EXHIBIT 10.01
================================================================================
REVOLVING CREDIT AGREEMENT
dated as of
October 17, 2002
among
▇▇▇▇▇▇▇▇-VAN HEUSEN CORPORATION,
THE IZOD CORPORATION
PVH WHOLESALE CORP.
PVH RETAIL CORP.
▇▇▇▇.▇▇▇ INC.
▇.▇. ▇▇▇▇ FRANCHISES INC.
CD GROUP INC.,
as Borrowers,
The Lenders Party Hereto,
JPMORGAN CHASE BANK,
as Administrative Agent and Collateral Agent,
Lead Arranger and Sole Bookrunner,
FLEET RETAIL FINANCE INC.,
as Co-Arranger and Co-Syndication Agent,
SUN TRUST BANK,
as Co-Syndication Agent,
THE CIT GROUP/COMMERCIAL SERVICES, INC.,
as Co-Documentation Agent
and
BANK OF AMERICA, N.A.,
as Co-Documentation Agent
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I Definitions.................................................................................1
Section 1.01. Defined Terms.................................................................1
Section 1.02. Classification of Loans and Borrowings.......................................24
Section 1.03. Terms Generally..............................................................24
Section 1.04. Accounting Terms; GAAP.......................................................24
ARTICLE II The Credits................................................................................25
Section 2.01. Commitments..................................................................25
Section 2.02. Loans and Borrowings.........................................................25
Section 2.03. Requests for Borrowings......................................................26
Section 2.04. Letters of Credit............................................................27
(a) General........................................................................27
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions............................................................27
(c) Expiration Date................................................................28
(d) Participations.................................................................28
(e) Reimbursement..................................................................28
(f) Obligations Absolute...........................................................29
(g) Disbursement Procedures........................................................30
(h) Interim Interest...............................................................30
(i) Resignation of Issuing Banks...................................................30
(j) Replacement of the Primary Issuing Bank........................................31
(k) Cash Collateralization.........................................................31
(l) Issuing Bank Reporting Requirements............................................32
Section 2.05. Funding of Borrowings........................................................32
Section 2.06. Interest Elections...........................................................32
Section 2.07. Termination and Reduction of Commitments.....................................33
Section 2.08. Repayment of Loans; Evidence of Debt.........................................34
Section 2.09. Prepayment of Loans..........................................................35
Section 2.10. Fees.........................................................................37
Section 2.11. Interest.....................................................................38
Section 2.12. Alternate Rate of Interest...................................................38
Section 2.13. Increased Costs..............................................................39
Section 2.14. Break Funding Payments.......................................................40
Section 2.15. Taxes........................................................................40
Section 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs...................................................................42
Section 2.17. Mitigation Obligations; Replacement of Lenders...............................44
ARTICLE III Representations and Warranties.............................................................45
Section 3.01. Existence and Power..........................................................45
Section 3.02. Corporate and Governmental Authorization; No
Contravention..............................................................45
i
Section 3.03. Binding Effect...............................................................45
Section 3.04. Financial Information........................................................45
Section 3.05. Litigation...................................................................46
Section 3.06. Compliance with ERISA........................................................46
Section 3.07. Taxes........................................................................46
Section 3.08. Environmental Compliance.....................................................46
Section 3.09. Properties...................................................................48
Section 3.10. Compliance with Laws and Agreements..........................................48
Section 3.11. Investment and Holding Company Status........................................48
Section 3.12. Full Disclosure..............................................................48
Section 3.13. Security Interest............................................................49
Section 3.14. Solvency.....................................................................49
Section 3.15. Employee Matters.............................................................49
Section 3.16. Subsidiaries.................................................................50
Section 3.17. No Change in Credit Criteria or Collection Policies..........................50
Section 3.18. Senior Indebtedness..........................................................50
ARTICLE IV Conditions.................................................................................50
Section 4.01. Effective Date...............................................................50
Section 4.02. Each Credit Event............................................................53
ARTICLE V Affirmative Covenants......................................................................53
Section 5.01. Information..................................................................53
Section 5.02. Maintenance of Property; Insurance...........................................56
Section 5.03. Compliance with Laws.........................................................57
Section 5.04. Inspection of Property, Books and Records....................................57
Section 5.05. Use of Proceeds..............................................................57
Section 5.06. Environmental Matters........................................................58
Section 5.07. Taxes........................................................................58
Section 5.08. Security Interests...........................................................58
Section 5.09. Existence; Conduct of Business...............................................58
Section 5.10. Litigation and Other Notices.................................................58
Section 5.11. Additional Grantors and Guarantors...........................................59
Section 5.12. Maintain Operating Accounts..................................................59
ARTICLE VI Negative Covenants.........................................................................60
Section 6.01. Indebtedness.................................................................60
Section 6.02. Liens........................................................................61
Section 6.03. Fundamental Changes..........................................................61
Section 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions...............................................................62
Section 6.05. Prepayment or Modification of Indebtedness;
Modification of Operating Documents........................................64
Section 6.06. Restricted Payments..........................................................64
Section 6.07. Transactions with Affiliates.................................................65
Section 6.08. Restrictive Agreements.......................................................65
Section 6.09. Fixed Charge Coverage........................................................65
ii
ARTICLE VII Events of Default..........................................................................66
ARTICLE VIII The Administrative Agent...................................................................68
ARTICLE IX Miscellaneous..............................................................................71
Section 9.01. Notices......................................................................71
Section 9.02. Waivers; Amendments..........................................................72
Section 9.03. Expenses; Indemnity; Damage Waiver...........................................73
Section 9.04. Successors and Assigns.......................................................74
Section 9.05. Survival.....................................................................77
Section 9.06. Counterparts; Integration; Effectiveness.....................................77
Section 9.07. Severability.................................................................77
Section 9.08. Right of Setoff..............................................................77
Section 9.09. Governing Law; Jurisdiction; Consent to Service
of Process.................................................................78
Section 9.10. Waiver of Jury Trial.........................................................78
Section 9.11. Headings.....................................................................79
Section 9.12. Confidentiality..............................................................79
Section 9.13. Interest Rate Limitation.....................................................79
iii
SCHEDULES
Schedule 1.01 -- Existing Letters of Credit
Schedule 2.01 -- Commitments
Schedule 3.05 -- Disclosed Matters as to Litigation
Schedule 3.08 -- Disclosed Matters as to Environmental Compliance
Schedule 3.09 -- Other Leased and Owned Property
Schedule 3.16 -- Subsidiaries
Schedule 5.01(j) -- Borrowing Base Certificate
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.03 - Fiscal Year End
Schedule 6.04 -- Existing Investments
Schedule 6.08 -- Existing Restrictions
EXHIBITS
Exhibit A -- Form of Assignment and Assumption
Exhibit B -- Form of Opinion of Borrowers' Counsel
Exhibit C -- Form of Promissory Note
Exhibit D -- Form of Borrowing Request
iv
CREDIT AGREEMENT dated as of October 17, 2002, among
▇▇▇▇▇▇▇▇-VAN HEUSEN CORPORATION, a Delaware corporation, THE
IZOD CORPORATION, a Pennsylvania corporation, PVH WHOLESALE
CORP., a Delaware corporation, PVH RETAIL CORP., a Delaware
corporation, ▇▇▇▇.▇▇▇ INC., a Delaware corporation, ▇.▇.
▇▇▇▇ FRANCHISES INC., a Delaware corporation, CD GROUP INC.,
a Delaware corporation, the LENDERS party hereto, JPMORGAN
CHASE BANK, as Administrative Agent and Collateral Agent,
Lead Arranger and Sole Bookrunner, FLEET RETAIL FINANCE
INC., as Co-Arranger and Co-Syndication-Agent, SUN TRUST
BANK, as Co-Syndication Agent, THE CIT GROUP/COMMERCIAL
SERVICES, INC., as Co-Documentation Agent and BANK OF
AMERICA, N.A., as Co-Documentation Agent.
The Borrowers have applied to the Lenders for Loans (such
terms and all other capitalized terms used in this paragraph having the
respective meanings ascribed to such terms hereinafter) up to an aggregate
principal amount not in excess of $325,000,000 at any time outstanding at any
time and from time to time during the Availability Period. The proceeds of the
Loans shall be used for the Borrowers' and their Subsidiaries' working capital,
to refinance existing Indebtedness on the Effective Date, permitted
acquisitions, Capital Expenditures and general corporate purposes. The Borrowers
and Guarantors will provide Collateral in accordance with the provisions of this
Agreement and the other Financing Documents. The Lenders are severally, and not
jointly, willing to extend such Loans to the Borrowers subject to the terms and
conditions hereinafter set forth. Accordingly, the Borrowers, the Lenders and
the Administrative Agent hereby agree as follows:
ARTICLE I
Definitions
Section 1.01. Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such
Interest Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means JPMorgan Chase Bank, in its
capacity as administrative and collateral agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another
Person that directly, or indirectly through one or more intermediaries, Controls
or is Controlled by or is under common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Base
CD Rate in effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due
to a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Applicable Rate" means, for any date of determination with
respect to any ABR Loan or Eurodollar Loan or with respect to the Revolving
Credit Commitment Fee or with respect to participation fees for any Letter of
Credit,
(i) if such date of determination occurs on or after the
Effective Date and prior to the delivery of the first
financial statements referred to in clause (ii) below, (w)
with respect to Loans that are Eurodollar Loans, 2.00%, (x)
with respect to Loans that are ABR Loans, 0%, (y) with
respect to the Revolving Credit Commitment Fee, 0.375% and
(z) with respect to Letter of Credit fees, 1.25%; and
(ii) if such date of determination occurs on or after the
first day of the next month after the date upon which the
Borrowers shall have delivered to the Administrative Agent
the financial statements required to be delivered for the
fiscal period ended February 2, 2003 pursuant to Section
5.01(a),
the rate as set forth below that corresponds to the Interest Coverage Ratio of
the Borrowers and their Subsidiaries on a consolidated basis as of the last day
of, and for, the four consecutive fiscal quarters most recently ended prior to
such day for which financial statements shall have been delivered to the
Administrative Agent as required pursuant to Sections 5.01(a) or (b) hereof,
together with the corresponding compliance certificate required pursuant to
Section 5.01(d) hereof; provided that if the Borrowers shall fail to timely
deliver such statements and certificates for any such fiscal quarter period or
during the continuance of an Event of Default, then the Applicable Rate with
respect to ABR Loans, Eurodollar Loans, the Revolving Credit Commitment Fee and
Letter of Credit fees shall be determined for the period (x) from and including
the date upon which such financial statements and certificate were required to
be delivered to but excluding the date upon which financial statements and a
certificate complying with Section 5.01(a) or (b) and Section 5.01(d) or (y)
from and including the date from which such Event of Default shall have occurred
but excluding the date upon which such Event of Default is cured or waived as if
the applicable Interest Coverage Ratio of the Borrowers and their Subsidiaries
was less than 1.50:1.00:
2
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Interest Coverage Ratio ABR Spread for Loans Eurodollar Spread for Revolving Credit Letter of Credit Fee
Loans Commitment Fee
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Less than or equal to 0.50% 2.50% 0.50% 1.50%
1.50:1.00
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Greater than 1.50:1.00 0.25% 2.25% 0.375% 1.25%
but less than or equal
to 1.80:1.00
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Greater than 1.80:1.00 0% 2.00% 0.375% 1.25%
but less than or equal
to 2.10:1.00
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Greater than 2.10:1.00 0% 1.75% 0.25% 1.00%
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
To the extent that a change in the Applicable Rate occurs
during the pendency of an Interest Period for an existing Eurodollar Loan, the
Applicable Rate shall remain the same for the remainder of the Interest Period
for such existing Eurodollar Loan.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.
"Assignment and Assumption" means an assignment and assumption
entered into by a Lender and an assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
in the form of Exhibit A.
"Availability" means at any time (i) the lesser at such time
of (x) the total Commitment plus the principal amount of Debentures outstanding
and (y) the Borrowing Base, minus (ii) the sum at such time of (u) the aggregate
principal amount of Debentures outstanding, (v) the unpaid principal balance of
the Loans, (w) all accrued interest, fees and expenses, (x) the LC Exposure, (y)
the Availability Block and (z) all Availability Reserves and Dilution Reserves.
"Availability Block" means $25,000,000.
"Availability Event" means each period commencing on the date
on which Covenant Availability
3
is less than $50,000,000 and ending on the date that Covenant Availability has
remained greater than $70,000,000 for 90 consecutive days; it being understood
and agreed that there shall be no limit to the number of Availability Events
that may occur during the Availability Period.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
"Availability Reserves" means, as of any date of
determination, such reserves in amounts as the Administrative Agent may from
time to time establish (upon five days' notice to the Borrowers in the case of
new reserve categories established after the Effective Date) and revise (upward
or downward) in good faith in accordance with its customary credit policies: (a)
to reflect events, conditions, contingencies or risks which, as determined by
the Administrative Agent, do, or are reasonably likely to, materially adversely
affect either (i) the Collateral or its value or (ii) the security interests and
other rights of the Administrative Agent or any Lender in the Collateral
(including the enforceability, perfection and priority thereof), (b) to reflect
the Administrative Agent's belief that any collateral report or financial
information furnished by or on behalf of the Borrowers is or may have been
incomplete, inaccurate or misleading in any material respect, (c) in respect of
any state of facts which the Administrative Agent determines in good faith
constitutes a Default or (d) to reflect any Derivative Obligations entered into
with a Lender or an Affiliate thereof. On the Effective Date, the initial
reserve categories shall include reserves with respect to royalty payments and
other payments that are required to be made in connection with any licensing
agreements.
"Average Availability" means, for any period, an amount equal
to (a) the sum of the end of day Covenant Availability for each day during such
period, it being understood that Eligible Inventory and Eligible Receivables
shall be measured only on a monthly basis, divided by (b) the number of days in
such period, all as determined by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary
CD Rate multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States of America.
"Borrowers" means each of PVH, The IZOD Corporation, a
Pennsylvania corporation, PVH Wholesale Corp., a Delaware corporation, PVH
Retail Corp., a Delaware corporation, ▇▇▇▇.▇▇▇, inc., a Delaware corporation,
▇.▇. ▇▇▇▇ Franchises, Inc., a Delaware corporation and CD Group, Inc., a
Delaware corporation.
"Borrowing" means Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Base" shall have the meaning assigned to such term
in Section 2.01.
"Borrowing Request" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
4
"Business Day" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; provided that, when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on which
banks are not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" shall mean all expenditures for the
acquisition or leasing (pursuant to a capital lease) of assets or additions to
equipment (including replacements, capitalized repairs and improvements) which
should be capitalized under GAAP.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Cash Interest Expense" means with respect to the Borrowers
for any period, Interest Expense for such period less all non-cash items
constituting Interest Expense during such period (including amortization of debt
discounts and payments of interest on Indebtedness by issuance of Indebtedness).
"Casualty Event" shall mean, with respect to any property of
the Borrowers or any of their Subsidiaries, any loss of title with respect to
such property or any loss or damage to or destruction of, or any condemnation or
other taking (including by any Governmental Authority) of, such property or any
interruption of the business of the Borrowers or any Subsidiary which is covered
by business interruption insurance.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change in Control" means (a) the occurrence of any change in
control or similar event (however denominated) with respect to the Borrowers
under and as defined in the Subordinated Debt Documents, as in effect on the
Effective Date, or any other indenture or agreement in respect of Material
Indebtedness to which the Borrowers or a Subsidiary is a party or (b) PVH shall
cease to own 100% of all Equity Interests of any of the other Borrowers.
"Change in Law" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender or
the Issuing Bank (or, for purposes of Section 2.13(b), by any lending office of
such Lender or Issuing Bank or by such Lender's or the Issuing Bank's holding
company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time.
5
"Collateral" means all collateral on which a Lien is granted
or purported to be granted pursuant to any Financing Document.
"Commitment" means, with respect to each Lender, the
commitment of such Lender to make Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lenders Revolving Credit Exposure hereunder, as such commitment
may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Commitment is set
forth on Schedule 2.01, or in the Assignment and Assumption pursuant to which
such Lender shall have assumed its Commitment, as applicable. The initial
aggregate amount of the Lenders' Commitments is $325,000,000. Effective upon the
assignment of an interest pursuant to Section 9.04, Schedule 2.01 may be amended
by the Administrative Agent to reflect such assignment.
"Control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Covenant Availability" means at any time (i) the lesser at
such time of (x) the total Commitment plus the principal amount of Debentures
outstanding and (y) the Borrowing Base, minus (ii) the sum at such time of (u)
the aggregate principal amount of Debentures outstanding, (w) the unpaid
principal balance of the Loans, (x) all accrued interest, fees and expenses, (y)
the LC Exposure and (z) all Availability Reserves and Dilution Reserves.
"Customer" means and includes the account debtor or obligor
with respect to any Receivable.
"Debentures" means the 7-3/4% Debentures Due 2023 of PVH
issued under the Debentures Indenture.
"Debentures Indenture" means the Indenture dated as of
November 1, 1993, by and between PVH and The Bank of New York, as Trustee,
governing the Debentures.
"Debentures Trustee" means The Bank of New York, as Trustee
under the Debentures Indenture, and its successors in such capacity.
"Default" means any event or condition which constitutes an
Event of Default or which upon notice, lapse of time or both would, unless cured
or waived, become an Event of Default.
"Derivative Obligations" means every obligation of a Person
under any forward contract, futures contract, swap, option, caps, floors,
collars and similar agreements, the value of which is dependent upon interest
rates, currency or exchange rates or valuations.
"Dilution Factors" means with respect to the Borrowers' and
Guarantors' Receivables for any period, the aggregate amount of all credit
memos, returns, adjustments, allowances, bad debt write-offs, volume rebates
(issued either as a credit to the Customer's
6
account balance or as a cash disbursement), other non-cash credits and all other
items that could dilute the value of the Borrowers' or the Guarantors'
Receivables.
"Dilution Ratio" means with respect to the Borrowers at any
date, the amount (expressed as a percentage) equal to (a) the aggregate amount
of the applicable Dilution Factors for the 12 most recently completed fiscal
months divided by (b) total gross sales for the 12 most recently completed
fiscal months.
"Dilution Reserve" means at any date of calculation by the
Administrative Agent, the applicable Dilution Ratio multiplied by the Eligible
Receivables on such date. A Dilution Reserve shall be calculated to the extent
that the Dilution Ratio, at any date, is in excess of 10%. The Dilution Reserve
shall equal the calculated Dilution Ratio in excess of 10%.
"Disclosed Matters" means the actions, suits and proceedings
and the environmental matters disclosed in Schedules 3.05 and 3.08.
"dollars" or "$" refers to lawful money of the United States
of America.
"EBITDA" means with respect to the Borrowers for any period
(a) the sum of (i) Net Income, (ii) Interest Expense, (iii) Federal, state,
local and foreign income taxes, (iv) depreciation and amortization and other
non-cash items properly deductible in determining Net Income, in each case on a
consolidated basis for PVH and its subsidiaries for such period, calculated in
accordance with GAAP, minus (b) non-cash items properly added in determining Net
Income for such period.
"EBITDAR" means with respect to the Borrowers for any period
(a) the sum of (i) Net Income, (ii) Interest Expense, (iii) Federal, state,
local and foreign income taxes, (iv) depreciation and amortization and other
non-cash items properly deductible in determining Net Income and (v) all rental
obligations or other commitments thereunder to make any direct or indirect
payment, whether as rent or otherwise, for fixed or minimum rentals or
percentage rentals, in each case on a consolidated basis for PVH and its
subsidiaries for such period, calculated in accordance with GAAP, minus (b)
non-cash items properly added in determining Net Income for such period.
"Effective Date" means the date on which the conditions
specified in Section 4.01 are satisfied (or waived in accordance with Section
9.02).
"Eligible Inventory" means inventory of the Borrowers and the
Guarantors comprised solely of finished goods (and specifically excluding raw
materials, work in process, supplies and foreign inventory) which is, in the
reasonable judgement of the Administrative Agent, not obsolete, slow-moving or
unmerchantable and is and at all times shall continue to be acceptable to the
Administrative Agent in all respects; provided, however, that Eligible Inventory
shall in no event include inventory which (i) is on consignment, is not in
conformity with the representations and warranties made by the Borrowers and the
Guarantors under the Financing Documents or is not located at one of the
addresses for locations of Collateral set forth on Annex C to the Security
Agreement and with respect to which the Administrative Agent has not been
granted and has not perfected a valid, first priority security interest (subject
to Permitted
7
Encumbrances) and, if such location is a property leased by the Borrowers or the
Guarantors or is an outside warehouse or processor, with respect to which the
Administrative Agent has not received a landlord waiver or warehouseman's or
processor's agreement, as the case may be, executed by the landlord of such
location or such warehouseman or processor, as the case may be, all in form and
substance satisfactory to the Administrative Agent or appropriate rent escrow
arrangements shall have been made with the Administrative Agent covering at
least three months' rent; provided, however, (a) landlord waivers shall not be
required with respect to inventory located at a retail store in a state that
does not have a statutory landlord lien, (b) landlord waivers shall not be
required to be delivered until 90 days after the Effective Date with respect to
retail stores existing on the Effective Date and located in a state that has a
statutory landlord lien and (c) landlord waivers or warehouseman's agreements
shall not be required with respect to inventory located in self-storage
facilities to the extent the aggregate value of such inventory does not exceed
$250,000, (ii) which is in transit, other than goods on the high seas having a
value (based on invoiced amounts) not exceeding $30,000,000 at any time
outstanding during the months of June, July, August, December, January and
February and $25,000,000 at all other times, which are not subject to Trade
Letters of Credit and for which payment has been made; provided that upon the
occurrence and during the continuance of an Availability Event, such goods will
remain as Eligible Inventory only to the extent that the Administrative Agent is
in receipt of the original bills of lading and any other documents of title or
(iii) has been returned or rejected by a Customer and has been determined to be
unmerchantable. Standards of eligibility may be fixed and revised from time to
time solely by the Administrative Agent in the Administrative Agent's exclusive
judgment exercised in good faith in accordance with its customary credit
policies. In determining eligibility, the Administrative Agent may, but need
not, rely on reports and schedules furnished by the Borrowers, but reliance by
the Administrative Agent thereon from time to time shall not be deemed to limit
the right of the Administrative Agent to revise standards of eligibility at any
time as to both present and future inventory of the Borrowers. If the inventory
is sold under a licensed trademark, for such inventory to constitute Eligible
Inventory, the Administrative Agent shall have entered into a licensor consent
letter, in form and substance reasonably satisfactory to the Administrative
Agent, with the licensor with respect to the rights of the Administrative Agent
to use the trademark to sell or otherwise dispose of such inventory.
"Eligible Receivables" means Receivables created by the
Borrowers and the Guarantors in the ordinary course of business arising out of
the sale or lease of goods or rendition of services by the Borrowers and the
Guarantors, which are and at all times shall continue to be acceptable to the
Administrative Agent in all respects. Standards of eligibility may be fixed and
revised from time to time solely by the Administrative Agent in the
Administrative Agent's exclusive judgment exercised in good faith in accordance
with its customary credit policies. In general, without limiting the foregoing,
a Receivable shall in no event be deemed to be an Eligible Receivable unless:
(a) all payments due on the Receivable have been invoiced and the underlying
goods shipped or services performed, as the case may be; (b) the payment due on
the Receivable is not more than the lesser of (i) 60 days past the due date and
(ii) 150 days past the invoice date in the case of Receivables due from Walmart
or Sam's Club and 120 days past the invoice date in the case of all other
Receivables; (c) the payments due on more than 50% of all Receivables from the
same Customer are less than 60 days past the due date or 150 days past the
invoice date in the case of Receivables due from Walmart or Sam's Club and 120
days past the invoice date in the case of all other Receivables; (d) the
Receivable
8
arose from a completed and bona fide transaction (and with respect to a sale of
goods, a transaction in which title has passed to the Customer) which requires
no further act under any circumstances on the part of the Borrowers or the
Guarantors in order to cause such Receivable to be payable in full by the
Customer; (e) the Receivable is in conformity in all material respects with the
representations and warranties made by the Borrowers and the Guarantors to the
Administrative Agent and the Lenders with respect thereto and is free and clear
of all security interests and Liens of any nature whatsoever other than any
security interest deemed to be held by the Borrowers or the Guarantors or any
security interest created pursuant to the Security Agreement or permitted by
Section 6.02 hereof; (f) the Receivable constitutes an "account" or "chattel
paper" within the meaning of the Uniform Commercial Code of the state in which
the applicable Borrower or Guarantor is located; (g) the Customer has not
asserted that the Receivable, and/or the Borrowers and the Guarantors are not
aware that the Receivable, arises out of a ▇▇▇▇ and hold, consignment or
progress billing arrangement or is subject to any setoff, contras, net-out
contract, offset, deduction, dispute, credit, counterclaim or other defense
arising out of the transactions represented by the Receivables or independently
thereof (but such Receivable shall be ineligible only to the extent of such
setoff, contras, net-out contract, offset, deduction, dispute, credit,
counterclaim or other defense) and the Customer has finally accepted the goods
from the sale out of which the Receivable arose and has not objected to its
liability thereon or returned, rejected or repossessed any of such goods, except
for complaints made or goods returned in the ordinary course of business for
which, in the case of goods returned, goods of equal or greater value have been
shipped in return; (h) the Receivable arose in the ordinary course of business
of the Borrowers or the Guarantors; (i) the Customer is not (x) the United
States government or the government of any state or political subdivision
thereof or therein, or any agency or department of any thereof (unless there has
been full compliance to the satisfaction of the Administrative Agent with any
applicable assignment of claims statute) or (y) an army, navy, marine, air
force, coast guard post or a post of another similar service corps (unless there
has been full compliance to the satisfaction of the Administrative Agent with
any applicable assignment of claims statute) or (z) an Affiliate of PVH or any
subsidiary of any thereof or a supplier or creditor of PVH or any subsidiary
thereof (provided that such Receivable shall only be ineligible to the extent of
amounts payable by PVH or any subsidiary to such supplier or outstanding to such
creditor); (j) the Customer is a United States or Canadian person or an obligor
in the United States, Puerto Rico or Canada or an obligor located in another
jurisdiction if the applicable Receivable is covered by a letter of credit or
credit insurance in favor of, or assigned to, the Administrative Agent in form
and substance reasonably satisfactory to the Administrative Agent; (k) the
Receivable complies with all material requirements of all applicable laws and
regulations, whether Federal, state or local (including usury laws and laws,
rules and regulations relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices and
privacy); (l) to the knowledge of the Borrowers and the Guarantors, the
Receivable is in full force and effect and constitutes a legal, valid and
binding obligation of the Customer enforceable in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and by general equity principles; (m) the Receivable is denominated in
and provides for payment by the Customer in dollars (unless a currency swap or
similar hedge approved by the Administrative Agent has been entered into with
respect to such Receivable the effect of which is to cause payment to be
denominated in dollars) and is payable within the United States; (n) the
Receivable has not been
9
and is not required to be charged off or written off as uncollectible in
accordance with GAAP or the customary business practices of the Borrowers or the
Guarantors; (o) the Administrative Agent on behalf of the Lenders possesses a
valid, perfected first priority security interest in such Receivable as security
for payment of the obligations, subject to Permitted Encumbrances; (p) the
Receivable is not with respect to a Customer located in New Jersey, Minnesota,
West Virginia or any other state denying creditors access to its courts in the
absence of a Notice of Business Activities Report or other similar filing,
unless the Borrowers or the Guarantors, as applicable, either have qualified as
a foreign corporation authorized to transact business in such state or have
filed a Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year; (q) an event as described in
paragraph (g) or (h) of Article VII has not occurred with respect to the
Customer; (r) the Receivable is not for accrued coop advertising; (s) the
Receivable is not related to an invoice that is less than 60 days past the due
date for which the Borrowers or the Guarantors have received payment but have
not yet applied such payment; (t) the Receivable is not related to a gift
certificate sold by a Borrower or a Guarantor and (u) the Administrative Agent
is satisfied with the credit standing of the Customer in relation to the amount
of credit extended. Notwithstanding the foregoing, all Receivables of any single
Customer which, in the aggregate, exceed 20%, and in the case of Sam's Club or
the May Company, 25%, of the total Eligible Receivables at the time of any such
determination shall be deemed not to be Eligible Receivables to the extent of
such excess.
"Environmental Laws" means all laws, rules, regulations,
codes, ordinances, orders or decrees issued, promulgated or entered into by any
Governmental Authority, and any judgments, injunctions, notices or binding
agreements entered against or into by PVH or any of its subsidiaries, relating
in any way to the environment, preservation or reclamation of natural resources,
the management, release or threatened release of any Hazardous Materials or to
health and safety matters.
"Environmental Liability" means any liability, contingent or
otherwise (including any liability for damages, costs of environmental
remediation, fines, penalties or indemnities), of any Borrower or any Subsidiary
directly or indirectly resulting from or based upon (a) violation of any
Environmental Law, (b) the generation, use, handling, transportation, storage,
treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"Equity Interests" means shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person, and any
warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrowers, is treated as a single employer
under Section 414(b) or (c) of the
10
Code or, solely for purposes of Section 302 of ERISA and Section 412 of the
Code, is treated as a single employer under Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrowers or any of their ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrowers or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrowers or any of their ERISA Affiliates of any
liability with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrowers or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrowers or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing,
refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in
Article VII.
"Excluded Taxes" means, with respect to the Administrative
Agent, any Lender, any Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of a Borrower hereunder, (a) income,
franchise or similar taxes imposed on (or measured by) its net income by the
United States of America, or by the jurisdiction (or any political subdivision
thereof or taxing authority therein) under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrowers
under Section 2.17(b)), any withholding or similar tax that (i) is in effect and
would apply to amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office),
except to the extent that such Foreign Lender (or its assignor, if any) would
have been entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the Borrowers with respect to
any withholding tax pursuant to Section 2.14(a) or (ii) is attributable to such
Foreign Lender's failure to comply with Section 2.15(e).
"Existing Credit Agreement" means the Credit Agreement dated
as of April 22, 1998, as amended, among PVH, the financial institutions named
therein and The Chase Manhattan Bank, as administrative agent and collateral
agent and Citicorp USA, Inc., as documentation agent.
11
"Existing Letter of Credit" means any letter of credit that
(a) was issued under the Existing Credit Agreement by an Issuing Bank, (b) is
outstanding on the Effective Date and (c) is listed in Schedule 1.01.
"Facility Letter" means the letter agreement among the
Borrowers and the Administrative Agent effective on the Effective Date
authorizing certain employees to handle certain of the credit operations
contemplated by this Agreement.
"Federal Funds Effective Rate" means, for any day, the
weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day that is a Business Day, the average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for
such day for such transactions received by the Administrative Agent from three
Federal funds brokers of recognized standing selected by it.
"Fee Letter" means the letter dated August 2002 among the
Borrowers and the Administrative Agent setting forth certain fees to be paid by
the Borrowers to the Administrative Agent.
"Financial Officer" means the chief executive officer,
president, chief financial officer, principal accounting officer, treasurer,
assistant treasurer, controller or assistant controller of PVH.
"Financing Documents" means this Agreement (including the
Schedules and Exhibits hereto), the Notes evidencing Loans, the Letters of
Credit, the Security Agreement, the Mortgages, any Guarantee, the Fee Letter and
any other agreement hereafter created to which the Borrowers or any Guarantor is
a party that provides for collateral security for any of the obligations of the
Borrowers or any such Guarantor under any of the foregoing.
"FIRREA" means the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended from time to time.
"Fixed Assets Component" means, as of any date of
determination, an amount equal to (i) the lesser of (x) $20,000,000 or (y) 70%
of the appraised value of the Reading, PA, Schuylkill Haven, PA, Jonesville, NC
and Chattanooga, TN distribution centers as determined from time to time by an
appraisal firm satisfactory to the Administrative Agent, minus (ii) an amount
equal to $111,111.11 (or such lesser amount as described in the next sentence)
times the number of complete months elapsed since the Effective Date, as such
Fixed Assets Component may be reduced from time to time pursuant to Section
2.09(e). If at any time there is a reduction pursuant to Section 2.09(e) by
reason of the disposition of a distribution center, then from and after the date
of such reduction, in calculating clause (ii) above, the $111,111.11 amount
shall be adjusted to be an amount equal to (i) the Fixed Assets Component as
reduced on such date divided by (ii) the remainder of (x) 180 minus (y) the
number of complete months elapsed since the Effective Date.
12
"Fixed Charge Coverage Ratio" means, with respect to PVH and
its subsidiaries on a consolidated basis for any period, the ratio of (i) the
remainder of (a) EBITDAR for such period minus (b) Capital Expenditures paid in
cash minus (c) cash dividends and other cash distributions of PVH to the extent
permitted by Sections 6.06(c) and 6.06(d) during such period minus (d) Federal,
state, local and foreign income taxes paid in cash minus (e) management fees
paid during such period, if any, to (ii) Fixed Charge Expense for such period.
"Fixed Charge Expense" means, with respect to PVH and its
subsidiaries for any period, the aggregate of (i) regularly scheduled principal
payments of all Funded Debt made or to be made by the Borrowers and their
Subsidiaries on a consolidated basis during such period, (ii) Cash Interest
Expense during such period, and (iii) in respect of leases of real and personal
property (other than finance leases), the aggregate amount of rental obligations
or other commitments thereunder to make any direct or indirect payment, whether
as rent or otherwise, for fixed or minimum rentals or percentage rentals for
such period, in each case determined on a consolidated basis in accordance with
GAAP.
"Foreign Lender" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"Funded Debt" means, with respect to PVH and its subsidiaries
as of the date of determination thereof, all Indebtedness of PVH and its
subsidiaries on a consolidated basis outstanding at such time (including the
current portion thereof and amounts outstanding in the final year of any Funded
Debt) which matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date of calculation which
is renewable or extendable at the option of the obligor to a date more than one
year from such date and including in any event the Loans.
"GAAP" means generally accepted accounting principles in the
United States of America.
"Governmental Authority" means the government of the United
States of America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality, regulatory
body, court, central bank or other entity exercising executive, legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor") means,
without duplication any obligation, contingent or otherwise, of the guarantor
guaranteeing or having the economic effect of guaranteeing any Indebtedness or
other obligation of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement
13
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Guarantor" means, collectively, each domestic Subsidiary
executing and delivering a Guarantee on the Effective Date and each domestic
Subsidiary which becomes a Guarantor after the Effective Date.
"Hazardous Materials" means all explosive or radioactive
substances or wastes and all hazardous or toxic substances, wastes or other
pollutants, including petroleum or petroleum distillates, asbestos or asbestos
containing materials, polychlorinated biphenyls, radon gas, infectious or
medical wastes and all other substances or wastes of any nature regulated
pursuant to any Environmental Law, including any material listed as a hazardous
substance under Section 101(14) of CERCLA.
"Indebtedness" of any Person means, without duplication, (a)
all obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such Person
upon which interest charges are customarily paid, (d) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (e) all obligations of such Person in respect
of the deferred purchase price of property or services (excluding current
accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person and
obligations in respect of synthetic leases, (i) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty, (j) all obligations, contingent or otherwise, of such
Person in respect of bankers' acceptances and (k) all Derivative Obligations.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Interest Coverage Ratio" means, with respect to PVH and its
subsidiaries on a consolidated basis for any four consecutive fiscal quarter
period, the ratio of (i) EBITDA, less Capital Expenditures paid in cash for such
period to (ii) the Cash Interest Expense for such period. In computing the
Interest Coverage Ratio, to the extent applicable, there shall be excluded in
the computation of Capital Expenditures assets acquired as part of Permitted
Acquisitions, even though the acquisition of such assets may be treated as
Capital Expenditures under GAAP.
14
"Interest Election Request" means a request by the Borrowers
to convert or continue a Borrowing in accordance with Section 2.06.
"Interest Expense" means, with respect to the Borrowers for
any period, the interest expense of PVH and its subsidiaries during such period
determined on a consolidated basis in accordance with GAAP, and shall in any
event include (i) the amortization of debt discounts, (ii) the amortization of
all fees payable in connection with the incurrence of Indebtedness to the extent
included in interest expense and (iii) the portion of any Capitalized Lease
Obligation allocable to interest expense.
"Interest Payment Date" means (a) with respect to any ABR
Loan, the first day of each month for the prior month then ended and (b) with
respect to any Eurodollar Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter; provided, that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (ii) any Interest Period that commences on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended, or any successor statute.
"Invested Cash" means cash invested in Permitted Investments
of the type described in clauses (c) and (d) of such definition with or through
the Administrative Agent, in which the Administrative Agent has a valid first
priority perfected Lien.
"Issuing Bank" means (a) JPMorgan Chase Bank, in its capacity
as issuer of Letters of Credit hereunder and (b) any other Lender designated by
the Borrowers from time to time with the consent of the Administrative Agent and
such Lender, which consent shall not be unreasonably withheld, provided that the
total number of Issuing Banks at any time under this Agreement shall not exceed
three (3). Each Issuing Bank may arrange for one or more Letters of Credit to be
issued by Affiliates of such Issuing Bank, in which case the term "Issuing Bank"
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
"LC Disbursement" means a payment made by any Issuing Bank
pursuant to a Letter of Credit issued by such Issuing Bank.
15
"LC Exposure" means, at any time, the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b) the
aggregate amount of all LC Disbursements that have not yet been reimbursed by or
on behalf of the Borrowers at such time. The LC Exposure of any Lender at any
time shall be its pro rata (based on its Commitment) of the total LC Exposure at
such time.
"Lenders" means the Persons listed on Schedule 2.01 and any
other Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Assumption.
"Letter of Credit" means any letter of credit (whether a
Standy-by Letter of Credit or a Trade Letter of Credit) issued or deemed to have
been issued, including each Existing Letter of Credit pursuant to this
Agreement.
"LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, the rate appearing on Page 3750 of the Dow ▇▇▇▇▇ Market
Service (or on any successor or substitute page of such Service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO Rate"
with respect to such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity comparable to
such Interest Period are offered by the principal London office of the
Administrative Agent in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset, (b) the interest of a vendor or a lessor under
any conditional sale agreement, capital lease or title retention agreement (or
any financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the loans made by the Lenders to the Borrowers
pursuant to this Agreement.
"Material Adverse Effect" means a material adverse effect on
(a) the business, assets, operations, properties, prospects or condition
(financial or otherwise), contingent liabilities or material agreements of the
Borrowers and their Subsidiaries taken as a whole, (b) the ability of a Borrower
or any Guarantor to perform any of its obligations under this Agreement and the
other Financing Documents, taken as a whole, (c) the rights of or benefits
available to the Lenders or the Administrative Agent under this Agreement and
the other Financing Documents, taken as a whole, or (d) the Administrative
Agent's Lien on any material portion of the Collateral or the priority of such
Lien.
16
"Material Indebtedness" means Indebtedness (other than the
Loans and Letters of Credit), or obligations in respect of one or more
Derivative Obligations, of any one or more of the Borrowers and their
Subsidiaries in an aggregate principal amount exceeding $10,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of a Borrower or any Subsidiary in respect of any Derivative
Obligation at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that such Borrower or such Subsidiary would be required
to pay if such Derivative Obligation were terminated at such time.
"Material Subsidiary" means any Subsidiary either (x) whose
total assets (based on book value) exceed $10,000,000 or (y) whose Net Income in
any fiscal year exceeds $2,000,000. On the Effective Date, the Material
Subsidiaries are identified on Schedule 3.16 hereto.
"Maturity Date" means October __, 2007.
"Mortgage" means the real property mortgages dated the
Effective Date and executed by PVH in favor of the Administrative Agent covering
the following four (4) owned or leased properties:
▇▇▇▇ ▇▇& ▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇. ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" means, at any time, the
aggregate value, computed at the lower of cost (on a FIFO basis) and current
market value, of Eligible Inventory of the Borrowers and the Guarantors.
"Net Amount of Eligible Receivables" means, at any time,
without duplication, the gross amount of Eligible Receivables at such time less
to the extent included in Eligible Receivables, (i) sales, excise or similar
taxes and (ii) to the extent not otherwise excluded from Eligible Receivables,
discounts, claims and allowances of any nature at any time issued, owing,
granted, outstanding, available to or claimed by the Customers in respect of
such Eligible Receivables.
"Net Income" means with respect to PVH and its subsidiaries
for any period, the consolidated income (or loss) of PVH and its subsidiaries
for such period which shall be an amount equal to net revenues and other proper
items of income for PVH and its subsidiaries less Federal, state, local and
foreign income taxes, but excluding any extraordinary gains or losses or any
gains or losses from the sale or disposition of assets other than in the
ordinary course of business, all computed and calculated in accordance with
GAAP.
"Net Proceeds" means (a) with respect to the sale or other
disposition of any asset the excess, if any, of (i) the aggregate amount
received in cash (including any cash received by
17
way of deferred payment pursuant to a note receivable, other non-cash
consideration or otherwise, but only as and when such cash is so received) in
connection with such sale or other disposition, over (ii) the sum of (A) the
amount of any Indebtedness which is secured by any such asset or which is
required to be, and is, repaid in connection with the sale or other disposition
thereof (other than Indebtedness hereunder), (B) the reasonable out-of-pocket
expenses and fees incurred with respect to legal, investment banking, brokerage,
advisor and accounting and other professional fees, sales commissions and
disbursements and all other reasonable fees, expenses and charges, in each case
actually incurred in connection with such sale or disposition, (C) all income
and transfer taxes payable in connection with such sale or other disposition,
whether actually paid or estimated to be payable in cash in connection with such
disposition or the payment of dividends or the making of other distributions of
the proceeds thereof and (D) reserves, required to be established in accordance
with GAAP or the definitive agreements relating to such disposition, with
respect to such disposition, including pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations; (b) with respect to the issuance, sale or other
disposition of any stock or debt securities the excess of (i) the aggregate
amount received in cash (including any cash received by way of deferred payment
pursuant to a note receivable, other non-cash consideration or otherwise, but
only as and when such cash is so received) in connection with such issuance,
sale or other disposition, over (ii) the sum of (A) the reasonable fees,
commissions, discounts and other out-of-pocket expenses including related legal,
investment banking and accounting fees and disbursements incurred in connection
with such issuance, sale or other disposition, and (B) all income and transfer
taxes payable in connection with such issuance, sale or other disposition,
whether payable at such time or thereafter; and (c) with respect to a Casualty
Event, the aggregate amount of proceeds received with respect to such Casualty
Event, over the sum of (i) the reasonable expenses incurred in connection
therewith, (ii) the amount of any Indebtedness (other than Indebtedness
hereunder) secured by any asset affected thereby and required to be, and in
fact, repaid in connection therewith and (iii) all income and transfer taxes
payable, whether actually paid or estimated to be payable, in connection
therewith.
"Note" means any of the promissory notes executed pursuant to
Section 2.08(e).
"Obligations" has the meaning assigned to such term in Section
2.08(f).
"Other Taxes" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement or any other
Financing Document.
"Participant" has the meaning assigned to such term in Section
9.04(c) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation referred
to and defined in ERISA and any successor entity performing similar functions.
"Permitted Acquisitions" means the acquisition of all or any
portion of the assets or stock or other equity interests of any Person engaged
in a business that would be permitted under 6.03(b)(i), including pursuant to a
merger or consolidation, where the aggregate
18
consideration, including cash, indebtedness assumed and the fair market value of
any Equity Interests issued, for all such acquisitions does not exceed
$150,000,000 during any consecutive twelve (12) month period or $200,000,000
during the term of this Agreement; provided that all such acquisitions are
approved by the Board of Directors and stockholders, if required, of the
applicable Borrower and the acquiree and are not otherwise hostile and such
Borrower is the surviving entity; and provided further, that (i) Average
Availability for the 30 day period prior to the closing date for such
acquisition, both before and after giving effect to such proposed acquisition
shall be equal to or greater than $70,000,000, (ii) on the closing date of such
acquisition, both before and immediately after giving effect to such proposed
acquisition, (x) Covenant Availability shall be equal to or greater than
$70,000,000 and (y) no Default has occurred or will occur or be continuing,
(iii) after giving effect to any such acquisition there shall be no negative
effect on EBITDA, on a pro forma basis, (iv) the Administrative Agent shall have
had the opportunity to perform a field examination and appraisal through its
examiners or through representatives that it may retain with respect to the
assets being acquired pursuant to such acquisition in order to determine whether
any adjustments should be made to the Borrowing Base and (v) the Administrative
Agent, for the benefit of the Secured Parties, shall be granted a first priority
security interest in all assets (including Equity Interests) acquired by the
Borrowers as part of such acquisition and the Borrowers shall, and shall cause
any applicable Subsidiary to, execute any documents and take all actions that
may be required under applicable law or that the Administrative Agent may
reasonably request, in order to grant, preserve, protect and perfect such
security interest, and otherwise comply with Section 5.11 herein, all in form
and substance satisfactory to the Administrative Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or
are being contested in compliance with Section 5.07;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.07 and (ii) landlord's Liens
arising by operation of law which are subordinated to the Liens in favor of the
Administrative Agent;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations or letters of credit or guarantees
issued in respect thereof;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the ordinary
course of business or letters of credit or guarantees issued in respect thereof;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (j) of Article VII;
19
(f) easements, zoning restrictions, rights-of-way and
similar encumbrances on real property (i) imposed by law or arising in the
ordinary course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or interfere with
the ordinary conduct of business of the Borrowers or any Subsidiary or (ii) in
the case of any real property subject to a Mortgage, encumbrances disclosed in
the title insurance policy issued to, and reasonably approved by, the
Administrative Agent;
(g) liens arising from UCC financing statements in respect
of leases permitted by this Agreement;
(h) liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs duties in connection
with the importation of goods so long as such Liens attach only to the imported
goods; and
(i) liens in favor of vendors of goods arising as a matter
of law securing the payment of the purchase price therefor so long as such Liens
attach only to the purchased goods, provided that the term "Permitted
Encumbrances" shall not include any Lien securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the principal of
and interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of acquisition,
the highest credit rating obtainable from Standard & Poor's or from ▇▇▇▇▇'▇
Investors Service, Inc.;
(c) investments in certificates of deposit, banker's
acceptances and time deposits maturing within 180 days from the date of
acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of not
less than $500,000,000;
(d) investments in money market mutual funds having
portfolio assets in excess of $2,000,000,000 that comply with the criteria set
forth in Securities and Exchange Commission Rule 2a-7 under the Investment
Company Act of 1940 and are rated AAA by Standard & Poor's and Aaa by ▇▇▇▇▇'▇
Investors Service, Inc.;
(e) fully collateralized repurchase agreements with a term
of not more than 30 days for securities described in clause (a) above and
entered into with a financial institution satisfying the criteria described in
clause (c) above;
(f) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth or
territory of the United States of
20
America, or any political subdivision or taxing authority thereof, and rated at
least A by Standard & Poor's or ▇▇▇▇▇'▇ Investors Service, Inc.; and
(g) with respect to any Person organized or conducting
operations outside of the United States, investments denominated in the currency
of the jurisdiction in which such Person is organized or conducting business
which are similar to the items specified in clauses (a) through (f) above (other
than the nationality of the governmental or non-governmental issuer or
counterparty involved).
"Permits" has the meaning assigned to such term in Section
3.08(i) hereof.
"Person" means any natural person, corporation, limited
liability company, trust, joint venture, association, company, partnership,
Governmental Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Primary Issuing Bank" means (a) JPMorgan Chase Bank, in its
capacity as issuer of Letters of Credit hereunder, and (b) any Lender or Lenders
becoming its successor or successors in such capacity as provided in Section
2.04(i).
"Prime Rate" means the rate of interest per annum publicly
announced from time to time by JPMorgan Chase Bank as its prime rate in effect
at its principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"PVH" means ▇▇▇▇▇▇▇▇-Van Heusen Corporation, a Delaware
corporation.
"Receivables" means and includes all of a Person's accounts,
instruments, documents, chattel paper and general intangibles, whether secured
or unsecured, whether now existing or hereafter created or arising, and whether
or not specifically assigned to the Administrative Agent for its own benefit
and/or the ratable benefit of the Lenders.
"Register" has the meaning set forth in Section 9.04(b)(iv).
"Regulation U" means Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Related Parties" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"Required Lenders" means, at any time, Lenders holding Loans,
LC Exposure and unused Commitments representing at least 51% of the aggregate of
the unpaid principal amount
21
of Loans, LC Exposure and unused Commitments, all after giving effect to the
terms of Section 2.16(e).
"Restricted Payment" means any dividend or other
distribution (whether in cash securities or other property) with respect to any
Equity Interests in a Borrower or any Subsidiary, or any payment (whether in
cash, securities or other property), including any sinking fund or similar
deposit, on account of the purchase, redemption, retirement, acquisition,
cancellation or termination of any such Equity Interests or any option, warrant
or other right to acquire any such Equity Interests.
"Revolving Credit Commitment Fee" has the meaning set forth in
Section 2.10(a).
"Revolving Credit Exposure" means, with respect to any Lender
at any time, the sum of the outstanding principal amount of such Lender's Loans
and its LC Exposure at such time.
"Security Agreement" means the Omnibus Pledge and Security
Agreement dated as of the date hereof, between and among the Borrower, the
Guarantors and the Administrative Agent, for its own benefit and for the ratable
benefit of the Lenders, as amended, modified or supplemented from time to time.
"Secured Parties" has the meaning assigned to such term in the
Security Agreement.
"Security Interests" means the security interests in the
Collateral granted under the Security Agreement to secure the Secured
Obligations (as defined therein) and the Lien granted under the Mortgages.
"Stand-by LC Exposure" means, at any time, the sum of (a) the
aggregate undrawn amount of all outstanding Stand-by Letters of Credit at such
time plus (b) the aggregate amount of all LC Disbursements with respect to
Stand-by Letters of Credit that have not yet been reimbursed by or on behalf of
the Borrowers at such time.
"Stand-by Letter of Credit" means a Letter of Credit other
than a Trade Letter of Credit.
"Statutory Reserve Rate" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which the Administrative Agent is
subject (a) with respect to the Base CD Rate, for new negotiable nonpersonal
time deposits in dollars of over $100,000 with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory
22
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.
"Subordinated Debt" means (a) the unsecured subordinated notes
issued by PVH on or prior to April 22, 1998 in the aggregate principal amount of
$150,000,000 and (b) the Indebtedness represented thereby.
"Subordinated Debt Documents" means the indenture under which
the Subordinated Debt is issued and all other instruments, agreements and other
documents evidencing or governing the Subordinated Debt or providing for any
Guarantee or other right in respect thereof.
"subsidiary" means, with respect to any Person (the "parent")
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent's consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held, or (b) that is, as of
such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of a Borrower, except the
Borrowers (other than PVH) shall be deemed to be Borrowers and not Subsidiaries
of PVH.
"Taxes" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day is not a Business Day, the next preceding
Business Day) by the Board through the public information telephone line of the
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day) or, if such rate is not so reported on such
day or such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Trade Letter of Credit" means any Letter of Credit that (a)
is issued in support of trade obligations incurred in the ordinary course of
business and (b) includes, as a condition to drawing thereunder, the
presentation to the applicable Issuing Bank of negotiable bills of lading,
invoices and related documents sufficient, in the judgment of such Issuing Bank,
to create a valid and perfected first priority security interest in the goods
covered thereby.
23
"Transactions" means the execution, delivery and performance
by the Borrowers and the Guarantors of the Financing Documents to which it is to
be a party, the borrowing of Loans, the use of the proceeds thereof and the
issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing,
refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan
as a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.02. Classification of Loans and Borrowings. For
purposes of this Agreement, Loans may be classified and referred to by Type
(e.g., a "Eurodollar Loan"). Borrowings also may be classified and referred to
by Type (e.g., an "ABR Borrowing").
Section 1.03. Terms Generally. The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase "without
limitation". The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document
as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof' and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
Section 1.04. Accounting Terms; GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrowers notify the Administrative Agent that the Borrowers
request an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith. In calculating
compliance with any of the financial covenants (and related definitions), any
amounts taken into account in making such calculations that were paid, incurred
or accrued in violation of any
24
provision of this Agreement shall be added back or deducted, as applicable, in
order to determine compliance with such covenants.
ARTICLE II
The Credits
Section 2.01. Commitments. Subject to the terms and
conditions set forth herein, each Lender agrees to make Loans to the Borrowers
from time to time during the Availability Period in an aggregate principal
amount that will not result in such Lender's Revolving Credit Exposure exceeding
such Lender's Commitment. Notwithstanding the foregoing, the aggregate principal
amount of Loans outstanding at any time to the Borrowers shall not exceed (1)
the lesser of (A) the Commitment and (B) an amount equal to the sum of (i)
eighty percent (80%) of the Net Amount of Eligible Receivables, plus (ii) the
lesser of (a) eighty-five percent (85%) of the net recovery value of Eligible
Inventory and (b) sixty-five percent (65%) of the Net Amount of Eligible
Inventory plus (iii) an amount equal to the Fixed Assets Component as of such
date of determination plus (iv) the lesser of (a) fifty-five percent (55%) of
the aggregate undrawn amount of Trade Letters of Credit and (b) $150,000,000
plus (v) Invested Cash (this clause (1)(B) referred to herein as the "Borrowing
Base") minus (2) the LC Exposure at such time. The Borrowing Base will be
computed monthly or more often as may reasonably be requested by the
Administrative Agent and a compliance certificate from a Financial Officer of
the Borrowers presenting its computation will be delivered to the Administrative
Agent in accordance with Section 5.01(j) hereof. The net recovery value of
Eligible Inventory was established as a percentage of cost on the Effective Date
as reflected in the opening Borrowing Base. If by reason of any subsequent
appraisals conducted pursuant to Section 5.04, net recovery values have
declined, the Administrative Agent shall, in good faith and in accordance with
its customary practices, reduce the effective advance rates (subject to further
adjustments, downward or upward (but not above those in effect on the Effective
Date)) by reducing the net recovery value of Eligible Inventory used in the
calculation of the Borrowing Base consistent with the results of such subsequent
appraisals. Subject to the foregoing and within the foregoing limits, the
Borrowers may borrow, repay (or prepay) and reborrow Loans, on and after the
date hereof through the Availability Period, subject to the terms, provisions
and limitations set forth herein, including the requirement that no Loan shall
be made hereunder if the amount thereof exceeds the Availability outstanding at
such time (in each case, after giving effect to the application of the proceeds
of such Loan). For purposes of this Section, "net recovery value" means the
estimated net proceeds which could reasonably be realized from the liquidation
of the inventory under an orderly liquidation and going-out-of-business and/or
store closing sale basis, given a reasonable period of time to find
purchaser(s), with the seller compelled to sell.
Section 2.02. Loans and Borrowings. (a) Each Loan shall be
made as part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments. The failure of any Lender to make
any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several
and no Lender shall be responsible for any other Lender's failure to make Loans
as required.
25
(b) Subject to Section 2.06, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrowers may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrowers to repay such Loan in accordance with the terms of
this Agreement.
(c) At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in a minimum amount of $5,000,000
and an aggregate amount that is an integral multiple of $100,000. At the time
that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than $100,000 (except that
the foregoing limitation shall not be applicable to the extent that the proceeds
of such Borrowing are requested, or deemed to be requested, to be disbursed to
the Borrowers' loan account maintained with the Administrative Agent); provided
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Commitments or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.04(e). Borrowings of more than one Type may be outstanding at the same time;
provided that there shall not at any time be more than a total of seven (7)
Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement,
the Borrowers shall not be entitled to request, or to elect to convert or
continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
Section 2.03. Requests for Borrowings. To request a
Borrowing, the Borrowers shall notify the Administrative Agent of such request
by writing, facsimile or telephone (a) in the case of a Eurodollar Borrowing,
not later than 12:00 noon, New York City time, three Business Days before the
date of the proposed Borrowing or (b) in the case of an ABR Borrowing, including
an ABR Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.04(e), not later than 12:00 noon, New York City time,
on the same Business Day of the proposed Borrowing. Each such Borrowing Request
shall be irrevocable and if given by telephone shall be confirmed (except that
no such confirmation will be required, unless requested by the Administrative
Agent, to the extent the proceeds of such Borrowing are requested, or deemed to
be requested, to be disbursed to the Borrowers' loan account maintained with the
Administrative Agent, in which event Borrowing and repayment procedures shall be
in accordance with the cash management agreement between the Borrowers and the
Administrative Agent and as contemplated by Section 4.4(b) of the Security
Agreement) promptly by writing or fax to the Administrative Agent of a written
Borrowing Request in a form attached as Exhibit D and signed by an authorized
signer of the Borrowers as set forth in the Facility Letter. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(a) the aggregate amount of the requested Borrowing;
(b) the date of such Borrowing, which shall be a Business
Day;
26
(c) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(d) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(e) the location and number of the Borrowers' account to
which funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrowers shall be
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each applicable Lender of the details thereof
and of the amount of such Lender's Loan to be made as part of the requested
Borrowing.
Section 2.04. Letters of Credit. (a) (a) General. Subject to
the terms and conditions set forth herein, the Borrowers may request the
issuance of Letters of Credit for their own account, in a form reasonably
acceptable to the Administrative Agent and the applicable Issuing Bank, at any
time and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrowers to, or entered into by the Borrowers with, the
Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. To request the issuance of a Trade Letter of Credit (or the
amendment, renewal or extension of an outstanding Letter of Credit), the
Borrowers shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the applicable
Issuing Bank) to the applicable Issuing Bank (reasonably in advance of the
requested date of issuance, amendment, renewal or extension) a notice requesting
the issuance of a Trade Letter of Credit, or identifying the Trade Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Trade Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Trade Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Trade Letter of Credit. The
Borrower shall deliver to the Administrative Agent no later than 3:30 p.m., New
York City time, on each Business Day a written report, in form and substance
satisfactory to the Administrative Agent, of all Trade Letters of Credit issued,
amended, renewed or extended on such Business Day. To request the issuance of a
Stand-by Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrowers shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by the applicable Issuing Bank) to the applicable Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Stand-by
Letter of Credit, or identifying the Stand-by Letter of Credit to be amended,
renewed or
27
extended, and specifying the date of issuance, amendment, renewal or extension
(which shall be a Business Day), the date on which such Stand-by Letter of
Credit is to expire (which shall comply with paragraph (c) of this Section), the
amount of such Stand-by Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Stand-by Letter of Credit. If requested by the
applicable Issuing Bank, the Borrowers also shall submit a letter of credit
application on such Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrowers shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the
Stand-by LC Exposure shall not exceed $20,000,000 and (ii) after giving effect
to the issuance of such Letter of Credit, Availability shall not be less than
zero.
(c) Expiration Date. Each Letter of Credit shall expire at
or prior to the close of business on the earlier of (i) the date one year after
the date of issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension); provided that a
Letter of Credit may provide that its expiration date shall be automatically
extended (but not beyond the date specified in clause (ii) below) to a date not
more than one year after the then outstanding expiration date unless, at least a
specified number of days prior to such then existing expiration date, the
applicable Issuing Bank shall have given the beneficiary thereof notice, in a
form that may be specified in such Letter of Credit, that such expiration date
shall not be so extended, and (ii) the date that is thirty Business Days prior
to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit
(or an amendment to a Letter of Credit increasing the amount thereof) and
without any further action on the part of the applicable Issuing Bank or the
Lenders, such Issuing Bank hereby grants to each Lender, and each Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's pro rata (based on its Commitment) portion of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
the applicable Issuing Bank, such Lender's pro rata (based on its Commitment)
portion of each LC Disbursement made by such Issuing Bank and not reimbursed by
the Borrowers on the date due as provided in paragraph (e) of this Section, or
of any reimbursement payment required to be refunded to the Borrowers for any
reason. Each Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including any amendment, renewal or extension of any Letter of
Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the applicable Issuing Bank shall make
any LC Disbursement in respect of a Letter of Credit, the Borrowers shall
reimburse such LC Disbursement by paying to such Issuing Bank (with confirmation
of such payment to the Administrative Agent) an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Borrowers shall have
28
received notice of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the Borrowers prior to
such time on such date, then not later than 12:00 noon, New York City time, on
(i) the Business Day that the Borrowers receive such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrowers receive such
notice, if such notice is not received prior to such time on the date of
receipt; provided that, if such LC Disbursement is not less than $100,000, the
Borrowers may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 that such payment be financed with an ABR
Borrowing. If the Borrowers fail to make such payment when due and the Issuing
Bank has so informed the Administrative Agent, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due from
the Borrowers in respect thereof and such Lender's pro rata (based on its
Commitment) portion thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its pro rata (based on its
Commitment) portion of the payment then due from the Borrowers, in the same
manner as provided in Section 2.05 with respect to Loans made by such Lender
(and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of
the Lenders), and the Administrative Agent shall promptly pay to the applicable
Issuing Bank the amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the Borrowers pursuant
to this paragraph, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this paragraph to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this paragraph to reimburse an Issuing Bank for any LC
Disbursement (other than the funding of ABR Loans as contemplated above) shall
not constitute a Loan and shall not relieve the Borrowers of their obligation to
reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrowers' obligation to
reimburse LC Disbursements as provided in paragraph (e) of this Section shall,
to the fullest extent permitted under applicable law, be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged, fraudulent or invalid
in any respect or any statement therein being untrue or inaccurate in any
respect (other than under circumstances which constitute gross negligence or
willful misconduct on the part of the Issuing Bank as finally determined by a
court of competent jurisdiction), (iii) payment of the applicable Issuing Bank
under a Letter of Credit against presentation of a draft or other document that
does not comply with the terms of such Letter of Credit (other than under
circumstances which constitute gross negligence or willful misconduct on the
part of the Issuing Bank as finally determined by a court of competent
jurisdiction), or (iv) any other event or circumstance whatsoever, whether or
not similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of, or provide a right of
setoff against, the Borrowers' obligations hereunder. None of the Administrative
Agent, the Lenders, any Issuing Bank, or any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication
29
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of such Issuing Bank;
provided that the foregoing shall not be construed to excuse the applicable
Issuing Bank from liability to the Borrowers to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Borrowers to the extent permitted by applicable law) suffered by
the Borrowers that are caused by such Issuing Bank's failure to exercise care
when determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or willful misconduct on the part of the
applicable Issuing Bank (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in compliance with the terms of a Letter of
Credit, the applicable Issuing Bank may, in its sole discretion, either accept
and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. Each Issuing Bank shall,
promptly following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit. The applicable Issuing
Bank shall promptly notify the Administrative Agent and the Borrowers by
telephone (confirmed by telecopy) (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) of
such demand for payment and whether such Issuing Bank has made or will make an
LC Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrowers of their obligation to reimburse
such Issuing Bank and the Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, unless the Borrowers shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrowers reimburse such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrowers fail to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.11(c) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the applicable
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (c) of this Section to reimburse such Issuing
Bank shall be for the account of such Lender to the extent of such payment.
(i) Resignation of Issuing Banks. Any Issuing Bank (other
than, except if a Default has occurred and is continuing, the Primary Issuing
Bank) may resign at any time upon not less than 30 days' prior written notice to
the Borrowers and the Administrative Agent. At the time any such resignation
shall become effective, the Borrowers shall pay all unpaid fees accrued for the
account of the resigning Issuing Bank pursuant to Section 2.10(b). After the
resignation of an Issuing Bank hereunder, such Issuing Bank shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuing
Bank under this Agreement with respect to Letters of Credit issued by it prior
to such resignation, but shall not be required to amend to
30
increase the principal amount of, extend beyond the expiration date or renew
existing, or to issue additional, Letters of Credit.
(j) Replacement of the Primary Issuing Bank. The Primary
Issuing Bank may be replaced at any time by written agreement among the
Borrowers, the Administrative Agent and the successor Primary Issuing Bank. The
Administrative Agent shall notify the Lenders of any such replacement of the
Primary Issuing Bank. At the time any such replacement shall become effective,
the Borrowers shall pay all unpaid fees accrued for the account of the replaced
Primary Issuing Bank pursuant to Section 2.10(b). From and after the effective
date of any such replacement, (i) the successor Primary Issuing Bank shall have
all the rights and obligations of the Primary Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references
herein to the term "Primary Issuing Bank" shall be deemed to refer to such
successor or to any previous Primary Issuing Bank, or to such successor and all
previous Primary Issuing Banks, as the context shall require. After the
replacement of a Primary Issuing Bank hereunder, the replaced Primary Issuing
Bank shall remain a party hereto and shall continue to have all the rights and
obligations of a Primary Issuing Bank under this Agreement with respect to
Letters of Credit issued by it prior to such replacement, but shall not be
required to amend to increase the principal amount of, extend beyond the
expiration date or renew existing, or to issue additional, Letters of Credit.
(k) Cash Collateralization. If any Default shall occur and
be continuing, on the Business Day that the Borrowers receive notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing at least 51% of the
total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Borrowers shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to 105% of the LC Exposure as of such date plus
any accrued and unpaid interest thereon, provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Default with respect to a Borrower described in
clause (g) or (h) of Article VII. Each such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrowers under this Agreement. The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made, to the extent practicable, at
the written request of the Borrowers at the Borrowers' risk and expense, such
deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the applicable Issuing Bank for
LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Borrowers for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing at least 51% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrowers are required
to provide an amount of cash collateral hereunder as a result of the occurrence
of a Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrowers within three Business Days after all Defaults have
been cured or waived.
31
(l) Issuing Bank Reporting Requirements. Each Issuing Bank
agrees to provide to the Borrowers and the Administrative Agent (i) no later
than the close of business on each Business Day, a written notice of the
aggregate outstanding Trade Letters of Credit issued by such Issuing Bank as of
the previous Business Day and (ii) any other information the Administrative
Agent may reasonably request from time to time with respect to Letters of Credit
issued by such Issuing Bank.
Section 2.05. Funding of Borrowings. (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 2:00 p.m., New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrowers by promptly wiring the amount so received, in like
funds, to an account of the Borrowers maintained with Bank of New York in New
York City or any other Lender reasonably acceptable to the Administrative Agent
and designated by the Borrowers either one Business Day prior to the Effective
Date or in the applicable Borrowing Request; provided that ABR Loans made to
finance the reimbursement of an LC Disbursement as provided in Section 2.04(e)
shall be remitted by the Administrative Agent to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's share
of such Borrowing, the Administrative Agent may assume that such Lender has made
such share available on such date in accordance with paragraph (a) of this
Section and may, in reliance upon such assumption, make available to the
Borrowers a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrowers severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or (ii) in
the case of the Borrowers, the interest rate applicable to ABR Loans. If such
Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender's Loan included in such Borrowing, and the Borrowers
shall be relieved of their obligation to make such payment.
Section 2.06. Interest Elections. (a) Each Borrowing on the
Effective Date shall be at the Alternate Base Rate and thereafter shall be of
the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. The Borrowers may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this Section.
The Borrowers may elect different options with respect to different portions of
the affected Borrowing, in which case each such portion shall be allocated
ratably among the Lenders holding the Loans comprising such Borrowing, and the
Loans comprising each such portion shall be considered a separate Borrowing.
32
(b) To make an election pursuant to this Section, the
Borrowers shall notify the Administrative Agent of such election in writing or
by facsimile transmission or by telephone (confirmed in writing or by fax) by
the time that a Borrowing Request would be required under Section 2.03 if the
Borrowers were requesting a Borrowing of the Type resulting from such election
to be made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrowers (or any Borrower).
(c) Each telephonic and written Interest Election Request
shall specify the following information in compliance with Section 2.02;
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being elected
with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in
which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant
to such Interest Election Request, which shall be a Business
Day;
(iii) whether the resulting Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto
after giving effect to such election, which shall be a
period contemplated by the definition of the term "Interest
Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrowers shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election
Request, the Administrative Agent shall advise each applicable Lender of the
details thereof and of such Lender's portion of each resulting Borrowing.
(e) If the Borrowers fail to deliver a timely Interest
Election Request with respect to a Eurodollar Borrowing prior to the end of the
Interest Period applicable thereto, then, unless such Borrowing is repaid as
provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
a Default has occurred and is continuing, then, so long as a Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
Eurodollar Borrowing and (ii) each Eurodollar Borrowing, unless repaid as
provided herein, shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto.
Section 2.07. Termination and Reduction of Commitments. (a)
Unless previously terminated, the Commitments shall terminate on the Maturity
Date.
33
(b) The Borrowers may at any time terminate, or from time to
time reduce, the Commitments; provided that (i) each reduction of the
Commitments shall be in an amount that is an integral multiple of $100,000 and
not less than $500,000, (ii) the Borrowers shall not terminate or reduce the
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.09, Availability would be less than zero, (iii) if any
termination shall occur prior to the first anniversary of the Effective Date,
the Borrowers shall pay to the Administrative Agent, for the ratable benefit of
the Lenders, a fee equal to 1.00% of the aggregate amount of the Lenders'
Commitments and (iv) if any termination shall occur on of after the first
anniversary of the Effective Date but prior to the second anniversary of the
Effective Date, the Borrowers shall pay to the Administrative Agent, for the
ratable benefit of the Lenders, a fee equal to 0.50% of the aggregate amount of
the Lenders' Commitments.
(c) The Borrowers shall notify the Administrative Agent of
any election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the applicable Lenders of the contents thereof. Each notice
delivered by the Borrowers pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Borrowers may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the
Borrowers (by notice to the Administrative Agent on or prior to the specified
effective date) if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the Commitments shall
be made ratably among the Lenders with Commitments in accordance with their
respective Commitments.
Section 2.08. Repayment of Loans; Evidence of Debt. (a) The
Borrowers hereby unconditionally promise to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Loan on the
Maturity Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrowers to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in
which it shall record (i) the amount of each Loan made hereunder, the Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrowers to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrowers
to repay the Loans in accordance with the terms of this Agreement.
34
(e) Unless all Lenders otherwise agree, the Loans of each
Lender shall be evidenced by a promissory note substantially in the form of
Exhibit C (each, a "Note"). The Borrowers shall execute and deliver to each
Lender a Note or Notes payable to the order of such Lender with blanks completed
to the satisfaction of such Lender.
(f) Each of the Borrowers shall be jointly and severally
liable with the other Borrowers for the payment of the principal of and interest
on the Loans, the LC Exposure, the Revolving Credit Commitment Fee, all other
fees and all other amounts payable under this Agreement and the other Financing
Documents and all Derivative Obligations to which a Lender is a party (the
"Obligations"), and each of the Obligations shall be secured by all of the
Collateral. Each of the Borrowers acknowledges that it is a co-borrower
hereunder and is jointly and severally liable under this Agreement and the other
Financing Documents. All credits extended to any of the Borrowers or requested
by any of the Borrowers shall be deemed to be credits extended for each of the
Borrowers, and each of the Borrowers hereby authorizes each other of the
Borrowers to effectuate Loans or Letters of Credit on its behalf.
Notwithstanding anything to the contrary contained in this Agreement or any of
the other Financing Documents, the Administrative Agent, the Issuing Banks and
the Lenders shall be entitled to rely upon any request, notice or other
communication received by them from any of the Borrowers on behalf of all
Borrowers, and shall be entitled to treat their giving of any notice hereunder
to any of the Borrowers as notice to each and all Borrowers. Each of the
Borrowers agrees that the joint and several liability of the Borrowers provided
for in this subsection (f) shall not be impaired or affected by any
modification, supplement, extension or amendment or any contract or agreement to
which the other Borrowers may hereafter agree (other than an agreement signed by
the Administrative Agent and the Lenders specifically releasing such liability),
nor by any delay, extension of time, renewal, compromise or other indulgence
granted by the Administrative Agent or any Lender with respect to any of the
Obligations, nor by any other agreements or arrangements whatsoever with the
other Borrowers or with any other person, each of the Borrowers hereby waiving
all notice of such delay, extension, release, substitution, renewal, compromise
or other indulgence, and hereby consenting to be bound thereby as fully and
effectually as if it had expressly agreed thereto in advance. The liability of
each of the Borrowers is direct and unconditional as to all of the Obligations,
and may be enforced without requiring the Administrative Agent or any Lender
first to resort to any other right, remedy or security. Each of the Borrowers
hereby expressly waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and any requirement that the
Administrative Agent or any Lender protect, secure, perfect or insure any Lien
or any property subject thereto or exhaust any right or take any action against
any of the Borrowers or any other person or any collateral. Each of the
Borrowers hereby irrevocably subordinates and makes junior to the Obligations
each of the other Borrower's "claims" (as defined in Section 101(5) of the
Bankruptcy Code) to which such Borrowers are or would be entitled by virtue of
the provisions of this subsection (f) or the performance of such Borrower's
obligations thereunder including any right of subrogation (whether contractual,
under Section 509 of the Bankruptcy Code or otherwise), reimbursement,
contribution, exoneration or similar right, or indemnity, or any right of
recourse to security for any of the Obligations unless and until all of the
Obligations to the Administrative Agent and the Lenders have been indefeasibly
paid in full.
Section 2.09. Prepayment of Loans. (a) The Borrowers shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to prior notice in
35
accordance with paragraph (b) of this Section; provided, however, the Borrowers
shall make prepayments of the Loans from time to time such that the Availability
equals or exceeds zero at all times.
(b) The Borrowers (or any Borrower) shall notify the
Administrative Agent by telephone (confirmed by telecopy) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later
than 12:00 noon, New York City time three Business Days before the date of
prepayment or (ii) in the case of prepayment of an ABR Borrowing, not later than
12:00 noon, New York City time, one Business Day before the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and
the principal amount of each Borrowing or portion thereof to be prepaid;
provided that, if a notice of prepayment is given under the circumstances in
which a conditional notice of termination of the Commitments is permitted as
contemplated by Section 2.07, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.07. Promptly
following receipt of any such notice relating to a Borrowing, the Administrative
Agent shall advise the applicable Lenders of the contents thereof. Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in the
case of an advance of a Borrowing of the same Type as provided in Section 2.02
(except that the foregoing shall not be applicable (i) to the extent that the
payment is made from the operation of Borrowers' controlled disbursement account
maintained with the Administrative Agent, (ii) to a prepayment in full of the
aggregate principal amount of a Borrowing then outstanding or (iii) to a
prepayment of Loans required to be made pursuant to the proviso to paragraph (a)
of this Section). Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.11.
(c) Within three Business Days of (i) the sale or other
disposition (including those arising from a Casualty Event) of any assets of the
Borrowers or any of their Subsidiaries, (ii) the consummation of the issuance of
any equity interests of any Borrower or any Subsidiary (other than the issuance
of Equity Interests by a Borrower or a Subsidiary to another Borrower or a
Subsidiary or Equity Interests issued pursuant to any option or similar plans to
employees of a Borrower or a subsidiary) or (iii) the consummation of the
issuance of any debt securities of a Borrower or any Subsidiary (other than
Indebtedness permitted pursuant to Section 6.01), the Borrowers shall make a
mandatory prepayment of the Loans in an amount equal to 100% of the Net Proceeds
received, any prepayment to be applied in accordance with subparagraphs (d) and
(e).
(d) Each prepayment of Loans required by subsection (c) of
this Section shall be made ratably among the Loans of the Lenders, and such
prepayments shall be made with respect to such Types of Loans as the Borrower
may specify by notice to the Administrative Agent at or before the time of such
prepayment and shall be applied to prepay the Loans comprising each such Type
pro rata; provided that, if no such timely specification is given by the
Borrower, such payment shall be allocated to such Type or Types as the
Administrative Agent may determine.
(e) Each prepayment of Loans required by subsection (c)(i)
of this Section shall also reduce the amount of the Fixed Assets Component by an
amount equal to 100% of the Net Proceeds received with respect to the premises,
if any, included in such sale or other
36
disposition; provided, however, that in no event shall the Fixed Assets
Component be reduced by more than the amount set forth below with respect to the
sale of such property listed below:
Reading, PA $6,020,000
Schuylkill Haven, PA $1,554,000
Jonesville, NC $9,100,000
Chattanooga, TN $3,500,000
Section 2.10. Fees. (a) The Borrowers agree to pay to the
Administrative Agent for the account of each Lender a commitment fee (the
"Revolving Credit Commitment Fee"), which shall accrue at the Applicable Rate on
the daily amount of the unused Commitment of such Lender during the period from
and including the Effective Date to but excluding the date on which such
Commitment terminates. Accrued Revolving Credit Commitment Fees shall be payable
monthly in arrears on the first day of each month and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date
hereof. All Revolving Credit Commitment Fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) The Borrowers agree to pay (i) to the Administrative
Agent for the account of each Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the Applicable Rate,
in each case on the average daily amount of such Lender's LC Exposure (excluding
any portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the Effective Date to but excluding the later of the
date on which such Lender's Commitment terminates and the date on which such
Lender ceases to have any LC Exposure, and (ii) to each Issuing Bank, a fronting
fee, which shall accrue at the rate or rates per annum separately agreed upon
between the Borrowers and such Issuing Bank on the average daily amount of the
LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) attributable to Letters of Credit issued by such Issuing Bank, in
each case during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as such Issuing Bank's
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder. Participation fees
and fronting fees accrued through and including the last day of January, April,
July and October of each year shall be payable on the third Business Day
following such last day, commencing on the first such date to occur after the
Effective Date; provided that all such fees shall be payable on the date on
which the Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand. Any other fees
payable to an Issuing Bank pursuant to this paragraph shall be payable to such
Issuing Bank on demand. All participation fees and fronting fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).
37
(c) The Borrowers agree to pay to the Administrative Agent,
for its own account, fees in the amounts set forth in the Fee Letter and any
other fees in the amounts and at the times separately agreed upon in writing
among the Borrowers and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates
due, in immediately available funds, to the Administrative Agent (or to the
applicable Issuing Bank, in the case of fees payable to it) for distribution, in
the case of commitment fees and participation fees, to the Lenders. Absent any
error in the calculation thereof, fees paid shall not be refundable under any
circumstances.
Section 2.11. Interest. (a) The Loans comprising each ABR
Borrowing shall bear interest for each day on which any principal of such Loans
remains outstanding at the Alternate Base Rate for such day plus the Applicable
Rate for such day.
(b) The Loans comprising each Eurodollar Borrowing shall
bear interest for each day during each Interest Period applicable thereto at the
Adjusted LIBO Rate for such Interest Period plus the Applicable Rate for such
day.
(c) Notwithstanding the foregoing, if a Default shall have
occurred and be continuing, then unless and until such Default shall have been
cured or waived, all outstanding Loans and Letters of Credit shall bear
interest, after as well as before judgment, at a rate per annum equal to 2% plus
the rate otherwise applicable to such Loan or Letter of Credit as provided in
the preceding paragraphs of this Section.
(d) Accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan, on the Maturity Date and,
upon termination of the Commitments; provided that (i) interest accrued pursuant
to paragraph (c) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Eurodollar Loan, accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment and (iii) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Eurodollar Loan shall be payable on the effective date
of such conversion.
(e) All interest hereunder shall be computed on the basis of
a year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
Section 2.12. Alternate Rate of Interest. If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate, for such Interest Period; or
38
(b) the Administrative Agent is advised by the Required
Lenders that the Adjusted LIBO Rate, for such Interest Period will not
adequately and fairly reflect the cost to such Lenders of making or maintaining
their Loans included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by telephone or telecopy, as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrowers and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request or Interest Election Request requests a
Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.
Section 2.13. Increased Costs. (a) If any Change in Law
shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of deposits with or
for the account of, or credit extended by, any Lender (except any
such reserve requirement reflected in the Adjusted LIBO Rate) or
any Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or the London
interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender or any Letter of Credit or
participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Eurodollar Loan) or to increase the cost to such
Lender or such Issuing Bank of participating in, issuing or maintaining any
Letter of Credit or to reduce the amount of any sum received or receivable by
such Lender or such Issuing Bank hereunder (whether of principal, interest or
otherwise with respect to its Eurodollar Loans or its maintenance of, or
participation in, Letters of Credit), then the Borrowers will pay to such Lender
or such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank, as the case may be, for such
additional costs incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines that any
Change in Law regarding capital requirements has or would have the effect of
reducing the rate of return on such Lender's or such Issuing Bank's capital or
on the capital of such Lender's or such Issuing Bank's holding company, if any,
as a consequence of this Agreement or the Loans made by, or participations in
Letters of Credit held by, such Lender, or the Letters of Credit issued by such
Issuing Bank, to a level below that which such Lender or such Issuing Bank or
such Lender's or such Issuing Bank's holding company could have achieved but for
such Change in Law (taking into consideration such Lender's or such Issuing
Bank's policies and the policies of such Lender's or such Issuing Bank's holding
company with respect to capital adequacy), then from time to time the Borrowers
will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender's or such Issuing Bank's holding company for any such reduction
suffered.
39
(c) A certificate of a Lender or an Issuing Bank setting
forth in reasonable detail the calculation of the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrowers
shall pay such Lender or such Issuing Bank, as the case may be, the amount shown
as due on any such certificate on demand.
(d) Failure or delay on the part of any Lender or any
Issuing Bank to demand compensation pursuant to this Section shall not
constitute a waiver of such Lender's or such Issuing Bank's right to demand such
compensation; provided that the Borrowers shall not be required to compensate a
Lender or an Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 270 days prior to the date that such Lender or the
Issuing Bank, as the case may be, notifies the Borrowers of the Change in Law
giving rise to such increased costs or reductions and of such Lender's or such
Issuing Bank's intention to claim compensation therefor; provided further that,
if the Change in Law giving rise to such increased costs or reductions is
retroactive, then the 270-day period referred to above shall be extended to
include the period of retroactive effect thereof.
Section 2.14. Break Funding Payments. In the event of (a)
the payment of any principal of any Eurodollar Loan other than on the last day
of an Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto or (c) the failure to borrow, convert,
continue or prepay any Eurodollar Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.09(b) and is revoked in accordance therewith), then, in any such
event, the Borrowers shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan, such loss, cost or
expense to any Lender shall be deemed to include an amount determined by such
Lender to be the excess, if any, of (i) the amount of interest which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan, for the period
from the date of such event to the last day of the then current Interest Period
therefor (or, in the case of a failure to borrow, convert or continue, for the
period that would have been the Interest Period for such Loan), over (ii) the
amount of interest which would accrue on such principal amount for such period
at the interest rate which such Lender would bid were it to bid, at the
commencement of such period, for dollar deposits of a comparable amount and
period from other banks in the eurodollar market. A certificate of any Lender
setting forth in reasonable detail any amount or amounts that such Lender is
entitled to receive pursuant to this Section shall be delivered to the Borrowers
and shall be conclusive absent manifest error. The Borrowers shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof. Notwithstanding the foregoing, the Borrowers shall not be
required to make any prepayment of a Eurodollar Borrowing pursuant to Section
2.09(c) until the last day of the Interest Period with respect thereto so long
as an amount equal to such prepayment is deposited by the Borrowers into a cash
collateral account with the Administrative Agent and applied to such prepayment
on the last day of such Interest Period.
Section 2.15. Taxes. (a) Any and all payments by or on
account of any obligation of the Borrowers hereunder or under any other
Financing Document shall be made
40
free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrowers shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made, (ii) the Borrowers shall make such deductions and (iii) the Borrowers
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.
(b) In addition, the Borrowers shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) The Borrowers shall indemnify the Administrative Agent,
each Lender and the Issuing Bank, within 10 days after written demand therefor,
for the full amount of any Indemnified Taxes or Other Taxes paid by the
Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or
with respect to any payment by or on account of any obligation of the Borrowers
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrowers by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrowers to a Governmental Authority, the Borrowers
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from
or reduction of withholding tax under the law of the jurisdiction in which a
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to such Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by such Borrower as will permit such payments to be
made without withholding or at a reduced rate.
(f) If the Administrative Agent or a Lender determines, in
its sole discretion, that it has received a refund of any Taxes or Other Taxes
as to which it has been indemnified by the Borrowers or with respect to which
the Borrowers have paid additional amounts pursuant to Section 2.15, it shall
pay over such refund to the Borrowers (but only to the extent of indemnity
payments made, or additional amounts paid, by the Borrowers under this Section
2.15 with respect to the Taxes or Other Taxes giving rise to such refund);
provided, that the Borrowers, upon the request of the Administrative Agent or
such Lender, agree to repay the amount paid over to the Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event that the
41
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or other
information relating to its taxes which it deems confidential) to the Borrowers
or any other Person.
Section 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs. (a) The Borrowers shall make each payment required to be
made by them hereunder (whether of principal, interest, fees or reimbursement of
LC Disbursements, or of amounts payable under Section 2.13, 2.14 or 2.15, or
otherwise) prior to 12:00 noon, New York City time, on the date when due, in
immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. At the option of the
Administrative Agent, in its sole discretion, subject only to the terms of this
Section 2.16, all payments of principal, interest, fees, reimbursement of LC
Disbursements and other items, including reimbursement of expenses pursuant to
Section 9.03, owing to the Administrative Agent, the Issuing Banks or the
Lenders on or with respect to this Agreement and/or Loans and other Financing
Documents may, when due and payable, be paid from the proceeds of Loans made
hereunder, whether made following a request by the Borrower pursuant to Section
2.03 or a deemed request as provided in this Section 2.16. The Borrower hereby
irrevocably authorizes the Administrative Agent to charge the Borrowers' loan
account with the Administrative Agent for the purpose of paying principal,
interest, fees, reimbursement of LC Disbursements and other items, including
reimbursement of expenses pursuant to Section 9.03, and agrees that all such
amounts charged shall constitute Loans and that all such Loans so made shall be
deemed to have been requested by Borrower pursuant to Section 2.03. All such
payments shall be made to the Administrative Agent at its offices at ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, except payments to be
made directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Sections 2.13, 2.14, 2.15 and 9.03 shall be made directly
to the Persons entitled thereto. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be payable for the period of
such extension; provided that, in the case of any prepayment of principal of or
interest on any Eurodollar Loan, if such next succeeding Business Day would fall
in the next calendar month, the date for payment shall instead be the next
preceding Business Day. All payments hereunder shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such parties.
42
(c) If any Lender shall, by exercising any right of set-off
or counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in LC
Disbursements; provided that (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent
of such recovery, without interest, and (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrowers pursuant to
and in accordance with the express terms of this Agreement or any payment
obtained by a Lender as consideration for the assignment of or sale of a
participation in any of its Loans or participations in LC Disbursements to any
assignee or participant, other than to the Borrowers or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrowers consent to the foregoing and agrees, to the extent they may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrowers rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have received
notice from the Borrowers prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders or any Issuing Bank
hereunder that the Borrowers will not make such payment, the Administrative
Agent may assume that the Borrowers have made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the applicable Issuing Bank, as the case may be, the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders or such Issuing Bank, as the case may be, severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including
the date such amount is distributed to it to but excluding the date of payment
to the Administrative Agent, at the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to
be made by it pursuant to Section 2.04(d) or (e), 2.05(b) or 2.16(c), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender's obligations under
such Sections until all such unsatisfied obligations are fully paid. Until such
Lender's unsatisfied obligations are fully paid, such Lender shall be excluded
from any determination of Required Lenders under this Agreement.
(f) The outstanding principal balance of Loans may fluctuate
from day to day, through the Administrative Agent's disbursement of funds to,
and receipt of funds from, the
43
Borrowers. In order to minimize the frequency of transfers of funds between the
Administrative Agent and each Lender, Loans and payments may be settled
according to the following procedures. On the third Business Day of each week,
or more frequently (including daily), if the Administrative Agent so elects
(each such day being a "Settlement Date"), the Administrative Agent will advise
each Lender by telephone, telex or telecopy of the amount of each such Lender's
actual dollar investment and its ratable portion (based on its Commitment) of
the outstanding principal balance of Loans as of the close of business on the
third Business Day immediately preceding the Settlement Date. In the event that
payments are necessary to adjust the amount of such Lender's actual dollar
investment in the outstanding principal balance of Loans to such Lender's
ratable portion (based on its Commitment) of the outstanding principal balance
of Loans as of any Settlement Date (based on the outstanding balances as of the
close of business on the third Business Day immediately preceding such
Settlement Date), the party from which such payment is due will pay the other,
in immediately available funds, by wire transfer to the other's account not
later than 2:00 p.m. (New York time) on the Business Day immediately following
the Settlement Date. Notwithstanding the foregoing, if the Administrative Agent
so elects, the Administrative Agent may require that each Lender make its
ratable portion (based on its Commitment) of any requested Loan available to the
Administrative Agent for disbursement on the date of funding applicable to such
Loan in accordance with Section 2.03 hereof. Notwithstanding these procedures,
each Lender's obligation to fund its portion of each Loan made by the
Administrative Agent to the Borrowers will commence on the date such advance is
made by the Administrative Agent.
Section 2.17. Mitigation Obligations; Replacement of
Lenders. (a) If any Lender requests compensation under Section 2.13, or if any
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrowers
hereby agree to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13,
or if the Borrowers are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section
2.15, or if any Lender defaults in its obligation to fund Loans hereunder, or if
any Lender fails to approve an amendment or waiver to this Agreement requiring
its consent, which amendment or waiver is approved by the Required Lenders, then
the Borrowers may, at their sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrowers,
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements,
44
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrowers (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrowers to require such assignment
and delegation cease to apply.
ARTICLE III
Representations and Warranties
Each of the Borrowers represents and warrants to the Lenders
that:
Section 3.01. Existence and Power. Each of PVH, PVH
Wholesale Corp., PVH Retail Corp., ▇▇▇▇.▇▇▇, inc., ▇.▇. ▇▇▇▇ Franchises, Inc.
and CD Group, Inc. is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware, and The IZOD Corporation is a
corporation organized, validly existing and in good standing under the laws of
the Commonwealth of Pennsylvania, and each of the Borrowers has all necessary
powers required to carry on its business as now conducted and, except where the
failure to do so could not be reasonably expected to result in a Material
Adverse Effect, is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required.
Section 3.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by each of the Borrowers
of the Financing Documents to which it is a party are within its corporate
powers, have been duly authorized by all necessary corporate action, require no
action by or in respect of, or filing with, any Governmental Authority (except
as contemplated by the Security Agreement) and do not contravene, or constitute
a default under, any provision of material applicable law or material regulation
or of its charter or bylaws or of any material agreement, judgment, injunction,
order, decree or other material instrument binding upon each or result in the
creation or imposition of any Lien on any material asset of any Borrower or any
of its Subsidiaries (except the Security Interests).
Section 3.03. Binding Effect. This Agreement and the other
Financing Documents to which it is a party constitute valid and binding
agreements of each Borrower, in each case enforceable in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or moratorium or other similar laws
relating to the enforcement of creditors' rights generally and by general
equitable principles.
Section 3.04. Financial Information. (a) The Borrowers have
heretofore furnished to the Administrative Agent consolidated financial
statements of PVH and its subsidiaries for the six (6) month period ended August
4, 2002, prepared by management and for the fiscal years ended February 3, 2002
and February 4, 2001, audited by Ernst & Young LLP, independent public
accountants. Such financial statements present fairly in all material respects
45
the financial condition and results of operations of PVH and its subsidiaries as
of the dates and for the periods indicated, and such financial statements
disclose in accordance with GAAP all material liabilities, direct or contingent,
of PVH and its subsidiaries as of the dates thereof.
(b) The Borrowers have heretofore furnished to the
Administrative Agent quarterly for the 2003 fiscal year, and annually
thereafter, projected income statements, balance sheets and cash flows for PVH
and its subsidiaries, together with a schedule demonstrating prospective
compliance with all financial covenants, all in form and substance reasonably
satisfactory to the Lenders in their good faith judgment, all such projections
disclosing all assumptions made by the Borrowers in formulating such projections
and giving effect to the Transactions. The projections are based upon reasonable
estimates and assumptions, all of which are reasonable in light of the
conditions which existed at the time the projections were made, have been
prepared on the basis of the assumptions stated therein, and reflect as of the
Effective Date the good faith estimate of the Borrowers of the results of
operations and other information projected therein, provided that no
representation is made that the assumptions will prove to be correct.
(c) Since August 5, 2002, there has been no material adverse
change in the business, prospects, assets, operations or financial condition of
the Borrowers and their consolidated Subsidiaries, considered as a whole.
Section 3.05. Litigation. Except for the Disclosed Matters,
there is no action, suit or proceeding pending against, or to the knowledge of
the Borrowers threatened against or affecting, the Borrowers or any of their
Subsidiaries before any arbitrator or any Governmental Authority, that (i) could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect, or (ii) which would in any material respect draw into
question the enforceability of any of the Financing Documents, taken as a whole.
Section 3.06. Compliance with ERISA. Each Borrower and its
Subsidiaries and each ERISA Affiliate has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code with respect to each Plan, and has
not incurred any liability under Title IV of ERISA (i) to the PBGC other than a
liability to the PBGC for premiums under Section 4007 of ERISA or (ii) in
respect of a Multiemployer Plan which has not been discharged in full when due.
Section 3.07. Taxes. To the extent applicable, each Borrower
and its Subsidiaries has filed all United States Federal income tax returns and
all other material tax returns which are required to be filed by it and has paid
all taxes stated to be due in such returns or pursuant to any assessment
received by it, except for taxes the amount, applicability or validity of which
is being contested in good faith by appropriate proceedings. The charges,
accruals and reserves on the books of the Borrowers and their Subsidiaries in
respect of taxes or other similar governmental charges, additions to taxes and
any penalties and interest thereon are, in the opinion of the Borrowers,
adequate.
Section 3.08. Environmental Compliance. (a) Except for
Disclosed Matters,
46
(i) the Borrowers and their Subsidiaries have,
obtained, or made timely application for, all permits,
certificates, licenses, approvals, registrations and other
authorizations (collectively "Permits") which are required
under all applicable Environmental Laws and are necessary
for their operations and are in compliance with the terms
and conditions of all such Permits, except where the failure
to obtain such Permits or to comply with their terms would
not have, individually or in the aggregate, a Material
Adverse Effect;
(ii) no notice, notification, demand, request for
information, citation, summons, complaint or order has been
issued, no complaint has been filed, no penalty has been
assessed and no investigation or review is pending, or to
the Borrowers' knowledge, threatened by any governmental
entity or other Person with respect to any (A) alleged
violation by the Borrowers or any Subsidiary of any
Environmental Law, (B) alleged failure by the Borrowers or
any Subsidiary to have any Permits required in connection
with the conduct of its business or to comply with the terms
and conditions thereof, (C) any generation, treatment,
storage, recycling, transportation or disposal of any
Hazardous Materials or (D) release of Hazardous Materials,
except where such event or events would not have,
individually or in the aggregate, a Material Adverse Effect;
(iii) to the knowledge of the Borrowers, all oral or
written notifications of a release of Hazardous Materials
required to be filed under any applicable Environmental Law
have been filed or are in the process of being filed by or
on behalf of the Borrowers or any Subsidiary;
(iv) no property now owned by the Borrowers or any
Subsidiary and, to the knowledge of the Borrowers, no such
property previously owned or now or previously leased or any
property to which the Borrowers or any Subsidiary has,
directly or indirectly, transported or arranged for the
transportation of any Hazardous Materials, is listed or, to
the Borrowers' knowledge, proposed for listing, on the
National Priorities List promulgated pursuant to CERCLA, or
CERCLIS (as defined in CERCLA) or any similar state list or
is the subject of federal, state or local enforcement
actions or, to the knowledge of the Borrowers, other
investigations which may lead to claims against the
Borrowers or any Subsidiary for clean-up costs, remedial
work, damage to natural resources or personal injury claims,
including, but not limited to, claims under CERCLA, except
where such listings or investigations would not have,
individually or in the aggregate, a Material Adverse Effect;
(v) there are no Liens under or pursuant to any
applicable Environmental Laws on any real property or other
assets owned or leased by the Borrowers or any Subsidiary,
and no government actions have been taken or, to the
knowledge of the Borrowers, are in process which could
subject any of such properties or assets to such Liens.
47
(b) For purposes of this Section, the terms "Borrowers"
and "Subsidiary" shall include any business or business entity (including a
corporation) which is a predecessor, in whole or in part, of the Borrowers or
any Subsidiary.
Section 3.09. Properties. (a) Each of the Borrowers and
its Subsidiaries has good title to, or valid leasehold interests in, all its
real and personal property material to its business, except for minor defects in
title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties for their intended purposes.
(b) Each of the Borrowers and its Subsidiaries owns, or
is licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by such
Borrower and its Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.
(c) Schedule 3.09 sets forth the address of each real
property that is owned or leased by the Borrowers or any of their Subsidiaries
as of the Effective Date other than those properties leased for use as a retail
store.
(d) As of the Effective Date, neither the Borrowers nor
any of their Subsidiaries has received notice of, or has knowledge of, any
pending or contemplated condemnation proceeding affecting any property that is
the subject of a Mortgage that, if determined adversely to the Borrowers, would
materially impair the value of such property, or any sale or disposition thereof
in lieu of condemnation. Neither any property that is the subject of a Mortgage
nor any interest therein is subject to any right of first refusal, option or
other contractual right to purchase such property or interest therein.
Section 3.10. Compliance with Laws and Agreements. Each
of the Borrowers and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, and each has all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted, in
each case, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
Section 3.11. Investment and Holding Company Status.
None of the Borrowers or any of their Subsidiaries is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
Section 3.12. Full Disclosure. All information
furnished by the Borrowers to the Administrative Agent or any Lender for
purposes of or in connection with this Agreement or any of the Transactions is,
taken as whole and in light of the circumstances under which such information is
furnished, true and accurate in all material respects on the date as of which
such information is furnished, and true and accurate in all material respects on
the date as of which such information is stated or certified. It is understood
that the foregoing is limited to the extent that (i) projections have been made
in good faith by the management of the Borrowers and in the
48
view of the Borrowers' management are reasonable in light of all information
known to management as of the Effective Date, and (ii) no representation or
warranty is made as to whether the projected results will be realized.
Section 3.13. Security Interest. Each of the Security
Agreement and the Mortgages creates and grants to the Administrative Agent, for
its own benefit and for the benefit of the Lenders, a legal, valid and perfected
first priority (except as permitted pursuant to Section 6.02 hereof) Lien in the
Collateral identified therein. Such Collateral is not subject to any other Liens
whatsoever, except Liens permitted by Section 6.02 hereof.
Section 3.14. Solvency. (a) The fair salable value of
the business of the Borrowers and their consolidated Subsidiaries is not less
than the amount that will be required to be paid on or in respect of the
probable liability on the existing debts and other liabilities (including
contingent liabilities) of the Borrowers and their consolidated Subsidiaries, as
they become absolute and mature.
(b) The assets of the Borrowers and their Subsidiaries
do not constitute unreasonably small capital for the Borrowers and their
Subsidiaries to carry out their business as now conducted and as proposed to be
conducted including the capital needs of the Borrowers and their Subsidiaries,
taking into account the particular capital requirements of the business
conducted by the Borrowers and their Subsidiaries and projected capital
requirements and capital availability thereof.
(c) None of the Borrowers or any of their Subsidiaries
intends to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by the
Borrowers and any of their Subsidiaries, and of amounts to be payable on or in
respect of debt of the Borrowers and any of their Subsidiaries).
(d) None of the Borrowers or any of their Subsidiaries
believes that final judgments against them in actions for money damages
presently pending will be rendered at a time when, or in an amount such that,
they will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of such judgments
in any such actions and the earliest reasonable time at which such judgments
might be rendered). The cash flow of the Borrowers and their consolidated
Subsidiaries, after taking into account all other anticipated uses of the cash
of the Borrowers and their consolidated Subsidiaries (including the payments on
or in respect of debt referred to in paragraph (c) of this Section), will at all
times be sufficient to pay all such judgments promptly in accordance with their
terms.
Section 3.15. Employee Matters. There are no strikes,
slowdowns, work stoppages or controversies pending or, to the knowledge of the
Borrowers threatened between the Borrowers and their Subsidiaries and their
respective employees, other than employee grievances arising in the ordinary
course of business, none of which could have, either individually or in the
aggregate, a Material Adverse Effect.
49
Section 3.16. Subsidiaries. As of the Effective Date,
Schedule 3.16 sets forth the name of, and the ownership interest of PVH in, each
Subsidiary and identifies each Subsidiary that is a Guarantor and each
Subsidiary that is a Material Subsidiary.
Section 3.17. No Change in Credit Criteria or
Collection Policies. There has been no material change in credit criteria or
collection policies concerning Receivables of the Borrowers and their
Subsidiaries since June 2, 2002.
Section 3.18. Senior Indebtedness. The Obligations
constitute "Senior Debt" under and as defined in the Subordinated Debt
Documents.
ARTICLE IV
Conditions
Section 4.01. Effective Date. The obligations of the
Lenders to make Loans and of any Issuing Bank to issue Letters of Credit
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall
have received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence reasonably satisfactory
to the Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a
favorable written opinion (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of each of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
counsel for the Borrowers, substantially in the form of Exhibit B, and (ii)
local counsel in each jurisdiction where a property that is the subject of a
Mortgage is located, in the case of each such opinion required by this
paragraph, covering such other matters relating to the Borrowers, the
Guarantors, the Financing Documents or the Transactions as the Required Lenders
shall reasonably request. The Borrowers hereby request such counsel to deliver
such opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel may
reasonably request relating to the organization, existence and good standing of
the Borrowers and any Guarantors, the authorization of the Transactions and any
other legal matters relating to the Borrowers and any Guarantors, the Financing
Documents or the Transactions, all in form and substance reasonably satisfactory
to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the Chairman of the Board,
President, a Vice President or a Financial Officer of each Borrower, confirming
compliance with the conditions set forth in paragraphs (a) and (b) of Section
4.02.
50
(e) The Administrative Agent shall have received all
fees and other amounts due and payable, on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrowers hereunder under any
other Financing Document.
(f) The Administrative Agent (or its counsel) shall
have received the other Financing Documents, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.
(g) With respect to any Liens not permitted pursuant to
Section 6.02 hereof, the Administrative Agent shall have received termination
statements in form and substance satisfactory to it.
(h) Each document (including each Uniform Commercial
Code financing statement) required by law or requested by the Administrative
Agent to be filed, registered or recorded in order to create in favor of the
Administrative Agent for its own benefit and for the benefit of the Lenders a
first priority perfected Lien in the Collateral shall have been properly filed,
registered or recorded in each jurisdiction in which the filing, registration or
recordation thereof is so required or requested, or arrangements reasonably
satisfactory to the Administrative Agent for the filing, registering or
recording thereof shall have been made.
(i) The Administrative Agent shall have received the
results of a search of tax and other Liens, and judgments and of the Uniform
Commercial Code filings made with respect to the Borrowers and each other
grantor of Collateral in the jurisdictions in which the Borrowers and each such
grantor is located (as defined in the Uniform Commercial Code), doing business
and/or in which any Collateral is located, and in which Uniform Commercial Code
filings have been, or are to be, made against the Borrowers, and each such
grantor pursuant to paragraph (h) above.
(j) The Administrative Agent shall have received and
determined to be in form and substance satisfactory to it:
(i) the most recent (dated within forty-five (45)
days of the Effective Date) aging of accounts receivable of
the Borrowers;
(ii) an opening Borrowing Base and evidence that
the Borrowers have not less than $100,000,000 in unused
Commitments on the Effective Date after giving effect to the
transactions occurring on that date;
(iii) a copy of a field examination of the
Borrowers' and their Subsidiaries' books and records;
(iv) evidence of the compliance by the Borrowers
with Section 5.02(b) hereof;
(v) the financial statements described in Section
3.04 hereof;
51
(vi) evidence of the repayment in full of, or the
existence of arrangements reasonably satisfactory to the
Administrative Agent for the repayment in full of, existing
credit arrangements with respect to the Collateral and the
termination of all commitments to lend thereunder, and the
termination of all security interests securing such
Indebtedness;
(vii) the results of an inventory valuation appraisal
by Great American Group Appraisal and Valuation Services,
L.L.C., which has been received in form and substance
reasonably satisfactory to the Administrative Agent;
(viii) the results of an environmental audit with
respect to the Borrowers' and subsidiaries' properties and
operations conducted by National Assessment Corp., which has
been received in form and substance satisfactory to the
Administrative Agent and the scope, methodology and results
of which are satisfactory to the Administrative Agent in all
respects;
(ix) the results of an appraisal by CB ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Inc., of the real property and improvements owned in fee
with respect to which the Mortgages are to be taken, in
compliance with the requirements of FIRREA and applicable
regulations, which has been received in form and substance
satisfactory to the Administrative Agent, and the issuance
of a lender's title policy, in form and substance reasonably
satisfactory to the Administrative Agent;
(x) a Borrowing Request executed by the Borrowers;
(xi) an acknowledgment from the Debentures Trustee of
the intercreditor arrangements set forth in the Security
Agreement;
(xii) copies of all material licensing agreements
entered into by any of the Borrowers or their Subsidiaries
and appropriate consent agreements from the licensors; and
(xiii) the Facility Letter.
(k) The Administrative Agent shall have had the opportunity
to conduct a pre-closing audit.
(l) The Borrowers shall have executed and delivered to the
Administrative Agent a disbursement authorization letter with respect to the
disbursement of the proceeds of the Loans made on the Effective Date.
(m) The Administrative Agent shall have received such other
documents, including a tri-party lockbox agreement, and completed such other
reviews, including material leases (including the obtaining of landlord waivers)
and contracts, litigation and taxes, as the Administrative Agent or its counsel
shall reasonably deem necessary.
The Administrative Agent shall notify the Borrowers and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of
52
the Lenders to make Loans and of the Issuing Banks to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on October 17, 2002 (and, in the event such conditions are not
so satisfied or waived, the Commitments shall terminate at such time).
Section 4.02. Each Credit Event. The obligation of any
Lender to make a Loan on the occasion of any Borrowing, and of any Issuing Bank
to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction on such date of the following conditions:
(a) The representations and warranties of the Borrowers set
forth in this Agreement shall be true and correct in all material respects on
and as of the date of such Borrowing or the date of issuance, amendment, renewal
or extension of such Letter of Credit, as applicable; provided that any such
representations and warranties that by their express terms are made as of a
specific date shall have been true and correct as of such specific date.
(b) At the time of and immediately after giving effect to
such Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be continuing and
the Borrowers shall otherwise be in compliance with the provisions of Section
2.01 or 2.04(b), as applicable.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrowers on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or been terminated and all
LC Disbursements have been reimbursed, the Borrowers covenant and agree with the
Lenders that:
Section 5.01. Information. The Borrowers will furnish to
the Administrative Agent and each of the Lenders:
(a) within 95 days after the end of each fiscal year, (i) a
consolidated balance sheet and consolidated income statement showing the
financial position of PVH and its subsidiaries as of the close of such fiscal
year and the results of their operations during such year, and (ii) a
consolidated statement of shareholders' equity and a consolidated statement of
cash flow, as of the close of such fiscal year, comparing such financial
position and results of operations to such financial condition and results of
operations for the comparable period during the immediately preceding fiscal
year, all the foregoing financial statements to be audited by Ernst & Young LLP
or other independent public accountants of recognized national standing selected
by PVH in compliance with applicable Securities and Exchange Commission rules
and
53
regulations (which report shall not contain any going concern or similar
qualification or exception as to scope), as being fairly stated in relation to
such audited financial statements taken as a whole and together with
management's discussion and analysis presented to the management of PVH and its
subsidiaries (the Borrowers being permitted to satisfy the requirements of this
clause (a) by delivery of its annual report on Form 10-K (or any successor
form), and all supplements or amendments thereto, as filed with the Securities
and Exchange Commission);
(b) within 50 days after the end of each of the first three
fiscal quarters of each fiscal year of PVH, unaudited consolidated balance
sheets of the PVH and its subsidiaries as of the end of such fiscal quarter,
together with the related consolidated statements of income for such fiscal
quarter and for the portion of the PVH's fiscal year ended at the end of such
fiscal quarter and the related consolidated statements of cash flows for the
portion of the PVH's fiscal year ended at the end of such fiscal quarter, and in
comparative form the corresponding financial information as at the end of, and
for, the corresponding fiscal quarter of the PVH's prior fiscal year and the
portion of the PVH's prior fiscal year ended at the end of such corresponding
fiscal quarter, in each case certified by a Financial Officer as presenting
fairly in all material respects the financial position and results of operations
and cash flow of PVH and its subsidiaries in accordance with GAAP (except the
absence of footnote disclosure), in each case subject to normal year-end audit
adjustments (the Borrowers being permitted to satisfy the requirements of this
clause (b) by delivery of its quarterly report on Form 10-Q (or any successor
form), and all supplements or amendments thereto, as filed with the Securities
and Exchange Commission);
(c) upon the occurrence and during the continuance of an
Availability Event, within 20 days after the end of each calendar month (other
than any such month that corresponds to the end of a fiscal quarter or fiscal
year of PVH), an unaudited consolidated balance sheet of PVH and its
subsidiaries as at the end of such month, together with the related unaudited
consolidated statement of income for such month and the portion of PVH's fiscal
year ended at the end of such month and the related consolidated statements of
cash flows for the portion of PVH's fiscal year ended at the end of such month,
setting forth in comparative form the corresponding financial information as at
the end of, and for, the corresponding month of PVH's prior fiscal year and the
portion of PVH's prior fiscal year ended at the end of such corresponding month,
in each case certified by a Financial Officer as presenting fairly in all
material respects the financial position and results of operations and cash
flows of PVH and its subsidiaries as at the date of, and for the periods covered
by, such financial statements, in accordance with GAAP (except for the absence
of footnotes), in each case subject to normal year-end audit adjustments;
(d) (i) concurrently with any delivery under (a) or (b) a
certificate of the firm or Person referred to therein (x) which certificate
shall, in the case of the certificate of a Financial Officer, certify that to
the best of his or her knowledge no Default has occurred (including calculations
demonstrating compliance, as of the dates of the financial statements being
furnished, with the covenants set forth in Sections 6.03, 6.06 and 6.09 hereof)
and, if such a Default has occurred, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect thereto and
(y) which certificate, in the case of the certificate furnished by the
independent public accountants in connection with the annual financial
statements, may be limited to accounting matters and disclaim responsibility for
legal
54
interpretations, but shall in any event state that to the best of such
accountants' knowledge, as of the dates of the financial statements being
furnished no Default has occurred under any of the covenants set forth in
Sections 6.03, 6.06 and 6.09 hereof and, if such a Default has occurred,
specifying the nature and extent thereof; provided, however, that any
certificate delivered by the independent public accountants in accordance
herewith shall be accompanied by a supplemental certificate confirming the
accuracy of the accountants' certificate (and shall in any event include
calculations demonstrating compliance with the covenants set forth in 6.03, 6.06
and 6.09 hereof) and signed by a Financial Officer;
(e) promptly after the same become publicly available,
copies of such registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed by PVH or
any of its Subsidiaries with the Securities and Exchange Commission pursuant to
the requirements of the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, if any;
(f) concurrently with any delivery under (a) above, a
management letter prepared by the independent public accountants who reported on
the financial statements delivered under (a) above, with respect to the internal
audit and financial controls of PVH and its subsidiaries;
(g) (i) within 20 days of the end of each fiscal month, (x)
an aging schedule of Receivables and reconciliation and accounts payable listing
and (y) an executive summary with respect to the Borrowers' top five accounts
for which Receivables are more than 90 days past due, comparing the total of
such past due Receivables for the month then ended to the total of past due
Receivables for the previous month and the Borrowers' plan with respect to the
collection of such past due Receivables, executed by a Financial Officer, (ii)
within 30 days after the end of each fiscal quarter, a current customer list
which shall include addresses and (iii) within 20 days of the end of each fiscal
month, a report showing sales, collections and debit and credit adjustments to
Receivables and any inventory designation, in each case in form and detail
reasonably satisfactory to the Administrative Agent; provided, that upon the
occurrence and during the continuance of an Availability Event, inventory
designations shall be delivered within three Business Days after the end of each
week (but in no event later than Wednesday) and all other items required to be
delivered pursuant to clause (iii) shall be delivered no later than the close of
business on each Business Day as of the previous Business Day;
(h) concurrently with any delivery under (a) or (b) above, a
certificate signed by a Financial Officer calculating the Applicable Rate test
as of the date of the financial statements being furnished;
(i) within 60 days after the beginning of each fiscal year,
a summary of business plans and financial operation projections (including with
respect to Capital Expenditures) for the Borrowers and their Subsidiaries for
such fiscal year (including quarterly balance sheets, statements of income and
of cash flow) and annual projections through the Maturity Date prepared by
management and in form, substance and detail (including principal assumptions
provided separately in writing) satisfactory to the Administrative Agent;
55
(j) within 20 days after the end of each fiscal month, a
certificate substantially in the form of Schedule 5.01(j) hereto executed by a
Financial Officer of the Borrowers demonstrating compliance as at the end of
each month with the Availability requirements, which shall include a Borrowing
Base calculation; provided, that upon the occurrence and during the continuance
of an Availability Event, the certificate shall be delivered no later than the
close of business on each Business Day demonstrating compliance as at the end of
the previous Business Day with the Availability requirements;
(k) as soon as practicable, copies of all material financial
reports, forms, filings, loan documents and financial information submitted to
governmental agencies and material financial reports distributed to its equity
holders;
(l) promptly upon becoming aware thereof, notice to the
Administrative Agent of the occurrence of any Default then continuing; and
(m) such other information as the Administrative Agent or
any Lender may reasonably request, including any financial information required
to be delivered under (a) or (b) as of the Effective Date but no longer required
to be delivered as a result of a change under the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended.
Section 5.02. Maintenance of Property; Insurance. (a) The
Borrowers will keep, and will cause each Subsidiary to keep, all property useful
and necessary in its business as then conducted in good working order and
condition, ordinary wear and tear excepted.
(b) The Borrowers will maintain, to the extent commercially
available on commercially reasonably terms, (i) physical damage insurance on
substantially all its real and personal property in the United States (including
all Collateral) on an "All Risks" form subject to normal exclusions (including
the perils of flood and quake) on a replacement cost basis (or, in the case of
idle properties, actual cash value basis) for all such property in an amount not
less than $100,000,000 (subject to a deductible amount or retention not to
exceed $500,000) and consequential loss coverage for extra expense, (ii) public
liability insurance (including products liability coverage) in an amount not
less than $25,000,000, and (iii) such other insurance coverage in such amounts
and with respect to such risks relating to the Borrowers' Collateral as the
Required Lenders may reasonably request. All such insurance shall be provided by
insurers having an A.M. Best policyholders rating of not less than A-. Prior to
the Effective Date, the Borrowers will cause the Administrative Agent to be
named as an insured party and loss payee, on behalf of the Secured Parties, on
each insurance policy covering risks relating to any of the Collateral and books
and records relating to any proceeds of Collateral and as an additional insured
on all other insurance. Each such insurance policy in effect during the term of
this Agreement shall include effective waivers by the insurer of all claims for
insurance premiums against the Administrative Agent or any other Person entitled
to the benefits of the Security Agreement, provide that all insurance proceeds
in excess of deductible amounts or retentions which are payable in respect of
losses relating to Collateral and books and records shall be adjusted with and
payable to the Administrative Agent (except so long as no Default has occurred
and is continuing any loss which is less than $1,000,000 may be adjusted with
and payable to the Borrowers), and provide that no cancellation or termination
thereof shall be effective until at least 30 days after receipt by the
Administrative Agent of written notice thereof.
56
The Administrative Agent will consult with the Borrowers before agreeing to any
adjustment of insurance proceeds covered by the preceding sentence. Net Proceeds
of insurance shall be applied to prepay Loans in accordance with Section 2.09(d)
hereof. During the occurrence and continuance of a Default, the Net Proceeds of
insurance shall be maintained in a cash collateral account with the
Administrative Agent and may be, upon notice to the Borrowers, setoff and
applied to prepay outstanding principal and interest on the Loans. The Borrowers
will deliver to the Administrative Agent (i) on the date of the first Borrowing
hereunder and within 91 days after the end of each fiscal year of the Borrowers,
a certificate dated such date showing the total amount of insurance coverage as
of such date, (ii) from time to time true and complete copies of such insurance
policies of the Borrowers (or, if the Borrowers do not have such insurance
policies in their possession, evidence thereof) relating to such insurance
coverage as the Required Lenders through the Administrative Agent may request,
(iii) within 15 days of receipt of notice from any insurer, a copy of any notice
of cancellation or material adverse change in coverage from that existing on the
date of this Agreement and (iv) within 15 days of any cancellation or nonrenewal
of coverage by the Borrowers, notice of such cancellation or nonrenewal.
Section 5.03. Compliance with Laws. The Borrowers will
comply, and cause each Subsidiary to comply, with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including Environmental Laws and ERISA and the rules and regulations
thereunder) except where failure to comply would not have a Material Adverse
Effect, or where the necessity of compliance therewith is being contested in
good faith by appropriate proceedings.
Section 5.04. Inspection of Property, Books and Records. The
Borrowers will keep, and will cause each Subsidiary to keep, proper books of
record and account reflecting its business and activities; and will permit, and
will cause each Subsidiary to permit, upon reasonable prior notice,
representatives of any Lender at such Lender's expense to visit and inspect any
of their respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective officers, senior employees and independent
public accountants, all during normal business hours and as often as may
reasonably be desired; provided that the Borrowers may, at their option, have
one or more employees or representatives present at any such inspection,
examination or discussion. At the Borrowers' expense, the Administrative Agent
(x) shall have the right to audit, upon reasonable prior notice, up to three
times each fiscal year (or as often as it may request upon the occurrence and
continuance of a Default or upon the occurrence and during the continuance of an
Availability Event), the existence and condition of the Collateral and to review
compliance with the Financing Documents and (y) shall have the right to retain
an inventory appraiser to appraise the inventory Collateral once (or upon the
occurrence and during the continuance of an Availability Event, twice) each
fiscal year (or as often as it may request upon the occurrence and continuance
of a Default).
Section 5.05. Use of Proceeds. The proceeds of the Loans
made under this Agreement will be used by the Borrowers for working capital,
Permitted Acquisitions, Capital Expenditures and general corporate purposes, and
on the Effective Date to repay Indebtedness. None of such proceeds will be used,
directly or indirectly, for the purpose, whether immediate,
57
incidental or ultimate, of buying or carrying any "margin stock" within the
meaning of Regulation U.
Section 5.06. Environmental Matters. The Borrowers will
promptly give to the Lenders notice in writing of any complaint, order, citation
or notice of violation with respect to, or if a Borrower becomes aware of, (i)
the existence or alleged existence of a violation of any applicable
Environmental Law, (ii) any release into the environment, (iii) the commencement
of any cleanup pursuant to or in accordance with any applicable Environmental
Law of any Hazardous Materials, (iv) any proceeding pending against a Borrower
for the termination, suspension or non-renewal of any permit required under any
applicable Environmental Law, (v) any property of the Borrowers or any
Subsidiary that is or will be subject to a Lien imposed pursuant to any
Environmental Law and (vi) any proposed acquisitions or leasing of property,
which, in each of cases (i) through (vi) above, individually or in the
aggregate, would have a Material Adverse Effect.
Section 5.07. Taxes. The Borrowers will, and will cause each
of its Subsidiaries to, pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon the Borrowers and
their Subsidiaries or upon their respective income or profits or in respect of
their respective properties before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, would give rise to Liens upon such properties or
any part thereof; provided, however, that such payment and discharge shall not
be required with respect to (i) any such tax, assessment, charge, levy or claim
so long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the applicable party, shall have set aside on its
books reserves with respect thereto as required by GAAP, and such contest
operates to suspend collection of the contested tax, assessment, charge, levy or
claims and enforcement of a Lien or (ii) any tax, assessment, charge, levy or
claims, the failure to pay and discharge when due which, individually or in the
aggregate would not have a Material Adverse Effect.
Section 5.08. Security Interests. The Borrowers will at all
times take, or permit to be taken, all actions necessary for the Administrative
Agent to maintain the Security Interests as valid and perfected Liens, subject
only to Liens permitted under Section 6.02, and supply all information to the
Administrative Agent necessary for such maintenance.
Section 5.09. Existence; Conduct of Business. The Borrowers
will, and will cause each of their Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business;
provided that the foregoing shall not prohibit any merger, consolidation,
liquidation or dissolution permitted under Section 6.03.
Section 5.10. Litigation and Other Notices. The Borrowers
will give the Administrative Agent prompt written notice of the following:
(a) the issuance against a Borrower or a Guarantor by any
court or Governmental Authority of any injunction, order, decision or other
restraint prohibiting, or having the effect of prohibiting, the making of the
Loans, or invalidating, or having the effect of
58
invalidating, any provision of this Agreement or the other Financing Documents
that would materially adversely affect the Lenders' ability to enforce any
payment obligations hereunder, or the initiation of any litigation or similar
proceeding seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or
proceeding against the Borrowers or any of their Subsidiaries, whether at law or
in equity or by or before any arbitrator or Governmental Authority, (i) which is
material and is brought by or on behalf of any Governmental Authority, or in
which injunctive or other equitable relief is sought or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting Standards No.
5) that there will be an adverse determination in each case and which, if
adversely determined, would (A) reasonably be expected to result in liability of
any Borrower or a Subsidiary thereof in an aggregate amount of $5,000,000 or
more, not reimbursable by insurance, or (B) materially impairs the right of any
Borrower or a Subsidiary thereof to perform its material obligations under this
Agreement, any Note or any other Financing Document to which it is a party;
(c) any Default, specifying the nature and extent thereof
and the action (if any) which is proposed to be taken with respect thereto;
(d) notices given or received (with copies thereof) with
respect to the Subordinated Debt Documents or any other subordinated
indebtedness; and
(e) any development in the business or affairs of any
Borrower or any of its Subsidiaries which has had or which is likely to have, in
the reasonable judgment of such Borrower, a Material Adverse Effect.
Section 5.11. Additional Grantors and Guarantors. The
Borrowers will, and will cause their Subsidiaries to, promptly inform the
Administrative Agent of the creation or acquisition of any direct or indirect
Subsidiary (subject to the provisions of Section 6.04) and cause each direct or
indirect domestic Subsidiary not in existence on the date hereof to enter into a
Guarantee in substantially the form of the Guarantee executed on the Effective
Date, and to execute the Security Agreement, as applicable, as a grantor, and
cause the direct parent of each such Subsidiary to pledge all of the Equity
Interests of such Subsidiary pursuant to the Security Agreement and cause each
such Subsidiary to pledge its accounts receivable and all other assets pursuant
to the Security Agreement. In connection therewith, the Borrowers or any
applicable Subsidiary shall provide such resolutions, certificates and opinions
of counsel as shall be reasonably requested by the Administrative Agent.
Section 5.12. Maintain Operating Accounts. The Borrowers
will, and will cause each of their Subsidiaries to, maintain all of their
operating accounts and cash management arrangements (including the establishment
of lockboxes) with the Administrative Agent or other Lenders acceptable to the
Administrative Agent to the extent provided for in the Security Agreement and on
terms (which shall include obtaining tri-party lockbox agreements) reasonably
satisfactory to the Administrative Agent in its sole discretion.
59
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable hereunder have been
paid in full and all Letters of Credit have expired or been terminated and all
LC Disbursements have been reimbursed, the Borrowers covenant and agree with the
Lenders that:
Section 6.01. Indebtedness. The Borrowers will not, and will
not permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(a) Indebtedness created under the Financing Documents;
(b) Indebtedness existing on the date hereof and set forth
in Schedule 6.01 and extensions, renewals and replacements of any such
Indebtedness that do not increase the outstanding principal amount thereof or
interest thereon or fees related thereto and otherwise on substantially similar
terms to such existing Indebtedness;
(c) Indebtedness of the Borrowers incurred to finance the
acquisition, construction or improvement of any fixed or capital assets,
including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets
prior to the acquisition thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the outstanding principal amount
thereof or interest thereon or fees related thereto or result in an earlier
maturity date or decreased weighted average life thereof; provided that such
Indebtedness is incurred prior to or within 90 days after such acquisition or
the completion of such construction or improvement;
(d) Indebtedness among (i) the Borrowers, (ii) the Borrowers
and their wholly-owned Subsidiaries which are Guarantors arising as a result of
intercompany loans pledged under the Security Agreement, provided that the
aggregate principal amount of all Indebtedness owing to the Borrowers or any
such Guarantor shall not exceed $5,000,000 at any time outstanding and (iii)
among the Borrowers and their foreign Subsidiaries arising as a result of
intercompany loans pledged under the Security Agreement, provided that the
aggregate principal amount of all Indebtedness owing to the Borrowers shall not
exceed $10,000,000 at any time outstanding;
(e) Guarantees permitted by Section 6.04;
(f) Indebtedness subject to Liens permitted under Section
6.02(a) through (f);
(g) Indebtedness owing to any insurance company in
connection with the financing of any insurance premiums permitted by such
insurance company in the ordinary course of business; and
(h) other unsecured Indebtedness (and if by Guarantee,
without duplicate counting of the amount guaranteed and the underlying
Indebtedness) in an aggregate principal amount not exceeding $40,000,000 at any
time outstanding.
60
Section 6.02. Liens. The Borrowers will not, and will not
permit any Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrowers or
any Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or asset of
the Borrowers or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the date hereof and extensions, renewals and
replacements thereof that do not increase the outstanding principal amount
thereof or the interest rate thereon or fees related thereto (except pursuant to
the instrument creating such Lien) and are on substantially similar terms;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrowers or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrowers or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof or interest thereon or fees related
thereto or otherwise alter the terms of such Lien in any material respect;
(d) Liens on fixed or capital assets acquired, constructed
or improved by the Borrowers or any Subsidiary; provided that (i) such security
interests secure Indebtedness permitted by clause (c) of Section 6.01, (ii) such
security interests and the Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion of such construction or
improvement, (iii) the Indebtedness secured thereby does not exceed 90% of the
cost of acquiring, constructing or improving such fixed or capital assets and
(iv) such security interests shall not apply to any other property or assets of
the Borrowers or any Subsidiary;
(e) Liens created by the Financing Documents in favor of the
Administrative Agent and the Lenders and, so long as such Liens continue in
favor of the Administrative Agent, the Debenture Trustee on behalf of the
holders of the Debentures; and
(f) licenses, leases or subleases permitted hereunder
granted to others not interfering in any material respect in the business of the
Borrowers or any of their Subsidiaries.
Section 6.03. Fundamental Changes. (a) The Borrowers will
not, and will not permit any Subsidiary to, merge into or consolidate with any
other Person, or permit any other Person to merge into or consolidate with any
of them, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions) any of their assets, or the stock or other equity
units of any of their Subsidiaries (in each case, whether now owned or hereafter
acquired), or liquidate or dissolve other than Permitted Acquisitions, except
that (i) each of Ropa PVH
61
Mexicana Camisas y Disenos S.A. de C.V., C.A.T. Industrial S.A. de C.V.,
Confeciones Imperio S.A., Caribe M&I Ltd. and Camisas Modernas, S.A. may be
liquidated, so long as in connection with such liquidation no liabilities are
transferred to any Borrower or any other subsidiary of PVH, (ii) any domestic
subsidiary may merge with or into another domestic subsidiary, (iii) any
domestic subsidiary may merge with or into a Borrower in a transaction in which
such Borrower is the surviving Person, (iv) any Borrower (other than PVH), may
merge with or into any other Borrower, provided that PVH would be the surviving
Person in any merger involving PVH, and (v) a foreign subsidiary may merge with
or into another foreign subsidiary; provided that, in each case, after giving
effect to such merger, no Material Adverse Effect has occurred.
(b) Each Borrower will not, and will not permit any of its
Subsidiaries to, (i) engage to any material extent in any business other than
businesses of the type conducted by such Borrower and its Subsidiaries on the
date hereof and businesses reasonably related thereto or (ii) change its fiscal
year as disclosed on Schedule 6.03.
(c) Notwithstanding the foregoing, the Borrowers and their
Subsidiaries may make:
(i) purchases and sales of inventory in the ordinary
course;
(ii) (x) sales of assets (excluding capital stock of a
Subsidiary) not to exceed $10,000,000 in the aggregate in
any fiscal year and (y) sales of worn out, obsolete, scrap
or surplus assets not to exceed for (x) and (y) together
$15,000,000 in the aggregate in any fiscal year and
$35,000,000 during the Availability Period and (z) sales of
other assets, in the Administrative Agent's discretion, with
a value of not more than $5,000,000 in the aggregate during
the Availability Period;
(iii) Capital Expenditures;
(iv) liquidations of Permitted Investments;
(v) Investments and Guarantees permitted by Section
6.04; and
(vi) dispositions of assets resulting from a Casualty
Event.
Section 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions. Each Borrower will not, and will not permit any of its
Subsidiaries to, purchase, hold or acquire (including pursuant to any merger
with any Person) any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit (collectively, "Investments"), except:
(a) Permitted Investments and Investments that were
Permitted Investments when made;
62
(b) Investments outstanding on the Effective Date and, in
the case of any such Investment, identified in Schedule 6.04, and any renewals,
amendments and replacements thereof that do not increase the amount thereof;
provided, however, with respect to the investment by PVH in the stock of The
▇▇▇▇ Company as disclosed on Schedule 6.04, such investment on PVH's balance
sheet may increase or decrease in accordance with GAAP, and, so long as no
Default is existing, PVH may sell its interest in The ▇▇▇▇ Company in an initial
public offering of The ▇▇▇▇ Company or a private sale of its interest on terms
approved by its board of directors;
(c) Guarantees constituting Indebtedness permitted by
Section 6.01 up to the aggregate sum of $25,000,000;
(d) indemnities made and surety bonds issued in the ordinary
course of business;
(e) indemnities made in the Financing Documents;
(f) Investments by a Borrower, in wholly-owned Subsidiaries
in existence on the Effective Date, and any increases therein up to the
aggregate sum of $2,000,000;
(g) Guarantees made in the ordinary course of business;
provided that such Guarantees are not of Indebtedness for borrowed money except
to the extent permitted pursuant to Section 6.01 and otherwise could not in the
aggregate reasonably be expected to have a Material Adverse Effect;
(h) advances, loans or extensions of credit by the Borrowers
or any Subsidiary to officers, directors, employees and agents of the Borrowers
or any Subsidiary (i) in the ordinary course of business for travel,
entertainment or relocation expenses, (ii) other advances, loans or extensions
of credit by the Borrowers or any Subsidiary to officers, directors, employees
or agents of the Borrowers or any Subsidiary in compliance with all applicable
laws not to exceed $2,000,000 in the aggregate at any one time outstanding and
(iii) relating to indemnification or reimbursement of such officers, directors,
employees and agents in respect of liabilities relating to their service in such
capacities;
(i) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and supplier arising in the
ordinary course of business;
(j) accounts, chattel paper and notes receivable arising
from the sale or lease of goods or the performance of services in the ordinary
course of business;
(k) Capital Expenditures and Liens not prohibited by this
Agreement
(l) Permitted Acquisitions; and
(m) other Investments not permitted under the foregoing
clauses (a) through (l) in an aggregate amount at any time outstanding not to
exceed $5,000,000.
63
Section 6.05. Prepayment or Modification of Indebtedness;
Modification of Operating Documents. (a) The Borrowers will not, and will not
permit any of their Subsidiaries to, directly or indirectly prepay, redeem,
purchase or retire any Indebtedness, including the Debentures or the
Subordinated Debt, other than Indebtedness incurred hereunder, and PVH may
prepay, redeem, purchase or retire any of the Subordinated Debt prior to the
final maturity thereof; provided, however, that (i) no Default exists or would
result therefrom, (ii) Average Availability for the 30 day period prior to the
date of such prepayment, redemption, purchase or retirement, both before and
immediately after giving effect to such prepayment, redemption, purchase or
retirement, shall be equal to or greater than $70,000,000, (iii) on the date of
such prepayment, redemption, purchase or retirement, both before and immediately
after giving effect to such prepayment, redemption, purchase or retirement,
Covenant Availability shall be equal to or greater than $70,000,000, (iv) such
prepayment, redemption, purchase or retirement, together with any tax liability
or other expenses due, payable, accrued or estimated to be paid as a result of
such prepayment, redemption, purchase or retirement, shall not exceed 80% of the
face value of the Subordinated Debt being prepaid, redeemed, purchased or
retired and (v) prepayments, redemptions, purchases or retirements of
Subordinated Debt shall not exceed $25,000,000 in any fiscal year and
$100,000,000 in the aggregate during the Availability Period.
(b) The Borrowers will not, and will not permit any of their
Subsidiaries to, modify, amend or alter the Debentures, the Debentures Indenture
or any other document evidencing or governing the Debentures or providing for
any Guarantee or other right in respect thereof or any Subordinated Debt
Document in a manner which could have a Material Adverse Effect or would
otherwise be materially disadvantageous to the Lenders, and shall not modify,
amend or alter any subordination provisions contained in any such documents.
(c) The Borrowers will not, and will not permit any of their
Subsidiaries to, modify, amend or alter their operating agreements, certificates
or articles of incorporation or other constitutive documents in a manner which
could have a Material Adverse Effect or would otherwise be materially
disadvantageous to the Lenders.
Section 6.06. Restricted Payments. The Borrowers will not,
and will not permit any of their Subsidiaries to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, except, so long as
no Default shall be continuing or would occur after giving effect to the
following, (a) any Borrower may declare and pay dividends with respect to its
Equity Interests payable solely in additional Equity Interests, (b) Subsidiaries
may declare and pay dividends ratably with respect to their Equity Interests,
(c) PVH may make Restricted Payments, pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of PVH and its
subsidiaries, or issue options or warrants as otherwise approved by the Board of
Directors of PVH or a committee thereof and (d) PVH may acquire shares of its
common stock and declare and pay cash dividends with respect to its capital
stock; provided that Restricted Payments made pursuant to clause (d) shall not
exceed $20,000,000 in the aggregate in any consecutive twelve (12) month period
or $65,000,000 in the aggregate during the Availability Period; provided,
further, that PVH may not acquire shares of its common stock or pay cash
dividends pursuant to clause (d) in any fiscal quarter to the extent that (i)
the Restricted Payment would not be permitted in such fiscal quarter under the
Subordinated Debt Documents, (ii) Average Availability for the 30 day period
prior to the date of such Restricted Payment, both before and immediately after
giving effect to such Restricted Payment, shall be
64
less than $70,000,000, (iii) on the date of such Restricted Payment, both before
and immediately after giving effect to such Restricted Payment, Covenant
Availability shall be less than $70,000,000 or (iv) a Default exists or the
making of such Restricted Payment would result in a Default.
Section 6.07. Transactions with Affiliates. The Borrowers
will not, and will not permit any of their Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of their Affiliates, except (a) in the ordinary course of
business at prices and on terms and conditions not less favorable to a Borrower
or such Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties, (b) transactions between or among PVH and its
subsidiaries in the ordinary course of business, (c) any Restricted Payment
permitted by Section 6.06, (d) loans and advances to officers, directors,
employees and agents permitted under Section 6.04(h), (e) fees and compensation
paid to, and customary indemnity and reimbursement provided on behalf of,
officers, directors, employees and agents of the Borrowers or any of their
Subsidiaries and (f) employment agreements entered into by the Borrowers or any
of their Subsidiaries in the ordinary course of business.
Section 6.08. Restrictive Agreements. The Borrowers will
not, and will not permit any of their Subsidiaries to, directly or indirectly,
enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (a) the ability of the
Borrowers or any Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Subsidiary to pay
dividends or other distributions with respect to any shares of its capital stock
or to make or repay loans or advances to the Borrowers or any other Subsidiary
or to Guarantee Indebtedness of the Borrowers or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions imposed by
law or by this Agreement, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.08 (but shall
apply to any amendment or modification expanding the scope of, any such
restriction or condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the sale of a
Subsidiary or any asset pending such sale, provided such restrictions and
conditions apply only to the Subsidiary or asset that is to be sold and such
sale is permitted hereunder, (iv) clause (a) of the foregoing shall not apply to
restrictions or conditions imposed by any agreement relating to Liens permitted
by this Agreement if such restrictions or conditions apply only to the property
or assets subject to such permitted Lien and (v) clause (a) of the foregoing
shall not apply to customary provisions in leases, licenses and other contracts
restricting the assignment thereof.
Section 6.09. Fixed Charge Coverage. The Borrowers will not,
at any time after Covenant Availability is less than $35,000,000, permit the
Fixed Charge Coverage Ratio for any four consecutive fiscal quarter period to be
less than 1.00:1.00. In computing compliance with this Section 6.09, to the
extent applicable, there shall be excluded in the computation of Capital
Expenditures assets acquired as part of Permitted Acquisitions, even though the
acquisition of such assets may be treated as Capital Expenditures under GAAP.
65
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall
occur:
(a) the Borrowers shall fail to pay any principal of any
Loan or any reimbursement obligation in respect of any LC Disbursement when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
(b) the Borrowers shall fail to pay any interest on any
Loan, the Revolving Credit Commitment Fee or any other fee or any other amount
(other than an amount referred to in clause (a) of this Article) payable under
this Agreement or any other Financing Document, when and as the same shall
become due and payable;
(c) any representation or warranty made or deemed made by
the Borrowers or a Guarantor in the Financing Documents, or in any report,
certificate, financial statement or other document furnished pursuant to the
Financing Documents, shall prove to have been incorrect in any material respect
as of the date when made or deemed made;
(d) the Borrowers shall fail to observe or perform any
covenant, condition or agreement contained in Section 5.01, 5.02 (with respect
to insurance), 5.04 (with respect to audits), 5.05, 5.08, 5.09 (with respect to
a Borrower's existence), 5.10(c) or 5.12 or in Article VI;
(e) the Borrowers or any Guarantor shall fail to observe or
perform any covenant, condition or agreement contained in this Agreement (other
than those specified in clause (a), (b) or (d) of this Article) or any other
Financing Document, and such failure shall continue unremedied for a period of
30 days;
(f) default shall be made with respect to any Material
Indebtedness of the Borrowers or any Subsidiary or Guarantor (excluding
Indebtedness outstanding hereunder) if the effect of any such default shall be
to accelerate, or to permit (with or without the giving of notice, the lapse of
time or both) the holder or obligee of such Indebtedness (or any trustee on
behalf of such holder or obligee) at its option to accelerate the maturity of
such Indebtedness;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of any Borrower or any Subsidiary or Guarantor or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Borrower or any Subsidiary or Guarantor
or for a substantial part of its assets, and, in any such case, such proceeding
or petition shall continue undismissed for 90 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) any Borrower or any Subsidiary or Guarantor shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or
66
hereafter in effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in clause
(g) of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official for
any Borrower or any Subsidiary or Guarantor or for a substantial part of its
assets, (iv) file an answer admitting the material allegations of a petition
filed against it in any such proceeding, (v) make a general assignment for the
benefit of creditors or (vi) take any action for the purpose of effecting any of
the foregoing;
(i) any Borrower or any Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;
(j) one or more judgments for the payment of money in an
aggregate amount in excess of $2,500,000 (not covered by insurance where the
carrier has accepted responsibility) shall be rendered against any Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
a period of 45 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any material assets of any Borrower or any Subsidiary to enforce any
such judgment;
(k) an ERISA Event shall have occurred that, in the opinion
of the Required Lenders, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in a Material Adverse
Effect;
(l) a Change in Control shall occur;
(m) any of the Financing Documents shall for any reason
cease to be, or shall be asserted by any Person obligated thereunder not to be,
a legal, valid and binding obligation of such Person, including the improper
filing by such Person of an amendment or termination statement relating to a
filed financing statement describing the Collateral, or any Lien on any material
portion of the Collateral purported to be created by any of such Financing
Documents shall for any reason cease to be, or be asserted by any Person
granting any such Lien not to be a valid, first priority perfected Lien (except
to the extent otherwise permitted under any of the Financing Documents);
(n) any material damage to, or loss, theft or destruction
of, any material Collateral, whether or not insured, or any strike, lockout,
labor dispute, embargo, condemnation, act of God or public enemy, or other
casualty continuing for more than 30 consecutive days beyond the coverage of any
applicable business interruption insurance, if in the case of any of the
foregoing, any such event or circumstance could reasonably be expected to have a
Material Adverse Effect;
(o) the filing of any Lien for taxes exceeding individually
or in the aggregate $1,000,000; or
(p) the subordination provisions of the Subordinated Debt
shall for any reason be revoked or invalidated or the validity or enforceability
thereof be contested in any manner by any party to the Subordinated Debt
Documents or an Event of Default (as such term is defined
67
therein) or an event or condition which upon notice, lapse of time or both would
become an Event of Default occurs under any agreement or instrument evidencing
the Subordinated Debt;
then, and in every such event (other than an event with respect to any Borrowers
described in clause (g) or (h) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrowers, take any one
or more of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Borrowers, (iii) require that
the Borrowers deposit cash collateral to the extent of the L/C Exposure or (iv)
exercise any other rights or remedies available under the Financing Documents or
applicable law; and in case of any event with respect to any Borrowers described
in clause (g) or (h) of this Article, the Commitments shall automatically
terminate and the principal of the Loans then outstanding, together with accrued
interest thereon and all fees and other obligations of the Borrowers accrued
hereunder, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrowers.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and each of the Issuing Banks hereby
irrevocably appoints the Administrative Agent as its agent both as
administrative agent and collateral agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof and the other
Financing Documents, together with such actions and powers as are reasonably
incidental thereto.
The bank serving as the Administrative Agent hereunder and
under the other Financing Documents shall have the same rights and powers in its
capacity as a Lender as any other Lender and may exercise the same as though it
were not the Administrative Agent and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
any Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.
The Administrative Agent shall not have any duties or
obligations except those expressly set forth herein or in the other Financing
Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or thereby that the Administrative Agent is
required to exercise in writing by the Required Lenders
68
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 9.02), and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for any failure to disclose, any information relating to the
Borrowers or any of their Subsidiaries that is communicated to or obtained by
the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Required Lenders (or
such other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its own gross
negligence or willful misconduct. The Administrative Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Administrative Agent by the Borrowers or a Lender, and the
Administrative Agent shall not be responsible for or have any duty to ascertain
or inquire into (i) any statement, warranty or representation made in or in
connection with this Agreement, (ii) the contents of any certificate, report or
other document delivered hereunder or in connection herewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV or elsewhere
herein, other than to confirm receipt of items expressly required to be
delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and
shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrowers), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all of its duties
and exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
With respect to the release of Collateral, the Lenders hereby
irrevocably authorize the Administrative Agent, at its option and in its
discretion, to release any Lien granted to or held by the Administrative Agent
upon any property covered by this Agreement or the other Financing Documents (i)
upon termination or expiration of the Commitments, the payment and satisfaction
of all obligations arising with respect to the Loans, all fees and expenses, the
expiration or termination of all the Letters of Credit and the reimbursement of
all LC Disbursements; or (ii) constituting property being sold or disposed of in
compliance with the provisions of the Financing Documents (and the
Administrative Agent may rely in good faith
69
conclusively on any certificate stating that the property is being sold or
disposed of in compliance with the provisions of the Financing Documents,
without further inquiry); provided, however, that (x) the Administrative Agent
shall not be required to execute any release on terms which, in the
Administrative Agent's opinion, would expose the Administrative Agent to
liability or create any obligation or entail any consequence other than the
release of such Liens without recourse or warranty, and (y) such release shall
not in any manner discharge, affect or impair any Liens upon all interests
retained, all of which shall continue to constitute part of the property covered
by the Financing Documents.
With respect to perfecting security interests in Collateral
which, in accordance with Article 9 of the Uniform Commercial Code or any
comparable provision of any Lien perfection statute in any applicable
jurisdiction, can be perfected only by possession, each Lender hereby appoints
each other Lender its agent for the purpose of perfecting such interest. Should
any Lender (other than the Administrative Agent) obtain possession of any such
Collateral, such Lender shall notify the Administrative Agent, and, promptly
upon the Administrative Agent's request, shall deliver such Collateral to the
Administrative Agent or in accordance with the Administrative Agent's
instructions. Each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any other Financing Document or to
realize upon any Collateral for the Loans, it being understood and agreed that
such rights and remedies may be exercised only by or with the approval of the
Administrative Agent.
In the event that a petition seeking relief under Title 11 of
the United States Code or any other Federal, state or foreign bankruptcy,
insolvency, liquidation or similar law is filed by or against any Borrower or
any other Person obligated under the Financing Document, the Administrative
Agent is authorized, to the fullest extent permitted by applicable law, to file
a proof of claim on behalf of itself and the Lenders in such proceeding for the
total amount of obligations owed by such Person. With respect to any such proof
of claim which the Administrative Agent may file, each Lender acknowledges that
without reliance on such proof of claim, such Lender shall make its own
evaluation as to whether an individual proof of claim must be filed in respect
of such obligations owed to such Lender and, if so, take the steps necessary to
prepare and timely file such individual claim.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent may
resign at any time by notifying the Lenders, the Issuing Banks and the
Borrowers. Upon any such resignation, the Required Lenders shall have the right,
with the approval of the Borrowers (not to be unreasonably withheld, except that
no such approval shall be required upon the occurrence and continuance of a
Default), to appoint a successor. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders and the Issuing
Banks, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank with such an
office. Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the
70
Borrowers to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrowers and such
successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder. Each
Lender acknowledges the potential conflict of interest of each other Lender as a
result of Lenders holding disproportionate interests in the Loans, and expressly
consents to and waives any claim based upon such conflict of interest.
The parties hereto agree that the titles Co-Syndication Agent
and Co-Documentation Agent are honorary and confer no duties upon such agents
except as a Lender hereunder, provided that each Co-Syndication Agent and
Co-Documentation Agent shall be entitled to the rights and benefits specifically
provided for herein.
ARTICLE IX
Miscellaneous
Section 9.01. Notices. (a) Except in the case of notices and
other communications expressly permitted to be given by telephone (and subject
to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(i) if to the Borrowers, to them at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(Telecopy No. 212-381-3970) with copies for informational
purposes only to ▇▇▇▇ ▇▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇-Van Heusen
Corporation, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
(Telecopy No. 212-381-3970) and ▇▇▇▇▇▇▇ ▇. Elegant, Esq.,
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (Telecopy No.
312-577-4676);
(ii) if to the Administrative Agent, to JPMorgan Chase
Bank, 1166 Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, Attention of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Account Officer (Telecopy
No. 212-899-2929) with copies for information purposes only
to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq., ▇▇▇▇ ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Telecopy No.
212-836-6475); and
71
(iii) if to any other Lender, to it at its address (or
telecopy number) set forth in its Administrative
Questionnaire.
(b) Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communications pursuant to
procedures approved by the Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrowers may, in their discretion, agree to accept notices and other
communications to them hereunder by electronic communications pursuant to
procedures approved by them; provided that approval of such procedures may be
limited to particular notices or communications.
(c) Any party hereto may change its address or telecopy
number for notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
Section 9.02. Waivers; Amendments. (a) No failure or delay
by the Administrative Agent, any Issuing Bank or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Banks and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by the Borrowers therefrom shall in any event be
effective unless given in accordance with paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or issuance of a Letter of Credit shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any Lender or any Issuing Bank may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders or by the
Borrowers and the Administrative Agent with the consent of the Required Lenders;
provided that no such agreement shall (i) increase the Commitment of any Lender
without the written consent of such Lender, (ii) reduce the principal amount of
any Loan, Note or LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, without the written consent of each Lender
directly affected thereby, (iii) postpone the Maturity Date or the scheduled
date of payment of the principal amount of any Loan (other than pursuant to
Section 2.09(c) hereof) or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby, (iv) change Section 2.16(b) or
(c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender, (v) increase any percentage
or amount contained in the definition of Borrowing Base, reduce the Availability
Block, release all or a material portion of the Collateral or make
72
overadvances without the written consent of each Lender, (vi) release any
Guarantee (other than in accordance with its terms) without the written consent
of each Lender or (vii) change any of the provisions of this Section or the
definition of "Required Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent or the Issuing Banks hereunder without the prior written consent of the
Administrative Agent or each of the Issuing Banks, as the case may be.
Section 9.03. Expenses; Indemnity; Damage Waiver. (a) The
Borrowers shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation of
this Agreement or any amendments, modifications or waivers requested by the
Borrowers of the provisions hereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by any Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for
payment thereunder and (iii) during the continuance of a Default, all
out-of-pocket expenses incurred by the Administrative Agent, any Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, any Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement,
including its rights under this Section, or in connection with the Loans made or
Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or negotiations in respect of such
Loans or Letters of Credit.
(b) The Borrowers shall indemnify the Administrative Agent,
each Issuing Bank and each Lender, and each Related Party of any of the
foregoing Persons (each such Person being called an "Indemnitee") against, and
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by an Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrowers or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrowers or any of their Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claim, damages,
liabilities or related expenses are attributable to an action brought by one
Indemnitee against another
73
Indemnitee or determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee.
(c) To the extent that the Borrowers fail to pay any amount
required to be paid by it to the Administrative Agent or any Issuing Bank under
paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the
Administrative Agent or the applicable Issuing Bank, as the case may be, such
Lender's pro rata share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought and based upon the Revolving
Credit Exposure) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against the Administrative Agent or any
Issuing Bank in its capacity as such.
(d) To the extent permitted by applicable law, the Borrowers
shall not assert, and hereby waive, any claim against any Indemnitee, on any
theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or
as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the
proceeds thereof.
(e) All amounts due under this Section shall be payable
promptly after written demand therefor.
Section 9.04. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby (including
any Affiliate of any Issuing Bank that issues any Letter of Credit), except that
(i) other than in accordance with Section 6.03, the Borrowers may not assign or
otherwise transfer any of their rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by the Borrowers without such consent shall be null and void) and (ii) no Lender
may assign or otherwise transfer its rights or obligations hereunder except in
accordance with this Section. Nothing in this Agreement, expressed or implied,
shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby (including an Affiliate
of any Issuing Bank that issues any Letter of Credit) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Banks and the Lenders) any legal or equitable right, remedy
or claim under or by reason of this Agreement.
(b) (i) Subject to the conditions set forth in paragraph
(b)(ii) below, any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it) with the prior written
consent (such consent not to be unreasonably withheld) of:
(A) the Borrowers, provided that no consent of the
Borrowers shall be required for an assignment to a Lender,
an Affiliate of a Lender, or, if a Default under Article VII
has occurred and is continuing, any other assignee; and
74
(B) the Administrative Agent, provided that no consent
of the Administrative Agent shall be required for an
assignment to an assignee that is a Lender immediately prior
to giving effect to such assignment.
(ii) Assignments shall be subject to the following
additional conditions:
(A) except in the case of an assignment to a Lender or
an Affiliate of a Lender or an assignment of the entire
remaining amount of the assigning Lender's Commitment or
Loans, the amount of the Commitment or Loans of the
assigning Lender subject to each such assignment (determined
as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent)
shall not be less than $5,000,000 unless each of the
Borrowers and the Administrative Agent otherwise consent,
provided that no such consent of the Borrowers shall be
required if a Default under Article VII has occurred and is
continuing;
(B) each partial assignment shall be made as an
assignment of a proportionate part of all the assigning
Lender's rights and obligations under this Agreement;
(C) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and
Assumption, together with a processing and recordation fee
of $5,000; and
(D) the assignee, if it shall not be a Lender, shall
deliver to the Administrative Agent an Administrative
Questionnaire.
(iii) Subject to acceptance and recording thereof pursuant
to paragraph (b)(iv) of this Section, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.04 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
paragraph (c) of this Section.
(iv) The Administrative Agent, acting for this purpose as an
agent of the Borrowers, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the "Register"). The entries in the Register
shall be conclusive, and the Borrowers, the Administrative Agent, the Issuing
Banks and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the
75
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers, any Issuing Bank and any Lender, at any reasonable
time and from time to time upon reasonable prior notice.
(v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section, any Note or Notes subject to such assignment and any
written consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Assumption and record
the information contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph. Upon notice to the Borrowers, at the
Borrowers' expense, the Borrowers shall execute and deliver to the
Administrative Agent in exchange for such surrendered Notes, new Notes to the
order of the assignee in an amount equal to the portion of the Commitments
assumed by it pursuant to such Assignment and Assumption and, if the assigning
Lender has retained any Commitment hereunder, new Notes to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder.
(c) (i) Any Lender may, without the consent of the
Borrowers, the Administrative Agent or any Issuing Bank, sell participations to
one or more banks or other entities (a "Participant") in all or a portion of
such Lender's rights and obligations under this Agreement (including all or a
portion of its Commitments and the Loans owing to it); provided that (A) such
Lender's obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrowers, the Administrative Agent,
the Issuing Banks and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrowers agree, to the
fullest extent permitted under applicable law, that each Participant shall be
entitled to the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though it were a
Lender, provided such Participant agrees to be subject to Section 2.16(c) as
though it were a Lender.
(ii) A Participant shall not be entitled to receive any
greater payment under Section 2.13 or 2.15 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant, unless the sale of the participation to such Participant is made
with the Borrowers' prior written consent. A Participant that would be a Foreign
Lender if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrowers are notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with
Section 2.15(e) as though it were a Lender.
76
(d) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement and the Notes
issued to such Lender to secure obligations of such Lender, including any pledge
or assignment to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
Section 9.05. Survival. All covenants, agreements,
representations and warranties made by the Borrowers herein and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement shall be considered to have been relied upon by the other parties
hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and the issuance of any Letters of Credit regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any Issuing Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 9.03 and
Article VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.
Section 9.06. Counterparts; Integration; Effectiveness. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Financing Documents and any separate letter agreements with respect to
fees payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject matter hereof and supersede any and all
previous agreements and understandings, oral or written, relating to the subject
matter hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
Section 9.07. Severability. Any provision of this Agreement
held to be invalid, illegal or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such invalidity, illegality
or unenforceability without affecting the validity, legality and enforceability
of the remaining provisions hereof, and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 9.08. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time
77
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other obligations at any time owing by such Lender or Affiliate to
or for the credit or the account of the Borrowers or their Subsidiaries against
any of and all the obligations of the Borrowers or their Subsidiaries now or
hereafter existing under this Agreement held by such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies (including other rights of
setoff) which such Lender may have.
Section 9.09. GOVERNING LAW; Jurisdiction; Consent to
Service of Process. (a) THIS AGREEMENT, IN ACCORDANCE WITH SECTION 5-1401 OF THE
GENERAL OBLIGATION LAW OF THE STATE OF NEW YORK, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ANY CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD CALL FOR THE APPLICATION
OF THE LAWS OF ANY OTHER JURISDICTION.
(b) Each of the Borrowers hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court for the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement, or for recognition or enforcement
of any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent, any Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement against the Borrowers or
their properties in the courts of any jurisdiction.
(c) Each of the Borrowers hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
(d) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 9.01. Nothing
in this Agreement will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT,
78
TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
Section 9.12. Confidentiality. Each of the Administrative
Agent, the Issuing Banks and the Lenders agrees to maintain the confidentiality
of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates' directors, officers, employees and agents,
including accountants, rating agencies, portfolio management servicers, legal
counsel and other advisors (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of any
remedies hereunder or any suit, action or proceeding relating to this Agreement
or the enforcement of rights hereunder, (f) subject to an agreement containing
provisions substantially the same as those of this Section, to any assignee of
or Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the
Borrowers or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Borrowers. For the purposes of this Section,
"Information" means all information received from the Borrowers relating to the
Borrowers or their businesses, other than any such information that is available
to the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis prior to disclosure by the Borrowers; provided that, in the case of
information received from the Borrowers after the date hereof, such information
is clearly identified at the time of delivery as confidential. Should a party be
required to disclose Information pursuant to a subpoena, similar legal process
or applicable law or regulations, such party shall, to the extent permitted by
applicable law, notify the Borrowers. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
Section 9.13. Interest Rate Limitation. Notwithstanding
anything herein to the contrary, if at any time the interest rate applicable to
any Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for,
charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder,
79
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
80
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
▇▇▇▇▇▇▇▇-VAN HEUSEN CORPORATION, Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
THE IZOD CORPORATION, Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
PVH WHOLESALE CORP., Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
PVH RETAIL CORP., Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇.▇▇▇. INC., Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
81
▇.▇. ▇▇▇▇ FRANCHISES INC., Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
CD GROUP INC., Borrower
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
JPMORGAN CHASE BANK, individually and as
Administrative and Collateral Agent, and as Arranger
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
FLEET RETAIL FINANCE INC., individually and
as Co-Arranger and Co-Syndication Agent,
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Director, Fleet Retail Finance
SUN TRUST BANK, individually and as Co-
Syndication Agent,
By: /s/ ▇▇▇▇▇ ▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Director, Senior Relationship Manager
82
THE CIT GROUP/COMMERCIAL SERVICES,
INC., individually and as
Co-Documentation Agent,
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
BANK OF AMERICA, N.A., individually and as Co-
Documentation Agent,
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
THE BANK OF NEW YORK
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
WHITEHALL BUSINESS CREDIT CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
83
TRANSAMERICA BUSINESS CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President
STANDARD FEDERAL BANK NATIONAL ASSOCIATION
By: LASALLE BUSINESS CREDIT, INC., as
Agent (formerly known as Michigan National
Bank, as successor-in-interest to Mellon Bank,
Inc.)
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
CONGRESS FINANCIAL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
GE CAPITAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Duly Authorized Signatory
84
BANK LEUMI USA
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: First Vice President
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
85