deducting from such
proceeds the reasonable expenses, if any, incurred by the Agent in the
collection or handling thereof, the Agent shall apply such proceeds, ratably, in
accordance with SECTION 4.5, or at the option of the Required Lenders, may
permit or require the Borrower or the applicable Guarantor to use such money, or
any part thereof, to replace, repair, restore or rebuild the relevant Fixed
Assets in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the condemnation; PROVIDED,
HOWEVER, that so long as there does not then exist any Default or Event of
Default, the Borrower or the applicable Guarantor shall be permitted to use
condemnation proceeds relating to Collateral consisting of Fixed Assets (other
than such proceeds of Fixed Assets that are obsolete or consist of discontinued
facilities) in an aggregate amount not to exceed $15,000,000 with respect to any
occurrence, to replace, repair, restore or rebuild the relevant Fixed Assets, in
the manner set forth in this sentence; and PROVIDED, FURTHER, that plans and
specifications for any such repair or restoration shall be reasonably
satisfactory to the Agent and the Required Lenders and shall be subject to the
reasonable approval of the Agent and the Required Lenders.
9.7 ENVIRONMENTAL LAWS.(a) The Borrower and each Guarantor shall conduct
its business in compliance in all material respects with all Environmental Laws
applicable to it, including those relating to the generation, handling, use,
storage, and disposal of any Contaminant. The Borrower and each Guarantor shall
take prompt and appropriate action to respond to any non-compliance with
Environmental Laws and shall regularly report to the Agent on such response.
(b) The Agent or any Lender may request copies of technical
reports prepared by the Borrower or any Guarantor and its communications with
any Governmental Authority to determine whether the Borrower or any applicable
Guarantor is proceeding reasonably to correct, cure or contest in good faith any
alleged non-compliance or environmental liability. The Borrower and each
Guarantor shall, at the Agent's or the Majority Lenders' request and at the
Borrower's or the applicable Guarantor's expense, (i) retain an independent
environmental engineer reasonably acceptable to the Agent to evaluate the site,
including tests if appropriate, where the non-compliance or alleged
non-compliance with Environmental Laws has occurred and prepare and deliver to
the Agent, in sufficient quantity for distribution by the Agent to the Lenders,
a report setting forth the results of such evaluation, a proposed plan for
responding to
80
any environmental problems described therein, and an estimate of the costs
thereof, and (ii) provide to the Agent a supplemental report of such engineer
whenever the scope of the environmental problems, or the response thereto or
the estimated costs thereof, shall change in any material respect.
9.8 COMPLIANCE WITH ERISA. The Borrower and each Guarantor shall, and shall
cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; (b) cause each Plan which is qualified under Section
401(a) of the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code; (d) not engage in
a prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan; and (e) not engage in a transaction that could be subject
to Section 4069 or 4212(c) of ERISA.
9.9 MERGERS, CONSOLIDATIONS OR SALES. Neither the Borrower nor any
Guarantor shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing (or apply to the Bankruptcy Court for authority to do so),
except (i) for sales of Inventory in the ordinary course of its business and
(ii) for sales or other dispositions of assets, including capital stock of
Subsidiaries, provided that (i) such sale or other disposition is approved by
the Bankruptcy Court and (ii) the proceeds of such sale or disposition are
applied to the outstanding Loans in accordance with SECTION 4.5. The inclusion
of proceeds in the definition of Collateral shall not be deemed to constitute
the Agent's or any Lender's consent to any sale or other disposition of the
Collateral except as expressly permitted herein.
9.10 DISTRIBUTIONS; CAPITAL CHANGE; RESTRICTED INVESTMENTS. Neither the
Borrower nor any Guarantor shall (i) directly or indirectly declare or make, or
incur any liability to make, any Distribution, except Distributions to the
Borrower by its Subsidiaries, (ii) make any change in its capital structure
which would have a Material Adverse Effect or (iii) make any Restricted
Investment.
9.11 TRANSACTIONS AFFECTING COLLATERAL OR OBLIGATIONS. Neither the Borrower
nor any Guarantor shall enter into any transaction subsequent to the Petition
Date which would be reasonably expected to have a Material Adverse Effect.
9.12 GUARANTIES. Neither the Borrower nor any Guarantor shall make, issue,
or become liable on (or apply to the Bankruptcy Court for authority to make,
issue or become liable on) any Guaranty, except Guaranties of the Obligations in
favor of the Agent, guaranties listed on Schedule 8.8 and amendments, renewals
and replacements of the foregoing.
9.13 DEBT. Neither the Borrower nor any Guarantor shall incur or maintain
any Debt (or apply to the Bankruptcy Court for authority to do so), other than:
(a) the Obligations; (b) trade payables and contractual obligations to suppliers
and customers arising in the ordinary course of business; (c) other Debt
existing on the Closing Date and reflected in the Financial Statements attached
hereto as EXHIBIT C; (d) Debt described on SCHEDULE 8.8 and (e) the Carve-Out.
81
9.14 PREPAYMENT. Neither the Borrower nor any Guarantor shall voluntarily
prepay any Debt (or apply to the Bankruptcy Court for authority to do so),
except the Obligations in accordance with the terms of this Agreement.
9.15 TRANSACTIONS WITH AFFILIATES. Except as set forth below and as set
forth on Schedule 9.15, neither the Borrower nor any Guarantor shall, sell,
transfer, distribute, or pay any money or property, including, but not limited
to, any fees or expenses of any nature (including, but not limited to, any fees
or expenses for management services), to any Affiliate, or lend or advance money
or property to any Affiliate, or invest in (by capital contribution or
otherwise) or purchase or repurchase any stock or indebtedness, or any property,
of any Affiliate, or become liable on any Guaranty of the indebtedness,
dividends, or other obligations of any Affiliate. Notwithstanding the foregoing,
while no Event of Default has occurred and is continuing, the Borrower and each
Guarantor may engage in transactions with Affiliates in the ordinary course of
business consistent with past practices, in amounts and upon terms fully
disclosed to the Agent and the Lenders, and no less favorable to the Borrower
and its Subsidiaries than would be obtained in a comparable arm's-length
transaction with a third party who is not an Affiliate.
9.16 INVESTMENT BANKING AND FINDER'S FEES. Neither the Borrower nor any
Guarantor shall pay or agree to pay, or reimburse any other party with respect
to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Borrower and each Guarantor shall defend and indemnify the Agent and the
Lenders against and hold them harmless from all claims of any Person that the
Borrower is obligated to pay for any such fees, and all costs and expenses
(including reasonable attorneys' fees) incurred by the Agent and/or any Lender
in connection therewith.
9.17 INTENTIONALLY OMITTED.
9.18 BUSINESS CONDUCTED. Neither the Borrower nor any Guarantor shall engage
directly or indirectly, in any line of business other than the businesses in
which the Borrower or such Guarantor was engaged immediately prior to the
Petition Date.
9.19 LIENS AND RECLAMATION CLAIMS.(a) Neither the Borrower nor any Guarantor
shall create, incur, assume, or permit to exist (or apply to the Bankruptcy
Court for authority to create, incur, assume or permit to exist) any Lien on any
property now owned or hereafter acquired by any of them, except Permitted Liens
and Liens granted pursuant to the Adequate Protection Order (all of which shall
be subordinated to the Liens granted hereunder in favor of the Agent and the
Lenders), as more fully provided herein.
(b) Neither Borrower nor any Guarantor shall make any payments
or transfer any property on account of claims asserted by any vendor of the
Borrower or any Guarantor for reclamation rights in accordance with Section
2-702 of the Uniform Commercial Code and section 546(c) of the Bankruptcy Code
in excess of an amount to be mutually agreed upon between the Borrower and
Agent.
9.20 SALE AND LEASEBACK TRANSACTIONS. Neither the Borrower nor any Guarantor
shall (or apply to the Bankruptcy Court for authority to), directly or
indirectly, enter into any
82
arrangement with any Person providing for the Borrower or such Guarantor to
lease or rent property that the Borrower or such Guarantor has sold or will sell
or otherwise transfer to such Person.
9.21 NEW SUBSIDIARIES. Neither the Borrower nor any Guarantor shall
directly or indirectly, organize, create, acquire or permit to exist any
Subsidiary other than those listed on SCHEDULE 8.5.
9.22 FISCAL YEAR. The Borrower and the Guarantors shall not change
their Fiscal Year.
9.23 CAPITAL EXPENDITURES. Neither the Borrower nor any Guarantor shall
make or incur (or apply to the Bankruptcy Court for authority to make or incur)
any Capital Expenditure if, after giving effect thereto, the aggregate amount of
all Capital Expenditures by the Borrower and the Guarantors and their
Subsidiaries on a consolidated basis (excluding payments under the Synthetic
Lease) would exceed $46,000,000 during Fiscal Year 2000 or the following amounts
during the following respective periods:
Maximum Capital
Period Expenditures
------ ------------
January 2, 2000 to April 1, 2000 $19,191,000
January 2, 2000 to July 1, 2000 $32,252,000
January 2, 2000 to September 30, 2000 $39,736,000
January 2, 2000 to December 30, 2000 $46,000,000
December 31, 2000 to March 31, 2001 $19,191,000
December 31, 2000 to June 30, 2001 $32,252,000
9.24 INTENTIONALLY OMITTED
9.25 EBITDAR
. The Parent and its Subsidiaries, on a consolidated basis, shall have
EBITDAR of not less than the following amounts measured of the last day of each
Fiscal Quarter for the following respective periods.
Period Minimum EBITDAR
------ ---------------
January 2, 2000 to April 1, 2000 $ 17,681,000
January 2, 2000 to July 1, 2000 $ 62,260,000
January 2, 2000 to September 30, 2000 $102,991,000
January 2, 2000 to December 30, 2000 $128,445,000
December 31, 2000 to March 31, 2001 $ 17,681,000
December 31, 2000 to June 30, 2001 $ 62,260,000
83
PROVIDED, HOWEVER, that if the Parent and its Subsidiaries fail to attain any
minimum EBITDAR requirement set forth above, but attain at least 90% of that
minimum EBITDAR requirement, such breach may be cured if EBITDAR for the
immediately following Fiscal Month exceeds the amount of EBITDAR set forth for
that Fiscal Month in the initial Projections by an amount that equals or exceeds
the short-fall in EBITDAR for the measurement period ending as of the last day
of the preceding Fiscal Quarter.
9.26 USE OF PROCEEDS. The Borrower and the Guarantors shall not, and
shall not suffer or permit any of their Subsidiaries to, use any portion of the
Loan proceeds (including Letters of Credit), directly or indirectly, (i) to
purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Borrower or others incurred to purchase or carry Margin
Stock, (iii) to extend credit for the purpose of purchasing or carrying any
Margin Stock, (iv) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act or (v) for any purpose other than (a) the
payment of Restructuring Expenses permitted hereunder, (b) the payment of
adequate protection and other similar payments permitted hereunder, (c) to
refinance and terminate the Securitization Arrangements, (d) for the operating
expenses and working capital needs of Parent, Borrower and the Domestic
Subsidiaries that are Guarantors, and (g) for the operating expenses and working
capital needs of Foreign Subsidiaries in the ordinary course of business of such
Foreign Subsidiaries in an amount not to exceed $30,000,000 in the aggregate at
any time outstanding to the extent approved by the Bankruptcy Court and
excluding prepayments of Debt For Borrowed Money.
9.27 FURTHER ASSURANCES. The Borrower and each Guarantor shall execute
and deliver, or cause to be executed and delivered, to the Agent and/or the
Lenders such documents and agreements, and shall take or cause to be taken such
actions, as the Agent or any Lender may, from time to time, request to carry out
the terms and conditions of this Agreement and the other Loan Documents,
including Revolving Loan Notes, if requested by any Lender to evidence such
Lender's Revolving Loan Commitment, in form and substance reasonably
satisfactory to the Agent and the Borrower.
9.28 CHAPTER 11 CLAIMS
. Neither the Borrower nor any Guarantor shall incur, create, assume,
suffer to exist or permit any administrative expense, unsecured claim, or other
Superpriority Claim or lien which is pari passu with or senior to the claims, as
the case may be, of the Agent and the Lenders against the Borrower and the
Guarantors hereunder, or apply to the Bankruptcy Court for authority so to do,
except for the Carve-Out.
9.29 ORDERS; PAYMENT OF CLAIMS.
(a) Neither the Borrower nor any Guarantor shall at any time
seek, consent to or suffer to exist any modification, stay, vacation or
amendment of the Interim Order or the Final Order except for any modifications
and amendments agreed to in writing by Agent.
(b) Prior to the date on which the Obligations have been paid
in full in cash and this Agreement has been terminated, neither the Borrower nor
any Guarantor shall pay any
84
administrative expense or other claims except (i) professional fees and
expenses, (ii) other administrative expense claims incurred in the ordinary
course of the business of the Borrower or such Guarantor, (iii) Pre-Petition
Payments of Pre-Petition Secured Indebtedness to the extent expressly permitted
and agreed to by Agent in the Adequate Protection Order, (iv) other Pre-Petition
Payments in an amount not to exceed $1,000,000 in the aggregate to the extent
approved by the Bankruptcy Court and to which Agent consents in writing; (v)
Pre-Petition Payments consisting of employee wage and benefit claims to the
extent approved by the Bankruptcy Court in an aggregate amount not to exceed
$28,800,000; (vi) allowances for an employee retention program in an aggregate
amount not to exceed $25,000,000 to the extent approved by the Bankruptcy Court;
(vii) customer promotion and allowance programs not to exceed $35,700,000 in the
aggregate, to the extent approved by the Bankruptcy Court and (viii) critical
pre-petition vendor payments in an aggregate amount not to exceed $29,000,000 to
the extent approved by the Bankruptcy Court.
ARTICLE 10
CONDITIONS OF LENDING
10.1 CONDITIONS PRECEDENT TO MAKING OF LOANS ON THE CLOSING DATE. The
obligation of the Lenders to make the initial Revolving Loans on the Closing
Date and to make the Term Loan, and the obligation of the Agent to cause the
Letter of Credit Issuer to issue any Letter of Credit on the Closing Date, are
subject to the following conditions precedent having been satisfied in a manner
reasonably satisfactory to the Agent and each Lender:
(a) This Agreement and the other Loan Documents shall have
been executed by each party thereto and the Borrower and each Guarantor shall
have performed and complied with all covenants, agreements and conditions
contained herein and the other Loan Documents which are required to be performed
or complied with by the Borrower and each Guarantor before or on such Closing
Date.
(b) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as if made on such date.
(c) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made, the Letters of
Credit to be issued and the Credit Support to be in place on such date.
(d) [Intentionally Omitted.]
(e) The Borrower shall have paid or shall have made
arrangements to pay all fees and expenses of the Agent and the Attorney Costs
incurred in connection with any of the Loan Documents and the transactions
contemplated thereby to the extent invoiced.
(f) The Agent shall have received evidence, in form, scope,
and substance, reasonably satisfactory to the Agent, of all insurance coverage
as required by this Agreement.
85
(g) The Agent and the Lenders shall have had an opportunity,
if they so choose, to examine the books of account and other records and files
of the Borrower and to make copies thereof, and to conduct a pre-closing audit
which shall include, without limitation, verification of Inventory, Accounts,
and the Borrowing Base, and the results of such examination and audit shall have
been satisfactory to the Agent and the Lenders in all respects.
(h) Unless otherwise agreed in writing by Agent, the use of
proceeds of the initial Loans shall include an amount sufficient to repurchase
all outstanding Accounts sold to FTL Receivables Company at a price equal to the
principal and all accrued interest and all other obligations with respect to
loans to FTL Receivables Company (but without premium or penalty).
(i) Unless otherwise agreed in writing by Agent, concurrently
with the initial Loans hereunder, the Securitization Arrangement shall be
terminated.
(j) All proceedings taken in connection with the execution of
this Agreement, the Term Loan Notes, all other Loan Documents and all documents
and papers relating thereto shall be reasonably satisfactory in form, scope, and
substance to the Agent and the Lenders.
(k) At the time of the making of the initial Loans or at the
time of the issuance of the initial Letters of Credit, whichever first occurs,
the Agent and the Lenders shall have received a certified copy (or such other
evidence satisfactory to Agent) of an order of the Bankruptcy Court
substantially in the form of Exhibit F (the "INTERIM ORDER"), which (i) as
entered, shall be acceptable in form and substance to Agent, (ii) shall have
been entered within two (2) days following the initial Petition Date, approving
the Loan Documents and granting Superpriority Claim status and the Liens
described in SECTION 6.18 with the priority described herein, (iii) shall have
been entered upon an application of the Borrower and the Guarantors satisfactory
in form and substance to Agent, (iv) shall be in full force and effect, and (v)
shall not have been stayed, reversed, modified or amended in any respect.
(l) The Bankruptcy Cases shall have been commenced by the
Borrower, and the Borrower and each Guarantor shall be a debtor and
debtor-in-possession.
(m) All orders entered in the Bankruptcy Cases on or prior to
the date the Interim Order is entered shall be in form and substance
satisfactory to the Agent.
The acceptance by the Borrower of any Loans made or Letters of Credit
issued on the Closing Date shall be deemed to be a representation and warranty
made by the Borrower and each Guarantor to the effect that all of the conditions
precedent to the making of such Loans or the issuance of such Letters of Credit
have been satisfied, with the same effect as delivery to the Agent and the
Lenders of a certificate signed by a Responsible Officer of the Borrower and
each Guarantor, dated the Closing Date, to such effect.
Execution and delivery to the Agent by a Lender of a counterpart of
this Agreement shall be deemed confirmation by such Lender that (i) all
conditions precedent in this SECTION 10.1 have been fulfilled to the
satisfaction of such Lender, (ii) the decision of such Lender to execute and
86
deliver to the Agent an executed counterpart of this Agreement was made by such
Lender independently and without reliance on the Agent or any other Lender as to
the satisfaction of any condition precedent set forth in this SECTION 10.1, and
(iii) all documents sent to such Lender for approval consent, or satisfaction
were acceptable to such Lender.
10.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lenders
to make each Loan, including the initial Revolving Loans on the Closing Date and
the Term Loan, and the obligation of the Agent to cause the Letter of Credit
Issuer to issue any Letter of Credit shall be subject to the further conditions
precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by the Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in CLAUSES (I) and (II), with the same effect as the
delivery to the Agent and the Lenders of a certificate signed by a Responsible
Officer, dated the date of such extension of credit, stating that:
(i) The representations and warranties
containedinthis Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of credit as though
made on and as of such date, other than any such representation or warranty
which relates to a specified prior date and except to the extent the Agent and
the Lenders have been notified by the Borrower that any representation or
warranty is not correct and the Majority Lenders have explicitly waived in
writing compliance with such representation or warranty; and
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes a Default or an
Event of Default; and
(b) The amount of the Borrowing Base shall be sufficient to
make such Revolving Loans or issue such Letters of Credit without exceeding the
Availability, PROVIDED, HOWEVER, that the foregoing conditions precedent are not
conditions to each Lender participating in or reimbursing the Bank or the Agent
for such Lenders' Pro Rata Share of any Non-Ratable Loan or Agent Advance made
in accordance with the provisions of SECTIONS 2.2(h), (i) and (j).
(c) No order shall have been entered in any of the Bankruptcy
Cases, (i) for the appointment of a trustee or receiver, (ii) to convert any
Bankruptcy Case from a proceeding under chapter 11 of the Bankruptcy Code to a
proceeding under chapter 7 of the Bankruptcy Code, or (iii) to dismiss any
Bankruptcy Case.
(d) ▇▇▇ ▇▇▇▇ & Associates or another financial advisor
reasonably acceptable to Agent shall have been (and shall continue to be)
retained by the Borrower on behalf of itself and the Guarantors.
(e) The Interim Order shall be in full force and effect and
shall not have been stayed, reversed, modified or amended in any respect;
PROVIDED, that:
(i) if (A) the proposed date for the making of such
Loan or issuance of such Letter of Credit is thirty (30) days or more
after the date of the entry of the Interim
87
Order or (B) the making of such Loan or the issuance of such Letter of
Credit would cause the aggregate amount of all Loans and Letters of
Credit then outstanding to exceed the amount thereof which was
authorized by the Bankruptcy Court in the Interim Order (collectively,
the "ADDITIONAL CREDIT"), the Agent and each of the Lenders shall have
received a certified copy (or other evidence satisfactory to the
Agent) of an order of the Bankruptcy Court substantially in the form
of Exhibit G, which, as entered, shall be acceptable in form and
substance to Agent (the "FINAL ORDER"); and
(ii) at the time of the extension of any Additional
Credit the Final Order shall be in full force and effect, and shall not
have been stayed, reversed, modified or amended in any respect.
(f) In connection with the first Loan to be made on or after
the fifth Business Day after entry by the Bankruptcy Court of the Final Order,
Agent shall have received a certified copy of the Final Order.
(g) None of the Bankruptcy Cases shall have been dismissed or
converted to chapter 7 of the Bankruptcy Code, neither the Borrower nor any
Guarantor shall have filed an application for an order converting its Bankruptcy
Case to a case under chapter 7 of the Bankruptcy Code, and no trustee under
chapter 7 or chapter 11 of the Bankruptcy Code shall have been appointed in any
of the Bankruptcy Cases.
ARTICLE 11
DEFAULT; REMEDIES
11.1 EVENTS OF DEFAULT. It shall constitute an event of default ("Event
of Default") if any one or more of the following shall occur for any reason:
(a) any failure by the Borrower to pay the principal of or
interest or premium on any of the Obligations when due or any fee or other
amount owing hereunder, within five (5) days after the date specified for
payment thereof, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by the
Borrower or any Guarantor in this Agreement or in any of the other Loan
Documents, any Financial Statement, or any certificate furnished by the Borrower
or any of its Subsidiaries at any time to the Agent or any Lender shall prove to
be untrue in any material respect as of the date on which made, deemed made, or
furnished;
(c) any default shall occur in the observance or performance
of any of the covenants and agreements contained in this Agreement or any other
Loan Documents (including in respect of any Bank Products), or if any such Loan
Document shall terminate (other than in accordance with its terms or the terms
hereof or with the written consent of the Agent and the Majority Lenders) or
become void or unenforceable, without the written consent of the Agent and the
Majority Lenders;
88
(d) If any Revolving Loan would cause the Aggregate Revolver
Outstandings plus the outstanding principal balance of the Term Loan to exceed
$275,000,000 or thirty (30) days or more shall have elapsed since the date on
which the Interim Order was entered and, in either case, a Final Order has not
been entered;
(e) the Borrower or any Guarantor shall file a certificate of
dissolution under applicable state law or shall be liquidated, dissolved or
wound-up under state law or shall commence or have commenced against it any
action or proceeding for dissolution, winding-up or liquidation, or shall take
any corporate action in furtherance thereof; provided that the Parent may
commence proceedings under the Companies Law of the Cayman Islands; provided,
further, that the Parent or the legal representative of the Parent under the
laws of the Cayman Islands shall expressly consent to the Parent's execution,
delivery and performance of this Agreement.
(f) all or any material part of the property of the Borrower
or any Guarantor shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of the
Borrower or such Guarantor shall be assumed by any Governmental Authority or any
court of competent jurisdiction at the instance of any Governmental Authority,
except where contested in good faith by proper proceedings diligently pursued
where a stay of enforcement is in effect;
(g) any guaranty of the Obligations shall be terminated,
revoked or declared void or invalid;
(h) any loss, theft, damage or destruction of any item or
items of Collateral or other property of the Borrower or any Subsidiary occurs
which could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(i) there occurs a Material Adverse Effect;
(j) there is filed against the Borrower or any of its
Subsidiaries any action, suit or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (i) is not dismissed
within one hundred twenty (120) days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(k) for any reason other than the failure of the Agent to take
any action available to it to maintain perfection of the Agent's Liens, pursuant
to the Loan Documents, any Loan Document ceases to be in full force and effect
or any Lien with respect to any material portion of the Collateral intended to
be secured thereby ceases to be, or is not, valid, perfected and prior to all
other Liens (other than Permitted Liens) or is terminated, revoked or declared
void;
(l) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an
89
aggregate amount in excess of $180,000,000; and (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans at any time exceeds
$65,000,000.
(m) there occurs a Change of Control;
(n) Intentionally omitted;
(o) any of the Bankruptcy Cases shall be dismissed or
converted to a case under chapter 7 of the Bankruptcy Code, or the Borrower or
any Guarantor shall file an application for an order converting a case to a case
under chapter 7 of the Bankruptcy Code; a trustee under chapter 7 or chapter 11
of the Bankruptcy Code shall be appointed in any of the Bankruptcy Cases; or an
application shall be filed by the Borrower or any Guarantor for the approval of
any other Superpriority Claim (other than the Carve-Out) in any Bankruptcy Case
which is PARI PASSU with or senior to the claims of the Agent and the Lenders
against the Borrower or any Guarantor, or there shall arise any such PARI PASSU
or senior Superpriority Claim, Adequate Protection Order or the Interim Order or
Final Order shall be stayed, modified without the written consent of Agent,
reversed or vacated;
(p) the Bankruptcy Court shall enter an order or orders
granting relief from the automatic stay applicable under Section 362 of the
Bankruptcy Code to the holder or holders of any security interest to permit
foreclosure (or the granting of a deed in lieu of foreclosure or the like) in
any assets of the Borrower or any Guarantor except for real estate listed on
Schedule 11.1(p) (the "IRB Properties"); or an order shall be entered by the
Bankruptcy Court that is not stayed pending appeal granting relief from the
automatic stay to any creditor of the Borrower or any Guarantor (other than the
Agent and the Lenders in their capacities as such) with respect to any claim
other than by the holders of industrial revenue bonds or their trustees listed
on Schedule 11.1(p) (the "IRB Claimants"); PROVIDED, HOWEVER, that it shall not
be an Event of Default if relief from the automatic stay is lifted solely for
the purpose of (i) allowing such creditor to determine the liquidated amount of
its claim against the Borrower or any Guarantor; (ii) seeking payment from a
collateral source other than any of the Borrower or any Guarantor; (iii)
granting or permitting the granting of Liens granted pursuant to the Adequate
Protection Order (all of which shall be subordinated to the Liens granted
hereunder in favor of the Agent and the Lenders);
(q) an order of the Bankruptcy Court shall be entered in any
of the Bankruptcy Cases appointing an examiner with enlarged powers relating to
the operation of the business under Section 1106(b) of the Bankruptcy Code and
such order shall not be reversed or vacated within thirty (30) days after the
entry thereof;
(r) an order by the Bankruptcy Court shall be entered
confirming a Reorganization Plan in any of the Bankruptcy Cases which does not
require a provision for termination of the Commitments and payment in full in
cash of all Obligations of the Borrower and the Guarantors hereunder and under
the other Loan Documents on or before the effective date of such Reorganization
Plan;
90
(s) an order by the Bankruptcy Court shall be entered, or the
Borrower or any Guarantor shall file an application for an order, dismissing any
of the Bankruptcy Cases which does not require a provision for termination of
the Commitments and payment in full in cash of all Obligations of the Borrower
and the Guarantors hereunder and under the other Loan Documents;
(t) an order by the Bankruptcy Court shall be entered with
respect to any of the Bankruptcy Cases or the Borrower or any Guarantor shall
file an application for an order with respect to any Bankruptcy Case, in each
case without the express prior written consent of Agent, (i) to revoke, reverse,
stay, modify, vacate, supplement or amend the Interim Order or the Final Order,
(ii) to permit any administrative expense or any claim (now existing or
hereafter arising, of any kind or nature whatsoever) to have an administrative
priority as to the Borrower or any Guarantor equal or superior to the priority
of the claims of the Agent and the Lenders in respect of the Obligations (other
than the Carve-Out), or (iii) to grant or permit the grant of a Lien on the
Collateral (other than the Carve-Out) except as permitted in the Adequate
Protection Order (all of which shall be subordinated to the Liens granted
hereunder in favor of the Agent and the Lenders);
(u) an application for any of the orders described in clauses
(o), (r), (s) or (t) above shall be made by a Person other than the Borrower or
any Guarantor and such application is not contested by the Borrower and the
Guarantors in good faith and the relief requested is granted in an order that is
not stayed pending appeal; or
(v) the Borrower or any Guarantor shall violate or fail to
comply with the Interim Order, the Final Order or the Adequate Protection
Order.
11.2 REMEDIES. Unless the Bankruptcy Court authorizes less notice, upon
not less than four days' prior written notice from the Agent to the Borrower:
(a) Subject to SECTION 11.2(d) below, if a Default or an Event
of Default exists, the Agent may, in its discretion, and shall, at the direction
of the Majority Lenders, without further order of or application to the
Bankruptcy Court, do one or more of the following at any time or times and in
any order: (i) reduce the Maximum Revolver Amount, or the advance rates against
Eligible Accounts and/or Eligible Inventory used in computing the Borrowing
Base, or reduce one or more of the other elements used in computing the
Borrowing Base; (ii) restrict the amount of or refuse to make Revolving Loans;
and (iii) restrict or refuse to provide Letters of Credit or Credit Support. If
an Event of Default exists, the Agent shall, at the direction of the Majority
Lenders, do one or more of the following, in addition to the actions described
in the preceding sentence, at any time or times and in any order, without notice
to or demand on the Borrower: (A) terminate the Commitments and this Agreement;
(B) declare any or all Obligations to be immediately due and payable; PROVIDED,
HOWEVER, that upon the occurrence of any Event of Default described in 11.1(d),
(g), (o), (p), (q), (r), (s), (t) or (u), the Commitments shall automatically
and immediately expire and all Obligations shall automatically become
immediately due and payable without notice or demand of any kind; and (C) pursue
its other rights and remedies under the Loan Documents and applicable law.
91
(b) If an Event of Default has occurred and is continuing: (i)
the Agent shall have for the benefit of the Lenders, in addition to all other
rights of the Agent and the Lenders, the rights and remedies of a secured party
under the UCC; (ii) the Agent may, at any time, take possession of the
Collateral and keep it on the Borrower's or any Guarantor's premises, at no cost
to the Agent or any Lender, or remove any part of it to such other place or
places as the Agent may desire, or the Borrower shall, upon the Agent's demand,
at the Borrower's and the Guarantors' cost, assemble the Collateral and make it
available to the Agent at a place reasonably convenient to the Agent; and (iii)
the Agent may sell and deliver any Collateral at public or private sales, for
cash, upon credit or otherwise, at such prices and upon such terms as the Agent
deems advisable, in its sole discretion, and may, if the Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement at
the time and place of sale or of such postponed or adjourned sale without giving
a new notice of sale. Without in any way requiring notice to be given in the
following manner, the Borrower and each Guarantor agrees that any notice by the
Agent of sale, disposition or other intended action hereunder or in connection
herewith, whether required by the UCC or otherwise, shall constitute reasonable
notice to the Borrower and the Guarantors if such notice is mailed by registered
or certified mail, return receipt requested, postage prepaid, or is delivered
personally against receipt to the Borrower, at least five (5) Business Days
prior to such action to the Borrower's address specified in or pursuant to
SECTION 15.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Agent or the Lenders receive payment, and if the buyer defaults in payment, the
Agent may resell the Collateral without further notice to the Borrower or any
Guarantor. In the event the Agent seeks to take possession of all or any portion
of the Collateral by judicial process, the Borrower and each Guarantor
irrevocably waives: (A) the posting of any bond, surety or security with respect
thereto which might otherwise be required; (B) any demand for possession prior
to the commencement of any suit or action to recover the Collateral; and (C) any
requirement that the Agent retain possession and not dispose of any Collateral
until after trial or final judgment. The Borrower and each Guarantor agrees that
the Agent has no obligation to preserve rights to the Collateral or marshal any
Collateral for the benefit of any Person, except as Agent may otherwise agree in
writing. The Agent is hereby granted a license or other right to use, without
charge, the Borrower's and each Guarantor's labels, patents, copyrights, name,
trade secrets, trade names, trademarks, and advertising matter, or any similar
property, in completing production of, advertising or selling any Collateral,
and the Borrower's and each Guarantor's rights under all licenses and all
franchise agreements shall inure to the Agent's benefit for such purpose. The
proceeds of sale shall be applied first to all expenses of sale, including
reasonable attorneys' fees, and then to the Obligations. The Agent will return
any excess to the Borrower or the applicable Guarantor and the Borrower and each
Guarantor shall remain liable for any deficiency.
(c) If an Event of Default has occurred and is continuing,
except as otherwise provided in this Section 11.2, the Borrower and each
Guarantor hereby waives all rights to notice and hearing prior to the exercise
by the Agent of the Agent's rights to repossess the Collateral without judicial
process or to reply, attach or levy upon the Collateral without notice or
hearing.
(d) If an Event of Default has occurred and is continuing, all
stays and injunctions, including the automatic stay pursuant to Bankruptcy Code
section 362, shall be
92
vacated and terminated by each of the Interim Order and the Final Order to the
extent necessary to permit the Agent and the Lenders full exercise of all of
their rights and remedies, including, without limitation, all of their rights
and remedies with respect to the Collateral. With respect to the Agent's and
Lenders' exercise of their rights and remedies, the Borrower and each Guarantor
agree and warrant as follows:
(i) the Borrower and each Guarantor waive, release,
and shall be enjoined from attempting to contest, delay, or
otherwise dispute the exercise by the Agent and the Lenders of
their rights and remedies before the Bankruptcy Court or
otherwise; except only as expressly stated in subparagraph
(ii) of this paragraph; and
(ii) when any Agent or Lender seeks to enforce its
rights and remedies based on an Event of Default, and if the
Borrower or any Guarantor disputes that an Event of Default
has occurred, the Borrower and the Guarantors will be entitled
to file an emergency motion with the Bankruptcy Court
disputing whether an Event of Default has occurred. Unless
otherwise agreed in writing by Agent, any such motion shall be
heard within two (2) Business Days after it is filed. At the
hearing on the emergency motion, the only issue that will be
heard by the Bankruptcy Court will be whether an Event of
Default has occurred and has not been cured, and, if an Event
of Default has occurred and has not been cured, the Agent and
the Lenders will be entitled to continue to exercise all of
their rights and remedies without the necessity of any further
notice or order. Furthermore, nothing herein shall be
construed to impose or reimpose any stay or injunction of any
kind against the Agent or the Lenders.
ARTICLE 12
TERM AND TERMINATION
12.1 TERM AND TERMINATION. The term of this Agreement shall end on the
Stated Termination Date, unless the Termination Date shall earlier occur. Unless
the Bankruptcy Court authorizes less notice, upon not less than four days' prior
written notice from the Agent to the Borrower, the Agent upon direction from the
Majority Lenders may terminate this Agreement upon the occurrence of an Event of
Default. Upon the effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including all unpaid principal, accrued and unpaid
interest and any early termination or prepayment fees or penalties) shall become
immediately due and payable and the Borrower shall immediately arrange for the
cancellation and return of Letters of Credit then outstanding. Notwithstanding
the termination of this Agreement, until all Obligations are indefeasibly paid
and performed in full in cash, the Borrower and each Guarantor shall remain
bound by the terms of this Agreement and shall not be relieved of any of their
Obligations hereunder, and the Agent and the Lenders shall retain all their
rights and remedies hereunder (including the Agent's Liens in and all rights and
remedies with respect to all then existing and after-arising Collateral).
93
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or any Guarantor therefrom, shall be effective unless
the same shall be in writing and signed by the Majority Lenders (or by the Agent
at the written request of the Majority Lenders) and the Borrower and the
Guarantors and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; PROVIDED,
HOWEVER, that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and the Borrower and the Guarantors and acknowledged
by the Agent, do any of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement or any
other Loan Document for any payment of principal, interest, fees or other
amounts due to the Lenders (or any of them) hereunder or under any other Loan
Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or any fees or other amounts payable hereunder or under
any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the
Lenders or any of them to take any action hereunder;
(e) increase any of the percentages set forth in the definition
of the Borrowing Base;
(f) amend this Section or any provision of the Agreement
providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by SECTION 14.12;
(h) change the definitions of "Majority Lenders" or "Required
Lenders"; or
(i) increase the Maximum Revolver Amount, the maximum
Revolving Loans advanced against Eligible Inventory, and Unused Letter of Credit
Subfacility;
PROVIDED, HOWEVER, the Agent may, in its sole discretion and notwithstanding
the limitations contained in CLAUSES (e) and (i) above and any other terms of
this Agreement, make Revolving Loans (including Agent Advances) in an amount
not to exceed 10% of the Borrowing Base and, PROVIDED FURTHER, that no
amendment, waiver or consent shall, unless in writing and signed by the
Agent, affect the rights or duties of the Agent under this Agreement or any
other Loan Document and, PROVIDED FURTHER, that SCHEDULE 1.1 hereto
(Commitments) may be amended from time to time by Agent alone to reflect
assignments of Commitments in accordance herewith.
94
13.2 ASSIGNMENTS; PARTICIPATIONS.
(a) Any Lender may, with the written consent of the Agent
(which consent shall not be unreasonably withheld or delayed) and the consent
of Borrower (which consent shall not be unreasonably withheld or delayed and
which consent shall not be required so long as an Event of Default has
occurred and is continuing), assign and delegate to one or more Eligible
Assignees (provided that no consent of the Agent or Borrower shall be
required in connection with any assignment and delegation by a Lender to an
Affiliate of such Lender) (each an "ASSIGNEE") all, or any ratable part of
all, of the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $10,000,000 (provided that,
unless an assignor Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted unless,
after giving effect thereto, such assignor Lender retains a Commitment in a
minimum amount of $10,000,000); PROVIDED, HOWEVER, that the Borrower and the
Agent may continue to deal solely and directly with such Lender in connection
with the interest so assigned to an Assignee until (i) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the
Borrower and the Agent by such Lender and the Assignee; (ii) such Lender and
its Assignee shall have delivered to the Borrower and the Agent an Assignment
and Acceptance in the form of EXHIBIT H ("ASSIGNMENT AND ACCEPTANCE")
together with any note or notes subject to such assignment and (iii) the
assignor Lender or Assignee has paid to the Agent a processing fee in the
amount of $3,000.
(b) From and after the date that the Agent notifies the
assignor Lender that it has received an executed Assignment and Acceptance
and payment of the above-referenced processing fee, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate in
Letters of Credit and Credit Support have been assigned to it pursuant to
such Assignment and Acceptance, shall have the rights and obligations of a
Lender under the Loan Documents, and (ii) the assignor Lender shall, to the
extent that rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all
or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender 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 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 Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien
granted by the Borrower or any Guarantor to the Agent or any Lender in the
Collateral; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Borrower or any Guarantor or the performance or observance by the Borrower or
any Guarantor of any of its obligations under this Agreement or any other
Loan Document furnished pursuant hereto; (iii)
95
such Assignee confirms that it has received a copy of this Agreement,
together with 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 Agent, such assigning Lender or any other Lender, 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; (v) such Assignee appoints and authorizes the Agent to
take such action as agent on its behalf and to exercise such powers under
this Agreement as are delegated to the Agent by the terms hereof, together
with such powers, including the discretionary rights and incidental power, as
are reasonably incidental thereto; and (vi) such Assignee 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.
(d) Immediately upon satisfaction of the requirements of
SECTION 13.2(a), this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce such Commitments of the assigning Lender
PRO TANTO.
(e) Any Lender may at any time sell to one or more commercial
banks, financial institutions, or other Persons not Affiliates of the
Borrower (a "PARTICIPANT") participating interests in any Loans, the
Commitment of that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan Documents; PROVIDED,
HOWEVER, that (i) the originating Lender's obligations under this Agreement
shall remain unchanged, (ii) the originating Lender shall remain solely
responsible for the performance of such obligations, (iii) the Borrower and
the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and obligations
under this Agreement and the other Loan Documents, and (iv) no Lender shall
transfer or grant any participating interest under which the Participant has
rights to approve any amendment to, or any consent or waiver with respect to,
this Agreement or any other Loan Document, and all amounts payable by the
Borrower hereunder shall be determined as if such Lender had not sold such
participation; except that, if amounts outstanding under this Agreement are
due and unpaid, or shall have been declared or shall have become due and
payable upon the occurrence and during the continuance of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement
to the same extent and subject to the same limitation as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
(f) Notwithstanding any other provision in this Agreement, any
Lender may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement in favor of any
Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
96
ARTICLE 14
THE AGENT
14.1 WITHHOLDING TAX.APPOINTMENT AND AUTHORIZATION. Each Lender
hereby designates and appoints Bank as its Agent under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes the Agent
to take such action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform such duties
as are expressly delegated to it by the terms of this Agreement or any other
Loan Document, together with such powers as are reasonably incidental
thereto. The Agent agrees to act as such on the express conditions contained
in this ARTICLE 14. The provisions of this ARTICLE 14 are solely for the
benefit of the Agent and the Lenders and the Borrower and the Guarantors
shall have no rights as a third party beneficiaries of any of the provisions
contained herein. Notwithstanding any provision to the contrary contained
elsewhere in this Agreement or in any other Loan Document, the Agent shall
not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the
term "agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as a
matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties. As
between Agent and the Lenders, except as expressly otherwise provided in this
Agreement, the Agent shall have and may use its sole discretion with respect
to exercising or refraining from exercising any discretionary rights or
taking or refraining from taking any actions which the Agent is expressly
entitled to take or assert under this Agreement and the other Loan Documents,
including (a) the determination of the applicability of ineligibility
criteria with respect to the calculation of the Borrowing Base, (b) the
making of Agent Advances pursuant to SECTION 2.2(i), and (c) the exercise of
remedies pursuant to SECTION 11.2, and any action so taken or not taken shall
be deemed consented to by the Lenders.
14.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made without gross negligence or willful misconduct.
14.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by the Borrower or any Guarantor or
Affiliate of the Borrower or any Guarantor, or any officer thereof, contained in
this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this
97
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other
Loan Document, or for any failure of the Borrower, any Guarantor or any other
party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of the
Borrower, any Guarantor or any of the Borrower's Subsidiaries or Affiliates.
14.4 RELIANCE BY AGENT. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Borrower and the Guarantors), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or refusing to take
any action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Lenders as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action. The
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders (or all Lenders if so required by
SECTION 13.1) and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
14.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Default or Event of Default, unless the Agent
shall have received written notice from a Lender or the Borrower referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." The Agent will notify the Lenders of its
receipt of any such notice. The Agent shall take such action with respect to
such Default or Event of Default as may be requested by the Majority Lenders in
accordance with SECTION 11; PROVIDED, HOWEVER, that unless and until the Agent
has received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable.
14.6 CREDIT DECISION. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Agent hereinafter taken, including any review of the affairs of
the Borrower, the Guarantors and their Affiliates, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to the Agent that it has, independently and
without reliance upon any Agent-Related Person and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower, the Guarantors and
their Affiliates, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower. Each Lender also
represents that it will, independently and without reliance upon any
98
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Borrower
and each Guarantor. Except for notices, reports and other documents expressly
herein required to be furnished to the Lenders by the Agent, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Borrower and each
Guarantor which may come into the possession of any of the Agent-Related
Persons.
14.7 INDEMNIFICATION. Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Borrower and the Guarantors and without limiting the obligation of the Borrower
and the Guarantors to do so), pro rata, from and against any and all Indemnified
Liabilities as such term is defined in SECTION 15.11; PROVIDED, HOWEVER, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from such Person's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Lender shall reimburse the Agent upon demand for its ratable share of any
costs or out-of-pocket expenses (including Attorney Costs) incurred by the Agent
in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower. The undertaking in
this Section shall survive the payment of all Obligations hereunder and the
resignation or replacement of the Agent.
14.8 AGENT IN INDIVIDUAL CAPACITY. The Bank and its Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with the Borrower, the
Guarantors and their Subsidiaries and Affiliates as though the Bank were not the
Agent hereunder and without notice to or consent of the Lenders. The Lenders
acknowledge that, pursuant to such activities, the Bank or its Affiliates may
receive information regarding the Borrower or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Borrower or such Subsidiary) and acknowledge that the Agent and the Bank shall
be under no obligation to provide such information to them. With respect to its
Loans, the Bank shall have the same rights and powers under this Agreement as
any other Lender and may exercise the same as though it were not the Agent, and
the terms "Lender" and "Lenders" include the Bank in its individual capacity.
14.9 SUCCESSOR AGENT. The Agent may resign as Agent upon 30 days
notice to the Lenders and the Borrower, such resignation to be effective upon
the acceptance of a successor agent to its appointment as Agent. In the event
the Bank sells all of its Commitment and Revolving Loans as part of a sale,
transfer or other disposition by the Bank of substantially all of its loan
portfolio, the Bank shall resign as Agent and such purchaser or transferee
shall become
99
the successor Agent hereunder. If the Agent resigns under this Agreement,
subject to the proviso in the preceding sentence, the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders. If no
successor agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the Lenders and
the Borrower, a successor agent from among the Lenders. Upon the acceptance
of its appointment as successor agent hereunder, such successor agent shall
succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this
ARTICLE 14 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor agent
has accepted appointment as Agent by the date which is thirty (30) days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Lenders
shall perform all of the duties of the Agent hereunder until such time, if
any, as the Majority Lenders appoint a successor agent as provided for above.
Notwithstanding the foregoing, in the event that Bank of America, N.A.
assigns all of its Loans to an Affiliate, such Affiliate shall automatically
become the successor Agent hereunder upon the effective date of such
assignment.
(a) If any Lender is a "foreign corporation, partnership or
trust" within the meaning of the Code and such Lender claims exemption from,
or a reduction of, U.S. withholding tax under Sections 1441 or 1442 of the
Code, such Lender agrees with and in favor of the Agent, to deliver to the
Agent:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States of America tax treaty,
properly completed IRS Forms W8ECI and W-8 before the payment of any interest
in the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States of America withholding tax because it
is effectively connected with a United States of America trade or business of
such Lender, two properly completed and executed copies of IRS Form W8BEN
before the payment of any interest is due in the first taxable year of such
Lender and in each succeeding taxable year of such Lender during which
interest may be paid under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be required under the
Code or other laws of the United States of America as a condition to
exemption from, or reduction of, United States of America withholding tax.
Such Lender agrees to promptly notify the Agent of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction of,
withholding tax under a United States of America tax treaty by providing IRS
Form W8ECI and such Lender sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations owing
100
to such Lender, such Lender agrees to notify the Agent of the percentage
amount in which it is no longer the beneficial owner of Obligations of the
Borrower to such Lender. To the extent of such percentage amount, the Agent
will treat such Lender's IRS Form W8ECI as no longer valid.
(c) If any Lender claiming exemption from United States of
America withholding tax by filing IRS Form W8BEN with the Agent sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations owing to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax requirements imposed by
Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to such
Lender an amount equivalent to the applicable withholding tax after taking
into account such reduction. If the forms or other documentation required by
SUBSECTION (a) of this Section are not delivered to the Agent, then the Agent
may withhold from any interest payment to such Lender not providing such
forms or other documentation an amount equivalent to the applicable
withholding tax.
(e) If the IRS or any other Governmental Authority of the
United States of America or other jurisdiction asserts a claim that the Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Lender shall indemnify the
Agent fully for all amounts paid, directly or indirectly, by the Agent as tax
or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to the Agent under this
Section, together with all costs and expenses (including Attorney Costs). The
obligation of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of the Agent.
14.11 CO-AGENTS. If any Lender is identified on the facing page or
signature pages of this Agreement as a "co-agent", it shall have any right,
power, obligation, liability, responsibility or duty under this Agreement
other than those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders so identified as a "co-agent" shall have or be
deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in taking or not
taking action hereunder.
14.12 COLLATERAL MATTERS.
(a) The Lenders hereby irrevocably authorize the Agent, at its
option and in its sole discretion, to release any Agent's Lien upon any
Collateral (i) upon the termination of the Commitments and payment and
satisfaction in full by Borrower and/or the Guarantors of all Loans and
reimbursement obligations in respect of Letters of Credit and Credit Support,
and the termination of all outstanding Letters of Credit (whether or not any of
such obligations are due) and all other Obligations; (ii) constituting property
being sold or disposed of if the Borrower certifies to the Agent that the sale
or disposition is made in compliance with SECTION 9.9 (and the
101
Agent may rely conclusively on any such certificate, without further
inquiry); (iii) constituting property in which the Borrower or the applicable
Guarantor owned no interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to the Borrower or the
applicable Guarantor under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided above, the
Agent will not release any of the Agent's Liens without the prior written
authorization of the Lenders; PROVIDED that the Agent may, in its discretion,
release the Agent's Liens on Collateral valued in the aggregate not in excess
of $5,000,000 during any one year period without the prior written
authorization of the Lenders. Upon request by the Agent or the Borrower at
any time, the Lenders will confirm in writing the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral
pursuant to this SECTION 14.12.
(b) Upon receipt by the Agent of any authorization required
pursuant to SECTION 14.12(a) from the Lenders of the Agent's authority to
release any Agent's Liens upon particular types or items of Collateral, and
upon at least five (5) Business Days prior written request by the Borrower,
the Agent shall (and is hereby irrevocably authorized by the Lenders to)
execute such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; PROVIDED, HOWEVER, that (i) the Agent
shall not be required to execute any such document on terms which, in the
Agent's opinion, would expose the Agent to liability or create any obligation
or entail any consequence other than the release of such Liens without
recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of the Borrower in respect of)
all interests retained by the Borrower or any Guarantor, including the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral.
(c) The Agent shall have no obligation whatsoever to any of the
Lenders to assure that the Collateral exists or is owned by the Borrower or
any Guarantor or is cared for, protected or insured or has been encumbered,
or that the Agent's Liens have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any duty
of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to the Agent pursuant to
any of the Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission or event related thereto, the Agent may
act in any manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Collateral in its capacity as one of the Lenders
and that the Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing.
14.13 RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS
(a) Each of the Lenders agrees that it shall not, without the
express consent of all Lenders, and that it shall, to the extent it is
lawfully entitled to do so, upon the request of all Lenders, set off against
the Obligations, any amounts owing by such Lender to the Borrower or any
Guarantor or any accounts of the Borrower or any Guarantor now or hereafter
maintained with such Lender. Each of the Lenders further agrees that it shall
not, unless specifically requested to do so by the Agent, take or cause to be
taken any action to enforce its rights under this Agreement or against the
Borrower or any Guarantor, including the commencement of any
102
legal or equitable proceedings, to foreclose any Lien on, or otherwise
enforce any security interest in, any of the Collateral.
(b) If at any time or times any Lender shall receive (i) by
payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any
payments with respect to the Obligations of the Borrower, any Guarantor, or any
Lender to such Lender arising under, or relating to, this Agreement or the other
Loan Documents, except for any such proceeds or payments received by such Lender
from the Agent pursuant to the terms of this Agreement, or (ii) payments from
the Agent in excess of such Lender's ratable portion of all such distributions
by the Agent, such Lender shall promptly (1) turn the same over to the Agent, in
kind, and with such endorsements as may be required to negotiate the same to the
Agent, or in same day funds, as applicable, for the account of all of the
Lenders and for application to the Obligations in accordance with the applicable
provisions of this Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied ratably as among
the Lenders in accordance with their Pro Rata Shares; PROVIDED, HOWEVER, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.
14.14 AGENCY FOR PERFECTION. Each Lender hereby appoints each other
Lender as agent for the purpose of perfecting the Lenders' security interest in
assets which, in accordance with Article 9 of the UCC can be perfected only by
possession. Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and, promptly upon
the Agent's request therefor shall deliver such Collateral to the Agent or in
accordance with the Agent's instructions.
14.15 PAYMENTS BY AGENT TO LENDERS. All payments to be made by the
Agent to the Lenders shall be made by bank wire transfer or internal transfer of
immediately available funds to each Lender pursuant to wire transfer
instructions delivered in writing to the Agent on or prior to the Closing Date
(or if such Lender is an Assignee, on the applicable Assignment and Acceptance),
or pursuant to such other wire transfer instructions as each party may designate
for itself by written notice to the Agent. Concurrently with each such payment,
the Agent shall identify whether such payment (or any portion thereof)
represents principal, premium or interest on the Revolving Loans, Term Loan or
otherwise.
14.16 CONCERNING THE COLLATERAL AND THE RELATED LOAN DOCUMENTS. Each
Lender authorizes and directs the Agent to enter into this Agreement and the
other Loan Documents, for the ratable benefit and obligation of the Agent and
the Lenders. Each Lender agrees that any action taken by the Agent, Majority
Lenders or Required Lenders, as applicable, in accordance with the terms of this
Agreement or the other Loan Documents, and the exercise by the Agent, the
Majority Lenders, or the Required Lenders, as applicable, of their respective
powers set forth therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the Lenders.
103
14.17 FIELD AUDIT AND EXAMINATION REPORTS; DISCLAIMER BY LENDERS. By
signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish such
Lender, promptly after it becomes available, a copy of each field audit or
examination report (each a "Report" and collectively, "Reports") prepared by the
Agent;
(b) expressly agrees and acknowledges that neither the Bank
nor the Agent (i) makes any representation or warranty as to the accuracy of any
Report, or (ii) shall be liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that the Agent or the Bank or other party
performing any audit or examination will inspect only specific information
regarding the Borrower and the Guarantors and will rely significantly upon the
Borrower's and the Guarantors' books and records, as well as on representations
of the Borrower's and the Guarantors' personnel;
(d) agrees to keep all Reports confidential and strictly for
its internal use, and not to distribute except to its participants, or use any
Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees: (i) to hold the
Agent and any such other Lender preparing a Report harmless from any action the
indemnifying Lender may take or conclusion the indemnifying Lender may reach or
draw from any Report in connection with any loans or other credit accommodations
that the indemnifying Lender has made or may make to the Borrower, or the
indemnifying Lender's participation in, or the indemnifying Lender's purchase
of, a loan or loans of the Borrower; and (ii) to pay and protect, and indemnify,
defend and hold the Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including Attorney Costs) incurred by the Agent and any such
other Lender preparing a Report as the direct or indirect result of any third
parties who might obtain all or part of any Report through the indemnifying
Lender.
14.18 RELATION AMONG LENDERS. The Lenders are not partners or
co-venturers, and no Lender shall be liable for the acts or omissions of, or
(except as otherwise set forth herein in case of the Agent) authorized to act
for, any other Lender.
ARTICLE 15
MISCELLANEOUS
15.1 NO WAIVERS; CUMULATIVE REMEDIES. No failure by the Agent or any
Lender to exercise any right, remedy, or option under this Agreement or any
present or future supplement thereto, or in any other agreement between or among
the Borrower, the Guarantors and the Agent and/or any Lender, or delay by the
Agent or any Lender in exercising the same, will operate as a waiver thereof. No
waiver by the Agent or any Lender will be effective unless it is
104
in writing, and then only to the extent specifically stated. No waiver by the
Agent or the Lenders on any occasion shall affect or diminish the Agent's and
each Lender's rights thereafter to require strict performance by the Borrower
and each Guarantor of any provision of this Agreement. The Agent and the Lenders
may proceed directly to collect the Obligations without any prior recourse to
the Collateral. The Agent's and each Lender's rights under this Agreement will
be cumulative and not exclusive of any other right or remedy which the Agent or
any Lender may have.
15.2 SEVERABILITY. The illegality or unenforceability of any provision
of this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
15.3 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION
ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE
OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF
ILLINOIS; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATES
OF ILLINOIS OR DELAWARE OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN
DISTRICT OF ILLINOIS OR THE DISTRICT OF DELAWARE, AND BY EXECUTION AND DELIVERY
OF THIS AGREEMENT, EACH OF THE BORROWER, THE AGENT, THE GUARANTORS, AND THE
LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWER, THE
GUARANTORS, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION,
INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM
NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION
OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS
SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR
ITS PROPERTY AND EACH GUARANTOR AND ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO
REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF
THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
105
(c) THE BORROWER AND THE GUARANTORS HEREBY WAIVE PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON THEM AND CONSENT THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO
THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 15.8 AND SERVICE SO MADE SHALL
BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL
AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER
MANNER PERMITTED BY LAW.
15.4 WAIVER OF JURY TRIAL. THE BORROWER, THE GUARANTORS, THE LENDERS
AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE BORROWER, THE GUARANTORS, THE LENDERS AND THE AGENT EACH AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
15.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the Borrower's
and each Guarantor's representations and warranties contained in this Agreement
shall survive the execution, delivery, and acceptance thereof by the parties,
notwithstanding any investigation by the Agent or the Lenders or their
respective agents.
15.6 OTHER SECURITY AND GUARANTIES. The Agent, may, without notice or
demand and without affecting the Borrower's or any Guarantor's obligations
hereunder, from time to time: (a) take from any Person and hold collateral
(other than the Collateral) for the payment of all or any part of the
Obligations and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of payment of all
or any part of the Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Lien in any other collateral as
security for the payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the Obligations.
15.7 FEES AND EXPENSES. The Borrower and the Guarantors, jointly and
severally, agree to pay to the Agent, for its benefit, on demand, all costs and
expenses that Agent pays or
106
incurs in connection with the negotiation, preparation, syndication,
consummation, administration, enforcement, and termination of this Agreement or
any of the other Loan Documents, including: (a) Attorney Costs; (b) costs and
expenses (including reasonable attorneys' and paralegals' fees and
disbursements) for any amendment, supplement, waiver, consent, or subsequent
closing in connection with the Loan Documents and the transactions contemplated
thereby; (c) costs and expenses of lien and title searches and title insurance;
(d) taxes, fees and other charges for recording the Mortgages, filing financing
statements and continuations, and other actions to perfect, protect, and
continue the Agent's Liens (including costs and expenses paid or incurred by the
Agent in connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the Borrower or any
Guarantor under the Loan Documents that the Borrower or the applicable Guarantor
fails to pay or take; (f) costs of appraisals, inspections, and verifications of
the Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Borrower's and each Guarantor's operations by the Agent plus
the Agent's then customary charge for field examinations and audits and the
preparation of reports thereof (such charge is currently $750 per day (or
portion thereof) for each agent or employee of the Agent with respect to each
field examination or audit); (g) costs and expenses of forwarding loan proceeds,
collecting checks and other items of payment, and establishing and maintaining
Payment Accounts and lock boxes; (h) costs and expenses of preserving and
protecting the Collateral; and (i) costs and expenses (including Attorneys'
Costs) paid or incurred to obtain payment of the Obligations, enforce the
Agent's Liens, sell or otherwise realize upon the Collateral, and otherwise
enforce the provisions of the Loan Documents, or to defend any claims made or
threatened against the Agent or any Lender arising out of the transactions
contemplated hereby (including preparations for and consultations concerning any
such matters). The foregoing shall not be construed to limit any other
provisions of the Loan Documents regarding costs and expenses to be paid by the
Borrower or the Guarantors. All of the foregoing costs and expenses shall be
charged to the Borrower's Loan Account as Revolving Loans as described in
SECTION 4.7.
15.8 NOTICES. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United States
mail, first class, certified or registered, with postage prepaid, or (c) in the
case of notice by such a telecommunications device, when properly transmitted,
in each case addressed to the party to be notified as follows:
If to the Agent or to the Bank:
Bank of America, N.A.
Mail Code I1123116-30
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
107
with copies to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower or any Guarantor:
c/o Fruit of the Loom, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Lanznar
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
15.9 WAIVER OF NOTICES. Unless otherwise expressly provided herein, the
Borrower and each Guarantor waives presentment, and notice of demand or dishonor
and protest as to any instrument, notice of intent to accelerate the Obligations
and notice of acceleration of the Obligations, as well as any and all other
notices to which it might otherwise be entitled. No notice to or demand on the
Borrower or any Guarantor which the Agent or any Lender may elect to give shall
entitle the Borrower or any Guarantor to any or further notice or demand in the
same, similar or other circumstances.
15.10 BINDING EFFECT. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; PROVIDED, HOWEVER, that no interest herein may be
assigned by the Borrower or any Guarantor without prior written consent of the
Agent and each Lender. The rights and benefits of the Agent
108
and the Lenders hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
15.11 INDEMNITY OF THE AGENT AND THE LENDERS BY THE BORROWER AND EACH
GUARANTOR.
(a) The Borrower and each Guarantor, jointly and severally,
agree to defend, indemnify and hold the Agent-Related Persons, and each Lender
and each of its respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time (including at any
time following repayment of the Loans and the termination, resignation or
replacement of the Agent or replacement of any Lender) be imposed on, incurred
by or asserted against any such Person in any way relating to or arising out of
this Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the
Borrower shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) The Borrower and each Guarantor, jointly and severally,
agree to indemnify, defend and hold harmless the Agent and the Lenders from any
loss or liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance relating to the Borrower's or any
Guarantor's operations, business or property. This indemnity will apply whether
the hazardous substance is on, under or about the Borrower's or any Guarantor's
property or operations or property leased to the Borrower or any Guarantor. The
indemnity includes but is not limited to Attorneys Costs. The indemnity extends
to the Agent and the Lenders, their parents, affiliates, subsidiaries and all of
their directors, officers, employees, agents, successors, attorneys and assigns.
"Hazardous substances" means any substance, material or waste that is or becomes
designated or regulated as "toxic," "hazardous," "pollutant," or "contaminant"
or a similar designation or regulation under any federal, state or local law
(whether under common law, statute, regulation or otherwise) or judicial or
administrative interpretation of such, including petroleum or natural gas. This
indemnity will survive repayment of all other Obligations.
15.12 LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE BORROWER,
ANY GUARANTOR, ANY LENDER OR OTHER PERSON AGAINST THE AGENT, ANY LENDER, OR THE
AFFILIATES, DIRECTORS, OFFICERS, OFFICERS, EMPLOYEES, OR AGENTS OF ANY OF THEM
FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR
RELATED TO THE
109
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND THE BORROWER, EACH
GUARANTOR AND EACH LENDER HEREBY WAIVE, RELEASE AND AGREE NOT TO ▇▇▇ UPON ANY
CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
15.13 FINAL AGREEMENT. This Agreement and the other Loan Documents are
intended by the Borrower, each Guarantor the Agent and the Lenders to be the
final, complete, and exclusive expression of the agreement between them. This
Agreement supersedes any and all prior oral or written agreements relating to
the subject matter hereof. No modification, rescission, waiver, release, or
amendment of any provision of this Agreement or any other Loan Document shall be
made, except by a written agreement signed by the Borrower, each Guarantor and a
duly authorized officer of each of the Agent and the Majority Lenders.
15.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, each Guarantor and the Borrower in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
15.15 CAPTIONS. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
15.16 RIGHT OF SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to the Borrower or any Guarantor, any such notice being
waived by the Borrower and each Guarantor to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by, and other indebtedness at any
time owing by, such Lender to or for the credit or the account of the Borrower
or any Guarantor against any and all Obligations owing to such Lender, now or
hereafter existing, irrespective of whether or not the Agent or such Lender
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Lender agrees promptly to
notify the Borrower and the Agent after any such set-off and application made by
such Lender; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application. NOTWITHSTANDING THE
FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE
LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF THE BORROWER HELD OR MAINTAINED
BY SUCH LENDER WITHOUT THE PRIOR WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
15.17 JOINT AND SEVERAL LIABILITY. The Borrower and each Guarantor
shall be liable for all amounts due to the Agent and/or any Lender under this
Agreement, regardless of whether Borrower or the applicable Guarantor actually
receives Loans or other extensions of credit hereunder or the amount of such
Loans received or the manner in which the Agent and/or such
110
Lender accounts for such Loans or other extensions of credit on its books and
records. Each Guarantor's Obligations with respect to Loans made to the
Borrower, and each Guarantor's Obligations arising as a result of the joint and
several liability of the Borrower and the Guarantors hereunder, with respect to
Loans made to the Borrower hereunder, shall be separate and distinct
obligations, but all such Obligations shall be primary obligations of the
Borrower and each Guarantor.
15.18 WAIVERS AND RELEASES.
(a) In consideration of the Loans to be made to the Borrower
hereunder, the Borrower and each Guarantor hereby agree not to assert, and
affirmatively waive and release any claim the Borrower or such Guarantor might
have with respect to, the Loans and the Letters of Credit under section 510 of
the Bankruptcy Code against the Agent and the Lenders in any form or manner
whatsoever and further release the Agent and the Lenders from, and affirmatively
waive and release any and all claims the Borrower or any Guarantor may have with
respect to, the Loans and the Letters of Credit against the Agent and the
Lenders from the beginning of time to the date hereof.
(b) Except as expressly permitted by this Agreement, Borrower
and each Guarantor hereby agree not to request an order of the Bankruptcy Court
pursuant to Section 363 of the Bankruptcy Code permitting any of them to use any
cash Collateral in which Agent claims or has a Lien pursuant hereto while this
Agreement is in effect and the Obligations are outstanding, and waive and
release their rights to request such use of any such cash Collateral.
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
BANK OF AMERICA, N.A.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
111
Each of the parties hereto has caused a counterpart of this Credit
Agreement to be duly executed and delivered as of the date first above written.
BORROWER
in its capacity as
debtor-in-possession:
FRUIT OF THE LOOM, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice-President and Treasurer
GUARANTORS
each in its capacity
as debtor-in-possession:
▇▇▇▇▇▇ ▇▇▇▇▇, INC.,
a Louisiana corporation
PRO PLAYER, INC.,
a New York corporation
▇▇▇▇▇ APPAREL, INC.,
a Georgia corporation
SALEM SPORTSWEAR CORPORATION,
a Delaware corporation
UNION SALES, INC.,
a Delaware corporation
UNION YARN ▇▇▇▇▇, INC.,
an Alabama corporation
▇▇▇▇▇▇▇▇ MANUFACTURING, INC.,
a South Carolina corporation
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ MILL, INC.,
an Alabama corporation
FTL REGIONAL SALES COMPANY, INC.,
a Delaware corporation
112
LEESBURG YARN ▇▇▇▇▇, INC.,
an Alabama corporation
SALEM SPORTSWEAR, INC.,
a New Hampshire corporation
FRUIT OF THE LOOM TRADING COMPANY,
a Delaware corporation
UNION UNDERWEAR COMPANY, INC.,
a New York corporation
ALICEVILLE COTTON MILL, INC.,
an Alabama corporation
THE B.V.D. LICENSING CORPORATION,
a Delaware corporation
FAYETTE COTTON MILL, INC.,
an Alabama corporation
FOL CARIBBEAN CORPORATION,
a Delaware corporation
FRUIT OF THE LOOM ARKANSAS, INC.,
an Arkansas corporation
FRUIT OF THE LOOM CARIBBEAN, INC.,
a Delaware corporation
FRUIT OF THE LOOM, INC.,
a New York corporation
FRUIT OF THE LOOM TEXAS, INC.,
a Texas corporation
FTL SALES COMPANY, INC.,
a New York corporation
GITANO FASHIONS LIMITED,
a Delaware corporation
GREENVILLE MANUFACTURING, INC.,
a Mississippi corporation
113
JET SEW TECHNOLOGIES, INC.,
a New York corporation
NWI LAND MANAGEMENT, INC.,
a Delaware corporation
ARTEX MANUFACTURING COMPANY, INC.,
a Delaware corporation
FTL INVESTMENTS, INC.,
a Delaware corporation
LEESBURG KNITTING ▇▇▇▇▇, INC.,
an Alabama corporation
DEKALB KNITTING CORP.,
an Alabama corporation
▇▇▇▇▇▇▇ WAREHOUSE CORP.,
a Mississippi corporation
FTL SYSTEMS, INC.,
a Tennessee corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President and a Financial
Officer of each of the foregoing
entities identified as a Guarantor
FRUIT OF THE LOOM, LTD.,
a Cayman Islands corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Title: Vice President and Treasurer
-------------------------------------
LENDERS: Bank of America, N.A., as a Lender
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Senior Vice President
114