Exhibit 10(a)
CREDIT AGREEMENT
among
INTERCO INCORPORATED,
BROYHILL FURNITURE INDUSTRIES, INC.,
THE LANE COMPANY, INCORPORATED,
VARIOUS BANKS,
and
BANKERS TRUST COMPANY,
as AGENT
__________________________________
Dated as of November 17 , 1994
__________________________________
TABLE OF CONTENTS
Page
SECTION 1. Amount and Terms of Credit . . . . . . . . 1
1.01 The Commitments . . . . . . . . . . . . . 1
1.02 Minimum Amount of Each Borrowing . . . . . 4
1.03 Notice of Borrowing . . . . . . . . . . . 5
1.04 Disbursement of Funds . . . . . . . . . . 6
1.05 Notes . . . . . . . . . . . . . . . . . . 7
1.06 Conversions . . . . . . . . . . . . . . . 8
1.07 Pro Rata Borrowings . . . . . . . . . . . 9
1.08 Interest . . . . . . . . . . . . . . . . . 9
1.09 Interest Periods . . . . . . . . . . . . . 10
1.10 Increased Costs, Illegality, etc. . . . . 12
1.11 Compensation . . . . . . . . . . . . . . . 15
1.12 Change of Lending Office . . . . . . . . . 15
1.13 Replacement of Banks . . . . . . . . . . . 15
SECTION 2. Letters of Credit . . . . . . . . . . . . 17
2.01 Letters of Credit . . . . . . . . . . . . 17
2.02 Minimum Stated Amount . . . . . . . . . . 19
2.03 Letter of Credit Requests . . . . . . . . 20
2.04 Letter of Credit Participations . . . . . 21
2.05 Agreement to Repay Letter of Credit
Drawings and Acceptance Payments . . . . 23
2.06 Increased Costs . . . . . . . . . . . . . 24
SECTION 3. Commitment Commission; Fees;
Reductions of Commitment . . . . . . . . 25
3.01 Fees . . . . . . . . . . . . . . . . . . . 25
3.02 Voluntary Termination of Unutilized
Commitments . . . . . . . . . . . . . . 27
3.03 Mandatory Reduction of Commitments . . . . 28
SECTION 4. Prepayments; Payments; Taxes . . . . . . . 29
4.01 Voluntary Prepayments . . . . . . . . . . 29
4.02 Mandatory Repayments, Cash
Collateralizations and Commitment
Reductions . . . . . . . . . . . . . . . . 30
4.03 Method and Place of Payment . . . . . . . 38
4.04 Net Payments . . . . . . . . . . . . . . . 38
(i)
Page
SECTION 5. Conditions Precedent to Initial
Credit Events . . . . . . . . . . . . . 41
5.01 Execution of Agreement; Notes . . . . . . 41
5.02 Fees, etc. . . . . . . . . . . . . . . . . 41
5.03 Opinions of Counsel . . . . . . . . . . . 41
5.04 Corporate Documents; Proceedings; etc. . . 42
5.05 Shareholders' Agreements; Collective
Bargaining Agreements; Permitted Debt
Agreements; Tax Sharing Agreements;
Services Agreements . . . . . . . . . . 42
5.06 Solvency Letter; Environmental Analyses;
Insurance Matters . . . . . . . . . . . 43
5.07 Consummation of the Florsheim
Recapitalization . . . . . . . . . . . . 44
5.08 Consummation of the Converse
Recapitalization . . . . . . . . . . . . . 44
5.09 Receivables Facility . . . . . . . . . . . 44
5.10 Refinancing . . . . . . . . . . . . . . . 45
5.11 Consummation of the Transaction . . . . . 46
5.12 Subsidiary Guaranty . . . . . . . . . . . 46
5.13 Pledge Agreement . . . . . . . . . . . . . 46
5.14 Security Agreement . . . . . . . . . . . . 47
5.15 Mortgages; Title Insurance; Surveys;
etc. . . . . . . . . . . . . . . . . . . 48
5.16 Consent Letter . . . . . . . . . . . . . . 49
5.17 Adverse Change; Governmental Approvals;
etc. . . . . . . . . . . . . . . . . . . 49
5.18 Litigation . . . . . . . . . . . . . . . . 50
5.19 Pro Forma Balance Sheet; Financial
Statements; Projections . . . . . . . . 50
5.20 Cash Management System . . . . . . . . . . 51
5.21 Closing Officer's Certificate Regarding
Estimated Converse Tax Liability and
INTERCO Tax Basis . . . . . . . . . . . 51
SECTION 6. Conditions Precedent to All Credit
Events . . . . . . . . . . . . . . . . . 52
6.01 No Default; Representations and
Warranties . . . . . . . . . . . . . . . 52
6.02 Notice of Borrowing; Letter of Credit
Request . . . . . . . . . . . . . . . . 52
(ii)
Page
SECTION 7. Representations, Warranties and
Agreements . . . . . . . . . . . . . . . 53
7.01 Corporate Status . . . . . . . . . . . . . 53
7.02 Corporate Power and Authority . . . . . . 53
7.03 No Violation . . . . . . . . . . . . . . . 54
7.04 Governmental Approvals . . . . . . . . . . 54
7.05 Financial Statements; Financial
Condition; Undisclosed Liabilities;
Projections; etc. . . . . . . . . . . . 55
7.06 Litigation . . . . . . . . . . . . . . . . 57
7.07 True and Complete Disclosure . . . . . . . 57
7.08 Use of Proceeds; Margin Regulations . . . 57
7.09 Tax Returns and Payments . . . . . . . . . 58
7.10 Compliance with ERISA . . . . . . . . . . 59
7.11 The Security Documents . . . . . . . . . . 60
7.12 Representations and Warranties in Other
Documents . . . . . . . . . . . . . . . 62
7.13 Properties . . . . . . . . . . . . . . . . 62
7.14 Capitalization . . . . . . . . . . . . . . 62
7.15 Subsidiaries . . . . . . . . . . . . . . . 63
7.16 Compliance with Statutes, etc. . . . . . . 63
7.17 Investment Company Act . . . . . . . . . . 64
7.18 Public Utility Holding Company Act . . . . 64
7.19 Environmental Matters . . . . . . . . . . 64
7.20 Labor Relations . . . . . . . . . . . . . 65
7.21 Patents, Licenses, Franchises and
Formulas . . . . . . . . . . . . . . . . 65
7.22 Indebtedness . . . . . . . . . . . . . . . 66
7.23 Transaction . . . . . . . . . . . . . . . 66
7.24 Special Purpose Corporation . . . . . . . 66
SECTION 8. Affirmative Covenants . . . . . . . . . . 67
8.01 Information Covenants . . . . . . . . . . 67
8.02 Books, Records and Inspections . . . . . . 71
8.03 Maintenance of Property; Insurance . . . . 72
8.04 Corporate Franchises . . . . . . . . . . . 73
8.05 Compliance with Statutes, etc. . . . . . . 74
8.06 Compliance with Environmental Laws . . . . 74
8.07 ERISA . . . . . . . . . . . . . . . . . . 75
8.08 End of Fiscal Years; Fiscal Quarters . . . 76
8.09 Performance of Obligations . . . . . . . . 76
8.10 Payment of Taxes; Post-Closing Tax
Certificate . . . . . . . . . . . . . . 77
8.11 Additional Security; Further Assurances;
Required Appraisals . . . . . . . . . . 77
8.12 Interest Rate Protection . . . . . . . . . 80
(iii)
Page
8.13 Ownership of Subsidiaries . . . . . . . . 80
8.14 Permitted Acquisitions . . . . . . . . . . 80
8.15 Maintenance of Corporate Separateness . . 81
8.16 Cash Management System . . . . . . . . . . 82
SECTION 9. Negative Covenants . . . . . . . . . . . . 82
9.01 Liens . . . . . . . . . . . . . . . . . . 82
9.02 Consolidation, Merger, Purchase or Sale
of Assets, etc. . . . . . . . . . . . . 85
9.03 Dividends . . . . . . . . . . . . . . . . 88
9.04 Indebtedness . . . . . . . . . . . . . . . 88
9.05 Investments; etc. . . . . . . . . . . . . 90
9.07 Capital Expenditures . . . . . . . . . . . 94
9.08 Consolidated Net Interest Coverage Ratio . 95
9.09 Adjusted Consolidated EBITDA . . . . . . . 95
9.10 Maximum Leverage Ratio . . . . . . . . . . 96
9.11 Limitation on Modifications of and
Payments on Indebtedness and Qualified
Preferred Stock; Modifications of
Certificate of Incorporation, By-Laws
and Certain Other Agreements; Surviving
Guaranty Payments, etc. . . . . . . . . 96
9.12 Limitation on Creation or Acquisition of
Subsidiaries and Restricted
Subsidiaries . . . . . . . . . . . . . . 98
9.13 Limitation on Issuance of Capital Stock . 99
9.14 Business . . . . . . . . . . . . . . . . . 100
9.15 Limitation on Certain Restrictions on
Subsidiaries . . . . . . . . . . . . . . . 100
9.16 Limitation on Receivables and
Receivables Facility . . . . . . . . . . 101
SECTION 10. Events of Default . . . . . . . . . . . . 101
10.01 Payments . . . . . . . . . . . . . . . . . 101
10.02 Representations, etc. . . . . . . . . . . 102
10.03 Covenants . . . . . . . . . . . . . . . . 102
10.04 Default Under Other Agreements . . . . . . 102
10.05 Bankruptcy, etc. . . . . . . . . . . . . . 102
10.06 ERISA . . . . . . . . . . . . . . . . . . 103
10.07 Security Documents . . . . . . . . . . . . 104
10.08 Subsidiary Guaranty . . . . . . . . . . . 104
10.09 Judgments . . . . . . . . . . . . . . . . 104
10.10 Change of Control . . . . . . . . . . . . 105
10.11 Tax Sharing Agreement; Services
Agreement . . . . . . . . . . . . . . . 105
10.12 Residual Converse Tax Liability . . . . . 105
(iv)
Page
10.13 Receivables Repurchases. . . . . . . . . . 105
SECTION 11. Definitions and Accounting Terms . . . . . 106
11.01 Defined Terms . . . . . . . . . . . . . . 106
SECTION 12. The Agent . . . . . . . . . . . . . . . . 151
12.01 Appointment . . . . . . . . . . . . . . . 151
12.02 Nature of Duties . . . . . . . . . . . . . 152
12.03 Lack of Reliance on the Agent . . . . . . 152
12.04 Certain Rights of the Agent . . . . . . . 153
12.05 Reliance . . . . . . . . . . . . . . . . . 153
12.06 Indemnification . . . . . . . . . . . . . 153
12.07 The Agent in its Individual Capacity . . . 154
12.08 Holders . . . . . . . . . . . . . . . . . 154
12.09 Resignation by the Agent . . . . . . . . . 154
SECTION 13. Miscellaneous . . . . . . . . . . . . . . 155
13.01 Payment of Expenses, etc. . . . . . . . . 155
13.02 Right of Setoff . . . . . . . . . . . . . 156
13.03 Notices . . . . . . . . . . . . . . . . . 157
13.04 Benefit of Agreement . . . . . . . . . . . 157
13.05 No Waiver; Remedies Cumulative . . . . . . 159
13.06 Payments Pro Rata . . . . . . . . . . . . 160
13.07 Calculations; Computations . . . . . . . . 161
13.08 GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE; WAIVER OF
JURY TRIAL . . . . . . . . . . . . . . . 162
13.09 Counterparts . . . . . . . . . . . . . . . 163
13.10 Effectiveness . . . . . . . . . . . . . . 163
13.11 Headings Descriptive . . . . . . . . . . . 163
13.12 Amendment or Waiver; etc. . . . . . . . . 163
13.13 Survival . . . . . . . . . . . . . . . . . 165
13.14 Domicile of Loans . . . . . . . . . . . . 165
13.15 Limitation on Additional Amounts, etc. . . 166
13.16 Confidentiality . . . . . . . . . . . . . 166
13.17 Register . . . . . . . . . . . . . . . . . 167
SCHEDULE I Commitments
SCHEDULE II Bank Addresses
SCHEDULE III Mortgaged Properties
SCHEDULE IV Undisclosed Liabilities
SCHEDULE V Tax Matters
SCHEDULE VI Subsidiaries
SCHEDULE VII Existing Indebtedness
SCHEDULE VIII Insurance
SCHEDULE IX Existing Liens
(v)
SCHEDULE X Existing Investments
SCHEDULE XI Existing Transactions
SCHEDULE XII Existing Letters of Credit
SCHEDULE XIII Certain Restrictions on Subsidiaries
SCHEDULE XIV Excluded Assets
SCHEDULE XV Leases Guarantied Under Surviving Guaranties
EXHIBIT A Notice of Borrowing
EXHIBIT B-1 Term Note
EXHIBIT B-2 Revolving Note
EXHIBIT B-3 Swingline Note
EXHIBIT C-1 Letter of Credit Service Agreement
EXHIBIT C-2 Trade Letter of Credit Request
EXHIBIT C-3 Standby Letter of Credit Request
EXHIBIT D Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Opinion of General Counsel of Credit Parties
EXHIBIT E-2 Opinion of Bryan Cave, Special
Counsel to Credit Parties
EXHIBIT F Officers' Certificate
EXHIBIT G Subsidiary Guaranty
EXHIBIT H Pledge Agreement
EXHIBIT I Security Agreement
EXHIBIT J Consent Letter
EXHIBIT K Assignment and Assumption Agreement
(vi)
CREDIT AGREEMENT, dated as of November 17, 1994,
among INTERCO INCORPORATED, a Delaware corporation
("INTERCO"), BROYHILL FURNITURE INDUSTRIES, INC., a North
Carolina corporation ("Broyhill"), THE LANE COMPANY,
INCORPORATED, a Virginia corporation ("Lane" and together
with INTERCO and Broyhill, each a "Borrower," and collec-
tively, the "Borrowers"), the Banks party hereto from time
to time, and BANKERS TRUST COMPANY, as Agent (all
capitalized terms used herein and defined in Section 11 are
used herein as therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and condi-
tions herein set forth, the Banks are willing to make
available to the Borrowers, on a joint and several basis,
the respective credit facilities provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. Amount and Terms of Credit.
1.01 The Commitments. (a) Subject to and upon
the terms and conditions set forth herein, each Bank with a
Term Loan Commitment severally agrees to make, on the
Initial Borrowing Date, a term loan (each, a "Term Loan"
and, collectively, the "Term Loans") to the Borrowers,
which Term Loans (i) shall, at the option of the Borrowers,
be Base Rate Loans or Eurodollar Loans, provided that (A)
except as otherwise specifically provided in Section
1.10(b), all Term Loans comprising the same Borrowing shall
at all times be of the same Type and (B) no more than two
Borrowings of Term Loans to be maintained as Eurodollar
Loans may be incurred prior to the 60th day after the
Initial Borrowing Date (which Borrowings of Eurodollar
Loans may only have an Interest Period of one month, and
the first of which Borrowings may only be made on the
Initial Borrowing Date and the second of which Borrowings
may only be made on the last day of the Interest Period of
the first Borrowings), (ii) shall be made by each Bank in
that initial aggregate principal amount as is equal to the
Term Loan Commitment of such Bank on the Initial Borrowing
Date (before giving effect to any reductions thereto on
such date pursuant to Section 3.03(b)(i) but after giving
effect to any reductions thereto on or prior to such date
pursuant to Section 3.03(b)(ii)) and (iii) shall be joint
and several obligations of each of the Borrowers. Once
repaid, Term Loans incurred hereunder may not be
reborrowed.
(b) Subject to and upon the terms and conditions
set forth herein, each Bank with a Revolving Loan Commit-
ment severally agrees, at any time and from time to time on
and after the Initial Borrowing Date and prior to the Final
Maturity Date, to make a revolving loan or revolving loans
(each, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrowers, which Revolving Loans (i) shall,
at the option of the Borrowers, be Base Rate Loans or Euro-
dollar Loans, provided that (A) except as otherwise
specifically provided in Section 1.10(b), all Revolving
Loans comprising the same Borrowing shall at all times be
of the same Type and (B) no more than two Borrowings of
Revolving Loans to be maintained as Eurodollar Loans may be
incurred prior to the 60th day after the Initial Borrowing
Date (which Borrowings of Eurodollar Loans may only have an
Interest Period of one month, and the first of which
Borrowings may only be made on the Initial Borrowing Date
and the second of which Borrowings may only be made on the
last day of the Interest Period of the first such
Borrowing), (ii) may be repaid and reborrowed in accordance
with the provisions hereof, (iii) shall not exceed for any
Bank at any time outstanding that aggregate principal
amount which, when added to the product of (x) such Bank's
Adjusted Percentage and (y) the sum of (I) the aggregate
amount of all Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid with the proceeds of, and
simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (II) the
aggregate principal amount of all Swingline Loans
(exclusive of Swingline Loans which are repaid with the
proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Revolving Loans) then outstanding,
equals the Revolving Loan Commitment of such Bank at such
time, (iv) shall not exceed for all Banks at any time out-
standing that aggregate principal amount which, when added
to (x) the aggregate amount of all Letter of Credit
Outstandings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the
incurrence of, the respective incurrence of Revolving
Loans) at such time and (y) the aggregate principal amount
of all Swingline Loans (exclusive of Swingline Loans which
are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving
Loans) then outstanding, equals the Total Available
Revolving Loan Commitment at such time, (v) shall not
-2-
exceed in aggregate principal amount on the Initial
Borrowing Date, when added to the aggregate principal
amount of Swingline Loans incurred on such date, an amount
equal to $20,000,000 and (vi) shall be the joint and
several obligations of each of the Borrowers.
(c) Subject to and upon the terms and conditions
herein set forth, BTCo in its individual capacity agrees to
make at any time and from time to time on and after the
Initial Borrowing Date and prior to the Swingline Expiry
Date, a revolving loan or revolving loans (each, a
"Swingline Loan" and, collectively, the "Swingline Loans")
to the Borrowers, unless BTCo shall have received written
notice from the Borrowers that a Default or Event of
Default has occurred, which Swingline Loans (i) shall be
made and maintained as Base Rate Loans, (ii) may be repaid
and reborrowed in accordance with the provisions hereof,
(iii) shall not exceed in aggregate principal amount at any
time outstanding, when combined with the aggregate
principal amount of all Revolving Loans made by Non-
Defaulting Banks then outstanding and the Letter of Credit
Outstandings at such time, an amount equal to the Adjusted
Total Available Revolving Loan Commitment at such time
(after giving effect to any reductions to the Adjusted
Total Available Revolving Loan Commitment on such date),
(iv) shall not exceed at any time outstanding the Maximum
Swingline Amount, (v) shall not exceed an aggregate
principal amount on the Initial Borrowing Date, when added
to the aggregate principal amount of Revolving Loans
incurred on such date, an amount equal to $20,000,000, and
(vi) shall be the joint and several obligations of each of
the Borrowers.
(d) On any Business Day, BTCo may, in its sole
discretion, give notice to the Banks that its outstanding
Swingline Loans shall be funded with a Borrowing of
Revolving Loans (provided that such notice shall be deemed
to have been automatically given upon the occurrence of a
Default or an Event of Default under Section 10.05 or upon
the exercise of any of the remedies provided in the last
paragraph of Section 10), in which case a Borrowing of
Revolving Loans constituting Base Rate Loans (each such
Borrowing, a "Mandatory Borrowing") shall be made on the
immediately succeeding Business Day by all Banks with a
Revolving Loan Commitment (without giving effect to any
reductions thereto pursuant to the last paragraph of
Section 10) pro rata based on each Bank's Adjusted
Percentage (determined before giving effect to any
termination of the Revolving Loan Commitments pursuant to
the last paragraph of Section 10) and the proceeds thereof
-3-
shall be applied directly to BTCo to repay BTCo for such
outstanding Swingline Loans. Each such Bank hereby irre-
vocably agrees to make Revolving Loans upon one Business
Day's notice pursuant to each Mandatory Borrowing in the
amount and in the manner specified in the preceding
sentence and on the date specified in writing by BTCo
notwithstanding that (i) the amount of the Mandatory Bor-
rowing may not comply with the minimum amount for
Borrowings otherwise required hereunder, (ii) whether any
conditions specified in Section 6 are then satisfied, (iii)
whether a Default or an Event of Default then exists, (iv)
the date of such Mandatory Borrowing and (v) the amount of
the Total Revolving Loan Commitment, Total Available
Revolving Loan Commitment, the Adjusted Total Revolving
Loan Commitment or the Adjusted Total Available Revolving
Loan Commitment at such time provided, that, in no event
shall such Bank be required to make Revolving Loans in
excess of such Bank's Revolving Loan Commitment. In the
event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including,
without limitation, as a result of the commencement of a
proceeding under the Bankruptcy Code with respect to the
Borrowers), then each such Bank hereby agrees that it shall
forthwith purchase (as of the date the Mandatory Borrowing
would otherwise have occurred, but adjusted for any
payments received from the Borrowers on or after such date
and prior to such purchase) from BTCo such participations
in the outstanding Swingline Loans as shall be necessary to
cause such Banks to share in such Swingline Loans ratably
based upon their respective Adjusted Percentages
(determined before giving effect to any termination of the
Revolving Loan Commitments pursuant to the last paragraph
of Section 10), provided that (x) all interest payable on
the Swingline Loans shall be for the account of BTCo until
the date as of which the respective participation is
required to be purchased and, to the extent attributable to
the purchased participation, shall be payable to the par-
ticipant from and after such date and (y) at the time any
purchase of participations pursuant to this sentence is
actually made, the purchasing Bank shall be required to pay
BTCo interest on the principal amount of participation pur-
chased for each day from and including the day upon which
the Mandatory Borrowing would otherwise have occurred to
but excluding the date of payment for such participation,
at the overnight Federal Funds Rate for the first three
days and at the rate otherwise applicable to Revolving
Loans maintained as Base Rate Loans hereunder for each day
thereafter.
-4-
1.02 Minimum Amount of Each Borrowing. The
aggregate principal amount of each Borrowing of any Term
Loans shall not be less than $5,000,000 and, if greater,
shall be in an integral multiple of $1,000,000. The
aggregate principal amount of each Borrowing of Revolving
Loans shall be not less than $1,000,000 and, if greater,
shall be in an integral multiple of $500,000, provided that
Mandatory Borrowings shall be made in the amounts required
by Section 1.01(d). The aggregate principal amount of each
Borrowing of Swingline Loans shall not be less than
$500,000 and, if greater, shall be in an integral multiple
of $100,000. More than one Borrowing may occur on the same
date, but at no time shall there be outstanding more than
eight Borrowings of Eurodollar Loans.
1.03 Notice of Borrowing. (a) Whenever the Bor-
rowers desire to make a Borrowing hereunder (excluding Bor-
rowings of Swingline Loans and Mandatory Borrowings), an
Authorized Representative of the Borrowers shall give the
Agent at its Notice Office at least one Business Day's
prior written (or telephonic notice promptly confirmed in
writing) notice of each Base Rate Loan and at least three
Business Days' prior written (or telephonic notice promptly
confirmed in writing) notice of each Eurodollar Loan to be
made hereunder, provided that any such notice shall be
deemed to have been given on a certain day only if given
before 11:00 A.M. (New York time) (12:00 Noon (New York
time) in the case of a Borrowing of Base Rate Loans) on
such day. Each such written notice or written confirmation
of telephonic notice (each a "Notice of Borrowing"), except
as otherwise expressly provided in Section 1.10, shall be
irrevocable and shall be given by the Borrowers in the form
of Exhibit A, appropriately completed to specify the aggre-
gate principal amount of the Loans to be made pursuant to
such Borrowing, the date of such Borrowing (which shall be
a Business Day), whether the Loans being made pursuant to
such Borrowing shall constitute Term Loans or Revolving
Loans and whether the Loans being made pursuant to such
Borrowing are to be initially maintained as Base Rate Loans
or Eurodollar Loans and, if Eurodollar Loans, the initial
Interest Period to be applicable thereto. The Agent shall
promptly give each Bank which is required to make Loans of
the Tranche specified in the respective Notice of Borrow-
ing, notice of such proposed Borrowing, of such Bank's pro-
portionate share thereof and of the other matters required
by the immediately preceding sentence to be specified in
the Notice of Borrowing.
(b) (i) Whenever the Borrowers desire to make a
Borrowing of Swingline Loans hereunder, an Authorized
-5-
Representative of the Borrowers shall give BTCo not later
than 12:00 Noon (New York time) on the date that a
Swingline Loan is to be made, written notice or telephonic
notice promptly confirmed in writing of each Swingline Loan
to be made hereunder. Each such notice shall be irre-
vocable and specify in each case (A) the date of Borrowing
(which shall be a Business Day) and (B) the aggregate prin-
cipal amount of the Swingline Loans to be made pursuant to
such Borrowing.
(ii) Mandatory Borrowings shall be made upon the
notice specified in Section 1.01(d), with each Borrower
irrevocably agreeing, by its incurrence of any Swingline
Loan, to the making of the Mandatory Borrowings as set
forth in Section 1.01(d).
(c) Without in any way limiting the obligation
of the Borrowers to confirm in writing any telephonic
notice of any Borrowing of Loans, the Agent may act without
liability upon the basis of telephonic notice of such Bor-
rowing, believed by the Agent in good faith to be from an
Authorized Representative of any Borrower prior to receipt
of written confirmation. In each such case, each Borrower
hereby waives the right to dispute the Agent's record of
the terms of such telephonic notice of such Borrowing of
Loans.
1.04 Disbursement of Funds. Except as otherwise
specifically provided in the immediately succeeding sent-
ence, no later than 12:00 Noon (New York time) on the date
specified in each Notice of Borrowing (or (x) in the case
of Swingline Loans, not later than 2:00 P.M. (New York
time) on the date specified pursuant to Section 1.03(b)(i)
or (y) in the case of Mandatory Borrowings, not later than
12:00 Noon (New York time) on the date specified in Section
1.01(d)), each Bank with a Commitment of the respective
Tranche will make available its pro rata portion of each
such Borrowing requested to be made on such date (or in the
case of Swingline Loans, BTCo shall make available the full
amount thereof). All such amounts shall be made available
in Dollars and in immediately available funds at the Pay-
ment Office of the Agent, and the Agent will make available
to the Borrowers at the Payment Office the aggregate of the
amounts so made available by the Banks (prior to 1:00 P.M.
(New York time)) on such day, to the extent of funds
actually received by the Agent prior to 12:00 Noon (New
York time) on such day). Unless the Agent shall have been
notified by any Bank prior to the date of Borrowing that
such Bank does not intend to make available to the Agent
such Bank's portion of any Borrowing to be made on such
-6-
date, the Agent may assume that such Bank has made such
amount available to the Agent on such date of Borrowing and
the Agent may, in reliance upon such assumption, make
available to the Borrowers a corresponding amount. If such
corresponding amount is not in fact made available to the
Agent by such Bank, the Agent shall be entitled to recover
such corresponding amount on demand from such Bank. If
such Bank does not pay such corresponding amount forthwith
upon the Agent's demand therefor, the Agent shall promptly
notify the Borrowers to immediately pay such corresponding
amount to the Agent. The Agent shall also be entitled to
recover on demand from such Bank or the Borrowers, as the
case may be, interest on such corresponding amount in
respect of each day from the date such corresponding amount
was made available by the Agent to the Borrowers until the
date such corresponding amount is recovered by the Agent,
at a rate per annum equal to (i) if recovered from such
Bank, the overnight Federal Funds Rate and (ii) if
recovered from the Borrowers, the rate of interest appli-
cable to the respective Borrowing, as determined pursuant
to Section 1.08. Nothing in this Section 1.04 shall be
deemed to relieve any Bank from its obligation to make
Loans hereunder or to prejudice any rights which the
Borrowers may have against any Bank as a result of any
failure by such Bank to make Loans hereunder.
1.05 Notes. (a) The Borrowers' obligation to
pay the principal of, and interest on, the Loans made by
each Bank shall be evidenced (i) if Term Loans, by a
promissory note duly executed and delivered by the
Borrowers substantially in the form of Exhibit B-1 with
blanks appropriately completed in conformity herewith
(each, a "Term Note" and, collectively, the "Term Notes"),
(ii) if Revolving Loans, by a promissory note duly executed
and delivered by the Borrowers substantially in the form of
Exhibit B-2, with blanks appropriately completed in
conformity herewith (each, a "Revolving Note" and, collec-
tively, the "Revolving Notes") and (iii) if Swingline
Loans, by a promissory note duly executed and delivered by
the Borrowers substantially in the form of Exhibit B-3,
with blanks appropriately completed in conformity herewith
(the "Swingline Note").
(b) The Term Note issued to each Bank shall (i)
be executed by the Borrowers, (ii) be payable to the order
of such Bank or its registered assigns and be dated the
Initial Borrowing Date, (iii) be in a stated principal
amount equal to the Term Loan Commitment of such Bank on
the Initial Borrowing Date and be payable in the principal
amount of Term Loans evidenced thereby, (iv) mature on the
-7-
Final Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base
Rate Loans and Eurodollar Loans, as the case may be, evid-
enced thereby, (vi) be subject to mandatory repayment as
provided in Section 4.02 and (vii) be entitled to the bene-
fits of this Agreement and the other Credit Documents.
(c) The Revolving Note issued to each Bank shall
(i) be executed by the Borrowers, (ii) be payable to the
order of such Bank or its registered assigns and be dated
the Initial Borrowing Date, (iii) be in a stated principal
amount equal to the Revolving Loan Commitment of such Bank
and be payable in the principal amount of the Revolving
Loans evidenced thereby, (iv) mature on the Final Maturity
Date, (v) bear interest as provided in the appropriate
clause of Section 1.08 in respect of the Base Rate Loans
and Eurodollar Loans, as the case may be, evidenced there-
by, (vi) be subject to mandatory repayment as provided in
Section 4.02 and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents.
(d) The Swingline Note issued to BTCo shall (i)
be executed by the Borrowers, (ii) be payable to the order
of BTCo or its registered assigns and be dated the Initial
Borrowing Date, (iii) be in a stated principal amount equal
to the Maximum Swingline Amount and be payable in the prin-
cipal amount of the outstanding Swingline Loans evidenced
thereby from time to time, (iv) mature on the Swingline
Expiry Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base
Rate Loans evidenced thereby and (vi) be entitled to the
benefits of this Agreement and the other Credit Documents.
(e) Each Bank will note on its internal records
the amount of each Loan made by it and each payment in re-
spect thereof and will prior to any transfer of any of its
Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to
make any such notation or any error in any such notation or
endorsement shall not affect the Borrowers' obligations in
respect of such Loans.
1.06 Conversions. The Borrowers shall have the
option to convert, on any Business Day occurring after the
Initial Borrowing Date, all or a portion equal to at least
(1) in the case of a conversion of Term Loans, $5,000,000
(and, if greater, in an integral multiple of $1,000,000)
and (2) in the case of a conversion of Revolving Loans,
$1,000,000 (and, if greater, in an integral multiple of
$500,000), of the outstanding principal amount of Loans
-8-
made pursuant to one or more Borrowings (so long as of the
same Tranche) of one or more Types of Loans into a
Borrowing (of the same Tranche) of another Type of Loan,
provided that (i) except as otherwise provided in Section
1.10(b), Eurodollar Loans may be converted into Base Rate
Loans only on the last day of an Interest Period applicable
to the Loans being converted and no such partial conversion
of Eurodollar Loans shall reduce the outstanding principal
amount of such Eurodollar Loans made pursuant to a single
Borrowing to less than (x) in the case of Term Loans,
$5,000,000 and (y) in the case of Revolving Loans,
$1,000,000, (ii) Base Rate Loans may only be converted into
Eurodollar Loans if no Default or Event of Default is in
existence on the date of the conversion, (iii) prior to the
60th day after the Initial Borrowing Date, conversions of
Base Rate Loans into Eurodollar Loans may only be made if
the conversion is effective on the first day of the second
Interest Period referred to in clause (B) of the proviso to
Section 1.01(a)(i) and referred to in clause (B) of the
proviso to Section 1.01(b)(i) and so long as such
conversion does not result in a greater number of
Borrowings of Eurodollar Loans prior to the 60th day after
the Initial Borrowing Date as are permitted under Sections
1.01(a) or (b), (iv) no conversion pursuant to this Section
1.06 shall result in a greater number of Borrowings of
Eurodollar Loans than is permitted under Section 1.02 and
(v) Swingline Loans may not be converted pursuant to this
Section 1.06. Each such conversion shall be effected by
the Borrowers by giving the Agent at its Notice Office
prior to 12:00 Noon (New York time) at least three Business
Days' prior notice (each a "Notice of Conversion")
specifying the Loans to be so converted, the Borrowing or
Borrowings pursuant to which such Loans were made and, if
to be converted into Eurodollar Loans, the Interest Period
to be initially applicable thereto. The Agent shall give
each Bank prompt notice of any such proposed conversion
affecting any of its Loans.
1.07 Pro Rata Borrowings. All Borrowings of
Term Loans and Revolving Loans under this Agreement shall
be incurred from the Banks pro rata on the basis of their
Term Loan Commitments or Revolving Loan Commitments, as the
case may be, provided that all Borrowings of Revolving
Loans made pursuant to a Mandatory Borrowing shall be
incurred from the Banks pro rata on the basis of their
Adjusted Percentages. It is understood that no Bank shall
be responsible for any default by any other Bank of its
obligation to make Loans hereunder and that each Bank shall
be obligated to make the Loans provided to be made by it
-9-
hereunder, regardless of the failure of any other Bank to
make its Loans hereunder.
1.08 Interest. (a) The Borrowers jointly and
severally agree to pay interest in respect of the unpaid
principal amount of each Base Rate Loan from the date the
proceeds thereof are made available to the Borrowers until
the earlier of (i) the maturity (whether by acceleration or
otherwise) of such Base Rate Loan and (ii) the conversion
of such Base Rate Loan to a Eurodollar Loan pursuant to
Section 1.06, at a rate per annum which shall be equal to
the sum of the Applicable Margin plus the Base Rate in
effect from time to time.
(b) The Borrowers jointly and severally agree to
pay interest in respect of the unpaid principal amount of
each Eurodollar Loan from the date the proceeds thereof are
made available to the Borrowers until the earlier of (i)
the maturity (whether by acceleration or otherwise) of such
Eurodollar Loan and (ii) the conversion of such Eurodollar
Loan to a Base Rate Loan pursuant to Section 1.06 or 1.10,
as applicable, at a rate per annum which shall, during each
Interest Period applicable thereto, be equal to the sum of
the Applicable Margin plus the Eurodollar Rate for such
Interest Period.
(c) Overdue principal and, to the extent permit-
ted by law, overdue interest in respect of each Loan and
any other overdue amount payable hereunder shall, in each
case, bear interest at a rate per annum equal to the great-
er of (x) 2% per annum in excess of the rate otherwise
applicable to Base Rate Loans from time to time and (y) the
rate which is 2% in excess of the rate then borne by such
Loans, in each case with such interest to be payable on a
joint and several basis by the Borrowers on demand.
(d) Accrued (and theretofore unpaid) interest
shall be payable (i) in respect of each Base Rate Loan,
quarterly in arrears on each Quarterly Payment Date, (ii)
in respect of each Eurodollar Loan, on the last day of each
Interest Period applicable thereto and, in the case of an
Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of
such Interest Period and (iii) in respect of each Loan
other than Swingline Loans and Revolving Loans which are
Base Rate Loans, on any repayment or prepayment (on the
amount repaid or prepaid), and in respect of each Loan, at
maturity (whether by acceleration or otherwise) and, after
such maturity, on demand.
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(e) Upon each Interest Determination Date, the
Agent shall determine the Eurodollar Rate for the
respective Interest Period or Interest Periods and shall
promptly notify the Borrowers and the Banks thereof. Each
such determination shall, absent manifest error, be final
and conclusive and binding on all parties hereto.
1.09 Interest Periods. At the time the
Borrowers give any Notice of Borrowing or Notice of
Conversion in respect of the making of, or conversion into,
any Eurodollar Loan (in the case of the initial Interest
Period applicable thereto) or on the third Business Day
prior to the expiration of an Interest Period applicable to
such Eurodollar Loan (in the case of any subsequent
Interest Period), the Borrowers shall have the right to
elect, by having an Authorized Representative of the
Borrowers give the Agent notice thereof, the interest
period (each an "Interest Period") applicable to such
Eurodollar Loan, which Interest Period shall, at the option
of the Borrowers, be a one, two, three or six-month period,
provided that:
(i) all Eurodollar Loans comprising a Borrowing
shall at all times have the same Interest Period;
(ii) the initial Interest Period for any
Eurodollar Loan shall commence on the date of Bor-
rowing of such Eurodollar Loan (including the date of
any conversion thereto from a Loan of a different
Type) and each Interest Period occurring thereafter in
respect of such Eurodollar Loan shall commence on the
day on which the next preceding Interest Period
applicable thereto expires;
(iii) if any Interest Period relating to a Euro-
dollar Loan begins on a day for which there is no
numerically corresponding day in the calendar month at
the end of such Interest Period, such Interest Period
shall end on the last Business Day of such calendar
month;
(iv) if any Interest Period would otherwise
expire on a day which is not a Business Day, such
Interest Period shall expire on the next succeeding
Business Day; provided, however, that if any Interest
Period for a Eurodollar Loan would otherwise expire on
a day which is not a Business Day but is a day of the
month after which no further Business Day occurs in
such month, such Interest Period shall expire on the
next preceding Business Day;
-11-
(v) no Interest Period may be selected at any
time when a Default or Event of Default is then in
existence;
(vi) no Interest Period in respect of any
Borrowing shall be selected which extends beyond the
Final Maturity Date; and
(vii) no Interest Period in respect of any Borrow-
ing of Term Loans shall be selected which extends
beyond any date upon which a mandatory repayment of
Term Loans will be required to be made under Section
4.02(b) if the aggregate principal amount of Term
Loans which have Interest Periods which will expire
after such date will be in excess of the aggregate
principal amount of Term Loans then outstanding less
the aggregate amount of such required prepayment.
If upon the expiration of any Interest Period
applicable to a Borrowing of Eurodollar Loans, the
Borrowers have failed to elect, or are not permitted to
elect, a new Interest Period to be applicable to such
Eurodollar Loans as provided above, the Borrowers shall be
deemed to have elected to convert such Eurodollar Loans
into Base Rate Loans effective as of the expiration date of
such current Interest Period.
1.10 Increased Costs, Illegality, etc. (a) In
the event that any Bank shall have determined (which deter-
mination shall, absent manifest error, be final and conclu-
sive and binding upon all parties hereto but, with respect
to clause (i) below, may be made only by the Agent):
(i) on any Interest Determination Date that, by
reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for
in the definition of Eurodollar Rate; or
(ii) at any time, that such Bank shall incur in-
creased costs or reductions in the amounts received or
receivable hereunder with respect to any Eurodollar
Loan because of (x) any change since the date of this
Agreement in any applicable law or governmental rule,
regulation, order, guideline or request (whether or
not having the force of law) or in the interpretation
or administration thereof and including the introduc-
tion of any new law or governmental rule, regulation,
order, guideline or request, such as, for example, but
-12-
not limited to: (A) a change in the basis of taxation
of payment to any Bank of the principal of or interest
on such Eurodollar Loan or any other amounts payable
hereunder (except for changes in the rate of tax on,
or determined by reference to, the net income or net
profits of such Bank, or any franchise tax based on
the net income or net profits of such Bank, in either
case pursuant to the laws of the United States of
America, the jurisdiction in which it is organized or
in which its principal office or applicable lending
office is located or any subdivision thereof or
therein), but without duplication of any amounts
payable in respect of Taxes pursuant to Section
4.04(a), or (B) a change in official reserve require-
ments, but, in all events, excluding reserves required
under Regulation D to the extent included in the com-
putation of the Eurodollar Rate and/or (y) other
circumstances since the date of this Agreement
affecting such Bank or the interbank Eurodollar market
or the position of such Bank in such market; or
(iii) at any time, that the making or continuance
of any Eurodollar Loan has been made (x) unlawful by
any law or governmental rule, regulation or order, (y)
impossible by compliance by any Bank in good faith
with any governmental request (whether or not having
force of law) or (z) impracticable as a result of a
contingency occurring after the date of this Agreement
which materially and adversely affects the interbank
Eurodollar market;
then, and in any such event, such Bank (or the Agent, in
the case of clause (i) above) shall promptly give notice
(by telephone confirmed in writing) to the Borrowers and,
except in the case of clause (i) above, to the Agent of
such determination (which notice the Agent shall promptly
transmit to each of the other Banks). Thereafter (x) in
the case of clause (i) above, Eurodollar Loans shall no
longer be available until such time as the Agent notifies
the Borrowers and the Banks that the circumstances giving
rise to such notice by the Agent no longer exist, and any
Notice of Borrowing or Notice of Conversion given by the
Borrowers with respect to Eurodollar Loans which have not
yet been incurred (including by way of conversion) shall be
deemed rescinded by the Borrowers, (y) in the case of
clause (ii) above, the Borrowers jointly and severally
agree to, subject to the provisions of Section 13.15 (to
the extent applicable), pay to such Bank, upon written
demand therefor, such additional amounts (in the form of an
increased rate of, or a different method of calculating,
-13-
interest or otherwise as such Bank in its sole discretion
shall determine) as shall be required to compensate such
Bank for such increased costs or reductions in amounts re-
ceived or receivable hereunder (a written notice as to the
additional amounts owed to such Bank, showing the basis for
the calculation thereof, submitted to the Borrowers by such
Bank in good faith shall, absent manifest error, be final
and conclusive and binding on all the parties hereto) and
(z) in the case of clause (iii) above, the Borrowers shall
take one of the actions specified in Section 1.10(b) as
promptly as possible and, in any event, within the time
period required by law. Each of the Agent and each Bank
agrees that if it gives notice to the Borrowers of any of
the events described in clause (i) or (iii) above, it shall
promptly notify the Borrowers and, in the case of any such
Bank, the Agent, if such event ceases to exist. If any
such event described in clause (iii) above ceases to exist
as to a Bank, the obligations of such Bank to make
Eurodollar Loans and to convert Base Rate Loans into
Eurodollar Loans on the terms and conditions contained
herein shall be reinstated.
(b) At any time that any Eurodollar Loan is
affected by the circumstances described in Section
1.10(a)(ii) or (iii), the Borrowers may (and in the case of
a Eurodollar Loan affected by the circumstances described
in Section 1.10(a)(iii) shall) either (x) if the affected
Eurodollar Loan is then being made initially or pursuant to
a conversion, cancel the respective Borrowing by giving the
Agent telephonic notice (confirmed in writing) on the same
date that the Borrowers were notified by the affected Bank
or the Agent pursuant to Section 1.10(a)(ii) or (iii) or
(y) if the affected Eurodollar Loan is then outstanding,
upon at least three Business Days' written notice to the
Agent, require the affected Bank to convert such Eurodollar
Loan into a Base Rate Loan, provided that, if more than one
Bank is affected at any time, then all affected Banks must
be treated the same pursuant to this Section 1.10(b).
(c) If at any time after the date of this Agree-
ment any Bank determines that the introduction of or any
change in any applicable law or governmental rule, regula-
tion, order, guideline, directive or request (whether or
not having the force of law) concerning capital adequacy,
or any change in interpretation or administration thereof
by any governmental authority, central bank or comparable
agency, will have the effect of increasing the amount of
capital required or expected to be maintained by such Bank
or any corporation controlling such Bank based on the
existence of such Bank's Commitments hereunder or its
-14-
obligations hereunder, then the Borrowers jointly and
severally agree, subject to the provisions of Section 13.15
(to the extent applicable), to pay to such Bank, upon its
written demand therefor, such additional amounts as shall
be required to compensate such Bank or such other
corporation for the increased cost to such Bank or such
other corporation or the reduction in the rate of return to
such Bank or such other corporation as a result of such
increase of capital. In determining such additional
amounts, each Bank will act reasonably and in good faith
and will use averaging and attribution methods which are
reasonable, provided that such Bank's reasonable good faith
determination of compensation owing under this Section
1.10(c) shall, absent manifest error, be final and
conclusive and binding on all the parties hereto. Each
Bank, upon determining that any additional amounts will be
payable pursuant to this Section 1.10(c), will give written
notice thereof to the Borrowers, which notice shall show
the basis for calculation of such additional amounts.
1.11 Compensation. The Borrowers jointly and
severally agree, subject to the provisions of Section 13.15
(to the extent applicable), to compensate each Bank, upon
its written request (which request shall set forth the
basis for requesting such compensation), for all reasonable
losses, expenses and liabilities (including, without
limitation, any loss, expense or liability incurred by
reason of the liquidation or reemployment of deposits or
other funds required by such Bank to fund its Eurodollar
Loans but excluding any loss of anticipated profit) which
such Bank may sustain: (i) if for any reason (other than a
default by such Bank or the Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on
a date specified therefor in a Notice of Borrowing or
Notice of Conversion (whether or not withdrawn by the
Borrowers or deemed withdrawn pursuant to Section 1.10(a));
(ii) if any repayment (including any repayment made
pursuant to Section 4.02 or as a result of an acceleration
of the Loans pursuant to Section 10) or conversion of any
of its Eurodollar Loans occurs on a date which is not the
last day of an Interest Period with respect thereto; (iii)
if any prepayment of any of its Eurodollar Loans is not
made on any date specified in a notice of prepayment given
by the Borrowers; or (iv) as a consequence of (x) any other
default by the Borrowers to repay its Loans when required
by the terms of this Agreement or any Note held by such
Bank or (y) any election made pursuant to Section 1.10(b).
1.12 Change of Lending Office. Each Bank agrees
that upon the occurrence of any event giving rise to the
-15-
operation of Section 1.10(a)(ii) or (iii), Section 1.10(c),
Section 2.06 or Section 4.04 with respect to such Bank, it
will, if requested by the Borrowers, use reasonable efforts
(subject to overall policy considerations of such Bank) to
designate another lending office for any Loans or Letters
of Credit affected by such event, provided that such
designation is made on such terms that such Bank and its
lending office suffer no economic, legal or regulatory
disadvantage, with the object of avoiding the consequence
of the event giving rise to the operation of such Section.
Nothing in this Section 1.12 shall affect or postpone any
of the obligations of the Borrowers or the rights of any
Bank provided in Sections 1.10, 2.06 and 4.04.
1.13 Replacement of Banks. (x) If any Bank
becomes a Defaulting Bank or otherwise defaults in its
obligations to make Loans or fund Unpaid Drawings, (y) upon
the occurrence of any event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06
or Section 4.04 with respect to any Bank which results in
such Bank charging to the Borrowers increased costs in
excess of those being generally charged by the other Banks
or (z) as provided in Section 13.12(b) in the case of
certain refusals by a Bank to consent to certain proposed
changes, waivers, discharges or terminations with respect
to this Agreement which have been approved by the Required
Banks, the Borrowers shall have the right, if no Default or
Event of Default will exist immediately after giving effect
to the respective replacement, to either replace such Bank
(the "Replaced Bank") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a
Defaulting Bank at the time of such replacement (collec-
tively, the "Replacement Bank") reasonably acceptable to
the Agent or, at the option of the Borrowers, to replace
only (a) the Revolving Loan Commitment (and outstandings
pursuant thereto) of the Replaced Bank with an identical
Revolving Loan Commitment provided by the Replacement Bank
or (b) in the case of a replacement as provided in
Section 13.12(b) where the consent of the respective Bank
is required with respect to less than all Tranches of its
Loans or Commitments, the Commitments and/or outstanding
Term Loans of such Bank in respect of each Tranche where
the consent of such Bank would otherwise be individually
required, with identical Commitments and/or Loans of the
respective Tranche provided by the Replacement Bank,
provided that (i) at the time of any replacement pursuant
to this Section 1.13, the Replacement Bank shall enter into
one or more Assignment and Assumption Agreements pursuant
to Section 13.04(b) (and with all fees payable pursuant to
said Section 13.04(b) to be paid by the Replacement Bank)
-16-
pursuant to which the Replacement Bank shall acquire all of
the Commitments and outstanding Loans of, and
participations in Letters of Credit by (or, in the case of
the replacement of only (a) the Revolving Loan Commitment,
the Revolving Loan Commitment and outstanding Revolving
Loans and participations in Letters of Credit or (b) the
Term Loans, the outstanding Term Loans), the Replaced Bank
and, in connection therewith, shall pay to (x) the Replaced
Bank in respect thereof an amount equal to the sum of (A)
an amount equal to the principal of, and all accrued
interest on, all outstanding Loans (or, in the case of the
replacement of only (I) the Revolving Loan Commitment, the
outstanding Revolving Loans or (II) the Term Loans, the
outstanding Term Loans) of the Replaced Bank, (B) except in
the case of the replacement of only the outstanding Term
Loans of a Replaced Bank, an amount equal to all Unpaid
Drawings that have been funded by (and not reimbursed to)
such Replaced Bank, together with all then unpaid interest
with respect thereto at such time and (C) an amount equal
to all accrued, but theretofore unpaid, Fees owing to the
Replaced Bank (but only with respect to the relevant
Tranche, in the case of the replacement of less than all
Tranches of Loans then held by the respective Replaced
Bank) pursuant to Section 3.01 and (y) except in the case
of the replacement of only the outstanding Term Loans of a
Replaced Bank, BTCo an amount equal to such Replaced Bank's
Adjusted Percentage (for this purpose, determined as if the
adjustment described in clause (y) of the immediately
succeeding sentence had been made with respect to such Re-
placed Bank) of (1) any Unpaid Drawing (which at such time
remains an Unpaid Drawing) and (2) any portion of any
Swingline Loan for which BTCo has given a notice of a
Mandatory Borrowing pursuant to Section 1.01(d) and such
Replaced Bank has not provided a Revolving Loan which it
was obligated to provide to the extent such amount was not
theretofore funded by such Replaced Bank, and (ii) all
obligations of the Borrowers owing to the Replaced Bank
(other than those (a) specifically described in clause (i)
above in respect of which the assignment purchase price has
been, or is concurrently being, paid or (b) relating to any
Tranche of Loans and/or Commitments of the respective
Replaced Bank which will remain outstanding after giving
effect to the respective replacement) shall be paid in full
to such Replaced Bank concurrently with such replacement.
Upon the execution of the respective Assignment and Assump-
tion Agreements, the payment of amounts referred to in
clauses (i) and (ii) above and, if so requested by the
Replacement Bank, delivery to the Replacement Bank of the
appropriate Note or Notes executed by the Borrowers, (x)
the Replacement Bank shall become a Bank hereunder and,
-17-
unless the respective Replaced Bank continues to have
outstanding Term Loans or a Revolving Loan Commitment
hereunder, the Replaced Bank shall cease to constitute a
Bank hereunder, except with respect to indemnification
provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 13.01 and
13.06), which shall survive as to such Replaced Bank and
(y) in the case of a replacement of a Defaulting Bank with
a Non-Defaulting Bank, the Adjusted Percentages of the
Banks shall be automatically adjusted at such time to give
effect to such replacement (and to give effect to the
replacement of a Defaulting Bank with one or more Non-
Defaulting Banks).
SECTION 2. Letters of Credit.
2.01 Letters of Credit. (a) Subject to and
upon the terms and conditions herein set forth, the Bor-
rowers may request that any Issuing Bank issue, at any time
and from time to time on and after the Initial Borrowing
Date and prior to the Final Maturity Date, for the joint
and several account of the Borrowers, one or more
irrevocable letters of credit denominated in Dollars or, in
the case of Trade Letters of Credit, through the creation
thereunder by the respective Issuing Bank of acceptances or
any other customary agreement or method for providing for
deferred payment under letters of credit ("Acceptances"),
and otherwise in a form customarily used by such Issuing
Bank or in such other form as has been approved by such
Issuing Bank (each such letter of credit, a "Letter of
Credit") in support of obligations described in the
definitions of Standby Letter of Credit or Trade Letter of
Credit and any other obligations of the Borrowers or any of
their Restricted Subsidiaries that are reasonably
acceptable to the Agent and otherwise permitted to exist
pursuant to this Agreement. On the Initial Borrowing Date,
all Existing Letters of Credit shall be deemed to have been
issued under this Agreement and shall for all purposes
constitute "Letters of Credit" hereunder.
(b) Each Issuing Bank may agree, in its sole
discretion, and BTCo hereby agrees that in the event a
requested Letter of Credit is not issued by one of the
other Issuing Banks, it will (subject to the terms and
conditions contained herein), at any time and from time to
time on or after the Initial Borrowing Date and prior to
the Final Maturity Date, following its receipt of the
respective Letter of Credit Request, issue for the account
of the Borrowers one or more Letters of Credit in support
of such obligations described in the definitions of Standby
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Letter of Credit and Trade Letter of Credit of the
Borrowers or any of their Restricted Subsidiaries as is
permitted to exist pursuant to this Agreement without giv-
ing rise to a Default or Event of Default hereunder,
provided that the respective Issuing Bank shall be under no
obligation to issue any Letter of Credit of the types
described above if at the time of such issuance:
(i) any order, judgment or decree of any govern-
mental authority or arbitrator shall purport by its
terms to enjoin or restrain such Issuing Bank from
issuing such Letter of Credit or any requirement of
law applicable to such Issuing Bank or any request or
directive (whether or not having the force of law)
from any governmental authority with jurisdiction over
such Issuing Bank shall prohibit, or request that such
Issuing Bank refrain from, the issuance of letters of
credit generally or such Letter of Credit in parti-
cular or shall impose upon such Issuing Bank with
respect to such Letter of Credit any restriction or
reserve or capital requirement (for which such Issuing
Bank is not otherwise compensated) not in effect on
the date hereof, or any unreimbursed loss, cost or
expense which was not applicable, in effect or known
to such Issuing Bank as of the date hereof and which
such Issuing Bank in good faith deems material to it;
or
(ii) such Issuing Bank shall have received notice
from any Bank prior to the issuance of such Letter of
Credit of the type described in the penultimate
sentence of Section 2.03(b).
(c) Notwithstanding the foregoing, (i) no Letter
of Credit shall be issued the Stated Amount of which, when
added to the Letter of Credit Outstandings (exclusive of
Unpaid Drawings which are repaid on the date of, and prior
to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) (a) at any time during
the period from the Initial Borrowing Date until the first
anniversary of the Initial Borrowing Date, $35,000,000, (b)
at any time during the period from the first anniversary of
the Initial Borrowing Date until the second anniversary of
the Initial Borrowing Date, $40,000,000, (c) at any time
during the period from the second anniversary of the
Initial Borrowing Date until the third anniversary of the
Initial Borrowing Date, $45,000,000 and (d) at any time
thereafter, $50,000,000 or (y) when added to the aggregate
principal amount of all Revolving Loans made by Non-
Defaulting Banks and then outstanding and Swingline Loans
-19-
then outstanding, an amount equal to the Adjusted Total
Available Revolving Loan Commitment at such time, (ii) no
Acceptance shall be created the Stated Amount of which,
when added to the amount of all Acceptances outstanding at
such time, would exceed $15,000,000 and (iii) each Letter
of Credit shall by its terms terminate or be terminable by
the Issuing Bank on such date that would result in all
drawings thereunder, or any Acceptances created thereunder,
being funded pursuant to the terms thereof prior to (x) (A)
in the case of Standby Letters of Credit, the date which
occurs 12 months after the date of the issuance thereof
(although any such Letter of Credit may be extendable for
successive periods of up to 12 months, but not beyond the
Final Maturity Date, on terms acceptable to the Issuing
Bank thereof) and (B) in the case of Trade Letters of
Credit, the date which occurs six months after the date of
the issuance thereof or (y) (A) in the case of Standby
Letters of Credit, the date which is five Business Days
prior to the Final Maturity Date and (B) in the case of
Trade Letters of Credit, the date which is thirty Business
Days prior to the Final Maturity Date.
2.02 Minimum Stated Amount. The Stated Amount
of each Letter of Credit shall be not less than $10,000 or
such lesser amount as is acceptable to the respective
Issuing Bank.
2.03 Letter of Credit Requests. (a) Whenever
any Borrower desires that a Letter of Credit be issued by
the Agent as Issuing Bank for its account, it shall have
(i) executed and delivered the Letter of Credit Service
Agreement in the form of Exhibit C-1 attached hereto (as
amended, modified or supplemented from time to time, the
"Letter of Credit Service Agreement"), which Letter of
Credit Service Agreement shall be in full force and effect
and (ii) made a request for the issuance of such Letter of
Credit in accordance with the terms of the Letter of Credit
Service Agreement. Whenever any Borrower desires that a
Trade Letter of Credit be issued by an Issuing Bank other
than the Agent for its account, it shall have (x) executed
and delivered to the respective Issuing Bank (with copies
having been sent to the Agent) at least five Business Days
prior to the issuance thereof, a Trade Letter of Credit
Request in the form of Exhibit C-2 attached hereto (each a
"Trade Letter of Credit Request") and (y) completed and
executed a letter of credit application in the form
customarily used by such Issuing Bank for Trade Letters of
Credit or in such other form as the Agent and the Issuing
Bank shall request. Whenever any Borrower desires that a
Standby Letter of Credit be issued by an Issuing Bank other
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than the Agent for its account it shall have executed and
delivered to the respective Issuing Bank (with copies
having been sent to the Agent) at least five Business Days
prior to the issuance thereof, a Standby Letter of Credit
Request in the form of Exhibit C-3 attached hereto (each a
"Standby Letter of Credit Request"). Letter of Credit
Requests shall be given in writing, or in the case of
requests of Trade Letters of Credit, by telephone, if
promptly confirmed in writing, or, if the Agent is the
Issuing Bank, as otherwise provided in the Letter of Credit
Service Agreement, provided that (I) if the express provi-
sions of any letter of credit application conflict with the
express provisions of this Agreement, the provisions of
this Agreement shall control to the extent of such conflict
and (II) no event (other than the failure to reimburse
Letter of Credit Drawings as provided for in Section 2.05)
which constitutes a default under any application shall
constitute an Event of Default hereunder solely by reason
of any default provisions contained in such application.
(b) The making of each Letter of Credit Request
shall be deemed to be a representation and warranty by the
Borrowers that such Letter of Credit may be issued in
accordance with, and will not violate the requirements of,
Section 2.01(c). Unless the respective Issuing Bank has
received notice from any Bank before it issues a Letter of
Credit that one or more of the conditions specified in
Section 6 are not then satisfied, or that the issuance of
such Letter of Credit would violate Section 2.01(c), then
such Issuing Bank may issue the requested Letter of Credit
for the account of the Borrowers in accordance with such
Issuing Bank's usual and customary practices. Upon its
issuance of any Letter of Credit, such Issuing Bank shall
promptly notify each Bank of such issuance.
2.04 Letter of Credit Participations.
(a) Immediately upon the issuance by any Issuing Bank of
any Letter of Credit, such Issuing Bank shall be deemed to
have sold and transferred to each Bank with a Revolving
Loan Commitment, other than such Issuing Bank (each such
Bank, in its capacity under this Section 2.04, a "Parti-
cipant"), and each such Participant shall be deemed irrevo-
cably and unconditionally to have purchased and received
from such Issuing Bank, without recourse or warranty, an
undivided interest and participation, to the extent of such
Participant's Adjusted Percentage in such Letter of Credit,
each drawing made thereunder and Acceptances created
thereunder and the obligations of the Borrowers under this
Agreement with respect thereto, and any security therefor
or guaranty pertaining thereto. Upon any change in the
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Revolving Loan Commitments or Adjusted Percentages of the
Banks pursuant to Section 1.13 or 13.04 or as a result of a
Bank Default, it is hereby agreed that, with respect to all
outstanding Letters of Credit, Acceptances and Unpaid Draw-
ings, there shall be an automatic adjustment to the parti-
cipations pursuant to this Section 2.04 to reflect the new
Adjusted Percentages of the assignor and assignee Bank or
of all Banks with Revolving Loan Commitments, as the case
may be.
(b) In determining whether to pay or create an
Acceptance under any Letter of Credit, such Issuing Bank
shall have no obligation relative to the other Banks other
than to confirm that any documents required to be delivered
under such Letter of Credit appear to have been delivered
and that they appear to substantially comply on their face
with the requirements of such Letter of Credit. Any action
taken or omitted to be taken by any Issuing Bank under or
in connection with any Letter of Credit if taken or omitted
in the absence of gross negligence or willful misconduct,
shall not create for such Issuing Bank any resulting
liability to the Borrowers or any Bank.
(c) In the event that any Issuing Bank makes any
payment under any Letter of Credit issued by it or any
Acceptance created thereunder and the Borrowers shall not
have reimbursed such amount in full to such Issuing Bank
pursuant to Section 2.05(a), such Issuing Bank shall
promptly notify the Agent, which shall promptly notify each
Participant of such failure, and each Participant shall
promptly and unconditionally pay to such Issuing Bank the
amount of such Participant's Adjusted Percentage of such
unreimbursed payment in Dollars and in same day funds. If
the Agent so notifies, prior to 11:00 A.M. (New York time)
on any Business Day, any Participant required to fund a
payment under a Letter of Credit, such Participant shall
make available to such Issuing Bank in Dollars such
Participant's Adjusted Percentage of the amount of such
payment on such Business Day in same day funds. If and to
the extent such Participant shall not have so made its
Adjusted Percentage of the amount of such payment available
to such Issuing Bank, such Participant agrees to pay to
such Issuing Bank, forthwith on demand, such amount,
together with interest thereon, for each day from such date
until the date such amount is paid to such Issuing Bank at
the overnight Federal Funds Rate. The failure of any
Participant to make available to such Issuing Bank its
Adjusted Percentage of any payment under any Letter of
Credit shall not relieve any other Participant of its
obligation hereunder to make available to such Issuing Bank
-22-
its Adjusted Percentage of any Letter of Credit or
Acceptance created thereunder on the date required, as
specified above, but no Participant shall be responsible
for the failure of any other Participant to make available
to such Issuing Bank such other Participant's Adjusted
Percentage of any such payment.
(d) Whenever any Issuing Bank receives a payment
of a reimbursement obligation as to which it has received
any payments from the Participants pursuant to clause
(c) above, such Issuing Bank shall pay to each Participant
which has paid its Adjusted Percentage thereof, in Dollars
and in same day funds, an amount equal to such
Participant's share (based upon the proportionate aggregate
amount originally funded by such Participant to the
aggregate amount funded by all Participants) of the princi-
pal amount of such reimbursement obligation and interest
thereon accruing after the purchase of the respective
participations.
(e) Upon the request of any Participant, each
Issuing Bank shall furnish to such Participant copies of
any Letter of Credit issued by it and such other
documentation as may reasonably be requested by such
Participant.
(f) The obligations of the Participants to make
payments to each Issuing Bank with respect to Letters of
Credit and Acceptances issued thereunder shall be
irrevocable and not subject to any qualification or
exception whatsoever and shall be made in accordance with
the terms and conditions of this Agreement under all
circumstances, including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of
this Agreement or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense
or other right which the Borrowers or any of their
Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any
transferee of any Letter of Credit (or any Person for
whom any such transferee may be acting), any holder of
an Acceptance, the Agent, any Participant, or any
other Person, whether in connection with this
Agreement, any Letter of Credit, any Acceptance, the
transactions contemplated herein or any unrelated
transactions (including any underlying transaction
-23-
between any Borrower and the beneficiary named in any
such Letter of Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect;
(iv) the surrender or impairment of any security
for the performance or observance of any of the terms
of any of the Credit Documents; or
(v) the occurrence of any Default or Event of
Default.
2.05 Agreement to Repay Letter of Credit
Drawings and Acceptance Payments. (a) The Borrowers
hereby jointly and severally agree to reimburse the
respective Issuing Bank, by making payment to the Agent in
immediately available funds at the Payment Office, for any
payment or disbursement made by such Issuing Bank under any
Letter of Credit or Acceptance created thereunder (each
such amount, so paid until reimbursed, an "Unpaid
Drawing"), immediately after, and in any event on the date
of such payment or disbursement, with interest on the
amount so paid or disbursed by such Issuing Bank, to the
extent not reimbursed prior to 12:00 Noon (New York time)
on the date of such payment or disbursement, from and
including the date paid or disbursed to but excluding the
date such Issuing Bank was reimbursed by the Borrowers
therefor at a rate per annum which shall be the Base Rate
in effect from time to time plus the Applicable Margin for
Base Rate Loans, provided, however, to the extent such
amounts are not reimbursed prior to 12:00 Noon (New York
time) on the second Business Day following such payment or
disbursement, interest shall thereafter accrue on the
amounts so paid or disbursed by such Issuing Bank (and
until reimbursed by the Borrowers) at a rate per annum
which shall be the Base Rate in effect from time to time
plus the Applicable Margin for Base Rate Loans plus 2%, in
each such case, with interest to be payable by the
Borrowers on demand. The respective Issuing Bank shall
give the Borrowers prompt notice of each Drawing under any
Letter of Credit or payment under any Acceptance created
thereunder, provided that the failure to give any such
notice shall in no way affect, impair or diminish the
Borrowers' obligations hereunder.
-24-
(b) The obligations of the Borrowers under this
Section 2.05 to reimburse the respective Issuing Bank with
respect to drawings on Letters of Credit and payments under
any Acceptance created thereunder (each, a "Drawing")
(including interest thereon) shall be joint and several and
shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim
or defense to payment which any Borrower may have or have
had against any Bank (including in its capacity as issuer
of the Letter of Credit or as Participant), or any
nonapplication or misapplication by the beneficiary of the
proceeds of such Drawing, the respective Issuing Bank's
only obligation to the Borrowers being to confirm that any
documents required to be delivered under such Letter of
Credit appear to have been delivered and that they appear
to substantially comply on their face with the requirements
of such Letter of Credit. Any action taken or omitted to
be taken by any Issuing Bank under or in connection with
any Letter of Credit or any Acceptance created thereunder
if taken or omitted in the absence of gross negligence or
willful misconduct, shall not create for such Issuing Bank
any resulting liability to the Borrowers.
2.06 Increased Costs. If at any time after the
date of this Agreement, the introduction of or any change
in any applicable law, rule, regulation, order, guideline
or request or in the interpretation or administration
thereof by any governmental authority charged with the
interpretation or administration thereof, or compliance by
any Issuing Bank or any Participant with any request or
directive by any such authority (whether or not having the
force of law), or any change in generally acceptable
accounting principles, shall either (i) impose, modify or
make applicable any reserve, deposit, capital adequacy or
similar requirement against Letters of Credit issued, or
Acceptances created, by any Issuing Bank or participated in
by any Participant, or (ii) impose on any Issuing Bank or
any Participant any other conditions relating, directly or
indirectly, to this Agreement, any Letter of Credit or any
Acceptance created thereunder; and the result of any of the
foregoing is to increase the cost to any Issuing Bank or
any Participant of issuing, maintaining or participating in
any Letter of Credit or any Acceptance created thereunder,
or reduce the amount of any sum received or receivable by
any Issuing Bank or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of
Credit and Acceptances created thereunder (except for
changes in the rate of tax on, or determined by reference
to, the net income or net profits of such Issuing Bank or
such Participant, or any franchise tax based on the net
-25-
income or net profits of such Bank or Participant, in
either case pursuant to the laws of the United States of
America, the jurisdiction in which it is organized or in
which its principal office or applicable lending office is
located or any subdivision thereof or therein), but without
duplication of any amounts payable in respect of Taxes pur-
suant to Section 4.04(a), then, upon demand to the
Borrowers by such Issuing Bank or any Participant (a copy
of which demand shall be sent by such Issuing Bank or such
Participant to the Agent) and subject to the provisions of
Section 13.15 (to the extent applicable), the Borrowers
jointly and severally agree to pay to such Issuing Bank or
such Participant such additional amount or amounts as will
compensate such Bank for such increased cost or reduction
in the amount receivable or reduction on the rate of return
on its capital. Any Issuing Bank or any Participant, upon
determining that any additional amounts will be payable
pursuant to this Section 2.06, will give prompt written
notice thereof to the Borrowers, which notice shall include
a certificate submitted to the Borrowers by such Issuing
Bank or such Participant (a copy of which certificate shall
be sent by such Issuing Bank or such Participant to the
Agent), setting forth in reasonable detail the basis for
the calculation of such additional amount or amounts
necessary to compensate such Issuing Bank or such Partici-
pant. The certificate required to be delivered pursuant to
this Section 2.06 shall, if delivered in good faith and
absent manifest error, be final and conclusive and binding
on the Borrowers.
SECTION 3. Commitment Commission; Fees; Reduc-
tions of Commitment.
3.01 Fees. (a) The Borrowers jointly and
severally agree to pay to the Agent for distribution to
each Non-Defaulting Bank with a Revolving Loan Commitment a
commitment commission (the "Commitment Commission") for the
period from the Initial Borrowing Date to but excluding the
Final Maturity Date (or such earlier date as the Total
Revolving Loan Commitment shall have been terminated), com-
puted at a rate for each day equal to 1/2 of 1% (3/8 of 1%
at any time that the Reduction Percentage equals an amount
other than zero) per annum on the daily average Unutilized
Revolving Loan Commitment of such Non-Defaulting Bank.
Accrued Commitment Commission shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on
the Final Maturity Date or such earlier date upon which the
Total Revolving Loan Commitment is terminated.
-26-
(b) The Borrowers jointly and severally agree to
pay to the Agent for pro rata distribution to each Non-
Defaulting Bank with a Revolving Loan Commitment (based on
their respective Adjusted Percentages) a fee in respect of
(x) each Letter of Credit issued hereunder (the "Letter of
Credit Fee"), for the period from and including the date of
issuance of such Letter of Credit to the termination of
such Letter of Credit, computed at a rate per annum equal
to the Applicable Margin for Eurodollar Loans as in effect
from time to time on the daily average Stated Amount of
such Letter of Credit and (y) each Acceptance (the
"Acceptance Fee") for the period from and including the
date of creation of such Acceptance to and including the
maturity of such Acceptance, computed at a rate per annum
equal to the Applicable Margin for Eurodollar Loans as in
effect from time to time on the daily average Stated Amount
of such Acceptance. Accrued Letter of Credit Fees and
Acceptance Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first
day on or after the termination of the Total Revolving Loan
Commitment upon which no Letters of Credit or Acceptances
remain outstanding.
(c) The Borrowers jointly and severally agree to
pay to the respective Issuing Bank, for its own account, a
facing fee in respect of (x) each Standby Letter of Credit
issued for its account hereunder (the "Letter of Credit
Facing Fee") for the period from and including the date of
issuance of such Standby Letter of Credit to and including
the termination of such Standby Letter of Credit, computed
at a rate equal to 1/4 of 1% per annum of the daily average
Stated Amount of such Standby Letter of Credit, provided
that in any event the minimum amount of the Letter of
Credit Facing Fee payable in any 12 month period for any
Standby Letter of Credit shall be $500 (it being agreed
that, on each anniversary of the issuance of any Standby
Letter of Credit or upon any earlier termination or
expiration of a Standby Letter of Credit, if $500 exceeds
the amount of Letter of Credit Facing Fees theretofore paid
or then accrued with respect to such Standby Letter of
Credit, in either case after the date of the issuance
thereof or, if later, after the date of the last anniver-
sary of the issuance thereof (but excluding any amounts
paid after such anniversary with respect to periods ending
on or prior to such anniversary, including, without limita-
tion, as a result of the operation of this parenthetical),
the amount of such excess shall be payable on the next date
upon which accrued Letter of Credit Facing Fees are
otherwise payable with respect to Standby Letters of Credit
as provided in the following sentence) and (y) each
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Acceptance created by it (the "Acceptance Facing Fee", and
together with the Letter of Credit Facing Fees, the "Facing
Fees") for the period from and including the date of
creation of such Acceptance to and including the maturity
of such Acceptance, computed at a rate equal to 1/4 of 1%
per annum of the daily average Stated Amount of such
Acceptance. Accrued Facing Fees shall be due and payable
quarterly in arrears on each Quarterly Payment Date and on
the date upon which the Total Revolving Loan Commitment has
been terminated and all Letters of Credit and Acceptances
have been terminated in accordance with their terms.
(d) The Borrowers jointly and severally agree to
pay, upon each drawing under, issuance of, or amendment to
any Letter of Credit, such amount as shall at the time of
such event be the administrative charge and out-of-pocket
expenses which the respective Issuing Bank is generally
imposing in connection with such occurrence with respect to
letters of credit.
(e) The Borrowers jointly and severally agree to
pay to the Agent, for its own account, such other fees as
have been agreed to in writing by the Borrowers and the
Agent.
3.02 Voluntary Termination of Unutilized Commit-
ments. (a) Upon at least two Business Days' prior notice
from an Authorized Representative of the Borrowers to the
Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks), the Borrowers
shall have the right, at any time or from time to time,
without premium or penalty, to terminate the Total
Unutilized Revolving Loan Commitment, in whole or in part,
in integral multiples of $1,000,000, provided that (i) each
such reduction shall apply proportionately to permanently
reduce the Revolving Loan Commitment of each Bank with such
a Commitment and (ii) the reduction to the Total Unutilized
Revolving Loan Commitment shall in no case be in an amount
which would cause the Revolving Loan Commitment of any Bank
to be reduced (as required by preceding clause (i)) by an
amount which exceeds the remainder of (x) the Unutilized
Revolving Loan Commitment of such Bank as in effect immedi-
ately before giving effect to such reduction minus (y) such
Bank's Adjusted Percentage of the aggregate principal
amount of Swingline Loans then outstanding.
(b) In the event of certain refusals by a Bank
as provided in Section 13.12(b) to consent to certain
proposed changes, waivers, discharges or terminations with
respect to this Agreement which have been approved by the
-28-
Required Banks, the Borrowers may, subject to their
compliance with the requirements of said Section 13.12(b),
upon five Business Days' written notice to the Agent at its
Notice Office (which notice the Agent shall promptly
transmit to each of the Banks) terminate all of the
Revolving Loan Commitment of such Bank so long as all
Revolving Loans, together with accrued and unpaid interest,
Fees and all other amounts, owing to such Bank (other than
amounts owing in respect of the Tranche of Term Loans
maintained by such Bank, if such Term Loans are not being
repaid pursuant to Section 13.12(b)) are repaid concur-
rently with the effectiveness of such termination (at which
time Schedule I shall be deemed modified to reflect such
changed amounts), and at such time, unless the respective
Bank continues to have outstanding Term Loans hereunder,
such Bank shall no longer constitute a "Bank" for purposes
of this Agreement, except with respect to indemnifications
under this Agreement (including, without limitation,
Sections 1.10, 1.11, 2.06, 4.04, 13.01 and 13.06), which
shall survive as to such repaid Bank.
3.03 Mandatory Reduction of Commitments. (a)
The Total Commitment (and the Term Loan Commitment and the
Revolving Loan Commitment of each Bank) shall terminate in
its entirety on November 30, 1994 unless the Initial
Borrowing Date shall have occurred on or prior to such
date.
(b) In addition to any other mandatory commit-
ment reductions pursuant to this Section 3.03, the Total
Term Loan Commitment (and the Term Loan Commitment of each
Bank) shall (i) terminate in its entirety on the Initial
Borrowing Date (after giving effect to the making of the
Term Loans on such date) and (ii) prior to the termination
of the Term Loan Commitment as provided in clause (i)
above, be reduced from time to time to the extent required
by Section 4.02.
(c) In addition to any other mandatory commit-
ment reductions pursuant to this Section 3.03, the Total
Revolving Loan Commitment (and the Revolving Loan Commit-
ment of each Bank) shall terminate in its entirety on the
Final Maturity Date.
(d) In addition to any other mandatory
commitment reductions pursuant to this Section 3.03, on
each date after the Initial Borrowing Date upon which a
mandatory prepayment of Term Loans pursuant to any of
Sections 4.02(c), (d), (e), (f), (g) and (h) is required
(and exceeds in amount the aggregate principal amount of
-29-
Term Loans then outstanding) or would be required if Term
Loans were then outstanding, the Total Revolving Loan
Commitment shall be permanently reduced by the amount, if
any, by which the amount required to be applied pursuant to
said Section (determined as if an unlimited amount of Term
Loans were actually outstanding) exceeds the aggregate
principal amount of Term Loans then outstanding.
(e) Each reduction to the Total Term Loan
Commitment and the Total Revolving Loan Commitment pursuant
to this Section 3.03 (or pursuant to Section 4.02) shall be
applied proportionately to reduce the Term Loan Commitment
or the Revolving Loan Commitment, as the case may be, of
each Bank with such a Commitment.
SECTION 4. Prepayments; Payments; Taxes.
4.01 Voluntary Prepayments. The Borrowers shall
have the right to prepay the Loans, without premium or pen-
alty, in whole or in part at any time and from time to time
on the following terms and conditions: (i) an Authorized
Representative of the Borrowers shall give the Agent prior
to 12:00 Noon (New York time) at its Notice Office (x) at
least one Business Day's prior written notice (or
telephonic notice promptly confirmed in writing) of the
Borrowers' intent to prepay Base Rate Loans (or same day
notice in the case of Swingline Loans provided such notice
is given prior to 11:00 A.M. (New York time)) and (y) at
least three Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) of its
intent to prepay Eurodollar Loans, whether Term Loans,
Revolving Loans or Swingline Loans shall be prepaid, the
amount of such prepayment and the Types of Loans to be pre-
paid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, which
notice the Agent shall promptly transmit to each of the
Banks; (ii) each prepayment shall be in an aggregate
principal amount of at least $1,000,000 (or $500,000 in the
case of Swingline Loans), provided that if any partial
prepayment of Eurodollar Loans made pursuant to any
Borrowing shall reduce the outstanding Eurodollar Loans
made pursuant to such Borrowing to an amount less than (1)
in the case of Term Loans, $5,000,000 and (2) in the case
of Revolving Loans, $1,000,000, then such Borrowing may not
be continued as a Borrowing of Eurodollar Loans and any
election of an Interest Period with respect thereto given
by the Borrowers shall have no force or effect; (iii) at
the time of any prepayment of Eurodollar Loans pursuant to
this Section 4.01 on any date other than the last day of
the Interest Period applicable thereto, the Borrowers shall
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pay the amounts required pursuant to Section 1.11, (iv)
each prepayment in respect of any Loans made pursuant to a
Borrowing shall, except as provided in clauses (v) and (vi)
below, be applied pro rata among such Loans; (v) in the
event of certain refusals by a Bank as provided in
Section 13.12(b) to consent to certain proposed changes,
waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Banks,
the Borrowers may, upon five Business Days' written notice
by an Authorized Representative of the Borrowers to the
Agent at its Notice Office (which notice the Agent shall
promptly transmit to each of the Banks) repay all Loans,
together with accrued and unpaid interest, Fees, and other
amounts owing to such Bank (or owing to such Bank with
respect to each Tranche which gave rise to the need to
obtain such Bank's individual consent) in accordance with,
and subject to the requirements of, said Section 13.12(b)
so long as (A) in the case of the repayment of Revolving
Loans of any Bank pursuant to this clause (v) the Revolving
Loan Commitment of such Bank is terminated concurrently
with such repayment (at which time Schedule I shall be
deemed modified to reflect the changed Revolving Loan
Commitments) and (B) the consents required by Sec-
tion 13.12(b) in connection with the repayment pursuant to
this clause (v) have been obtained; (vi) at the Borrowers'
election in connection with any prepayment of Revolving
Loans, such prepayment shall not be applied to the
prepayment of Revolving Loans of a Defaulting Bank and
(vii) an amount equal to 50% of each voluntary prepayment
of Term Loans pursuant to this Section 4.01 (other than
pursuant to clause (v) hereof) shall be applied to reduce
any then remaining Scheduled Repayments of Term Loans which
will be due and payable within one year from the date of
such voluntary prepayment, with any remainder to be applied
pro rata based upon the then remaining amount of Scheduled
Repayments of Term Loans after giving effect to all prior
reductions thereto.
4.02 Mandatory Repayments, Cash
Collateralizations and Commitment Reductions. (a)(i) On
any day on which the sum of the aggregate outstanding
principal amount of the Revolving Loans made by Non-
Defaulting Banks, Swingline Loans and the Letter of Credit
Outstandings exceeds the Adjusted Total Available Revolving
Loan Commitment as then in effect, the Borrowers jointly
and severally agree to prepay principal of Swingline Loans
and, after the Swingline Loans have been repaid in full,
Revolving Loans of Non-Defaulting Banks in an amount equal
to such excess. If, after giving effect to the prepayment
of all outstanding Swingline Loans and Revolving Loans of
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Non-Defaulting Banks, the aggregate amount of the Letter of
Credit Outstandings exceeds the Adjusted Total Available
Revolving Loan Commitment as then in effect, the Borrowers
jointly and severally agree to pay to the Agent at the
Payment Office on such date an amount of cash or Cash
Equivalents equal to the amount of such excess (up to a
maximum amount equal to the Letter of Credit Outstandings
at such time), such cash or Cash Equivalents to be held as
security for all obligations of the Borrowers to Non-
Defaulting Banks hereunder in a cash collateral account to
be established by the Agent.
(ii) On any day on which the aggregate
outstanding principal amount of the Revolving Loans made by
any Defaulting Bank exceeds the Revolving Loan Commitment
of such Defaulting Bank, the Borrowers jointly and
severally shall prepay principal of Revolving Loans of such
Defaulting Bank in an amount equal to such excess.
(b) In addition to any other mandatory
repayments or commitment reductions pursuant to this
Section 4.02, on each date set forth below, the Borrowers
jointly and severally shall be required to repay that
principal amount of Term Loans, to the extent then
outstanding, as is set forth opposite such date (each such
repayment, as the same may be reduced as provided in
Sections 4.01 and 4.02(i) and (j), a "Scheduled
Repayment"):
Scheduled Repayment Date Amount
Last Business Day in March, 1995 $ 7,500,000
Last Business Day in September, 1995 $ 7,500,000
Last Business Day in March, 1996 $10,000,000
Last Business Day in September, 1996 $10,000,000
Last Business Day in March, 1997 $15,000,000
Last Business Day in September, 1997 $15,000,000
Last Business Day in March, 1998 $20,000,000
Last Business Day in September, 1998 $20,000,000
Last Business Day in March, 1999 $25,000,000
Last Business Day in September, 1999 $25,000,000
Last Business Day in March, 2000 $32,500,000
Last Business Day in September, 2000 $32,500,000
Last Business Day in March, 2001 $32,500,000
Final Maturity Date $32,500,000
(c) In addition to any other mandatory repay-
ments or commitment reductions pursuant to this Section
4.02, on each date after the Effective Date upon which
INTERCO or any of its Restricted Subsidiaries receives any
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proceeds from any sale or issuance of its equity
(including, without limitation, proceeds received from
Preferred Stock but excluding (i) proceeds received from
the issuance of shares of INTERCO Common Stock as a result
of the exercise of options issued pursuant to the Employee
Stock Option Plan, to the extent that the aggregate
proceeds excluded do not exceed the Excluded Option Amount,
(ii) proceeds received from any exercise of INTERCO
Warrants, (iii) proceeds received from the issuance of
shares of INTERCO Common Stock or Qualified Preferred Stock
as payment of consideration pursuant to a Permitted
Acquisition or as consideration in connection with the
creation, acquisition or Investment in an Unrestricted
Subsidiary (to the extent INTERCO does not receive any cash
proceeds from the issuance thereof), (iv) any amount of
equity proceeds actually used, at the time of the receipt
thereof, to make Guaranty Payments pursuant to Section
9.11(b)(ii)(y)(C), (v) any amount of equity proceeds
actually used as described in the second paragraph of this
Section 4.02(c) and (vi) so long as no Default or Event of
Default then exists (x) proceeds of Disqualified Preferred
Stock issued pursuant to Section 9.13(b)(iii) which are
used to repay or otherwise replace the Receivables Facility
on or after the date which is four and one-half years after
the Initial Borrowing Date, (y) up to $50,000,000 of
proceeds received from the issuance of Disqualified
Preferred Stock pursuant to Section 9.13(b)(i), minus the
aggregate principal amount of Permitted Subordinated
Indebtedness incurred on or prior to the date of the
issuance of such Disqualified Preferred Stock pursuant to
Section 9.04(ii)(x) and not required to be used to repay
Term Loans as a result of clause (x)(ii) of the first
parenthetical of Section 4.02(e), to the extent all such
proceeds from the issuance of Disqualified Preferred Stock
and incurrence of Permitted Subordinated Indebtedness are
or were used to effect Permitted Acquisitions so long as an
Authorized Representative of the Borrowers has delivered a
certificate to the Agent on or prior to such date stating
that such proceeds shall be committed to be used to make
Permitted Acquisitions within six months following the date
of such issuance of Disqualified Preferred Stock, and so
long as such proceeds are so used in such time frame, it
being understood and agreed that any amount of proceeds not
so used within such time frame shall at the end of such six
month period be required to be applied as otherwise
provided in this clause (c) and (z) up to $25,000,000 of
proceeds of Disqualified Preferred Stock issued pursuant to
Section 9.13(b)(ii), minus the aggregate principal amount
of Permitted Unsecured Indebtedness incurred on or prior to
such date of issuance pursuant to Section 9.04(iii)) an
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amount equal to 50% (or 100% (x) with respect to proceeds
of Disqualified Preferred Stock not otherwise excluded
above and (y) for any period from and after any Trigger
Date to and including the Trigger Termination Date relating
thereto) of the Net Cash Proceeds of the respective sale or
issuance shall be applied as a mandatory repayment of
principal of outstanding Term Loans (or, if the Initial
Borrowing Date has not yet occurred, such amounts shall be
applied as a mandatory reduction to the Total Term Loan
Commitment) in accordance with the requirements of Section
4.02(i) and (j).
Notwithstanding the foregoing paragraph, on any
date on which INTERCO or any of its Restricted Subsidiaries
receives proceeds from any sale or issuance of equity, and
INTERCO, either (i) pays amounts then due and payable in
respect of the Converse Tax Liability or (ii) elects (a
"Deferred Payment Election") to pay amounts due in respect
of the Converse Tax Liability as same become payable,
INTERCO may retain such proceeds subject to the remaining
provisions of this paragraph, provided, that to the extent
the proceeds from any such sale or issuance exceed the
Anticipated Deferred Payment Amount as specified in the
respective Deferred Payment Notice, then such excess shall
be treated as proceeds of the issuance or sale of equity of
INTERCO and/or its Restricted Subsidiaries immediately
subject to the repayment requirements of the first
paragraph of this Section 4.02(c) without regard to this
second paragraph. INTERCO may exercise its Deferred
Payment Election (within the parameters specified in this
paragraph) with respect to an issuance or sale of equity of
INTERCO and/or its Restricted Subsidiaries if (x) no
Default or Event of Default exists on the date of delivery
of the Deferred Payment Notice referred to in clause (z)
below, (y) INTERCO effects any prepayment of Revolving
Loans (and cash collateralization of Letter of Credit
Outstandings) that may be required after giving effect to
such Deferred Payment Notice and the resultant increase, if
any, in the Blocked Amount and (z) INTERCO delivers a
Deferred Payment Notice to the Agent on the Business Day
following the date of the consummation of the respective
issuance or sale of equity, with such Deferred Payment
Election being effective with respect to the proceeds of
such issuance or sale of equity to the extent of the
Anticipated Deferred Payment Amount specified in such
Deferred Payment Notice. On the Deferred Payment
Prepayment Date with respect to a Deferred Payment
Election, an amount equal to any remaining Deferred Payment
Prepayment Amount which gave rise to an increase in the
Blocked Amount, if any, for such Deferred Payment Election
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shall be applied to the prepayment of the outstanding
principal of the Term Loans as required by the first
paragraph of this Section 4.02(c).
(d) In addition to any other mandatory
repayments or commitment reductions pursuant to this
Section 4.02, on each date after the Effective Date upon
which INTERCO receives any proceeds from the exercise of
the INTERCO Warrants, an amount equal to 25% (or 100% for
any period from and after any Trigger Date to and including
the Trigger Termination Date relating thereto) of the Net
Cash Proceeds of such exercise shall be applied as a manda-
tory repayment of principal of outstanding Term Loans (or,
if the Initial Borrowing Date has not yet occurred, such
amount shall be applied as a mandatory reduction to the
Total Term Loan Commitment) in accordance with the
requirements of Section 4.02(i) and (j).
(e) In addition to any other mandatory repay-
ments or commitment reductions pursuant to this Section
4.02, on each date after the Effective Date upon which
INTERCO or any of its Restricted Subsidiaries receives any
proceeds from any incurrence by INTERCO or any of its
Restricted Subsidiaries of Indebtedness for borrowed money
((x) including Permitted Subordinated Indebtedness, but
excluding, so long as no Default or Event of Default then
exists (i) an amount of Permitted Subordinated Indebtedness
incurred and simultaneously used to repay, refinance or
otherwise replace the Receivables Facility on or after the
date which is four and one-half years after the Initial
Borrowing Date and (ii) up to $50,000,000 of Permitted
Subordinated Indebtedness issued pursuant to Section
9.04(ii)(x), less the aggregate amount of Disqualified
Preferred Stock issued on or prior to the date of the
incurrence of such Permitted Subordinated Indebtedness
pursuant to Section 9.13(b)(i) and not required to repay
Term Loans as a result of clause (vi)(y) of Section
4.02(c), to the extent such proceeds of the incurrence of
Permitted Subordinated Indebtedness and issuance of
Disqualified Preferred Stock are or were used to effect
Permitted Acquisitions so long as an Authorized
Representative of the Borrowers has delivered a certificate
to the Agent on or prior to such date stating that such
proceeds shall be committed to be used to make such
Permitted Acquisitions within six months following the date
of such incurrence of Permitted Subordinated Indebtedness,
and so long as such proceeds are so used within such time
frame, it being understood and agreed that any amount of
proceeds not so used within such time frame shall at the
end of such six month period be required to be applied as
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otherwise provided in this clause (e), (y) including
Attributed Receivables Facility Indebtedness incurred
pursuant to the Receivables Facility which in aggregate
principal amount exceeds $150,000,000 outstanding at any
time (but excluding other Attributed Receivables Facility
Indebtedness) and (z) excluding any other Indebtedness for
borrowed money permitted to be incurred pursuant to Section
9.04 (excluding, however, clauses (ii) and (xi) thereof) as
such Section is in effect on the Effective Date)), an
amount equal to 100% of the Net Cash Proceeds of the
respective incurrence of Indebtedness shall be applied as a
mandatory repayment of principal of outstanding Term Loans
(or, if the Initial Borrowing Date has not yet occurred,
such amounts shall be applied as a mandatory reduction to
the Total Term Loan Commitment) in accordance with the
requirements of Section 4.02(i) and (j).
(f) In addition to any other mandatory repay-
ments or commitment reductions pursuant to this Section
4.02, on each date after the Effective Date upon which
INTERCO or any of its Restricted Subsidiaries (other than
the Receivables Subsidiary) receives proceeds from any sale
or other disposition of assets (including capital stock and
securities held thereby, but excluding (i) sales or
transfers of inventory in the ordinary course of business,
(ii) sales or transfers of assets with a fair market value
less than (A) $100,000 per such sale or disposition (or in
a series of related sales or dispositions) and (B) with
respect to any sale or transfer in an amount in excess of
the amount referred to in clause (A) above, $1,000,000 in
the aggregate for all such transfers in any Fiscal Year,
(iii) sales or transfers of assets permitted pursuant to
Sections 9.02 (v) and (vi) and (iv) sales of Excluded
Assets, the Net Sales Proceeds of which do not exceed
$15,000,000), an amount equal to 80% (or 100% for any
period from and after any Trigger Date to and including any
Trigger Termination Date related thereto) of the Net Sale
Proceeds therefrom shall be applied as a mandatory
repayment of principal of outstanding Term Loans (or, if
the Initial Borrowing Date has not yet occurred, such
amounts shall be applied as a mandatory reduction to the
Total Term Loan Commitment) in accordance with the require-
ments of Sections 4.02(i) and (j).
(g) In addition to any other mandatory repay-
ments pursuant to this Section 4.02, on each Excess Cash
Flow Payment Date, an amount equal to 50% (or 100% for any
period from and after any Trigger Date to and including the
Trigger Termination Date related thereto) of the Excess
Cash Flow for the relevant Excess Cash Flow Payment Period
-36-
shall be applied as a mandatory repayment of principal of
outstanding Term Loans in accordance with the requirements
of Sections 4.02(i) and (j).
(h) In addition to any other mandatory
repayments or commitment reductions pursuant to this
Section 4.02, within 10 days following each date after the
Effective Date on which INTERCO or any of its Restricted
Subsidiaries receives any proceeds from any Recovery Event
(other than proceeds from Recovery Events in an amount less
than (A) $100,000 per each Recovery Event and (B) with
respect to any Recovery Event with proceeds in excess of
the amount referred to in clause (A) above, $1,000,000 in
the aggregate for all such Recovery Events in any Fiscal
Year), an amount equal to 100% of the proceeds of such
Recovery Event (net of reasonable costs including, without
limitation, legal costs and expenses, and taxes incurred in
connection with such Recovery Event) shall be applied as a
mandatory repayment of principal of outstanding Term Loans
(or, if the Initial Borrowing Date has not yet occurred,
such amounts shall be applied as a mandatory reduction to
the Total Term Loan Commitment in accordance with the
requirements of Sections 4.02(i) and (j)), provided that
(x) so long as no Default or Event of Default then exists
and such proceeds do not exceed $5,000,000, such proceeds
shall not be required to be so applied on such date to the
extent that an Authorized Representative of the Borrowers
has delivered a certificate to the Agent on or prior to
such date stating that such proceeds shall be used or shall
be committed to be used to replace or restore any
properties or assets in respect of which such proceeds were
paid within one year following the date of such Recovery
Event (which certificate shall set forth the estimates of
the proceeds to be so expended) and (y) so long as no
Default or Event of Default then exists and to the extent
that (a) the amount of such proceeds exceeds $5,000,000,
(b) the amount of such proceeds, together with other cash
available to the Borrowers and permitted to be spent by
them or their Restricted Subsidiaries on Capital
Expenditures during the relevant period pursuant to
Section 9.07, equals at least 100% of the cost of replace-
ment or restoration of the properties or assets in respect
of which such proceeds were paid as determined by the
Borrowers and as supported by such estimates or bids from
contractors or subcontractors or such other supporting
information as the Agent may reasonably request, (c) an
Authorized Representative of the Borrower has delivered to
the Agent a certificate on or prior to the date the
application would otherwise be required pursuant to this
Section 4.02(h) in the form described in clause (x) above
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and also certifying its determination as required by
preceding clause (b) and certifying the sufficiency of
business interruption insurance as required by succeeding
clause (d), and (d) an Authorized Representative of the
Borrower has delivered to the Agent such evidence as the
Agent may reasonably request in form and substance reason-
ably satisfactory to the Agent establishing that the Bor-
rowers have sufficient business interruption insurance and
that the Borrowers will receive payment thereunder in such
amounts and at such times as are necessary to satisfy all
obligations and expenses of the Borrowers (including,
without limitation, all debt service requirements,
including pursuant to this Agreement) without any delay or
extension thereof, for the period from the date of the
respective casualty, condemnation or other event giving
rise to the Recovery Event and continuing through the
completion of the replacement or restoration of respective
properties or assets, then the entire amount of the
proceeds of such Recovery Event and not just the portion in
excess of $5,000,000 shall be deposited with the Agent
pursuant to a cash collateral arrangement reasonably
satisfactory to the Agent whereby such proceeds shall be
disbursed to the Borrowers from time to time as needed to
pay actual costs incurred by them in connection with the
replacement or restoration of the respective properties or
assets (pursuant to such certification requirements as may
be established by the Agent), provided further that at any
time while an Event of Default has occurred and is contin-
uing, the Required Banks may direct the Agent (in which
case the Agent shall, and is hereby authorized by the Bor-
rowers to, follow said directions) to apply any or all pro-
ceeds then on deposit in such collateral account to the re-
payment of Obligations hereunder in the same manner as pro-
ceeds would be applied pursuant to the Security Agreement,
and provided further, that if all or any portion of such
proceeds not required to be applied to the repayment of
Term Loans pursuant to the second preceding proviso
(whether pursuant to clause (x) or (y) thereof) are either
(A) not so used or committed to be so used within one year
after the date of the respective Recovery Event or (B) if
committed to be used within one year after the date of
receipt of such Net Sale Proceeds and not so used within 18
months after the date of respective Recovery Event then, in
either such case, such remaining portion not used or com-
mitted to be used in the case of preceding clause (A) and
not used in the case of preceding clause (B) shall be
applied on the date which is the first anniversary of the
date of the respective Recovery Event in the case of clause
(A) above or the date occurring 18 months after the date of
the respective Recovery Event in the case of clause (B)
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above as a mandatory repayment of principal of outstanding
Term Loans in accordance with the requirements of Sections
4.02(i) and (j).
(i) Any amount required to be applied to Term
Loans pursuant to this Section 4.02 shall be applied to
reduce the then remaining Scheduled Repayments pro rata
based upon the then remaining amount of Scheduled
Repayments after giving effect to all prior reductions
thereto.
(j) With respect to each repayment of Loans re-
quired by this Section 4.02, the Borrowers may designate
the Types of Loans of the respective Tranche which are to
be repaid and, in the case of Eurodollar Loans, the spec-
ific Borrowing or Borrowings of the respective Tranche pur-
suant to which made, provided that: (i) repayments of
Eurodollar Loans pursuant to this Section 4.02 may only be
made on the last day of an Interest Period applicable
thereto unless all Eurodollar Loans of the respective
Tranche with Interest Periods ending on such date of re-
quired repayment and all Base Rate Loans of the respective
Tranche have been paid in full; (ii) if any repayment of
Eurodollar Loans made pursuant to a single Borrowing shall
reduce the outstanding Eurodollar Loans made pursuant to
such Borrowing to an amount less than (x) in the case of
Term Loans, $5,000,000 and (y) in the case of Revolving
Loans, $1,000,000, such Borrowing shall be converted at the
end of the then current Interest Period into a Borrowing of
Base Rate Loans; and (iii) each repayment of any Loans made
pursuant to a Borrowing shall, except as set forth in
Section 4.02(a), be applied pro rata among such Loans. In
the absence of a designation by the Borrowers as described
in the preceding sentence, the Agent shall, subject to the
above, make such designation in its sole discretion with a
view, but no obligation, to minimize breakage costs owing
under Section 1.11.
(k) Notwithstanding anything to the contrary
contained elsewhere in this Agreement, (i) all then out-
standing Swingline Loans shall be repaid in full on the
Swingline Expiry Date and (ii) all other then outstanding
Loans shall be repaid in full on the Final Maturity Date.
4.03 Method and Place of Payment. Except as
otherwise specifically provided herein, all payments under
this Agreement or any Note shall be made to the Agent for
the account of the Bank or Banks entitled thereto not later
than 12:00 Noon (New York time) on the date when due and
shall be made in Dollars in immediately available funds at
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the Payment Office of the Agent. Any payments received by
the Agent after such time shall be deemed to have been
received on the next Business Day. Whenever any payment to
be made hereunder or under any Note shall be stated to be
due on a day which is not a Business Day, the due date
thereof shall be extended to the next succeeding Business
Day and, with respect to payments of principal, interest
shall be payable at the applicable rate during such exten-
sion.
4.04 Net Payments. (a) All payments made by
the Borrowers hereunder or under any Note will be made
without setoff, counterclaim or other defense. Except as
provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding
for, any present or future taxes, levies, imposts, duties,
fees, assessments or other charges of whatever nature now
or hereafter imposed by any jurisdiction or by any poli-
tical subdivision or taxing authority thereof or therein
with respect to such payments (but excluding, except as
provided in the second succeeding sentence, any tax imposed
on or measured by the net income or net profits of a Bank
pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office
or applicable lending office of such Bank is located or any
subdivision thereof or therein) and all interest, penalties
or similar liabilities with respect thereto (all such non-
excluded taxes, levies, imports, duties, fees, assessments
or other charges being referred to collectively as
"Taxes"). If any Taxes are so levied or imposed, the
Borrowers jointly and severally agree to pay the full
amount of such Taxes, and such additional amounts as may be
necessary so that every payment of all amounts due under
this Agreement or under any Note, after withholding or
deduction for or on account of any Taxes, will not be less
than the amount provided for herein or in such Note. If
any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrowers agree to reimburse each
Bank, upon the written request of such Bank, for taxes
imposed on or measured by the net income or net profits of
such Bank pursuant to the laws of the jurisdiction in which
the principal office or applicable lending office of such
Bank is located or under the laws of any political subdivi-
sion or taxing authority of any such jurisdiction in which
the principal office or applicable lending office of such
Bank is located and for any withholding of income or
similar taxes imposed by the United States of America as
such Bank shall determine are payable by, or withheld from,
such Bank in respect of such amounts so paid to or on
behalf of such Bank pursuant to the preceding sentence and
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in respect of any amounts paid to or on behalf of such Bank
pursuant to this sentence. The Borrowers will furnish to
the Agent within 45 days after the date the payment of any
Taxes is due pursuant to applicable law certified copies of
tax receipts evidencing such payment by the Borrowers. The
Borrowers jointly and severally agree to indemnify and hold
harmless each Bank, and reimburse such Bank upon its
written request, for the amount of any Taxes so levied or
imposed and paid by such Bank.
(b) Each Bank that is not a United States person
(as such term is defined in Section 7701(a)(30) of the
Code) agrees to deliver to the Borrowers and the Agent on
or prior to the Effective Date, or in the case of a Bank
that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the
respective Bank was already a Bank hereunder immediately
prior to such assignment or transfer), on the date of such
assignment or transfer to such Bank, (i) two accurate and
complete original signed copies of Internal Revenue Service
Form 4224 or 1001 (or successor forms) certifying to such
Bank's entitlement to a complete exemption from United
States withholding tax with respect to payments to be made
under this Agreement and under any Note, or (ii) if the
Bank is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and cannot deliver either Internal
Revenue Service Form 1001 or 4224 pursuant to clause (i)
above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 4.04(b)(ii)
Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or
successor form) certifying to such Bank's entitlement to a
complete exemption from United States withholding tax with
respect to payments of interest to be made under this
Agreement and under any Note. In addition, each Bank
agrees that from time to time after the Effective Date,
when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any
material respect, it will deliver to the Borrowers and the
Agent two new accurate and complete original signed copies
of Internal Revenue Service Form 4224 or 1001, or Form W-8
and a Section 4.04(b)(ii) Certificate, as the case may be,
and such other forms as may be required in order to confirm
or establish the entitlement of such Bank to a continued
exemption from or reduction in United States withholding
tax with respect to payments under this Agreement and any
Note, or it shall immediately notify the Borrowers and the
Agent of its inability to deliver any such Form or
Certificate. Notwithstanding anything to the contrary
contained in Section 4.04(a), but subject to Section
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13.04(b) and the immediately succeeding sentence, (x) the
Borrowers shall be entitled, to the extent they are
required to do so by law, to deduct or withhold income or
similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or
therein) from interest, fees or other amounts payable
hereunder for the account of any Bank which is not a United
States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax
purposes to the extent that such Bank has not provided to
the Borrowers U.S. Internal Revenue Service Forms that
establish a complete exemption from such deduction or
withholding and (y) the Borrowers shall not be obligated
pursuant to Section 4.04(a) hereof to gross-up payments to
be made to a Bank in respect of income or similar taxes
imposed by the United States if (I) such Bank has not
provided to the Borrowers the Internal Revenue Service
Forms required to be provided to the Borrowers pursuant to
this Section 4.04(b) or (II) in the case of a payment,
other than interest, to a Bank described in clause (ii)
above, to the extent that such forms do not establish a
complete exemption from withholding of such taxes.
Notwithstanding anything to the contrary contained in the
preceding sentence or elsewhere in this Section 4.04 and
except as set forth in Section 13.04(b), the Borrowers
agree to pay additional amounts and to indemnify each Bank
in the manner set forth in Section 4.04(a) (without regard
to the identity of the jurisdiction requiring the deduction
or withholding) in respect of any amounts deducted or with-
held by it as described in the immediately preceding sen-
tence as a result of any changes after the Effective Date
in any applicable law, treaty, governmental rule,
regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income
or similar Taxes.
(c) The provisions of this Section 4.04 are
subject to the provisions of Section 13.15 (to the extent
applicable).
SECTION 5. Conditions Precedent to Initial
Credit Events. The obligation of each Bank to make Loans,
and the obligation of each Issuing Bank to issue Letters of
Credit, on the Initial Borrowing Date, is subject at the
time of the making of such Loans or the issuance of such
Letters of Credit to the satisfaction of the following
conditions:
5.01 Execution of Agreement; Notes. On or prior
to the Initial Borrowing Date (i) the Effective Date shall
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have occurred and (ii) there shall have been delivered to
the Agent for the account of each of the Banks the appro-
priate Term Note and/or Revolving Note executed by the
Borrowers, and to BTCo the Swingline Note executed by the
Borrowers, in each case in the amount, maturity and as
otherwise provided herein.
5.02 Fees, etc. On the Initial Borrowing Date,
the Borrowers shall have paid to the Agent and the Banks
all costs, fees and expenses (including, without
limitation, legal fees and expenses) payable to the Agent
and the Banks to the extent then due.
5.03 Opinions of Counsel. On the Initial Bor-
rowing Date, the Agent shall have received (i) from Lynn
Chipperfield, Esq., General Counsel to INTERCO and its
Restricted Subsidiaries, an opinion addressed to the Agent
and each of the Banks and dated the Initial Borrowing Date
covering the matters set forth in Exhibit E-1, (ii) from
Bryan Cave, special counsel to INTERCO and its Restricted
Subsidiaries, an opinion addressed to the Agent and each of
the Banks and dated the Initial Borrowing Date covering the
matters set forth in Exhibit E-2 and (iii) from local
counsel satisfactory to the Agent, opinions each of which
shall be in form and substance reasonably satisfactory to
the Agent and the Required Banks and shall cover the per-
fection of the security interests granted pursuant to the
Security Agreement and the Mortgages and such other matters
incident to the transactions contemplated herein as the
Agent may reasonably request.
5.04 Corporate Documents; Proceedings; etc. (a)
On the Initial Borrowing Date, the Agent shall have
received a certificate, dated the Initial Borrowing Date,
signed by the Chairman or an Authorized Representative of
each Credit Party, and attested to by the Secretary or any
Assistant Secretary of such Credit Party, in the form of
Exhibit F with appropriate modifications, together with
copies of the Certificate of Incorporation and By-Laws of
such Credit Party and the resolutions of such Credit Party
referred to in such certificate, and the foregoing shall be
reasonably acceptable to the Agent.
(b) All corporate and legal proceedings and all
instruments and agreements in connection with the transac-
tions contemplated by this Agreement and the other Docu-
ments shall be reasonably satisfactory in form and
substance to the Agent and the Required Banks, and the
Agent shall have received all information and copies of all
documents and papers, including records of corporate
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proceedings, governmental approvals, good standing
certificates and bring-down telegrams or facsimiles, if
any, which the Agent reasonably may have requested in con-
nection therewith, such documents and papers where appro-
priate to be certified by proper corporate or governmental
authorities.
5.05 Shareholders' Agreements; Collective
Bargaining Agreements; Permitted Debt Agreements; Tax
Sharing Agreements; Services Agreements. (a) On the
Initial Borrowing Date, there shall have been delivered to
the Agent true and correct copies, certified as true and
complete by an appropriate officer of INTERCO or the other
Borrowers, as the case may be, of (i) all agreements
entered into by INTERCO or any of its Restricted Subsidi-
aries governing the terms and relative rights of its
capital stock and any agreements entered into by
shareholders relating to any such entity with respect to
its capital stock (collectively, the "Shareholders' Agree-
ments"), (ii) all collective bargaining agreements applying
or relating to any employee of INTERCO or any of its
Restricted Subsidiaries (collectively, the "Collective Bar-
gaining Agreements"), (iii) all agreements evidencing or
relating to Existing Indebtedness, (collectively, the
"Permitted Debt Agreements") and (iv) all information with
respect to the Surviving Guaranties, to the extent copies
thereof were requested by the Agent prior to the Effective
Date; all of which Shareholders' Agreements, Collective
Bargaining Agreements and Permitted Debt Agreements shall
be in form and substance reasonably satisfactory to the
Agent and the Required Banks and shall be in full force and
effect on the Initial Borrowing Date.
(b) On or before the Initial Borrowing Date, (x)
each of (i) the Borrowers and their Restricted
Subsidiaries, (ii) INTERCO and Florsheim, and (iii) INTERCO
and Converse shall have entered into separate Tax Sharing
Agreements and (y) each of (i) INTERCO and Florsheim and
(ii) INTERCO and Converse shall have entered into separate
Services Agreements, all of which Tax Sharing Agreements
and Services Agreements shall be in full force and effect
and shall be the only such agreements relating to the
subject matter covered thereby in existence, and all of the
foregoing shall be in form and substance satisfactory to
the Agent and the Required Banks.
5.06 Solvency Letter; Environmental Analyses;
Insurance Matters. On or before the Initial Borrowing
Date, the Borrowers shall cause to be delivered to the
Agent (i) a solvency letter in form and substance
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satisfactory to the Agent from Houlihan Lokey Howard &
Zukin or any other independent valuation firm acceptable to
the Agent, setting forth its conclusions that, after giving
effect to the Transaction and the incurrence of all the
financings contemplated herein, each of Florsheim, Converse
and the Borrowers (on a stand-alone basis) and each of
Florsheim, Converse and the Borrowers and their respective
Subsidiaries (on a consolidated basis) is not insolvent,
and has not been rendered insolvent by the Indebtedness
incurred in connection therewith (assuming the full
utilization of the Commitments), and will not be left with
unreasonably small capital with which to engage in its
and/or their businesses and will not have incurred debts
beyond its and/or their ability to pay such debts as they
mature, (ii) environmental review and reports prepared by
an engineering consultant selected by the Agent, the
results of which will be in scope, form and substance
acceptable to the Agent and the Required Banks, and (iii)
evidence of insurance complying with the requirements of
Section 8.03 for the business and properties of INTERCO and
its Restricted Subsidiaries, in scope, form and substance
reasonably satisfactory to the Agent and the Required Banks
and naming the Collateral Agent as an additional insured
and/or loss payee, and stating that such insurance shall
not be cancelled or revised without 30 days prior written
notice by the insurer to the Agent.
5.07 Consummation of the Florsheim Recapitaliza-
tion. On or prior to the Initial Borrowing Date, (i)
Florsheim shall have obtained gross cash proceeds from in-
ternally generated funds and/or proceeds of Indebtedness or
other financings to be incurred by Florsheim without
recourse to INTERCO or its other Subsidiaries (the
"Florsheim Financing") in an aggregate amount, when added
to the amount of the Converse Financing described in
Section 5.08(i) below, equal to at least $180,000,000, (ii)
Florsheim shall have used such proceeds to repay or
otherwise satisfy its outstanding Indebtedness and/or its
allocated share of joint and several Indebtedness of
INTERCO and its Subsidiaries and pay fees and expenses in
connection with the Florsheim Disposition and Florsheim
Financing (the "Florsheim Application"), (iii) following
the consummation of the Florsheim Financing and the
Florsheim Application, Florsheim shall be spun-off or dis-
tributed to shareholders of INTERCO (the "Florsheim
Disposition") and (iv) there shall have been delivered to
the Agent true and correct copies of all Florsheim Docu-
ments, which shall be in form and substance satisfactory to
the Agent.
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5.08 Consummation of the Converse Recapitaliza-
tion. On or prior to the Initial Borrowing Date (i)
Converse shall have obtained gross cash proceeds from
internally generated funds and/or proceeds of Indebtedness
or other financings to be incurred by Converse without
recourse to INTERCO or its other Subsidiaries (the
"Converse Financing") in an aggregate amount, when added to
the amount of the Florsheim Financing described in Section
5.07(i) above, equal to at least $180,000,000, (ii)
Converse shall have used such proceeds to repay or
otherwise satisfy its outstanding Indebtedness and/or its
allocated share of outstanding joint and several
Indebtedness of INTERCO and its Subsidiaries and pay fees
and expenses in connection with the Converse Disposition
and Converse Financing (the "Converse Application"), (iii)
following the consummation of the Converse Financing and
the Converse Application, Converse shall be spun-off or
distributed to shareholders of INTERCO (the "Converse Dis-
position") and (iv) there shall have been delivered to the
Agent true and correct copies of all Converse Documents,
which shall be in form and substance satisfactory to the
Agent.
5.09 Receivables Facility. On or prior to the
Initial Borrowing Date, (i) the initial sale of receivables
shall have been effected pursuant to the Receivables
Facility, (ii) such sale shall have generated net cash
proceeds to Lane, Broyhill and Action of at least
$125,000,000, (iii) Lane, Broyhill and Action shall have
used such proceeds to repay or otherwise satisfy their
outstanding Indebtedness and/or their allocated portion of
outstanding joint and several Indebtedness of INTERCO and
its Subsidiaries and to pay fees and expenses in connection
with the Receivables Facility and (iv) there shall have
been delivered to the Agent true and correct copies of all
Receivables Documents, which shall be in full force and
effect and shall be in form and substance satisfactory to
the Agent, and all conditions set forth in the Receivables
Documents shall have been satisfied and not waived (unless
waived with the consent of the Agent).
5.10 Refinancing. (a) On or prior to the
Initial Borrowing Date or concurrently with the Credit
Events then occurring, all commitments under the Terminated
Debt Agreements shall have been terminated, and all loans
and other obligations and notes issued thereunder shall
have been repaid in full, permanently defeased or satisfied
and discharged, together with interest thereon, all letters
of credit issued under any Terminated Debt Agreement shall
have been assumed as Existing Letters of Credit, terminated
-46-
or supported by one or more Letters of Credit issued
hereunder (in which case all obligations of INTERCO and its
Restricted Subsidiaries in respect of such supported
letters of credit shall be terminated and released) and all
other amounts owing pursuant to the Terminated Debt Agree-
ments shall have been repaid in full, permanently defeased
or otherwise satisfied and discharged in the manner
provided in the Terminated Debt Agreements. The Agent
shall have received evidence in form, scope and substance
reasonably satisfactory to it that the matters set forth in
this Section 5.10(a) have been satisfied on such date.
(b) On or prior to the Initial Borrowing Date or
concurrently with the Credit Events then occurring, the
creditors under the Terminated Debt Agreements shall have
terminated and released all security interests and Liens on
the capital stock of INTERCO and any of its Subsidiaries,
or any other assets owned by INTERCO or any of its
Restricted Subsidiaries granted in connection with the
Terminated Debt Agreements. The Agent shall have received
such releases of security interests in and Liens on the
capital stock of INTERCO and any of its Subsidiaries, or
any other assets owned by INTERCO and its Restricted
Subsidiaries, as may have been reasonably requested by the
Agent, which releases shall be in form and substance
reasonably satisfactory to the Agent. Without limiting the
foregoing, there shall have been delivered (i) proper
termination statements (Form UCC-3 or the appropriate
equivalent) for filing under the UCC of each jurisdiction
where a financing statement (Form UCC-1 or the appropriate
equivalent) was filed with respect to INTERCO or any of its
Subsidiaries in connection with the security interests
created with respect to the Terminated Debt Agreements and
the documentation related thereto, (ii) terminations or
assignments of any security interest in, or Lien on, any
patents, trademarks, copyrights, or similar interests of
INTERCO or any of its Restricted Subsidiaries on which
filings have been made and (iii) terminations of all mort-
gages, leasehold mortgages and deeds of trust created with
respect to property of INTERCO or any of its Restricted
Subsidiaries, in each case to secure the obligations under
the Terminated Debt Agreements, all of which shall be in
form and substance reasonably satisfactory to the Agent.
5.11 Consummation of the Transaction. At the
time of the initial Credit Event, INTERCO, Florsheim,
Converse, and their respective Subsidiaries shall use all
proceeds received by them pursuant to Sections 5.07, 5.08
and 5.09 to effectuate the Refinancing and otherwise
consummate the Transaction prior to, or concurrently with,
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the initial Credit Event hereunder. At the time of the
initial Credit Events, the Transaction shall have been
consummated (or shall concurrently with the Credit Events
then occurring be consummated), in compliance with the
Transaction Documents and with applicable laws, and all
conditions set forth in any Transaction Document shall have
been satisfied and not waived (unless waived with the
consent of the Agent).
5.12 Subsidiary Guaranty. On the Initial
Borrowing Date, each Subsidiary Guarantor shall have duly
authorized, executed and delivered the Subsidiary Guaranty
in the form of Exhibit G hereto (as modified, supplemented
or amended from time to time, the "Subsidiary Guaranty").
5.13 Pledge Agreement. On the Initial Borrowing
Date, each Credit Party shall have duly authorized, execu-
ted and delivered a Pledge Agreement in the form of Exhibit
H (as modified, supplemented or amended from time to time,
the "Pledge Agreement") and shall have delivered to the
Collateral Agent, as Pledgee, all the Pledged Securities
referred to therein then owned by such Credit Party, (x)
endorsed in blank in the case of promissory notes
constituting Pledged Securities and (y) together with
executed and undated stock powers, in the case of capital
stock constituting Pledged Securities.
5.14 Security Agreement. On the Initial Bor-
rowing Date, each Credit Party shall have duly authorized,
executed and delivered a Security Agreement in the form of
Exhibit I (as modified, supplemented or amended from time
to time, the "Security Agreement") covering all of such
Credit Party's present and future Security Agreement Col-
lateral, together with:
(a) proper Financing Statements (Form UCC-1)
fully executed for filing under the UCC or other
appropriate filing offices of each jurisdiction as may
be necessary or, in the reasonable opinion of the
Collateral Agent, desirable to perfect the security
interests purported to be created by the Security
Agreement and evidence satisfactory to the Collateral
Agent that such Financing Statements shall be filed
prior to any Financing Statements filed pursuant to
the Receivables Facility;
(b) certified copies of Requests for Information
or Copies (Form UCC-11), or equivalent reports,
listing all effective financing statements that name
any Credit Party as debtor and that are filed in the
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jurisdictions referred to in clause (a) above,
together with copies of such other financing state-
ments (none of which shall cover the Collateral except
to the extent evidencing Permitted Liens or in respect
of which the Collateral Agent shall have received
termination statements (Form UCC-3) or such other
termination statements as shall be required by local
law) fully executed for filing;
(c) evidence of the completion of all other re-
cordings and filings of, or with respect to, the Secu-
rity Agreement as may be necessary or, in the
reasonable opinion of the Collateral Agent, desirable
to perfect the security interests intended to be
created by the Security Agreement;
(d) lockbox agreements and other agreements from
deposit banks utilized pursuant to the Cash Management
System, recognizing the security interests granted
pursuant thereto and directing payments from deposit
accounts to be made to the Concentration Account; and
(e) evidence that all other actions necessary
or, in the reasonable opinion of the Collateral Agent,
desirable to perfect and protect the security
interests purported to be created by the Security
Agreement have been taken.
5.15 Mortgages; Title Insurance; Surveys; etc.
On the Initial Borrowing Date, the Collateral Agent shall
have received:
(a) fully executed counterparts of mortgages or
deeds to secure debt in each case in form and
substance reasonably satisfactory to the Agent (each,
a "Mortgage" and, collectively, the "Mortgages"),
which Mortgages shall cover such of the Real Property
owned or leased by the Borrowers or any of their
respective Restricted Subsidiaries as shall be desig-
nated as such on Schedule III (each, a "Mortgaged
Property" and, collectively, the "Mortgaged Proper-
ties"), together with evidence that counterparts of
the Mortgages have been delivered to the title insur-
ance company insuring the Lien of the Mortgages for
recording in all places to the extent necessary or, in
the reasonable opinion of the Collateral Agent, desir-
able to effectively create a valid and enforceable
first priority mortgage lien (subject to Permitted
Liens) on each Mortgaged Property in favor of the
Collateral Agent (or such other trustee as may be
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required or desired under local law) for the benefit
of the Secured Creditors;
(b) mortgagee title insurance policies on each
Mortgaged Property issued by Lawyers' Title Insurance
Company or such other title insurers reasonably satis-
factory to the Collateral Agent (the "Mortgage
Policies") in amounts satisfactory to the Agent and
the Required Banks assuring the Collateral Agent that
the Mortgages on such Mortgaged Properties are valid
and enforceable first priority mortgage liens on the
respective Mortgaged Properties, free and clear of all
defects and encumbrances except Permitted Encumbrances
and such Mortgage Policies shall otherwise be in form
and substance reasonably satisfactory to the Agent and
the Required Banks and shall include, as appropriate,
an endorsement for future advances under this Agree-
ment and the Notes and for any other matter that the
Collateral Agent in its reasonable discretion may
reasonably request, shall not include an exception for
mechanics' liens, and shall provide for affirmative
insurance and such reinsurance as the Collateral Agent
in its discretion may reasonably request; and
(c) a perimeter survey (including, without
limitation, notations identifying any encroachments or
overlaps), in form and substance satisfactory to the
Collateral Agent, of each Mortgaged Property,
certified by a licensed professional surveyor
satisfactory to the Collateral Agent.
5.16 Consent Letter. On the Initial Borrowing
Date, the Agent shall have received a letter from CT
Corporation System, presently located at 1633 Broadway, New
York, New York 10019, substantially in the form of Exhibit
J, indicating its consent to its appointment by each Credit
Party as its agent to receive service of process as spec-
ified in Section 13.08 or in the respective Security
Document.
5.17 Adverse Change; Governmental Approvals;
etc. (a) On the Initial Borrowing Date, nothing shall
have occurred (and the Banks shall have become aware of no
facts, conditions or other information not previously
known) which the Agent or the Required Banks reasonably
believe could have a material adverse effect on the rights
or remedies of the Agent or the Banks, or on the ability of
the Credit Parties to perform their respective obligations
to the Agent and the Banks or which the Agent or the
Required Banks reasonably believe would have a material
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adverse effect on the operations, property, assets,
liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or the
Borrowers and their Restricted Subsidiaries taken as a
whole.
(b) On the Initial Borrowing Date, there shall
have been no material adverse change after the Effective
Date to the syndication market for credit facilities
similar in nature to this Agreement and there shall not
have occurred and be continuing a material disruption of or
a material adverse change in financial, banking or capital
markets that would have a material adverse effect on the
syndication, in each case as determined by the Agent in its
sole discretion.
(c) On or prior to the Initial Borrowing Date,
all necessary and material governmental (domestic and
foreign) and third party approvals in connection with the
Transaction shall have been obtained and remain in effect,
and all applicable waiting periods shall have expired
without any action being taken by any competent authority
which restrains, prevents or imposes materially adverse
conditions upon the consummation of the Transaction.
Additionally, there shall not exist any judgment, order,
injunction or other restraint issued or filed or a hearing
seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse condi-
tions upon the making of any Loan, issuance of any Letter
of Credit or the consummation of the Transaction.
5.18 Litigation. On the Initial Borrowing Date,
no litigation by any entity (private or governmental) shall
be pending or threatened with respect to the Transaction or
any documentation executed in connection therewith
(including any Credit Document), or which the Agent or the
Required Banks shall reasonably believe could have a
materially adverse effect on the Transaction or the busi-
ness, property, assets, nature of assets, liabilities, con-
dition (financial or otherwise) or prospects of the
Borrowers taken as a whole or the Borrowers and their
Restricted Subsidiaries taken as a whole.
5.19 Pro Forma Balance Sheet; Financial State-
ments; Projections. (a) On or prior to the Initial
Borrowing Date, there shall have been delivered to the
Agent an unaudited pro forma consolidated and consolidating
balance sheet of INTERCO and its Subsidiaries and a
combined balance sheet of INTERCO and its Restricted
Subsidiaries as of September 30, 1994 and after giving
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effect to the Transaction and prepared in accordance with
generally accepted accounting principles, together with (x)
historical consolidated and consolidating financial
statements of INTERCO and its Subsidiaries and combined
financial statements of INTERCO and its Restricted
Subsidiaries, in each case, for the last fiscal quarter
ending before the Initial Borrowing Date and (y) historical
consolidated and consolidating financial statements of
INTERCO and its Subsidiaries and combined financial
statements of INTERCO and its Restricted Subsidiaries, in
each case for the five Fiscal Years preceding such fiscal
quarter referred to in the foregoing clause (x), which his-
torical statements shall (i) be audited, in the case of
combined income and cash flow statements for the three most
recent Fiscal Years and in the case of the balance sheets
for the two most recent Fiscal Years and (ii) be certified
by an officer of either INTERCO or the other Borrowers, as
the case may be, in the case of the five most recent Fiscal
Years.
(b) On or prior to the Initial Borrowing Date,
there shall have been delivered to the Agent:
(i) the consolidated and consolidating balance
sheet of INTERCO and its Subsidiaries as of the end of
each calendar month of INTERCO ended after June 30,
1994 and the related consolidated and consolidating
statement of income and statement of cash flows for
each such month, and for the elapsed portion of the
calendar year ended with the last day of each such
month, in each case setting forth comparative figures
for the corresponding month in the prior calendar year
and compared to the budget delivered to the Banks for
the then current calendar year, which financial
statements shall be prepared in accordance with GAAP
and shall be in form and substance satisfactory to the
Agent; and
(ii) the consolidated and consolidating balance
sheet of INTERCO and its Subsidiaries as of the end of
each fiscal quarter of INTERCO ended after December
31, 1993, and the related consolidated and
consolidating statements of earnings, shareholder's
equity and cash flows for such quarterly periods and
the elapsed portion of the Fiscal Year ended with the
last day of each such quarter, in each case setting
forth comparative figures for the related periods in
the prior Fiscal Year and compared to the budget
delivered to the Banks for the then current Fiscal
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Year, all of which shall be certified by the chief
financial officer of INTERCO.
(c) On or prior to the Initial Borrowing Date
there shall have been delivered to the Agent "management
case" projected combined financial statements of INTERCO
and its Restricted Subsidiaries, set forth in the
Confidential Memorandum dated September, 1994, for the
period from December 31, 1994 to December 31, 1998 (the
"Projections"), which Projections (x) shall reflect the
forecasted combined financial conditions and income and
expenses of INTERCO and its Restricted Subsidiaries after
giving affect to the Transaction and the related financing
thereof and the other transactions contemplated hereby and
(y) shall be satisfactory in form and substance to the
Agent.
5.20 Cash Management System. On or prior to the
Initial Borrowing Date, INTERCO and its Restricted Subsi-
diaries shall create a cash management system (the "Cash
Management System") satisfactory to the Agent (it being
understood that the cash management system provided by an
Affiliate of the Agent prior to the Effective Date, as
modified to permit separate accounts for the Receivables
Facility, shall be satisfactory to the Agent), and all
agreements related thereto shall have been delivered to the
Agent and shall be satisfactory to the Agent.
5.21 Closing Officer's Certificate Regarding
Estimated Converse Tax Liability and INTERCO Tax Basis. On
the Initial Borrowing Date, the Agent shall have received a
certificate of the chief financial officer of INTERCO
certifying as to (x) the amount of the Converse Tax
Liability (determined as described in clause (x) of the
definition thereof, it being understood that such
calculation of the amount of the Converse Tax Liability
shall be determined based on the anticipated range of
values for the capital stock of Converse immediately after
the Converse Disposition) and (y) the amounts set forth in
Section 7.09(b), which certificate shall set forth the
calculations of the matters described therein and the
timing of any estimated payments in respect of the Converse
Tax Liability, all in form and substance satisfactory to
the Agent and the Required Banks.
SECTION 6. Conditions Precedent to All Credit
Events. The obligation of each Bank to make Loans (includ-
ing Loans made on the Initial Borrowing Date but excluding
Mandatory Borrowings made thereafter, which shall be made
as provided in Section 1.01(d)), and the obligation of an
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Issuing Bank to issue any Letter of Credit, is subject, at
the time of each such Credit Event (except as hereinafter
indicated), to the satisfaction of the following
conditions:
6.01 No Default; Representations and Warranties.
At the time of each such Credit Event and also after giving
effect thereto (i) there shall exist no Default or Event of
Default and (ii) all representations and warranties con-
tained herein or in any other Credit Document shall be true
and correct in all material respects with the same effect
as though such representations and warranties had been made
on the date of the making of such Credit Event (it being
understood and agreed that any representation or warranty
which by its terms is made as of a specified date shall be
required to be true and correct in all material respects
only as of such specified date).
6.02 Notice of Borrowing; Letter of Credit Re-
quest. (a) Prior to the making of each Loan (excluding
Swingline Loans), the Agent shall have received the notice
required by Section 1.03(a). Prior to the making of any
Swingline Loan, BTCo shall have received the notice
required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of
Credit, the Agent and the respective Issuing Bank shall
have received a Letter of Credit Request meeting the
requirements of Section 2.03.
The acceptance of the benefit of each Credit
Event shall constitute a representation and warranty by the
Borrowers to the Agent and each of the Banks that all the
conditions specified in Section 5 and in this Section 6 and
applicable to such Credit Event exist as of that time
(except to the extent that any of the conditions specified
in Section 5 are required to be satisfactory to or
determined by any Bank, the Required Banks and/or the
Agent). All of the Notes, certificates, legal opinions and
other documents and papers referred to in Section 5 and in
this Section 6, unless otherwise specified, shall be
delivered to the Agent at the Notice Office for the account
of each of the Banks and, except for the Notes, in
sufficient counterparts or copies for each of the Banks and
shall be in form and substance reasonably satisfactory to
the Banks.
SECTION 7. Representations, Warranties and
Agreements. In order to induce the Banks to enter into
this Agreement and to make the Loans, and issue (or partic-
-54-
ipate in) the Letters of Credit as provided herein, each of
the Borrowers makes the following representations,
warranties and agreements, in each case after giving effect
to the Transaction consummated on the Initial Borrowing
Date, all of which shall survive the execution and delivery
of this Agreement and the Notes and the making of the Loans
and issuance of the Letters of Credit, with the occurrence
of each Credit Event on or after the Initial Borrowing Date
being deemed to constitute a representation and warranty
that the matters specified in this Section 7 are true and
correct in all material respects on and as of the Initial
Borrowing Date and on the date of each such Credit Event
(it being understood and agreed that any representation or
warranty which by its terms is made as of a specified date
shall be required to be true and correct in all material
respects only as of such specified date).
7.01 Corporate Status. INTERCO and each of its
Restricted Subsidiaries (i) is a duly organized and validly
existing corporation in good standing under the laws of the
jurisdiction of its incorporation, (ii) has the corporate
power and authority to own its property and assets and to
transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is
authorized to do business and is in good standing in each
jurisdiction where the conduct of its business requires
such qualifications except for failures to be so qualified
which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the
Borrowers taken as a whole or of the Borrowers and their
Restricted Subsidiaries taken as a whole.
7.02 Corporate Power and Authority. Each Credit
Party has the corporate power and authority to execute,
deliver and perform the terms and provisions of each of the
Documents to which it is party and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of such Documents. Each Credit
Party has duly executed and delivered each of the Documents
to which it is party, and each of such Documents
constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms,
except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally
affecting creditors' rights and by equitable principles
(regardless of whether enforcement is sought in equity or
at law).
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7.03 No Violation. Neither the execution,
delivery or performance by any Credit Party of the
Documents to which it is a party, nor compliance by it with
the terms and provisions thereof, (i) will contravene any
provision of any applicable law, statute, rule or
regulation or any applicable order, writ, injunction or
decree of any court or governmental instrumentality, (ii)
will conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or consti-
tute a default under, or result in the creation or impos-
ition of (or the obligation to create or impose) any Lien
(except pursuant to the Security Documents) upon any of the
material properties or assets of INTERCO or any of its
Restricted Subsidiaries pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement or
loan agreement, or any other material agreement, contract
or instrument, to which INTERCO or any of its Restricted
Subsidiaries is a party or by which it or any of its prop-
erty or assets is bound or to which it may be subject or
(iii) will violate any provision of the Certificate of
Incorporation or By-Laws of INTERCO or any of its
Restricted Subsidiaries.
7.04 Governmental Approvals. No order, consent,
approval, license, authorization or validation of, or fil-
ing, recording or registration with (except (i) as have
been obtained or made prior to the Initial Borrowing Date
and (ii) other than UCC-1 filings performed pursuant to
Section 5.14, which filings, if this representation is
being made on a date which is more than ten days after the
Initial Borrowing Date, have been made), or exemption by,
any governmental or public body or authority, or any subdi-
vision thereof, is required to authorize, or is required in
connection with, (i) the execution, delivery and perform-
ance of any Document or (ii) the legality, validity, bind-
ing effect or enforceability of any such Document except,
with respect to the Transaction Documents, where the
failure to so obtain would not have a material adverse
effect on the business, operations, property, assets,
liabilities, conditions (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the Bor-
rowers and their Restricted Subsidiaries taken as a whole.
7.05 Financial Statements; Financial Condition;
Undisclosed Liabilities; Projections; etc. (a) (i) The
consolidated and consolidating statements of financial
condition of INTERCO and its Subsidiaries, and the combined
statements of financial condition of INTERCO and its Re-
stricted Subsidiaries, in each case at December 31, 1993
and September 30, 1994 and the related consolidated and
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consolidating statements of income and cash flow and
changes in shareholders' equity of INTERCO and its
Subsidiaries and combined statements of income and cash
flow and changes in shareholders' equity of INTERCO and its
Restricted Subsidiaries, in each case for the Fiscal Year
and nine-month period ended on such dates, as the case may
be, and furnished to the Banks prior to the Effective Date,
(ii) the consolidated and consolidating balance sheet of
INTERCO and its Subsidiaries as of the end of each calendar
month of INTERCO ended after June 30, 1994 and the related
consolidated and consolidating statement of income and
statement of cash flows of INTERCO and its Subsidiaries for
each such month, and furnished to the Banks prior to the
Effective Date and (iii) the consolidated and consolidating
balance sheet of INTERCO and its Subsidiaries as of the end
of each fiscal quarter of INTERCO ended after December 31,
1993, and the related consolidated and consolidating
statements of earnings, shareholder's equity and cash flows
of INTERCO and its Subsidiaries for such quarterly periods,
and furnished to the Banks prior to the Effective Date, in
each case, present fairly the financial condition of
INTERCO and its Subsidiaries (or INTERCO and its Restricted
Subsidiaries, as the case may be) at the date of such
statements of financial condition and the results of the
operations of INTERCO and its Subsidiaries (or INTERCO and
its Restricted Subsidiaries as the case may be) for the
respective Fiscal Year, nine-month period, fiscal quarter
or calendar month, as the case may be (subject, in the case
of unaudited financial statements, to normal year-end
adjustments). All such financial statements have been pre-
pared in accordance with generally accepted accounting
principles and practices consistently applied, except, in
the case of nine-month and monthly statements, for the
omission of footnotes, and certain reclassifications and
ordinary end of period adjustments and accruals (all of
which are of a recurring nature and none of which
individually, or in the aggregate, would be material).
After giving effect to the Transaction, since December 31,
1993, there has been no material adverse change in the
business, operations, property, assets, liabilities, condi-
tion (financial or otherwise) or prospects of the Borrowers
taken as a whole or of the Borrowers and their Restricted
Subsidiaries taken as a whole.
(b) (i) On and as of the Initial Borrowing
Date, after giving effect to the Transaction and to all
Indebtedness (including the Loans) being incurred or
assumed and Liens created by the Credit Parties in connec-
tion therewith (assuming the full utilization of all
Commitments on the Initial Borrowing Date), (a) the sum of
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the assets, at a fair valuation, of each Borrower,
individually, Converse, individually, Florsheim,
individually, each Borrower and its Subsidiaries, Converse
and its Subsidiaries and Florsheim and its Subsidiaries
(each of the foregoing, as to itself, as to itself and its
Subsidiaries, as to Converse or as to Florsheim, a "Solvent
Entity") will exceed its or their debts; (b) each Solvent
Entity has not incurred and does not intend to incur, and
does not believe that it will incur, debts beyond its
ability to pay such debts as such debts mature; and (c)
each Solvent Entity will have sufficient capital with which
to conduct its businesses. For purposes of this Section
7.05(b), "debt" means any liability on a claim, and "claim"
means (i) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured, or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right
to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, disputed, undisputed,
secured or unsecured.
(c) Except as fully disclosed in the financial
statements delivered pursuant to Section 7.05(a) or in
Schedule IV, there were as of the Initial Borrowing Date no
liabilities or obligations with respect to INTERCO or any
of its Subsidiaries of any nature whatsoever (whether
absolute, accrued, contingent or otherwise and whether or
not due) which, either individually or in aggregate, is
reasonably likely to be material to any Borrower or any
Borrower and its Subsidiaries taken as a whole. As of the
Initial Borrowing Date, none of the Borrowers knows of any
basis for the assertion against it of any liability or
obligation of any nature whatsoever that is not fully
disclosed in the financial statements delivered pursuant to
Section 7.05(a) or as disclosed in Schedule IV hereto
which, either individually or in the aggregate, could be
material to any Borrower or any Borrower and its
Subsidiaries taken as a whole.
(d) On and as of the Initial Borrowing Date, the
Projections previously delivered to the Agent and the Banks
have been prepared on a basis consistent with the financial
statements referred to in Section 7.05(a) (other than as
set forth or presented in such Projections), and there are
no statements or conclusions in any of the Projections
which are based upon or include information known to the
Borrowers to be misleading in any material respect or which
fail to take into account material information regarding
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the matters reported therein. On the Initial Borrowing
Date, the Borrowers believed that the Projections were
reasonable and attainable.
7.06 Litigation. There are no actions, suits or
proceedings pending or, to the best knowledge of the Bor-
rowers, threatened (i) on the Initial Borrowing Date, in
respect of any material Transaction Document (other than
any Credit Document), (ii) with respect to any Credit
Document or (iii) that could reasonably be expected to
materially and adversely affect the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole
or of the Borrowers and their Restricted Subsidiaries taken
as a whole.
7.07 True and Complete Disclosure. All factual
information (taken as a whole) furnished by or on behalf of
INTERCO or any of its Subsidiaries in writing to the Agent
or any Bank (including, without limitation, all factual in-
formation contained in the Documents) for purposes of or in
connection with this Agreement, the other Credit Documents
or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole)
hereafter furnished by or on behalf of INTERCO or any of
its Subsidiaries in writing to the Agent or any Bank will
be, true and accurate in all material respects on the date
as of which such information is dated or certified and not
incomplete by omitting to state any fact necessary to make
such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances
under which such information was provided.
7.08 Use of Proceeds; Margin Regulations. (a)
All proceeds of the Term Loans shall be used by the Bor-
rowers (i) to effect the Refinancing and (ii) to pay fees
and expenses related to the Refinancing.
(b) All proceeds of the Revolving Loans and
Swingline Loans shall be used for the Borrowers' and their
Subsidiaries' general corporate purposes; provided, that,
not more than $20,000,000 in aggregate principal amount of
Revolving Loans and Swingline Loans may be used to make
payments (including payments of fees and expenses) in
connection with the Transaction; provided, that Revolving
Loans and Swingline Loans may be incurred without regard to
the foregoing $20,000,000 limitation to pay amounts owing
in respect of taxes, if any, payable as a result of the
Florsheim Disposition and the Converse Disposition.
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(c) No part of the proceeds of any Loan will be
used to purchase or carry any Margin Stock or to extend
credit for the purpose of purchasing or carrying any Margin
Stock. Neither the making of any Loan nor the use of the
proceeds thereof nor the occurrence of any other Credit
Event will violate or be inconsistent with the provisions
of Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
7.09 Tax Returns and Payments. (a) Each of
INTERCO and its Restricted Subsidiaries have timely filed
or caused to be timely filed, on the due dates thereof or
within applicable grace periods (inclusive of any permitted
extensions), with the appropriate taxing authority, all
Federal, state and other material returns, statements,
forms and reports for taxes (the "Returns") required to be
filed by or with respect to the income, properties or
operations of INTERCO and its Restricted Subsidiaries. The
Returns accurately reflect in all material respects all
liability for taxes of INTERCO and its Restricted Subsi-
diaries for the periods covered thereby. Each of INTERCO
and its Restricted Subsidiaries have paid all material
taxes payable by them other than taxes which are not
delinquent, and other than those contested in good faith
and for which adequate reserves have been established in
accordance with generally accepted accounting principles.
Except as disclosed in the financial statements referred to
in Section 7.05(a) and except as disclosed on Schedule V,
there is, as of the Initial Borrowing Date, no material
action, suit, proceeding, investigation, audit, or claim
now pending or, to the best knowledge of the Borrowers,
threatened by any authority regarding any taxes relating to
INTERCO or its Restricted Subsidiaries. As of the Initial
Borrowing Date, none of INTERCO or its Restricted
Subsidiaries has entered into an agreement or waiver or
been requested to enter into an agreement or waiver
extending any statute of limitations relating to the
payment or collection of taxes of INTERCO or its Restricted
Subsidiaries, or is aware of any circumstances that would
cause the taxable years or other taxable periods of INTERCO
or its Restricted Subsidiaries not to be subject to the
normally applicable statute of limitations. As of the
Initial Borrowing Date, none of INTERCO or its Restricted
Subsidiaries has provided, with respect to themselves or
property held by them, any consent under Section 341 of the
Code. Except as set forth in Schedule V, none of INTERCO
or its Restricted Subsidiaries has incurred, or will incur,
any material tax liability in connection with the
Transaction and the other transactions contemplated hereby.
Additionally, all of the foregoing representations are true
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and correct as to all Unrestricted Subsidiaries of INTERCO
(to the same extent they were Restricted Subsidiaries)
except to the extent any and all failures to be true and
correct could not reasonably be expected to materially and
adversely affect the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or the
Borrowers and their Restricted Subsidiaries taken as a
whole.
(b) INTERCO'S tax basis in the shares of capital
stock of (x) Converse spun-off in connection with the
Converse Disposition shall be an amount not less than
$165,000,000 at the time of the consummation thereof and
(y) Florsheim spun-off in connection with the Florsheim
Disposition shall be an amount not less than $50,000,000
(it being understood that such tax bases shall be
calculated based on identified assumptions with respect to
earnings and cash positions at the time of the Converse
Disposition and the Florsheim Disposition, respectively).
7.10 Compliance with ERISA. (a) Each Plan is
in substantial compliance with ERISA and the Code; no
Reportable Event has occurred with respect to a Plan; no
Plan is insolvent or in reorganization; no Plan has an
Unfunded Current Liability; no Plan has an accumulated or
waived funding deficiency, or has applied for an extension
of any amortization period within the meaning of Section
412 of the Code; all contributions required to be made by
the Borrowers, any of their respective Restricted
Subsidiaries or any ERISA Affiliate with respect to a Plan
and a Foreign Pension Plan have been timely made; none of
the Borrowers or any of their respective Restricted
Subsidiaries nor any ERISA Affiliate has incurred any
liability to or on account of a Plan pursuant to Section
409, 502(i), 502(1), 515, 4062, 4063, 4064, 4069, 4201,
4204 or 4212 of ERISA or Section 401(a)(29), 4971, 4975 or
4980 of the Code or reasonably expects to incur any
liability (including any indirect, contingent or secondary
liability) under any of the foregoing sections with respect
to any Plan; no proceedings have been instituted to
terminate or appoint a trustee to administer any Plan; no
condition exists which presents a risk to the Borrowers or
any of their respective Restricted Subsidiaries or any
ERISA Affiliate of incurring a liability to or on account
of a Plan pursuant to the foregoing provisions of ERISA and
the Code; using actuarial assumptions and computation
methods consistent with Part 1 of subtitle E of Title IV of
ERISA, the aggregate liabilities of the Borrowers, their
respective Restricted Subsidiaries and their ERISA Affili-
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ates to all Plans which are multiemployer plans (as defined
in Section 4001(a)(3) of ERISA) in the event of a complete
withdrawal therefrom, as of the close of the most recent
fiscal year of each such Plan ended prior to the date of
the most recent Credit Event, would not exceed $50,000; no
lien imposed under the Code or ERISA on the assets of the
Borrowers or any of their respective Restricted
Subsidiaries or any ERISA Affiliate exists or is likely to
arise on account of any Plan; and the Borrowers and their
respective Restricted Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA) which provides benefits to
retired employees or other former employees (other than as
required by Section 601 of ERISA) or any employee pension
benefit plan (as defined in Section 3(2) of ERISA).
(b) Each Foreign Pension Plan has been
maintained in substantial compliance with its terms and
with the requirements of any and all applicable laws,
statutes, rules, regulations and orders and has been
maintained, where required, in good standing with
applicable regulatory authorities. None of the Borrowers
nor any of their respective Restricted Subsidiaries has
incurred any obligation in connection with the termination
of or withdrawal from any Foreign Pension Plan. The
present value of the accrued benefit liabilities (whether
or not vested) under each Foreign Pension Plan, determined
as of the end of the Borrower's most recently ended fiscal
year on the basis of actuarial assumptions, each of which
is reasonable, did not exceed the current value of the
assets of such Foreign Pension Plan allocable to such
benefit liabilities.
(c) Notwithstanding anything to the contrary in
this Section 7.10, the representations made in this Section
7.10 shall only be untrue if the aggregate effect of all
failures and noncompliances of the types described above
could reasonably be expected to have a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the
Borrowers and their Restricted Subsidiaries taken as a
whole.
7.11 The Security Documents. (a) The
provisions of the Security Agreement are effective to
create in favor of the Collateral Agent for the benefit of
the Secured Creditors a legal, valid and enforceable
security interest in all right, title and interest of the
Credit Parties in the Security Agreement Collateral
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described therein, and the Security Agreement, upon the
filing of Form UCC-1 financing statements or the
appropriate equivalent (which filings, if this representa-
tion is being made more than 10 days after the Initial
Borrowing Date, have been made), create a fully perfected
first lien on, and security interest in, all right, title
and interest in all of the Security Agreement Collateral
described therein, to the extent that a security interest
may be perfected therein by filing a financing statement
under the UCC, subject to no other Liens other than
Permitted Liens. The recordation of the Assignment of
Security Interest in U.S. Patents and Trademarks in the
form attached to the Security Agreement in the United
States Patent and Trademark Office together with filings on
Form UCC-1 made pursuant to the Security Agreement will be
effective, under applicable law, to perfect the security
interest granted to the Collateral Agent in the trademarks
and patents covered by the Security Agreement. Each of the
Credit Parties party to the Security Agreement has good and
valid title to all Security Agreement Collateral owned by
such Credit Party described therein, free and clear of all
Liens except those described above in this clause (a).
(b) The security interests created in favor of
the Collateral Agent, as Pledgee, for the benefit of the
Secured Creditors under the Pledge Agreement constitute
first priority perfected security interests in the Pledged
Securities described in the Pledge Agreement, subject to no
security interests of any other Person. No filings or
recordings are required in order to perfect (or maintain
the perfection or priority of) the security interests
created in the Pledged Securities and the proceeds thereof
under the Pledge Agreement.
(c) The Mortgages create, as security for the
obligations purported to be secured thereby, a valid and
enforceable perfected security interest in and mortgage
lien on all of the Mortgaged Properties in favor of the
Collateral Agent (or such other trustee as may be required
or desired under local law) for the benefit of the Secured
Creditors, superior to and prior to the rights of all third
persons (except that the security interest and mortgage
lien created in the Mortgaged Properties may be subject to
the Permitted Encumbrances related thereto) and subject to
no other Liens (other than Permitted Liens). Schedule III
contains a true and complete list of each parcel of Real
Property owned or leased by INTERCO and its Restricted
Subsidiaries on the Effective Date, and the type of
interest therein held by INTERCO or such Restricted
Subsidiary. INTERCO and each of its Restricted Subsidi-
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aries have good and indefeasible title to all fee-owned
Mortgaged Properties and valid leasehold title to all
Leaseholds material to its business, in each case free and
clear of all Liens except those described in the first
sentence of this subsection (c).
7.12 Representations and Warranties in Other
Documents. All representations and warranties set forth in
the other Documents were true and correct in all material
respects at the time as of which such representations and
warranties were made (or deemed made) and shall be true and
correct in all material respects as of the Initial
Borrowing Date as if such representations and warranties
were made on and as of such date, unless stated to relate
to a specific earlier date, in which case such
representations and warranties shall be true and correct in
all material respects as of such earlier date.
7.13 Properties. INTERCO and each of its Re-
stricted Subsidiaries have good and valid title to all
material properties owned by them, including all property
reflected in the balance sheet of INTERCO and its
Restricted Subsidiaries referred to in Section 7.05(a) and
in the pro forma balance sheet referred to in Section 5.19
(except as sold or otherwise disposed of since the date of
such balance sheet in the ordinary course of business or
otherwise as permitted hereunder), free and clear of all
Liens, other than (i) as referred to in the balance sheet
or in the notes thereto or in the pro forma balance sheet
or (ii) Permitted Liens otherwise permitted by Section
9.01.
7.14 Capitalization. (a) On the Business Day
before the Initial Borrowing Date and after giving effect
to the Transaction, the authorized capital stock of INTERCO
consisted of (i) 100,000,000 shares of INTERCO Common
Stock, $1.00 stated value per share, of which 50,064,515
shares were issued and outstanding as of November 11, 1994,
and at least 60% of such outstanding shares shall be owned
by the Apollo Group or a Controlled Account. As of the
Initial Borrowing Date, INTERCO does not have outstanding
any securities convertible into or exchangeable for its
capital stock or outstanding any rights to subscribe for or
to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or other-
wise) of, or any calls, commitments or claims of any
character relating to, its capital stock, in each case
other than the options outstanding pursuant to the Employee
Stock Option Plan and the INTERCO Warrants.
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(b) On the Initial Borrowing Date and after
giving effect to the Transaction, the authorized capital
stock of Broyhill shall consist of 100 shares of common
stock, no par value per share, all of which shall be issued
and outstanding and delivered for pledge pursuant to the
Pledge Agreement. All such outstanding shares of common
stock have been duly and validly issued, are fully paid and
nonassessable. As of the Initial Borrowing Date, Broyhill
does not have outstanding any securities convertible into
or exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its
capital stock.
(c) On the Initial Borrowing Date and after
giving effect to the Transaction, the authorized capital
stock of Lane shall consist of 1,000 shares of common
stock, no par value per share, all of which shall be issued
and outstanding and delivered for pledge pursuant to the
Pledge Agreement. All such outstanding shares of common
stock have been duly and validly issued, are fully paid and
nonassessable. As of the Initial Borrowing Date, Lane does
not have outstanding any securities convertible into or
exchangeable for its capital stock or outstanding any
rights to subscribe for or to purchase, or any options for
the purchase of, or any agreements providing for the
issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its
capital stock.
7.15 Subsidiaries. (a) On the Initial
Borrowing Date and after giving effect to the Transaction,
INTERCO has no Subsidiaries other than the other Borrowers,
their respective Subsidiaries and Interfashions Industries,
S.A. and its Subsidiaries.
(b) After giving effect to the Transaction,
INTERCO will have no Subsidiaries other than (i) those
Subsidiaries listed on Schedule VI and (ii) new
Subsidiaries created in compliance with this Agreement.
7.16 Compliance with Statutes, etc. INTERCO and
each of its Subsidiaries are in compliance with all applic-
able statutes, regulations and orders of, and all applic-
able restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of their
business and the ownership of their property (including
applicable statutes, regulations, orders and restrictions
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relating to environmental standards and controls), except
such noncompliances as could not, individually or in the
aggregate, reasonably be expected to have a material
adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the
Borrowers and their Restricted Subsidiaries taken as a
whole.
7.17 Investment Company Act. None of INTERCO
nor any of its Subsidiaries is an "investment company" or a
company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
7.18 Public Utility Holding Company Act. None
of INTERCO nor any of its Subsidiaries is a "holding com-
pany," or a "subsidiary company" of a "holding company," or
an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
7.19 Environmental Matters. (a) INTERCO and
each of its Subsidiaries have complied with, and on the
date of each Credit Event will be in compliance with, all
applicable Environmental Laws and the requirements of any
permits issued under such Environmental Laws. There are no
pending or, to the best knowledge of the Borrowers after
due inquiry, threatened Environmental Claims against
INTERCO, or any of its Subsidiaries or any Real Property
owned or operated by INTERCO or any of its Subsidiaries.
There are no facts, circumstances, conditions or
occurrences on any Real Property owned or operated by
INTERCO or any of its Subsidiaries or, to the best
knowledge of INTERCO or the Borrowers after due inquiry, on
any property adjoining or in the vicinity of any such Real
Property that, to the best knowledge of the Borrowers after
due inquiry, could reasonably be expected (i) to form the
basis of an Environmental Claim against INTERCO or any of
its Subsidiaries or any such Real Property, or (ii) to
cause any such Real Property to be subject to any restric-
tions on the ownership, occupancy, use or transferability
of such Real Property by INTERCO or any of its Subsidiaries
under any applicable Environmental Law.
(b) Hazardous Materials have not at any time
been generated, used, treated or stored on, or transported
to or from, any Real Property owned or operated by INTERCO
or any of its Subsidiaries except in compliance with all
applicable Environmental Laws and so as not to give rise to
an Environmental Claim. Hazardous Materials have not at
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any time been Released on or from any Real Property owned
or operated by INTERCO or any of its Subsidiaries except in
compliance with all applicable Environmental Laws and so as
not to give rise to an Environmental Claim.
(c) Notwithstanding anything to the contrary in
this Section 7.19, the representations made in this Section
7.19 shall only be untrue if the aggregate effect of all
failures and noncompliances of the types described above
could reasonably be expected to have a material adverse
effect on the business, operations, property, assets, lia-
bilities, condition (financial or otherwise) or prospects
of the Borrowers taken as a whole or of the Borrowers and
their Restricted Subsidiaries taken as a whole.
7.20 Labor Relations. None of INTERCO nor any
of its Subsidiaries is engaged in any unfair labor practice
that could reasonably be expected to have a material
adverse effect on the Borrowers taken as a whole or the
Borrowers and their Restricted Subsidiaries taken as a
whole. There is (i) no unfair labor practice complaint
pending against INTERCO or any of its Subsidiaries or, to
the best knowledge of the Borrowers, threatened against any
of them, before the National Labor Relations Board, and no
material grievance or material arbitration proceeding
arising out of or under any collective bargaining agreement
is so pending against INTERCO or any of its Subsidiaries
or, to the best knowledge of the Borrowers, threatened
against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against INTERCO or any of its
Subsidiaries or, to the best knowledge of the Borrowers,
threatened against INTERCO or any of its Subsidiaries and
(iii) to the best knowledge of the Borrowers, no union
representation proceeding pending with respect to the
employees of INTERCO or any of its Subsidiaries, except
(with respect to any matter specified in clause (i), (ii)
or (iii) above, either individually or in the aggregate)
such as could not reasonably be expected to have a material
adverse effect on the business, operations, property,
assets, liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the
Borrowers and their Restricted Subsidiaries taken as a
whole.
7.21 Patents, Licenses, Franchises and Formulas.
INTERCO and its Subsidiaries own all material patents,
trademarks, permits, service marks, trade names, copy-
rights, licenses, franchises and formulas, or rights with
respect to the foregoing, and have obtained assignments of
all leases and other rights of whatever nature, reasonably
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necessary for the present conduct of their business,
without any known conflict with the rights of others which,
or the failure to obtain which, as the case may be, could
reasonably be expected to result in a material adverse
effect on the business, operations, property, assets,
liabilities, condition (financial or otherwise) or
prospects of the Borrowers taken as a whole or of the
Borrowers and their Restricted Subsidiaries taken as a
whole.
7.22 Indebtedness. Schedule VII sets forth a
true and complete list of all Indebtedness for borrowed
money of INTERCO and its Restricted Subsidiaries as of the
Initial Borrowing Date and which is to remain outstanding
after giving effect to the Transaction (excluding the Loans
and the Letters of Credit and the Attributed Receivables
Facility Indebtedness, the "Existing Indebtedness"), in
each case showing the aggregate principal amount thereof
and the name of the respective borrower and any other
entity which directly or indirectly guaranteed such debt
all of which Existing Indebtedness is or shall be evidenced
by the Permitted Debt Agreements.
7.23 Transaction. At the time of consummation
thereof, the Transaction shall have been consummated in all
respects in accordance with the terms of the Transaction
Documents and all applicable laws. At the time of consum-
mation of the Transaction, all consents and approvals of,
and filings and registrations with, and all other actions
in respect of, all governmental agencies, authorities or
instrumentalities required in order to make or consummate
the Transaction will have been obtained, given, filed or
taken and are or will be in full force and effect (or eff-
ective judicial relief with respect thereto has been ob-
tained), except where the failure to so obtain, give, file
or take would not have a material adverse effect on the
business, operations, property, assets, liabilities, condi-
tion (financial or otherwise) or prospects of the Borrowers
taken as a whole or of the Borrowers and their Restricted
Subsidiaries taken as a whole. All applicable waiting
periods with respect thereto have or, prior to the time
when required, will have, expired without, in all such
cases, any action being taken by any competent authority
which restrains, prevents, or imposes material adverse
conditions upon the Transaction. Additionally, there does
not exist any judgment, order or injunction prohibiting or
imposing material adverse conditions upon the Transaction
or the occurrence of any Credit Event or the performance by
the Credit Parties of their obligations under the
respective Documents. All actions taken by the Credit
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Parties pursuant to or in furtherance of the Transaction
have been taken in material compliance with the respective
Documents and all applicable laws.
7.24 Special Purpose Corporation. The Receiv-
ables Subsidiary was formed for the purpose of purchasing,
and receiving contributions of, receivables from each of
the Borrowers (other than INTERCO) and their respective Re-
stricted Subsidiaries, and selling such receivables to the
Receivables Purchasers, pursuant to the Receivables
Facility and except in connection with the foregoing (and
activities reasonably incidental thereto), the Receivables
Subsidiary engages in no business activities and has no
significant assets or liabilities and shall in no event
purchase receivables from any Unrestricted Subsidiary.
SECTION 8. Affirmative Covenants. Each of the
Borrowers hereby covenants and agrees that on and after the
Effective Date and until the Total Commitment and all
Letters of Credit and Acceptances have terminated and the
Loans, Notes and Unpaid Drawings, together with interest,
Fees and all other Obligations incurred hereunder and
thereunder, are paid in full:
8.01 Information Covenants. The Borrowers will
furnish to the Agent, and the Agent will promptly forward
to each Bank:
(a) Monthly Reports. Within 30 days after the
end of each calendar month of INTERCO (within 45 days
after the end of the last month of each Fiscal Year),
(i) the combined balance sheets of INTERCO and its
Restricted Subsidiaries and (ii) the consolidated and
consolidating balance sheets of INTERCO and its
Subsidiaries, in each case, as at the end of such
month and the related combined, consolidated and
consolidating statements of income and retained
earnings and statement of cash flows for such month
and for the elapsed portion of the calendar year ended
with the last day of such month, in each case setting
forth comparative figures for the corresponding month
in the prior calendar year and the budgeted figures
for such month as set forth in the respective budget
delivered pursuant to Section 8.01(e).
(b) Quarterly Financial Statements. As soon as
available and in any event within 45 days after the
close of each of the first three quarterly account
periods in each Fiscal Year, (i) the combined balance
sheets of INTERCO and its Restricted Subsidiaries and
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(ii) the consolidated and consolidating balance sheets
of INTERCO and its Subsidiaries, in each case, as at
the end of such quarterly period and the related
combined, consolidated and consolidating statements of
income and retained earnings and cash flows for such
quarterly period and for the elapsed portion of the
Fiscal Year ended with the last day of such quarterly
period and setting forth comparative figures for the
related periods in the prior Fiscal Year and the
budgeted figures for such quarterly period as set
forth in the respective budget delivered pursuant to
Section 8.01(e) and (iii) management's discussion and
analysis of the important operational and financial
developments during such quarterly period.
(c) Annual Financial Statements. Within 95 days
after the close of each Fiscal Year, (i) the combined
balance sheets of INTERCO and its Restricted Subsidi-
aries; (ii) the consolidated and consolidating balance
sheets of INTERCO and its Subsidiaries, in each case,
as at the end of such Fiscal Year and the related
combined, consolidated and consolidating statements of
income and retained earnings and of cash flows for
such Fiscal Year setting forth comparative figures for
the preceding Fiscal Year and (A) certified, in the
case of such consolidated financial statements and (B)
confirmed by a letter, in the case of the combined and
consolidating statements, delivered in substantially
the form of the auditor's letter delivered to INTERCO
on February 8, 1994, in each case by Peat Marwick or
such other independent certified public accountants of
recognized national standing reasonably acceptable to
the Agent, together with a report of such accounting
firm stating that in the course of its regular audit
of the financial statements of INTERCO and its
Subsidiaries, which audit was conducted in accordance
with generally accepted auditing standards, such
accounting firm obtained no knowledge of any Default
or Event of Default which has occurred and is
continuing or, if in the opinion of such accounting
firm such a Default or Event of Default with respect
to the covenants set forth in Sections 9.02 through
9.16, inclusive, has occurred and is continuing, a
statement as to the nature thereof and (iii) manage-
ment's discussion and analysis of the important opera-
tional and financial developments during such Fiscal
Year.
(d) Management Letters. Promptly after the re-
ceipt thereof by INTERCO or any of its Restricted Sub-
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sidiaries, a copy of any "management letter" received
by such Person from their certified public accountants
and the management's responses thereto.
(e) Budgets. No later than 30 days following
the commencement of the first day of each Fiscal Year,
a budget in form satisfactory to the Agent (including
budgeted statements of income and sources and uses of
cash and balance sheets) prepared by INTERCO for (x)
each of the twelve months of such Fiscal Year prepared
in detail and (y) each of the four Fiscal Years
immediately following such Fiscal Year prepared in
summary form, in each case, of INTERCO and its
Restricted Subsidiaries, accompanied by the statement
of an Authorized Representative of INTERCO to the
effect that, to the best of his knowledge, the budget
is a reasonable estimate for the period covered there-
by.
(f) Officer's Certificates. At the time of the
delivery of the financial statements provided for in
Section 8.01(a), (b) and (c), a certificate of an
Authorized Representative of INTERCO to the effect
that, to the best of such Authorized Representative's
knowledge, no Default or Event of Default has occurred
and is continuing or, if any Default or Event of
Default has occurred and is continuing, specifying the
nature and extent thereof, which certificate shall, in
the case of any such financial statements delivered in
respect of a period ending on the last day of a fiscal
quarter or year of INTERCO, (x) set forth the
calculations required to establish whether the
Borrowers were in compliance with the provisions of
Section 4.02 (excluding Section 4.02(g)), 9.02, 9.03,
9.04, 9.05 and 9.07 through 9.10, inclusive, and 9.16
at the end of such fiscal quarter or year, as the case
may be, (y) if delivered with the financial statements
required by Section 8.01(c), set forth the amount of
Excess Cash Flow for the respective Excess Cash Flow
Payment Period and (z) set forth the amount of the
Available $10 million Basket Amount, Available CapX
Amount, Available Retained Excess Cash Flow Amount,
Available Unrestricted Proceeds Amount, Available Net
Income Amount and Available Permitted Acquisition
Amount at the end of the period covered by such
financial statements, and all sources and uses of
proceeds relating to the calculation thereof changing
during the period covered by such statements.
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(g) Notice of Default or Litigation. Promptly,
and in any event within three Business Days after an
executive officer of any Borrower obtains knowledge
thereof, notice of (i) the occurrence of any event
which constitutes a Default or Event of Default and
(ii) any litigation or governmental investigation or
proceeding pending (x) against INTERCO or any of its
Subsidiaries which could reasonably be expected to
materially and adversely affect the business,
operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers
taken as a whole or the Borrowers and their Restricted
Subsidiaries taken as a whole, (y) with respect to any
material Indebtedness of INTERCO and its Restricted
Subsidiaries taken as a whole or (z) with respect to
any Document.
(h) Other Reports and Filings. Promptly, copies
of all financial information, proxy materials and
other information and reports, if any, which INTERCO
or any of its Restricted Subsidiaries shall file with
the Securities and Exchange Commission or any succes-
sor thereto (the "SEC") or deliver to holders of its
Indebtedness pursuant to the terms of the documenta-
tion governing such Indebtedness (or any trustee,
agent or other representative therefor).
(i) Environmental Matters. Promptly upon, and
in any event within ten Business Days after, an
executive officer of INTERCO or any of its Restricted
Subsidiaries obtains knowledge thereof, notice of one
or more of the following environmental matters, unless
such environmental matters could not, individually or
when aggregated with all other such environmental
matters, be reasonably expected to materially and
adversely affect the business, operations, property,
assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a
whole or of the Borrowers and their Restricted Subsid-
iaries taken as a whole:
(i) any pending or threatened Environmental
Claim against INTERCO or any of its Subsidiaries
or any Real Property owned or operated by INTERCO
or any of its Subsidiaries;
(ii) any condition or occurrence on or aris-
ing from any Real Property owned or operated by
INTERCO or any of its Subsidiaries that (a) re-
sults in noncompliance by INTERCO or any of its
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Subsidiaries with any applicable Environmental
Law or (b) could reasonably be expected to form
the basis of an Environmental Claim against
INTERCO or any of its Subsidiaries or any such
Real Property;
(iii) any condition or occurrence on any Real
Property owned or operated by INTERCO or any of
its Subsidiaries that could reasonably be
expected to cause such Real Property to be sub-
ject to any restrictions on the ownership, occu-
pancy, use or transferability by INTERCO or any
of its Subsidiaries of such Real Property under
any Environmental Law; and
(iv) the taking of any removal or remedial
action in response to the actual or alleged pres-
ence of any Hazardous Material on any Real
Property owned or operated by INTERCO or any of
its Subsidiaries as required by any Environmental
Law or any governmental or other administrative
agency; provided that in any event the Borrowers
shall deliver to each Bank all notices received
by them or any of their respective Subsidiaries
from any government or governmental agency under,
or pursuant to, CERCLA.
All such notices shall describe in reasonable detail
the nature of the claim, investigation, condition,
occurrence or removal or remedial action, and the
Borrowers' or such Subsidiary's response thereto. In
addition, the Borrowers will provide the Banks with
copies of all material communications with any
government or governmental agency relating to Environ-
mental Laws, all communications with any Person (other
than its attorneys) relating to any Environmental
Claim of which notice is required to be given pursuant
to this Section 8.01(i), and such detailed reports of
any such Environmental Claim as may reasonably be
requested by the Banks.
(j) Annual Meetings with Banks. At the request
of the Agent, INTERCO shall within 120 days after the
close of each Fiscal Year hold a meeting at a time and
place selected by INTERCO and acceptable to the Agent
with all of the Banks at which meeting shall be re-
viewed the financial results of the previous Fiscal
Year and the financial condition of INTERCO and the
budgets presented for the current Fiscal Year.
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(k) Other Information. From time to time, such
other information or documents (financial or
otherwise) with respect to INTERCO or any of its
Subsidiaries as any Bank may reasonably request in
writing.
8.02 Books, Records and Inspections. The Bor-
rowers will, and will cause each of their respective Re-
stricted Subsidiaries to, keep proper books of record and
account in which full, true and correct entries in
conformity with generally accepted accounting principles
and all requirements of law shall be made of all dealings
and transactions in relation to its business and
activities. The Borrowers will, and will cause each of
their respective Restricted Subsidiaries to, permit
officers and designated representatives of the Agent or the
Required Banks to visit and inspect, after reasonable
notice during regular business hours and under guidance of
officers of the Borrowers or such Restricted Subsidiary,
any of the properties of the Borrowers or such Restricted
Subsidiary, and to examine the books of account of the Bor-
rowers or such Restricted Subsidiary and discuss the
affairs, finances and accounts of the Borrowers or such
Restricted Subsidiary with, and be advised as to the same
by, its and their officers and independent accountants, all
at such reasonable times and intervals and to such reason-
able extent as the Agent or such Bank may request.
8.03 Maintenance of Property; Insurance. (a)
Schedule VIII sets forth a true and complete listing of all
insurance (including self-insurance programs) maintained by
INTERCO and its Restricted Subsidiaries as of the Effective
Date. The Borrowers will, and will cause each of their
respective Restricted Subsidiaries to, (i) keep all
property necessary in its business in good working order
and condition (ordinary wear and tear excepted), (ii)
maintain insurance on all its property in at least such
amounts and against at least such risks as is consistent
and in accordance with industry practice and (iii) furnish
to the Agent, upon written request, full information as to
the insurance carried. In addition to the requirements of
the immediately preceding sentence, the Borrowers will at
all times cause insurance of the types described in
Schedule VIII to be maintained (with the same scope of
coverage as that described in Schedule VIII) at levels
which are at least as great as the respective amount
described opposite the respective type of insurance on
Schedule VIII under the column headed "Minimum Amount
Required to be Maintained."
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(b) Except with respect to self-insurance
programs listed on Schedule VIII, the Borrowers will, and
will cause their respective Restricted Subsidiaries to, at
all times keep their respective property insured in favor
of the Collateral Agent, and all policies (including
Mortgage Policies) or certificates (or certified copies
thereof) with respect to such insurance (and any other
insurance maintained by the Borrowers or any of their
respective Restricted Subsidiaries) (i) shall be endorsed
to the Collateral Agent's satisfaction for the benefit of
the Collateral Agent (including, without limitation, by
naming the Collateral Agent as loss payee or as an addi-
tional insured (provided, that INTERCO and its Restricted
Subsidiaries shall be permitted to settle claims in an
amount less than $10,000,000 per claim, so long as the
proceeds from such claims are applied in accordance with
Section 4.02(h))), (ii) shall state that such insurance
policies shall not be cancelled without 30 days' prior
written notice thereof by the respective insurer to the
Collateral Agent, (iii) shall provide that the respective
insurers irrevocably waive any and all rights of
subrogation with respect to the Collateral Agent and the
Secured Creditors, (iv) shall contain the standard non-
contributory mortgagee clause endorsement in favor of the
Collateral Agent with respect to hazard insurance coverage,
(v) shall, except in the case of public liability insurance
and workers' compensation insurance, provide that any
losses shall be payable notwithstanding (A) any act or
neglect of the Borrowers or any of their respective
Restricted Subsidiaries, (B) the occupation or use of the
properties for purposes more hazardous than those permitted
by the terms of the respective policy if such coverage is
obtainable at commercially reasonable rates and is of the
kind from time to time customarily insured against by
Persons owning or using similar property and in such
amounts as are customary, (C) any foreclosure or other
proceeding relating to the insured properties if such
coverage is available at commercially reasonable rates or
(D) any change in the title to or ownership or possession
of the insured properties and (vi) shall be deposited with
the Collateral Agent if such coverage is available at
commercially reasonable rates.
(c) If the Borrowers or any of their respective
Restricted Subsidiaries shall fail to maintain all
insurance in accordance with this Section 8.03, or if the
Borrowers or any of their respective Restricted Subsidi-
aries shall fail to so endorse and deposit all policies or
certificates with respect thereto, the Agent and/or the
Collateral Agent shall have the right (but shall be under
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no obligation) after giving notice to INTERCO (but not
requiring any consent from INTERCO) to procure such
insurance and the Borrowers agree to jointly and severally
reimburse the Agent or the Collateral Agent, as the case
may be, for all costs and expenses of procuring such
insurance.
8.04 Corporate Franchises. The Borrowers will,
and will cause each of their respective Restricted Subsidi-
aries (other than Interfashions Industries, S.A. and its
Subsidiaries) to, do or cause to be done, all things
necessary to preserve and keep in full force and effect its
existence and its material rights, franchises, licenses and
patents; provided, however, that nothing in this Section
8.04 shall prevent (i) sales of assets or other
transactions by INTERCO or any of its Restricted
Subsidiaries in accordance with Section 9.02 or (ii) the
withdrawal by INTERCO or any of Restricted Subsidiaries of
its qualification as a foreign corporation in any juris-
diction where such withdrawal could not reasonably be ex-
pected to have a material adverse effect on the business,
operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrowers
taken as a whole or the Borrowers and their Restricted
Subsidiaries taken as a whole.
8.05 Compliance with Statutes, etc. The Bor-
rowers will, and will cause each of their respective
Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions
imposed by, all governmental bodies, domestic or foreign,
in respect of the conduct of its business and the ownership
of its property, except such noncompliances as could not,
individually or in the aggregate, reasonably be expected to
have a material adverse effect on the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole
or of the Borrowers and their Restricted Subsidiaries taken
as a whole.
8.06 Compliance with Environmental Laws. (a)
The Borrowers will comply, and will cause each of their
respective Subsidiaries to comply, in all material respects
with all Environmental Laws applicable to the ownership or
use of its Real Property now or hereafter owned or operated
by INTERCO or any of its Subsidiaries, will within a
reasonable time period pay or cause to be paid all costs
and expenses incurred in connection with such compliance,
and will keep or cause to be kept all such Real Property
free and clear of any Liens on such Real Property imposed
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pursuant to such Environmental Laws; provided, that, none
of INTERCO nor any of its Subsidiaries shall be required to
remove any such Liens, so long as the aggregate amount of
obligations purported to be secured by such Liens does not
exceed $1,000,000, and such Liens are being contested in
good faith and by proper proceedings if it has maintained
adequate reserves with respect thereto in accordance with
generally accepted accounting principles. None of INTERCO
nor any of its Subsidiaries will generate, use, treat,
store, release or dispose of, or permit the generation,
use, treatment, storage, release or disposal of Hazardous
Materials on any Real Property now or hereafter owned or
operated by INTERCO or any of its Subsidiaries, or
transport or permit the transportation of Hazardous
Materials to or from any such Real Property except for
Hazardous Materials used or stored at any such Real Prop-
erties in material compliance with all applicable Environ-
mental Laws and reasonably required in connection with the
operation, use and maintenance of any such Real Property.
(b) At the written request of the Agent or the
Required Banks, which request shall specify in reasonable
detail the basis therefor, at any time and from time to
time, the Borrowers will provide, at the Borrowers' joint
and several cost and expense, an environmental site
assessment report concerning any Real Property now or
hereafter owned or operated by INTERCO or any of its
Subsidiaries, prepared by an environmental consulting firm
approved by the Agent, indicating the presence or absence
of Hazardous Materials and the potential cost of any
removal or remedial action in connection with any Hazardous
Materials on such Real Property; provided, that such
request may be made only if (i) there has occurred and is
continuing an Event of Default, (ii) the Agent reasonably
believes that INTERCO, any of its Subsidiaries or any such
Real Property is not in material compliance with
Environmental Law, or (iii) circumstances exist that
reasonably could be expected to form the basis of a
material Environmental Claim against INTERCO, any of its
Subsidiaries or any such Real Property. If the Borrowers
fail to provide the same within 90 days after such request
was made, the Agent may order the same, and the Borrowers
shall grant and hereby grant to the Agent and the Banks and
their agents access to such Real Property and specifically
grant the Agent and the Banks an irrevocable non-exclusive
license, subject to the rights of tenants, to undertake
such an assessment, all at the Borrowers' joint and several
expense.
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8.07 ERISA. As soon as possible and, in any
event, within 10 days after the Borrowers or any of their
respective Restricted Subsidiaries or any ERISA Affiliate
knows or has reason to know of the occurrence of any of the
following, the Borrowers will deliver to the Agent, and the
Agent shall promptly forward to each Bank a certificate of
an Authorized Representative of the Borrowers setting forth
details as to such occurrence and the action, if any, that
the Borrowers, such Restricted Subsidiary or such ERISA
Affiliate is required or proposes to take, together with
any notices required or proposed to be given to or filed
with or by the Borrowers, such Restricted Subsidiary, the
ERISA Affiliate, the PBGC, or a Plan participant or the
Plan administrator with respect thereto: that a Reportable
Event has occurred; that an accumulated funding deficiency
has been incurred or an application is likely to be or has
been made to the Secretary of the Treasury for a waiver or
modification of the minimum funding standard (including any
required installment payments) or an extension of any
amortization period under Section 412 of the Code with
respect to a Plan; that a contribution required to be made
to a Plan or Foreign Pension Plan has not been timely made;
that a Plan has been or is reasonably expected to be
terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that a Plan has an Unfunded
Current Liability giving rise to a lien under ERISA or the
Code; that proceedings are likely to be or have been
instituted or notice has been given to terminate or appoint
a trustee to administer a Plan, that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a
delinquent contribution to a Plan if material in amount;
that the Borrowers, any of their respective Restricted
Subsidiaries or any ERISA Affiliate will or is reasonably
expected to incur any material liability (including any
indirect, contingent or secondary liability) to or on
account of the termination of or withdrawal from a Plan
under Section 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of
ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409 or 502(i) or
502(l) of ERISA; or that the Borrowers or any Restricted
Subsidiary is reasonably expected to incur any liability
pursuant to any employee welfare benefit plan (as defined
in Section 3(1) of ERISA) that provides benefits to retired
employees or other former employees (other than as required
by Section 601 of ERISA) which liability could reasonably
be expected to have a material adverse effect on the
business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the
Borrowers taken as a whole or the Borrowers and the
Restricted Subsidiaries taken as a whole, or any employee
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pension benefit plan (as defined in Section 3(2) of ERISA).
Upon request, the Borrowers will deliver to each of the
Banks a complete copy of the annual report (Form 5500) of
each Plan required to be filed with the Internal Revenue
Service. In addition to any certificates or notices deliv-
ered to the Banks pursuant to the first sentence hereof,
copies of such annual reports and any material notices
received by the Borrowers or any of their respective
Restricted Subsidiaries or any ERISA Affiliate with respect
to any Plan or Foreign Pension Plan shall be delivered to
the Banks no later than 20 days after the date such report
has been requested or such notice has been received by the
Borrowers, the Restricted Subsidiary or the ERISA
Affiliate, as applicable.
8.08 End of Fiscal Years; Fiscal Quarters.
INTERCO shall cause (i) each of its Fiscal Years to end on
December 31, and each of its fiscal quarters to end on the
last day of each March, June, September and December and
(ii) each of its Restricted Subsidiaries' (x) fiscal years
to end on the closest Saturday to December 31 and (y)
fiscal quarters to end on the closest Saturday to the last
day of each March, June, September and December.
8.09 Performance of Obligations. Each of the
Borrowers will, and will cause each of its Subsidiaries to,
perform all of its obligations under the terms of each
mortgage, indenture, security agreement and other debt
instrument by which it is bound, except such non-perfor-
mances as could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on
the business, operations, property, assets, liabilities,
condition (financial or otherwise) or prospects of the
Borrowers taken as a whole or of the Borrowers and the
Restricted Subsidiaries taken as a whole.
8.10 Payment of Taxes; Post-Closing Tax Certifi-
cate. (a) Each of the Borrowers will pay and discharge or
cause to be paid and discharged, and will cause each of
their respective Subsidiaries to pay and discharge, all
material taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits, or
upon any material properties belonging to it, in each case
on a timely basis, and all lawful claims which, if unpaid,
might become a lien or charge upon any properties of
INTERCO or any of its Restricted Subsidiaries; provided
that none of INTERCO nor any of its Subsidiaries shall be
required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by proper
proceedings if it has maintained adequate reserves with
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respect thereto in accordance with generally accepted
accounting principles.
(b) On or before the date which is thirty days
after the Initial Borrowing Date, the chief financial
officer of INTERCO shall have delivered to the Agent a
certificate (i) as to the amount of the Converse Tax
Liability (determined as described in clause (x) of the
definition thereof) as of the Initial Borrowing Date, and
(ii) indicating that INTERCO's basis in the capital stock
of (x) Converse spun-off in connection with the Converse
Disposition was an amount not less than $165,000,000 at the
time of the consummation thereof and (y) Florsheim spun-off
in connection with the Florsheim Disposition was an amount
not less than $50,000,000 at the time of the consummation
thereof, which certificate shall set forth the calculations
for the matters described therein and the timing of any
estimated payment in respect of the Converse Tax Liability,
all in form and substance satisfactory to the Agent.
8.11 Additional Security; Further Assurances;
Required Appraisals. (a) The Borrowers will, and will
cause each of their respective Restricted Subsidiaries to,
grant to the Collateral Agent security interests and
mortgages (an "Additional Mortgage") in such Real Property
(other than Real Property encumbered by (i) liens incurred
by a Restricted Subsidiary at a time when it was an
Unrestricted Subsidiary, to the extent such Liens are
otherwise permitted by this Agreement and (ii) Liens
securing Indebtedness permitted pursuant to Section 9.04
(vii), but only until such time as such Indebtedness is
repaid) of the Borrowers or any of their respective
Restricted Subsidiaries as are not covered by the original
Mortgages, to the extent such Real Property is acquired
after the Effective Date and either (x) the cost (including
assumed Indebtedness) of such Real Property is in excess of
$2,500,000 or (y) the respective Additional Mortgage has
been requested by the Required Banks (each such Real
Property, an "Additional Mortgaged Property"). All such
Additional Mortgages shall be granted pursuant to documen-
tation substantially in the form of the Mortgages delivered
to the Agent on the Effective Date or in such other form as
is reasonably satisfactory to the Agent and shall
constitute valid and enforceable perfected Liens superior
to and prior to the rights of all third Persons and subject
to no other Liens except as are permitted by Section 9.01
at the time of perfection thereof. The Additional Mort-
gages or instruments related thereto shall have been duly
recorded or filed in such manner and in such places as are
required by law to establish, perfect, preserve and protect
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the Liens in favor of the Collateral Agent required to be
granted pursuant to the Additional Mortgages and all taxes,
fees and other charges payable in connection therewith
shall have been paid in full.
(b) The Borrowers will, and will cause each of
their respective Restricted Subsidiaries to, at the joint
and several expense of the Borrowers, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral
Agent from time to time such vouchers, invoices, schedules,
confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney,
certificates, real property surveys, reports and other
assurances or instruments and take such further steps
relating to the Collateral covered by any of the Security
Documents as the Collateral Agent may reasonably require
pursuant to this Section 8.11. Furthermore, the Borrowers
shall cause to be delivered to the Collateral Agent such
opinions of counsel, title insurance and other related
documents as may be requested by the Collateral Agent to
assure itself that this Section 8.11 has been complied
with.
(c) Each Borrower agrees to cause each
Restricted Subsidiary established or created in accordance
with Section 9.12 to execute and deliver a guaranty of all
Obligations and all obligations under Interest Rate
Protection Agreements in substantially the form of the
Subsidiary Guaranty, or by becoming a party to the
Subsidiary Guaranty.
(d) Each Borrower agrees to pledge all of the
capital stock of each new Subsidiary (other than any Subsi-
diary of an Unrestricted Subsidiary) created in accordance
with Section 9.12 to the Collateral Agent for the benefit
of the Secured Creditors pursuant to the Pledge Agreement.
(e) Each Borrower will cause each Restricted
Subsidiary established or created in accordance with
Section 9.12 to grant to the Collateral Agent a first
priority Lien on all property (tangible and intangible) of
such Subsidiary upon terms similar to those set forth in
the Security Documents as appropriate, and satisfactory in
form and substance to the Agent and Required Banks. Each
Borrower shall cause each of its respective Restricted
Subsidiaries, at its own expense, to execute, acknowledge
and deliver, or cause the execution, acknowledgement and
delivery of, and thereafter register, file or record in any
appropriate governmental office, any document or instrument
reasonably deemed by the Collateral Agent to be necessary
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or desirable for the creation and perfection of the
foregoing Liens. Each Borrower will cause each of its
respective Restricted Subsidiaries to take all actions
requested by the Agent (including, without limitation, the
filing of UCC-1's) in connection with the granting of such
security interests.
(f) The security interests required to be
granted pursuant to this Section 8.11 shall be granted
pursuant to security documentation (which shall be
substantially similar to the Security Documents already
executed and delivered by INTERCO and its Restricted
Subsidiaries, as applicable) or otherwise satisfactory in
form and substance to the Agent and shall constitute valid
and enforceable perfected security interests prior to the
rights of all third Persons and subject to no other Liens
except such Liens as are permitted by Section 9.01. The
Additional Security Documents and other instruments related
thereto shall be duly recorded or filed in such manner and
in such places and at such times as are required by law to
establish, perfect, preserve and protect the Liens, in
favor of the Collateral Agent for the benefit of the
respective Secured Creditors, required to be granted
pursuant to the Additional Security Documents and all
taxes, fees and other charges payable in connection
therewith shall be paid, jointly and severally, in full by
the Borrowers. At the time of the execution and delivery
of the Additional Security Documents, the Borrowers shall
cause to be delivered to the Collateral Agent such opinions
of counsel, Mortgage Policies, title surveys, real estate
appraisals and other related documents as may be reasonably
requested by the Agent or the Required Banks to assure
themselves that this Section 8.11 has been complied with.
(g) In the event that the Agent or the Required
Banks at any time after the Effective Date determine in its
or their good faith discretion that real estate appraisals
satisfying the requirements of FIRREA (any such appraisal a
"Required Appraisal") are or were required to be obtained,
or should be obtained, in connection with any Mortgaged
Property or Mortgaged Properties, then, within 120 days
after receiving written notice thereof from the Agent or
the Required Banks, as the case may be, such Required
Appraisal shall be delivered, at the expense of the
Borrowers, to the Agent which Required Appraisal, and the
respective appraiser, shall be satisfactory to the Agent.
(h) Each of the Borrowers agrees that each
action required above by Section 8.11 (a) or (b) shall be
completed as soon as possible, but in no event later than
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60 days after such action is requested to be taken by the
Agent or the Required Banks. Each of the Borrowers further
agrees that each action required by Section 8.11(c), (d),
(e) and (f) with respect to the Additional Collateral shall
be completed contemporaneously with the creation of such
new Subsidiary.
8.12 Interest Rate Protection. No later than
the 90th day after the Initial Borrowing Date, the
Borrowers shall enter into, and shall maintain for a period
of three years thereafter, Interest Rate Protection
Agreements acceptable to the Agent establishing a fixed or
maximum interest rate acceptable to the Agent in respect of
at least $170,000,000 of outstanding Term Loans.
8.13 Ownership of Subsidiaries. INTERCO shall
at all times own 100% of the outstanding capital stock of
the other Borrowers. Except to the extent otherwise
expressly consented in writing by the Required Banks and
except as set forth in Schedule VI, the Borrowers shall
directly or indirectly own 100% of the capital stock of
each of their Subsidiaries (other than as permitted
pursuant to the definition of Permitted Acquisition).
8.14 Permitted Acquisitions. Subject to the
provisions of this Section 8.14, Section 9.02(vii) and the
requirements contained in the definition of Permitted
Acquisition, the Borrowers and their Restricted
Subsidiaries may from time to time after the Initial
Borrowing Date effect Permitted Acquisitions, so long as
(i) the Borrowers shall have given the Agent and the Banks
at least 10 Business Days' prior written notice of any
Permitted Acquisition, (ii) based on calculations made by
the Borrowers on a Pro Forma Basis after giving effect to
the respective Permitted Acquisition, no Default or Event
of Default will exist under, or would have existed during
the periods covered by, the financial covenants contained
in Sections 9.08 through 9.10, inclusive, of this
Agreement, (iii) based on good faith projections prepared
by the Borrowers for the period from the date of the
consummation of the Permitted Acquisition to the date which
is one year thereafter, the level of financial performance
measured by the covenants set forth in Sections 9.08
through 9.10 inclusive shall be better than or equal to
such level as would be required to provide that no Default
or Event of Default would exist under the financial
covenants contained in Sections 9.08 through 9.10,
inclusive, of this Agreement as compliance with such
covenants would be required through the date which is one
year from the date of the consummation of the respective
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Permitted Acquisition, (iv) the Agent shall have been
satisfied in its reasonable discretion that the proposed
Permitted Acquisition could not reasonably be expected to
result in materially increased tax, ERISA or environmental
liabilities with respect to INTERCO or any of its
Restricted Subsidiaries and (v) the Borrowers shall have
delivered to the Agent an officer's certificate executed by
an Authorized Representative of the Borrowers, certifying
(A) to the best of his knowledge, compliance with the
requirements of preceding clauses (i), (ii) and (iii) and
containing the calculations required by the preceding
clauses (ii) and (iii) and (B) compliance with the
requirements of Section 9.02(vii).
8.15 Maintenance of Corporate Separateness.
INTERCO will, and will cause each of its Subsidiaries to,
satisfy customary corporate formalities, including the
holding of regular board of directors' and shareholders'
meetings or action by directors or shareholders without a
meeting and the maintenance of corporate offices and
records. None of the Borrowers nor any of their respective
Restricted Subsidiaries shall make any payment to a
creditor of any Unrestricted Subsidiaries in respect of any
liability of any Unrestricted Subsidiaries, and no bank
account of any Unrestricted Subsidiary shall be commingled
with any bank account of any of the Borrowers or any of
their respective Restricted Subsidiaries. Any financial
statements distributed to any creditors of any Unrestricted
Subsidiaries shall clearly establish or indicate the
corporate separateness of such Unrestricted Subsidiary from
the Borrowers and their respective Restricted Subsidiaries.
Finally, neither INTERCO nor any of its Subsidiaries shall
take any action, or conduct its affairs in a manner, which
is likely to result in the corporate existence of INTERCO
or any of its Subsidiaries being ignored, or in the assets
and liabilities of the Borrowers or any of their respective
Restricted Subsidiaries being substantively consolidated
with those of any Unrestricted Subsidiaries in a bank-
ruptcy, reorganization or other insolvency proceeding.
8.16 Cash Management System. The Borrowers
will, and will cause each of their respective Restricted
Subsidiaries to, utilize and maintain the Cash Management
System for all deposits made by any of them (including the
concentration of all such deposits in the Concentration
Account). The Cash Management System shall be operated
solely for the business of the Borrowers and their
respective Restricted Subsidiaries.
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SECTION 9. Negative Covenants. The Borrowers
covenant and agree that on and after the Effective Date and
until the Total Commitments and all Letters of Credit and
Acceptances have terminated and the Loans, Notes and Unpaid
Drawings, together with interest, Fees and all other Obli-
gations incurred hereunder and thereunder, are paid in
full:
9.01 Liens. The Borrowers will not, and will
not permit any of their respective Restricted Subsidiaries
to, create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real or
personal, tangible or intangible) of INTERCO or any of its
Restricted Subsidiaries, whether now owned or hereafter
acquired, or sell any such property or assets subject to an
understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of
accounts receivable with recourse to INTERCO or any of its
Restricted Subsidiaries), or assign any right to receive
income or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any
similar recording or notice statute; provided that the
provisions of this Section 9.01 shall not prevent the
creation, incurrence, filing, assumption or existence of
the following (Liens described below are herein referred to
as "Permitted Liens"):
(i) incipient Liens for taxes, assessments or
governmental charges or levies not yet due and payable
or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by
appropriate proceedings for which adequate reserves
have been established in accordance with generally
accepted accounting principles in the United States
(or the equivalent thereof in any country in which a
Foreign Sales Corporation or a Foreign Subsidiary is
doing business, as applicable);
(ii) Liens in respect of property or assets of the
Borrowers or any of their Restricted Subsidiaries
imposed by law, which were incurred in the ordinary
course of business and do not secure Indebtedness for
borrowed money, such as carriers', warehousemen's,
materialmen's and mechanics' liens and other similar
Liens arising in the ordinary course of business, and
(x) which do not in the aggregate materially detract
from the value of the Borrowers' or such Restricted
Subsidiary's property or assets or materially impair
the use thereof in the operation of the business of
the Borrowers or such Restricted Subsidiary or
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(y) which are being contested in good faith by appro-
priate proceedings, which proceedings have the effect
of preventing the forfeiture or sale of the property
or assets subject to any such Lien;
(iii) Liens in existence on the Effective Date
which are listed, and the property subject thereto
described, in Schedule IX, but only to the respective
date, if any, set forth in such Schedule IX for the
removal and termination of any such Liens, plus
renewals and extensions of such Liens to the extent
set forth on Schedule IX, provided that (x) the
aggregate principal amount of the Indebtedness, if
any, secured by such Liens does not increase from that
amount outstanding at the time of any such renewal or
extension and (y) any such renewal or extension does
not encumber any additional assets or properties of
INTERCO or any of its Restricted Subsidiaries;
(iv) Permitted Encumbrances;
(v) Liens created pursuant to the Security Docu-
ments;
(vi) licenses, leases or subleases granted to
other Persons in the ordinary course of business not
materially interfering with the conduct of the busi-
ness of INTERCO and its Restricted Subsidiaries taken
as a whole;
(vii) Liens upon assets subject to Capitalized
Lease Obligations of the Borrowers and their
Restricted Subsidiaries to the extent permitted by
Section 9.04(vii), provided that (x) such Liens only
serve to secure the payment of Indebtedness arising
under such Capitalized Lease Obligation and (y) the
Lien encumbering the asset giving rise to the
Capitalized Lease Obligation does not encumber any
other asset of the Borrowers or any Restricted Sub-
sidiary of the Borrowers;
(viii) Liens placed upon assets used in the ordinary
course of business of the Borrowers or any of their
Restricted Subsidiaries at the time of acquisition
thereof by the Borrowers or any such Restricted Subsi-
diary or within 180 days thereafter to secure
Indebtedness incurred to pay all or a portion of the
purchase price thereof, or Liens securing Permitted
Acquired Debt, provided that (x) the aggregate
outstanding principal amount of all Indebtedness
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secured by Liens permitted by this clause (viii) shall
not at any time exceed the amount permitted by Section
9.04(vii) and (y) in all events, the Lien encumbering
the assets so acquired does not encumber any other
asset of the Borrowers or such Restricted Subsidiary;
(ix) easements, rights-of-way, restrictions
(including zoning restrictions), encroachments,
protrusions and other similar charges or encumbrances,
and minor title deficiencies, in each case whether now
or hereafter in existence, not securing Indebtedness
and not materially interfering with the conduct of the
business of the Borrowers or any of their respective
Restricted Subsidiaries;
(x) Liens arising from precautionary UCC financ-
ing statement filings regarding operating leases
entered into by the Borrowers or any of their
Restricted Subsidiaries in the ordinary course of
business;
(xi) Liens arising out of the existence of
judgments or awards not constituting an Event of
Default under Section 10.09, provided that no cash or
property is deposited or delivered to secure the
respective judgment or award (or any appeal bond in
respect thereof, except as permitted by following
clause (xiv));
(xii) Liens, and the filing of financing statements
in connection therewith, created by, and as set forth
in, the Receivables Documents;
(xiii) statutory and contractual landlords' liens
under leases to which the Borrowers or any of their
Restricted Subsidiaries are a party;
(xiv) Liens (other than any Lien imposed by ERISA)
(x) incurred or deposits made in the ordinary course
of business of the Borrowers and their respective Re-
stricted Subsidiaries in connection with workers' com-
pensation, unemployment insurance and other types of
social security, (y) to secure the performance by the
Borrowers and their respective Restricted Subsidiaries
of tenders, statutory obligations (other than excise
taxes), surety, stay, customs and appeal bonds, statu-
tory bonds, bids, leases, government contracts, trade
contracts, performance and return of money bonds and
other similar obligations (exclusive of obligations
for the payment of borrowed money) or (z) to secure
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the performance by the Borrowers and their respective
Restricted Subsidiaries of leases of Real Property, to
the extent incurred or made in the ordinary course of
business consistent with past practices, provided that
the aggregate amount of deposits at any time pursuant
to sub-clause (y) and sub-clause (z) shall not exceed
$5,000,000 in the aggregate;
(xv) any interest or title of a lessor, sublessor,
licensee or licensor under any lease or license
agreement permitted by this Agreement;
(xvi) Liens in favor of customs and revenue
authorities arising as a matter of law to secure the
payment of customs duties in connection with the
importation of goods and deposits made to secure
statutory obligations in the form of excise taxes;
(xvii) Liens arising out of conditional sale, title
retention, consignment or similar arrangements for the
sale of goods entered into by the Borrowers or any of
their Restricted Subsidiaries in the ordinary course
of business in accordance with the past practices of
the Borrowers and their Restricted Subsidiaries prior
to the Effective Date; and
(xviii) Liens not otherwise permitted by the
foregoing clauses (i) through (xvii) to the extent
attaching to properties and assets with an aggregate
fair value not in excess of, and securing liabilities
not in excess of, $10,000,000 in the aggregate at any
time outstanding.
9.02 Consolidation, Merger, Purchase or Sale
of Assets, etc. The Borrowers will not, and will not
permit any of their respective Restricted Subsidiaries to,
wind up, liquidate or dissolve its affairs (other than with
respect to Interfashions Industries, S.A. and its
Subsidiaries) or enter into any transaction of merger or
consolidation, or convey, sell, lease or otherwise dispose
of (or agree to do any of the foregoing at any future time)
all or any part of its property or assets (other than the
liquidation of Cash Equivalents in the ordinary course of
business), or enter into any sale-leaseback transactions,
or purchase or otherwise acquire (in one or a series of re-
lated transactions) any part of the property or assets
(other than purchases or other acquisitions of inventory,
materials, equipment, furniture, fixtures, and intangible
assets in the ordinary course of business) of any Person,
except that:
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(i) Capital Expenditures by the Borrowers and
their Restricted Subsidiaries shall be permitted to
the extent not in violation of Section 9.07;
(ii) each of the Borrowers and their Restricted
Subsidiaries may (x) in the ordinary course of
business, sell, lease or otherwise dispose of any
assets which, in the reasonable judgment of such
Person, are obsolete, worn out or otherwise no longer
useful in the conduct of such Person's business, (y)
sell, lease or otherwise dispose of any other assets,
provided that each such sale, lease or disposition
shall be for fair market value (other than with
respect to sales, leases or dispositions in an
aggregate amount not to exceed $100,000 per calendar
year) and at least 75% of the consideration therefor
shall be in the form of cash, and provided further,
that the aggregate Net Sale Proceeds of all assets
subject to sales or other dispositions pursuant to
clauses (x) and (y) shall not exceed $15,000,000 in
the aggregate in any Fiscal Year and (z) enter into
transactions permitted under Section 9.01(vi);
(iii) Investments may be made to the extent per-
mitted by Section 9.05;
(iv) each of the Borrowers and their Restricted
Subsidiaries may lease (as lessee) real or personal
property (so long as any such lease does not create a
Capitalized Lease Obligation except to the extent
permitted by Section 9.04);
(v) each of the Borrowers and their Restricted
Subsidiaries may make sales or transfers of inventory
in the ordinary course of business;
(vi) sales and contributions of accounts
receivable to the Receivables Subsidiary and sales of
accounts receivable by the Receivables Subsidiary to
the Receivables Purchasers, and purchases and
acquisitions of accounts receivable by the Receivables
Subsidiary, in each case pursuant to the Receivables
Facility shall be permitted;
(vii) the Borrowers and their respective
Restricted Subsidiaries shall be permitted to make
Permitted Acquisitions so long as (i) such Permitted
Acquisitions are effected in accordance with the
requirements of Section 8.14, (ii) after giving effect
to any Permitted Acquisition, the aggregate amount
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paid (including for the purpose of this clause (vii)
all cash consideration paid, the face amount of all
Permitted Acquired Debt incurred, and the fair market
value of any merger consideration, but excluding the
fair market value of all INTERCO Common Stock and/or
Qualified Preferred Stock issued as consideration
therefor, in each case in connection with such
Permitted Acquisition) by the Borrowers and their
Restricted Subsidiaries in connection with such
Permitted Acquisition shall not exceed the Available
Permitted Acquisition Amount at such time (after
giving effect to all prior or contemporaneous
adjustments thereto), provided that in no event shall
such aggregate amount paid in connection with
Permitted Acquisitions, when added to the amount of
Investments in Unrestricted Subsidiaries by INTERCO
pursuant to Section 9.05(viii), exceed $50,000,000 and
(iii) with respect to each Permitted Acquisition, no
Default or Event of Default is in existence at the
time of the consummation of such Permitted Acquisition
or would exist after giving effect thereto;
(viii) INTERCO may sell or otherwise dispose of any
shares of capital stock of any Unrestricted
Subsidiaries owned by it;
(ix) so long as no Default or Event of Default
then exists or would result therefrom, the Borrowers
or any Wholly-Owned Subsidiary which is a Restricted
Subsidiary (other than the Receivables Subsidiary) of
INTERCO may be merged into any Borrower (so long as
such Borrower is the surviving corporation of such
merger) or any other Wholly-Owned Subsidiary which is
a Restricted Subsidiary (other than the Receivables
Subsidiary) of the Borrowers;
(x) the Borrowers and their respective
Restricted Subsidiaries (other than the Receivables
Subsidiary) shall be permitted to merge with another
Person (so long as such Borrower or Restricted
Subsidiary is the surviving corporation), so long as
such merger is used to effect a Permitted Acquisition
in compliance with Section 9.02(vii); and
(xi) the Borrowers may sell or otherwise dispose
of Excluded Assets.
To the extent the Required Banks waive the provisions of
this Section 9.02 with respect to the sale of any Col-
lateral, or any Collateral is sold as permitted by this
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Section 9.02, such Collateral (unless sold to INTERCO or a
Subsidiary of INTERCO) shall be sold free and clear of the
Liens created by the Security Documents, and the Agent and
Collateral Agent shall be authorized to take any actions
deemed appropriate in order to effect the foregoing.
9.03 Dividends. INTERCO shall not, and shall
not permit any of its Restricted Subsidiaries to, autho-
rize, declare or pay any Dividends with respect to INTERCO
or any of its Restricted Subsidiaries, except that:
(i) any Restricted Subsidiary of any Borrower
may pay Dividends to such Borrower or any Wholly-Owned
Subsidiary which is a Restricted Subsidiary of the
Borrowers;
(ii) so long as no Default or Event of Default
exists or would result therefrom, INTERCO shall be
permitted to pay Dividends (including, without limita-
tion, Dividends on Qualified Preferred Stock) in an
amount not to exceed (A) $5,000,000 plus (to the
extent a positive number) (B) the sum of (a) the then
Available Unrestricted Proceeds Amount (after giving
effect to all prior or contemporaneous adjustments
thereto) plus (b) the then Available Net Income Amount
(after giving effect to all prior or contemporaneous
adjustments thereto) minus (C) all Dividends made
pursuant to clause (A) above and all Guaranty Payments
made by INTERCO pursuant to Section 9.11(b)(ii)(y)(A)
and (B); and
(iii) so long as no Default or Event of Default
exists or would result therefrom, INTERCO may pay
regularly accruing cash Dividends on Disqualified
Preferred Stock in accordance with the terms of the
certificate of designation therefor.
9.04 Indebtedness. INTERCO will not, and will
not permit any of its Restricted Subsidiaries to, contract,
create, incur, assume or suffer to exist any Indebtedness,
except:
(i) Indebtedness incurred pursuant to this
Agreement and the other Credit Documents;
(ii) Permitted Subordinated Indebtedness not to
exceed (x) in aggregate principal amount $150,000,000,
minus the aggregate liquidation preference or amount
of all Disqualified Preferred Stock issued on or prior
to the date of the incurrence of such Permitted
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Subordinated Indebtedness pursuant to Section
9.13(b)(i), plus (y) an amount of Permitted
Subordinated Indebtedness incurred and simultaneously
used to repay, refinance or otherwise replace the
Receivables Facility on or after the date which is
four and one-half years after the Initial Borrowing
Date, in each case shall be permitted on terms and
conditions set forth in the definition of Permitted
Subordinated Indebtedness and on other terms and
conditions reasonably satisfactory to the Agent and
the Required Banks (provided that such other terms and
conditions shall be deemed satisfactory to the
Required Banks unless objected to by the Required
Banks in writing on or prior to the date which is
twenty Business Days after the documentation therefor
is delivered to the Banks);
(iii) Permitted Unsecured Indebtedness (whether
directly incurred or incurred as Permitted Acquired
Debt) not to exceed in aggregate principal amount
$25,000,000 minus the aggregate liquidation preference
or amount of all Disqualified Preferred Stock issued
on or prior to the date of the incurrence of such
Permitted Unsecured Indebtedness pursuant to Section
9.13(b)(ii), shall be permitted on terms and
conditions set forth in the definition of Permitted
Unsecured Indebtedness and on other terms and
conditions reasonably satisfactory to the Agent;
(iv) Existing Indebtedness shall be permitted to
the extent the same is listed on Schedule VII, but no
refinancings or renewals thereof, except as expressly
permitted on such Schedule VII;
(v) accrued expenses and current trade accounts
payable incurred in the ordinary course of business;
(vi) Indebtedness under Interest Rate Protection
Agreements entered into in compliance with Section
8.12;
(vii) Indebtedness of the Borrowers and their
Restricted Subsidiaries evidenced by Capitalized Lease
Obligations to the extent permitted pursuant to Sec-
tion 9.01(vii), and Indebtedness secured by Liens
permitted under Section 9.01(viii), provided that in
no event shall the aggregate principal amount of
Capitalized Lease Obligations and Indebtedness per-
mitted by this clause (vii) exceed $20,000,000;
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(viii) Indebtedness under Currency Hedging
Agreementsentered intoincompliance withSection9.05(x).
(ix) Contingent Obligations of the Borrowers or
any Restricted Subsidiary as a guarantor of the lessee
under any lease pursuant to which the Borrowers or a
Restricted Subsidiary is the lessee so long as such
lease is otherwise permitted hereunder;
(x) Contingent Obligations of INTERCO pursuant
to (x) the Surviving Guaranties, provided that the
making of any payments thereunder, and any renewals or
extensions of such Surviving Guaranties, shall be
subject to restrictions set forth in Section 9.11(b)
and (y) the Tax Sharing Agreements;
(xi) Indebtedness (a) consisting of Attributed
Receivables Facility Indebtedness of the Receivables
Subsidiary so long as the Net Cash Proceeds of
Attributed Receivables Facility Indebtedness in excess
of $150,000,000 shall be applied to repay Term Loans
in accordance with Section 4.02(e) and (b) consisting
of the Contingent Obligations of INTERCO in respect of
certain of its Restricted Subsidiaries (other than the
Receivables Subsidiary) with respect to certain
limited obligations under the Receivables Facility as
set forth in the Receivables Documents; and
(xii) Indebtedness among the Borrowers and their
Restricted Subsidiaries to the extent permitted
pursuant to Section 9.05(v).
In furtherance of the foregoing and in no way in
limitation thereof, INTERCO shall not permit any
Unrestricted Subsidiary to incur any Indebtedness having
any element of recourse to INTERCO or its Restricted
Subsidiaries or to any of their assets or property.
9.05 Investments; etc. The Borrowers will not,
and will not permit any of their respective Restricted
Subsidiaries to, directly or indirectly, lend money or
credit or make advances to any Person, or purchase or
acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any
other Person (any of the foregoing, an "Investment"), or
purchase or own a futures contract or otherwise become
liable for the purchase or sale of currency or other com-
modities at a future date in the nature of a futures con-
tract, or hold any cash or Cash Equivalents, except that
the following shall be permitted:
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(i) the Borrowers and their Restricted Subsi-
diaries may acquire and hold accounts receivables
owing to any of them, if created or acquired in the
ordinary course of business and payable or discharge-
able in accordance with customary terms;
(ii) the Borrowers and their Restricted Subsi-
diaries may acquire and hold cash and Cash Equivalents
(including cash and Cash Equivalents held by INTERCO
on behalf of its Restricted Subsidiaries pursuant to
the Cash Management System), provided that during any
time that Revolving Loans of Non-Defaulting Banks or
Swingline Loans are outstanding, the aggregate amount
of cash and Cash Equivalents permitted to be held by
the Borrowers and their Restricted Subsidiaries
(including cash and Cash Equivalents held by INTERCO
on behalf of its Restricted Subsidiaries pursuant to
the Cash Management System) shall not exceed
$20,000,000 for any period of five consecutive days;
(iii) INTERCO and its Restricted Subsidiaries may
make loans and advances in the ordinary course of
business to their respective employees so long as the
aggregate principal amount thereof at any time out-
standing (determined without regard to any write-downs
or write-offs of such loans and advances) shall not
exceed $1,000,000;
(iv) the Borrowers may enter into Interest Rate
Protection Agreements to the extent permitted in
Section 9.04(vi);
(v) any Credit Party or the Receivables
Subsidiary may make intercompany loans and advances to
any other Credit Party;
(vi) the Borrowers may (x) establish Subsidiaries
in compliance with Section 9.12 and (y) make
Investments therein as otherwise provided in this
Section 9.05;
(vii) so long as no Default or Event of Default
exists, or would result therefrom, the Borrowers and
their Restricted Subsidiaries may make Investments in
an aggregate amount not to exceed the sum of (A) the
then Available $10 Million Basket Amount (after giving
effect to all prior or contemporaneous adjustments
thereto) plus (B) the then Available Unrestricted
Proceeds Amount (after giving effect to all prior or
contemporaneous adjustments thereto) plus (C) the
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Available Net Income Amount (after giving effect to
all prior or contemporaneous adjustments thereto);
provided that at no time shall the aggregate amount of
Investments permitted pursuant to this Section
9.05(vii) exceed $25,000,000;
(viii) so long as no Default or Event of Default
exists or would result therefrom, INTERCO and any of
its Unrestricted Subsidiaries may acquire and/or
establish (in compliance with Section 9.12 and the
definition of Unrestricted Subsidiary) and/or make
Investments in any Unrestricted Subsidiary in an
aggregate amount (including the fair market value of
any INTERCO Common Stock issued as consideration
therefor) not to exceed the then Available
Unrestricted Proceeds Amount (after giving effect to
all prior or contemporaneous adjustments thereto);
provided, that at no time shall the aggregate amount
of Investments permitted pursuant to this Section
9.05(viii), when added to the amount of consideration
paid or deemed paid in connection with all Permitted
Acquisitions made pursuant to Section 9.02(vii),
exceed $50,000,000;
(ix) the Borrowers and their Restricted Subsi-
diaries may retain cash consideration plus purchase
money notes derived from asset sales permitted
pursuant to Section 9.02(ii);
(x) the Borrowers may enter into and perform
their obligations under Currency Hedging Agreements
entered into in the ordinary course of business and
consistent with past practices so long as (i) any such
Currency Hedging Agreement is related to income
derived from foreign operations of the Borrowers or
any Restricted Subsidiary (or any Foreign Sales
Corporation which is a Restricted Subsidiary) or
otherwise related to purchases permitted hereunder
from foreign suppliers and (ii) such Currency Hedging
Agreements do not exceed a notional amount equal to
$15,000,000 in the aggregate at any one time;
(xi) the Borrowers and their Restricted Subsi-
diaries may acquire and own investments (including
debt obligations) received in connection with the
bankruptcy or reorganization of their suppliers and
customers and in settlement of delinquent obligations
of, and other disputes with, their customers and
suppliers in the ordinary course of business;
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(xii) existing Investments by the Borrowers and
their Restricted Subsidiaries shall be permitted to
the extent listed on Schedule X;
(xiii) the Restricted Subsidiaries of INTERCO may
contribute accounts receivable to the Receivables
Subsidiary in accordance with the provisions of the
Receivables Documents;
(xiv) INTERCO shall be permitted to make capital
contributions to Foreign Sales Corporations in an
amount not to exceed $100,000 in the aggregate; and
(xv) Permitted Acquisitions shall be permitted in
compliance with Sections 8.14 and 9.02(vii).
9.06 Transactions with Affiliates and
Unrestricted Subsidiaries. The Borrowers will not, and
will not permit any of their respective Restricted Sub-
sidiaries to, enter into any transaction or series of re-
lated transactions with any Affiliate of INTERCO or any of
its Subsidiaries or any of its Unrestricted Subsidiaries,
other than in the ordinary course of business and on terms
and conditions substantially as favorable to the Borrowers
or such Restricted Subsidiary as would reasonably be
obtained by the Borrowers or such Restricted Subsidiary at
that time in a comparable arm's-length transaction with a
Person other than an Affiliate, except that:
(i) Dividends may be paid to the extent provided
in Section 9.03;
(ii) Investments may be made to the extent
permitted by Section 9.05;
(iii) the transactions entered into between the
Borrowers and their Subsidiaries shall be permitted to
the extent expressly permitted by Section 9.02;
(iv) customary fees may be paid to non-officer
directors of the Borrowers and their Restricted Subsi-
diaries;
(v) INTERCO and its Restricted Subsidiaries may
enter into employment arrangements with respect to the
procurement of services with their respective officers
and employees in the ordinary course of business;
(vi) the Borrowers and their respective
Restricted Subsidiaries may make (x) capital
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contributions to any of their respective Restricted
Subsidiaries which is a Credit Party or (y) capital
contributions of accounts receivable to the
Receivables Subsidiary in accordance with the
Receivables Documents;
(vii) Florsheim, Converse, INTERCO and its Subsi-
diaries shall enter into and perform the terms of the
respective Tax Sharing Agreements and the Services
Agreements;
(viii) so long as no Default or Event of Default
exists, or would result therefrom, INTERCO shall be
permitted to pay management fees to Apollo Advisors,
L.P. pursuant to the Apollo Management Agreement,
provided, that, such fees shall not exceed $650,000 in
any Fiscal Year and no amendment adverse to the inter-
ests of the Banks shall be made to the Apollo
Management Agreement without the consent of the Agent;
(ix) existing transactions between INTERCO and
its Subsidiaries and their Affiliates shall be
permitted to the extent listed on Schedule XI; and
(x) INTERCO may sell or issue INTERCO Common
Stock and Qualified Preferred Stock to its Affiliates
(other than its Subsidiaries).
Except as specifically provided above, no manage-
ment or similar fees shall be paid or payable by INTERCO or
any of its Restricted Subsidiaries to any Affiliate (other
than INTERCO).
Notwithstanding anything contained in the
foregoing to the contrary, any transactions between and
among INTERCO and/or Restricted Subsidiaries on the one
hand and any of their respective Affiliates (excluding
INTERCO and its Restricted Subsidiaries) on the other hand,
shall be arm's length transactions and on terms and
conditions at least as favorable to INTERCO and/or such
Restricted Subsidiaries as the terms and conditions which
would apply to a similar transaction on an arm's length
basis with a Person that is not an Affiliate; provided,
that, any transaction (other than as described in clauses
(i), (ii), (iii) and (vi) above) between and among the
aforementioned parties with a value in excess of (A)
$1,000,000 shall only be permitted if a majority of the
disinterested directors of INTERCO and/or such Restricted
Subsidiaries approve the transaction and (B) (other than as
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described in clause (x) above) $10,000,000 shall only be
permitted if the parties thereto provide a fairness opinion
from persons, and in form and substance, satisfactory to
the Agent.
9.07 Capital Expenditures. (a) The Borrowers
will not, and will not permit any of their respective
Restricted Subsidiaries to, make any Capital Expenditures,
except that the Borrowers and their Restricted Subsidiaries
shall be permitted to make Capital Expenditures in any
Fiscal Year in an amount not to exceed the Available CapX
Amount as in effect on the date that the respective Capital
Expenditure is made.
(b) Notwithstanding anything to the contrary
contained in clause (a) above, the Borrowers and their Re-
stricted Subsidiaries shall be permitted to make Capital
Expenditures (i) consisting of Permitted Acquisitions made
otherwise in compliance with this Agreement (but not
pursuant to clause (B) (v) of the definition of Available
Permitted Acquisition Amount), (ii) otherwise in an amount
equal to the sum of (x) the Available Unrestricted Proceeds
Amount (after giving effect to all prior and
contemporaneous adjustments thereto), (y) the Available Net
Income Amount (after giving effect to all prior and
contemporaneous adjustments thereto) and (z) the proceeds
of Recovery Events which are not required to repay Term
Loans pursuant to Section 4.02(h) and (iii) in the amount,
if any, by which the Leverage Improvement Amount exceeded
the Converse Tax Liability on the Initial Borrowing Date.
9.08 Consolidated Net Interest Coverage Ratio.
The Borrowers will not permit the Consolidated Net Interest
Coverage Ratio for any period of four consecutive fiscal
quarters, in each case taken as one accounting period,
ended during a period set forth below to be less than the
amount set forth opposite such period below:
Period Ratio
January 1, 1995 through
September 30, 1995 2.40:1.0
October 1, 1995 through
September 30, 1996 2.70:1.0
October 1, 1996 through
September 30, 1997 3.05:1.0
Thereafter 3.55:1.0
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9.09 Adjusted Consolidated EBITDA. The
Borrowers will not permit Adjusted Consolidated EBITDA for
any period of four consecutive fiscal quarters, in each
case taken as one accounting period, ended during a period
(with any calculation for any such period which includes a
period occurring prior to the Initial Borrowing Date to be
adjusted, on a Pro Forma Basis, to give effect to the
Transaction) set forth below to be less than the amount set
forth opposite such period below:
Period Amount
January 1, 1995 through
September 30, 1995 $ 95,000,000
October 1, 1995 through
September 30, 1996 $100,000,000
October 1, 1996 through
September 30, 1997 $108,000,000
Thereafter $115,000,000
9.10 Maximum Leverage Ratio. The Borrowers will
not permit the Leverage Ratio at any time during any fiscal
quarter ending during a period (with any calculation for
any such period which includes a period occurring before
the Initial Borrowing Date to be adjusted, on a Pro Forma
Basis, to give effect to the Transaction) set forth below
to be greater than the ratio set forth opposite such period
below:
Period Ratio
Initial Borrowing Date through
September 30, 1995 5.0:1.0
October 1, 1995 through
September 30, 1996 4.5:1.0
October 1, 1996 through
September 30, 1997 4.0:1.0
Thereafter 3.55:1.0
9.11 Limitation on Modifications of and Payments
on Indebtedness and Qualified Preferred Stock;
Modifications of Certificate of Incorporation, By-Laws and
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Certain Other Agreements; Surviving Guaranty Payments, etc.
(a) The Borrowers will not, and will not permit any of
their respective Restricted Subsidiaries to, (i) make (or
give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption, repurchase or
acquisition for value of any of the Existing Indebtedness,
or after the incurrence thereof, any Permitted Unsecured
Indebtedness, Permitted Subordinated Indebtedness, or
Disqualified Preferred Stock (any such payment, prepayment,
redemption or acquisition, a "Restricted Junior Payment"),
if at such time (x) a Default or Event of Default then
exists or arises therefrom and (y) such Restricted Junior
Payment shall exceed an amount equal to the sum of (A) the
then Available Unrestricted Proceeds Amount (after giving
effect to all prior or contemporaneous adjustments thereto)
and (B) the then Available Net Income Amount (after giving
effect to all prior and contemporaneous adjustments
thereto), (ii) amend or modify, or permit the amendment or
modification of, any provision of the Existing Indebtedness
or the Receivables Documents, or after the incurrence or
issuance thereof, any Permitted Unsecured Indebtedness,
Permitted Subordinated Indebtedness, Qualified Preferred
Stock or Disqualified Preferred Stock or of any agreement
(including, without limitation, any purchase agreement,
indenture, loan agreement, security agreement or
certificate of designation) relating thereto, other than
any amendments or modifications to the Existing
Indebtedness, the Receivables Documents, any Permitted
Unsecured Indebtedness, any Permitted Subordinated
Indebtedness, any Qualified Preferred Stock and any
Disqualified Preferred Stock which (A) do not make any term
or condition thereof more restrictive than the previously
existing terms and conditions with respect thereto, (B) do
not in any way materially adversely affect the interests of
the Banks and (C) do not increase the interest or dividend
rates applicable thereunder, reduce the maturity date
thereunder or change any pay-in-kind mechanics or
requirements or any subordination provision thereof from
those in effect on the Effective Date or (iii) amend or
modify its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certifi-
cate of designation, other than any certificate of
designation relating to Qualified Preferred Stock or
Disqualified Preferred Stock) or By-Laws, or any agreement
entered into by it, with respect to its capital stock
(including any Shareholders' Agreement), or enter into any
new agreement with respect to its capital stock if the
foregoing would in any way materially and adversely affect
the Banks.
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(b) INTERCO will not (i) amend, extend, renew or
modify, or permit the amendment, extension, renewal or
modification of, any provision of the Surviving Guaranties
(or any lease obligation guarantied thereby) or any
agreement relating thereto, other than any renewal or
extension of a lease obligation guarantied by any Surviving
Guaranty pursuant to the renewal and/or extension
provisions contained therein as in effect on the Effective
Date which (a) creates a continuing guaranty obligation
with respect to such existing lease (without any amendments
thereto which would increase the lessee's obligations
thereunder) that INTERCO is required to permit pursuant to
the terms of its Services Agreement with Florsheim, (b) is
exercised (x) not more than 30 days prior to the last day
on which such extension or renewal may be exercised in
accordance with the terms of the lease relating thereto and
(y) at a time when no Default or Event of Default then
exists or arises therefrom and (c) creates future fixed
payment obligations with respect thereto which, when
combined with all future fixed payment obligations under
renewals and/or extensions made in compliance with this
Section 9.11(b)(i), would not exceed $10,000,000 or (ii)
make any payment whatsoever, whether voluntary, mandatory
or otherwise, in respect of the Surviving Guaranties (any
such payment, a "Guaranty Payment") if at such time (x) a
Default or Event of Default then exists or arises therefrom
or (y) such payment shall exceed an aggregate amount equal
to the sum of (A) $5,000,000, plus (B) at any time, the
aggregate amount of Dividends which could be made pursuant
to (1) Section 9.03(ii)(A), (2) Section 9.03(ii)(B)(a) and
(3) Section 9.03(ii)(B)(b), in each case at such time
(without including the amount of such Guaranty Payment
contemplated to be made in the calculation of Section
9.03(ii)(B) at such time), plus (C) the amount of Guaranty
Payments made with the cash proceeds of issuances of equity
by INTERCO permitted to be so used for such purposes
pursuant to clause (iv) of the first parenthetical of
Section 4.02(c).
(c) The Borrowers will not, and will not permit
any of their respective Restricted Subsidiaries to, amend,
modify or change any provision of any Tax Sharing Agreement
or any Services Agreement, other than any amendment,
modification or change deemed immaterial by the Agent or as
otherwise consented to by the Required Banks.
9.12 Limitation on Creation or Acquisition of
Subsidiaries and Restricted Subsidiaries. The Borrowers
will not, and will not permit any of their respective
Restricted Subsidiaries to, establish, create or acquire
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after the Effective Date any Subsidiary, unless (x) if such
Subsidiary is an Unrestricted Subsidiary (other than a
Foreign Sales Corporation), (i) it is established, created
or acquired by INTERCO or another Unrestricted Subsidiary,
(ii) if owned by INTERCO, 100% of the capital stock of such
new Unrestricted Subsidiary owned by INTERCO shall be
pledged pursuant to the Pledge Agreement and the
certificates representing such stock, together with stock
powers duly executed in blank, shall be delivered to the
Collateral Agent and (iii) such Unrestricted Subsidiary
shall, at the request of the Agent, become a party to a Tax
Sharing Agreement and/or Services Agreement, (y) if such
Subsidiary is a Restricted Subsidiary (other than a Foreign
Sales Corporation), (i) at least 10 Business Days' prior
written notice thereof is given to the Agent and the Banks,
(ii) 100% of the capital stock of such new Subsidiary is
pledged pursuant to the Pledge Agreement and the
certificates representing such stock, together with stock
powers duly executed in blank, are delivered to the
Collateral Agent and (iii) such new Restricted Subsidiary
executes a counterpart of the Subsidiary Guaranty, the
Security Agreement and the Pledge Agreement or (z) if such
Subsidiary is a Foreign Sales Corporation, any Investment
therein is made in accordance with Section 9.05(xiv). In
addition, each new Restricted Subsidiary shall execute and
deliver, or cause to be executed and delivered, all other
relevant documentation of the type described in Section 5
as such new Restricted Subsidiary would have had to deliver
if such new Restricted Subsidiary were a Restricted
Subsidiary and/or a Subsidiary Guarantor on the Initial
Borrowing Date.
9.13 Limitation on Issuance of Capital Stock.
(a) INTERCO shall not issue (i) any Preferred Stock (other
than Qualified Preferred Stock and Disqualified Preferred
Stock issued pursuant to clause (b) below, the proceeds of
which are applied as required pursuant to Section 4.02(c))
or (ii) any redeemable common stock unless, in either case,
all terms thereof are satisfactory to the Required Banks in
their sole discretion.
(b) INTERCO may issue Disqualified Preferred
Stock not to exceed in aggregate liquidation preference or
amount (i) $150,000,000 minus the aggregate principal
amount of all Permitted Subordinated Indebtedness issued
pursuant to Section 9.04(ii)(x), plus (ii) $25,000,000
minus the aggregate principal amount of all Permitted
Unsecured Indebtedness issued pursuant to Section
9.04(iii), plus (iii) any amount of Disqualified Preferred
Stock the proceeds of which are used to repay, refinance or
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otherwise replace the Receivables Facility on or after the
date which is four and one-half years after the Initial
Borrowing Date on terms and conditions set forth in the
definition of Disqualified Preferred Stock and on other
terms and conditions reasonably satisfactory to the Agent.
(c) No Restricted Subsidiary of INTERCO shall
issue, or permit any of their Restricted Subsidiaries to
issue, any capital stock (including by way of sales of
treasury stock) or any options or warrants to purchase, or
securities convertible into, capital stock, except (i) for
transfers and replacements of then outstanding shares of
capital stock, (ii) for stock splits, stock dividends and
additional issuances which do not decrease the percentage
ownership of INTERCO or any of its Restricted Subsidiaries
in any class of the capital stock of such Restricted
Subsidiaries, (iii) to qualify directors to the extent
required by applicable law, and (iv) Restricted
Subsidiaries formed after the Effective Date pursuant to
Section 9.12 may issue capital stock to the Borrowers or
the respective Restricted Subsidiary of the Borrowers which
is to own such stock in accordance with the requirements of
Section 9.12. All capital stock issued in accordance with
this Section 9.13(c) shall, to the extent required by the
Pledge Agreement, be delivered to the Collateral Agent for
pledge pursuant to the Pledge Agreement.
9.14 Business. The Borrowers will not, and will
not permit any of their Restricted Subsidiaries to, engage
(directly or indirectly) in any business other than
substantially the same lines of business in which they are
engaged on the Effective Date and reasonable extensions
thereof. No Restricted Subsidiary of INTERCO will, or will
permit any of their Restricted Subsidiaries to, create or
own any Unrestricted Subsidiaries. The Foreign Sales
Corporation will not engage in any business other than the
sale of goods and/or services outside of the United States
and any business reasonably incidental to the foregoing.
9.15 Limitation on Certain Restrictions on Sub-
sidiaries. (a) The Borrowers will not, and will not permit
any of their respective Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer
to exist or become effective, except as set forth on
Schedule XIII, any encumbrance or restriction on the
ability of any such Restricted Subsidiary to (x) pay
dividends or make any other distributions on its capital
stock or any other interest or participation in its profits
owned by INTERCO or any Restricted Subsidiary of INTERCO,
or pay any Indebtedness owed to INTERCO or a Restricted
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Subsidiary of INTERCO, (y) make loans or advances to
INTERCO or any of INTERCO's Restricted Subsidiaries or (z)
transfer any of its properties or assets to INTERCO, except
for such encumbrances or restrictions existing under or by
reason of (i) applicable law, (ii) this Agreement and the
other Credit Documents, (iii) customary provisions
restricting subletting or assignment of any lease governing
a leasehold interest of the Borrowers or a Restricted
Subsidiary of the Borrowers, (iv) customary provisions
restricting assignment of any licensing agreement entered
into by the Borrowers or any Restricted Subsidiary of the
Borrowers in the ordinary course of business and (v)
restrictions on the Receivables Subsidiary set forth in the
Receivables Documents.
(b) INTERCO will not permit any of its Unre-
stricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any
restriction whatsoever on the operations of INTERCO and/or
its Restricted Subsidiaries.
9.16 Limitation on Receivables and Receivables
Facility. (a) The Receivables Subsidiary shall engage in
no business activities other than the purchase,
acquisition, sale and pledge of receivables (or interests
therein) pursuant to the Receivables Facility and any
business activities reasonably incidental thereto, all in
accordance with the Receivables Facility, and shall have no
assets or liabilities, other than receivables purchased
from each of the Borrowers and their Restricted
Subsidiaries, cash collections therefrom, any investments
of such cash collections and other assets and liabilities
reasonably incidental to the foregoing activities, and
shall in no event purchase any receivables from an
Unrestricted Subsidiary.
(b) INTERCO and its Restricted Subsidiaries shall
not cause, permit, or suffer to exist (including as a
result of actions taken by the Receivables Purchasers) (i)
unless the Receivables Facility has been terminated,
refinanced or replaced as otherwise permitted under the
provisions of this Agreement, the Receivables Subsidiary to
cease selling receivables pursuant to the Receivables
Facility for a period in excess of five consecutive
Business Days (excluding any Business Day on which (x) none
of Broyhill, Lane or Action generate any receivables or (y)
no Swingline Loans and no Revolving Loans of Non-Defaulting
Banks are outstanding), (ii) the Receivables Facility to
be terminated on any date prior to the date which is (x)
five years after the Initial Borrowing Date or (y) four and
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one-half years after the Initial Borrowing Date, in the
event the Receivables Facility is repaid, refinanced or
otherwise replaced by Permitted Subordinated Indebtedness
and/or Disqualified Preferred Stock, (iii) an Event of
Termination (as defined in either Receivables Purchase
Agreement) to have occurred and be continuing and which
shall not have been cured or waived for a period in excess
of five consecutive Business Days or (iv) the sum of the
Yield Reserve, the Loss Reserve, the Service Fee Reserve
and the Dilution Reserve (each as defined in the
Receivables Documents) to exceed 30% at any time.
SECTION 10. Events of Default. Upon the occur-
rence of any of the following specified events (each an
"Event of Default"):
10.01 Payments. The Borrowers shall (i) default
in the payment when due of any principal of any Loan or any
Note or (ii) default, and such default shall continue
unremedied for three or more Business Days, in the payment
when due of any Unpaid Drawings or interest on any Loan or
Note, or any Fees or any other amounts owing hereunder or
thereunder; or
10.02 Representations, etc. Any representation,
warranty or statement made by any Credit Party herein or in
any other Credit Document or in any certificate (including,
without limitation, the certificates delivered pursuant to
Sections 5.21 and 8.10(b)) delivered pursuant hereto or
thereto shall prove to be untrue in any material respect on
the date as of which made or deemed made; or
10.03 Covenants. The Borrowers shall (i)
default in the due performance or observance by it of any
term, covenant or agreement contained in Section
8.01(g)(i), 8.08, 8.11, 8.15, 8.16 or Section 9 or (ii)
default in the due performance or observance by it of any
other term, covenant or agreement contained in this
Agreement and such default shall continue unremedied for a
period of 30 days after written notice to the Borrowers by
the Agent or any Bank; or
10.04 Default Under Other Agreements. The Bor-
rowers or any of their respective Restricted Subsidiaries
shall (i) default in any payment of any Indebtedness (other
than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such
Indebtedness was created or (ii) default in the observance
or performance of any agreement or condition relating to
any Indebtedness (other than the Obligations) or contained
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in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or
holders of such Indebtedness (or a trustee or agent on
behalf of such holder or holders) to cause (determined
without regard to whether any notice is required), any such
Indebtedness to become due prior to its stated maturity, or
(iii) any Indebtedness (other than the Obligations) of the
Borrowers or any of their respective Restricted
Subsidiaries shall be declared to be due and payable, or
required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof,
provided that (x) it shall not be a Default or Event of
Default under this Section 10.04 unless the aggregate prin-
cipal amount of all Indebtedness as described in preceding
clauses (i) through (iii), inclusive, is at least
$5,000,000; or
10.05 Bankruptcy, etc. The Borrowers or any of
their respective Subsidiaries shall commence a voluntary
case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy," as now or hereafter in effect,
or any successor thereto (the "Bankruptcy Code"); or an
involuntary case is commenced against the Borrowers or any
of their respective Subsidiaries and the petition is not
controverted within 30 days, or is not dismissed within 60
days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the
Borrowers or any of their respective Subsidiaries, or the
Borrowers or any of their respective Subsidiaries commences
any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insol-
vency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the
Borrowers or any of their respective Subsidiaries, or there
is commenced against the Borrowers or any of their
respective Subsidiaries any such proceeding which remains
undismissed for a period of 60 days, or the Borrowers or
any of their respective Subsidiaries is adjudicated insol-
vent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or the
Borrowers or any of their respective Subsidiaries suffers
any appointment of any custodian or the like for it or any
substantial part of its property to continue undischarged
or unstayed for a period of 60 days; or the Borrowers or
any of their respective Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate
action is taken by the Borrowers or any of their respective
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Subsidiaries for the purpose of effecting any of the fore-
going; or
10.06 ERISA. (a) Any Plan shall fail to
satisfy the minimum funding standard required for any plan
year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted
under Section 412 of the Code, any Plan shall have had or
is likely to have a trustee appointed to administer such
Plan pursuant to Section 4042 of ERISA, any Plan is, shall
have been or is reasonably expected to be terminated or to
be the subject of termination proceedings under Section
4042 of ERISA, any Plan shall have an Unfunded Current
Liability, a contribution required to be made to a Plan or
Foreign Pension Plan has not been timely made, the
Borrowers or any their respective Restricted Subsidiaries
or any ERISA Affiliate has incurred or is reasonably
expected to incur a liability to or on account of a Plan
under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064,
4069, 4201, 4204 or 4212 of ERISA or Section 401(a)(29),
4971, 4975 or 4980 of the Code, or the Borrowers or any of
their respective Restricted Subsidiaries has incurred or is
reasonably expected to incur liabilities pursuant to one or
more employee welfare benefit plans (as defined in Section
3(1) of ERISA) which provide benefits to retired employees
or other former employees (other than as required by
Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA); (b) there shall result
from any such event or events the imposition of a lien, the
granting of a security interest, or a liability or a
material risk of incurring a liability; (c) and in each
case in clauses (a) and (b) above, such lien, security
interest or liability, individually, and/or in the
aggregate, in the opinion of the Required Banks, will have
a material adverse effect upon the business, operations,
property, assets, liabilities, condition (financial or
otherwise) or prospects of the Borrowers taken as a whole
or of the Borrowers and their Restricted Subsidiaries taken
as a whole; or
10.07 Security Documents. At any time after the
execution and delivery thereof, any of the Security Docu-
ments shall cease to be in full force and effect, or shall
cease in any material respect to give the Collateral Agent
for the benefit of the Secured Creditors the Liens, rights,
powers and privileges purported to be created thereby
(including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral), in favor
of the Collateral Agent, superior to and prior to the
rights of all third Persons (except as permitted by Section
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9.01), and subject to no other Liens (except as permitted
by Section 9.01), or any Credit Party shall default in the
due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant
to any of the Security Documents and such default shall
continue beyond any grace period specifically applicable
thereto pursuant to the terms of such Security Document; or
10.08 Subsidiary Guaranty. The Subsidiary
Guaranty or any provision thereof shall cease to be in full
force or effect as to any Subsidiary Guarantor, or any
Subsidiary Guarantor or Person acting by or on behalf of
such Subsidiary Guarantor shall deny or disaffirm such
Subsidiary Guarantor's obligations under the Subsidiary
Guaranty, or any Subsidiary Guarantor shall default in the
due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant
to the Subsidiary Guaranty; or
10.09 Judgments. One or more judgments or de-
crees shall be entered against the Borrowers or any of
their respective Restricted Subsidiaries involving in the
aggregate for the Borrowers and their respective Restricted
Subsidiaries a liability (not paid or fully covered by a
reputable and solvent insurance company) and such judgments
and decrees either shall be final and non-appealable or
shall not be vacated, discharged or stayed or bonded pend-
ing appeal for any period of 60 consecutive days, and the
aggregate amount of all such judgments exceeds $5,000,000;
or
10.10 Change of Control. A Change of Control
shall occur; or
10.11 Tax Sharing Agreement; Services Agreement.
One or more parties to a Tax Sharing Agreement or a
Services Agreement (other than Borrowers or any of their
respective Restricted Subsidiaries) shall have defaulted in
its or their payment obligations (other than reimbursement
obligations in respect of payments made under the Surviving
Guaranties) in an aggregate amount equal to or greater than
$2,500,000 thereunder and such default or defaults shall
remain unremedied for a period in excess of ten consecutive
Business Days; or
10.12 Residual Converse Tax Liability. At any
time on or after (x) June 30, 1995, the Residual Converse
Tax Liability shall exceed $10 million or (y) December 31,
1995, the Residual Converse Tax Liability shall exceed
zero; or
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10.13 Receivables Repurchases. The Borrowers
and/or their respective Restricted Subsidiaries shall have
repurchased accounts receivables (pursuant to indemnity
provisions or otherwise) from the Receivables Subsidiary
and/or the Receivables Purchasers in an aggregate amount
exceeding $15,000,000 in any Fiscal Year;
then, and in any such event, and at any time thereafter, if
any Event of Default shall then be continuing, the Agent,
upon the written request of the Required Banks, shall by
written notice to the Borrowers, take any or all of the
following actions, without prejudice to the rights of the
Agent, any Bank or the holder of any Note to enforce its
claims against any Credit Party (provided that, if an Event
of Default specified in Section 10.05 shall occur with re-
spect to the Borrowers, the result of which would occur
upon the giving of written notice by the Agent to the
Borrowers as specified in clauses (i) and (ii) below shall
occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon all
Commitments of each Bank shall forthwith terminate immedi-
ately and any Commitment Commission and other Fees shall
forthwith become due and payable without any other notice
of any kind; (ii) declare the principal of and any accrued
interest in respect of all Loans and the Notes and all
Obligations owing hereunder and thereunder to be, whereupon
the same shall become, forthwith due and payable without
presentment, demand, protest or other notice of any kind,
all of which are hereby waived by each Credit Party; (iii)
terminate any Letter of Credit which may be terminated in
accordance with its terms; (iv) direct the Borrowers to pay
(and the Borrowers agree that upon receipt of such notice,
or upon the occurrence of an Event of Default specified in
Section 10.05 with respect to the Borrowers, they will pay)
to the Collateral Agent at the Payment Office such addi-
tional amount of cash, to be held as security by the
Collateral Agent, as is equal to the aggregate Stated
Amount of all Letters of Credit issued for the account of
the Borrowers and all Acceptances then outstanding; (v)
enforce, as Collateral Agent, all of the Liens and security
interests created pursuant to the Security Documents; and
(vi) apply any cash collateral held for the benefit of the
Banks pursuant to Section 4.02 to repay outstanding
Obligations.
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SECTION 11. Definitions and Accounting Terms.
11.01 Defined Terms. As used in this Agreement,
the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and
plural forms of the terms defined):
"Acceptance" shall have the meaning provided in
Section 2.01(a).
"Acceptance Facing Fee" shall having the meaning
provided in Section 3.01(c)(y).
"Acceptance Fee" shall have the meaning provided
in Section 3.01(b).
"Action" shall mean Action Industries, Inc., a
Virginia corporation.
"Additional Collateral" shall mean all property
(whether real or personal) in which security interests are
granted (or have been purported to be granted) (and
continue to be in effect at the time of determination)
pursuant to Section 8.11.
"Additional Mortgage" shall have the meaning pro-
vided in Section 8.11(a).
"Additional Mortgaged Property" shall have the
meaning provided in Section 8.11(a).
"Additional Security Documents" shall mean all
mortgages, pledge agreements, security agreements and other
security documents entered into pursuant to Section 8.11
with respect to Additional Collateral.
"Adjusted Certificate of Deposit Rate" shall
mean, on any day, the sum (rounded to the nearest 1/100 of
1%) of (1) the rate obtained by dividing (x) the most
recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the
secondary market as published in the most recent Federal
Reserve System publication entitled "Select Interest
Rates," published weekly on Form H.15 as of the date
hereof, or if such publication or a substitute containing
the foregoing rate information shall not be published by
the Federal Reserve System for any week, the weekly average
offering rate determined by the Agent on the basis of
quotations for such certificates received by it from three
certificate of deposit dealers in New York of recognized
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standing or, if such quotations are unavailable, then on
the basis of other sources reasonably selected by the
Agent, by (y) a percentage equal to 100% minus the stated
maximum rate of all reserve requirements as specified in
Regulation D applicable on such day to a three-month certi-
ficate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without
limitation, any marginal, emergency, supplemental, special
or other reserves), plus (2) the then daily net annual
assessment rate as estimated by the Agent for determining
the current annual assessment payable by the Agent to the
Federal Deposit Insurance Corporation for insuring three-
month certificates of deposit.
"Adjusted Consolidated EBITDA" shall mean, for
any period of determination, the remainder of (i)
Consolidated EBITDA for such period minus (or plus) (ii)
the increase (or decrease), if any, in Adjusted
Consolidated Working Capital from the first day to the last
day of such period.
"Adjusted Consolidated Net Income" for any period
shall mean Consolidated Net Income for such period plus,
without duplication, the sum of the amount of all net non-
cash charges (including, without limitation, depreciation,
amortization, deferred tax expense and non-cash interest
expense, but excluding any net non-cash charges reflected
in Adjusted Consolidated Working Capital) and net non-cash
losses which were included in arriving at Consolidated Net
Income for such period less the sum of the amount of all
net non-cash income or gains (exclusive of items reflected
in Adjusted Consolidated Working Capital) included in
arriving at Consolidated Net Income for such period.
"Adjusted Consolidated Working Capital" at any
time shall mean Consolidated Current Assets (but excluding
therefrom all cash and Cash Equivalents) less Consolidated
Current Liabilities.
"Adjusted Percentage" shall mean (x) at a time
when no Bank Default exists, for each Bank, such Bank's
Percentage and (y) at a time when a Bank Default exists (i)
for each Bank that is a Defaulting Bank, zero and (ii) for
each Bank that is a Non-Defaulting Bank, the percentage
determined by dividing such Bank's Revolving Loan
Commitment at such time by the Adjusted Total Revolving
Loan Commitment at such time, it being understood that all
references herein to Revolving Loan Commitments and the
Adjusted Total Revolving Loan Commitment at a time when the
Total Revolving Loan Commitment or Adjusted Total Revolving
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Loan Commitment, as the case may be, has been terminated
shall be references to the Revolving Loan Commitments or
Adjusted Total Revolving Loan Commitment, as the case may
be, in effect immediately prior to such termination,
provided that (A) no Bank's Adjusted Percentage shall
change upon the occurrence of a Bank Default from that in
effect immediately prior to such Bank Default, to the
extent such change after giving effect to such Bank
Default, and any repayment of Revolving Loans and Swingline
Loans at such time pursuant to Section 4.02(a) or
otherwise, would cause the sum of (i) the aggregate
outstanding principal amount of Revolving Loans of all Non-
Defaulting Banks plus (ii) the aggregate outstanding prin-
cipal amount of Swingline Loans plus (iii) the Letter of
Credit Outstandings, to exceed the Adjusted Total Revolving
Loan Commitment; (B) any changes to the Adjusted Percentage
that would have become effective upon the occurrence of a
Bank Default but that did not become effective as a result
of the preceding clause (A) shall become effective on the
first date after the occurrence of the relevant Bank
Default on which the sum of (i) the aggregate outstanding
principal amount of the Revolving Loans of all Non-
Defaulting Banks plus (ii) the aggregate outstanding
principal amount of Swingline Loans plus (iii) the Letter
of Credit Outstandings is equal to or less than the
Adjusted Total Revolving Loan Commitment; and (C) if (i) a
Non-Defaulting Bank's Adjusted Percentage is changed
pursuant to the preceding clause (B) and (ii) any repayment
of such Bank's Revolving Loans, or of Unpaid Drawings with
respect to Letters of Credit or of Swingline Loans, that
were made during the period commencing after the date of
the relevant Bank Default and ending on the date of such
change to its Adjusted Percentage must be returned to the
Borrowers as a preferential or similar payment in any
bankruptcy or similar proceeding of the Borrowers, then the
change to such Non-Defaulting Bank's Adjusted Percentage
effected pursuant to said clause (B) shall be reduced to
that positive change, if any, as would have been made to
its Adjusted Percentage if (x) such repayments had not been
made and (y) the maximum change to its Adjusted Percentage
would have resulted in the sum of the outstanding principal
of Revolving Loans made by such Bank plus such Bank's new
Adjusted Percentage of the outstanding principal amount of
Swingline Loans and of Letter of Credit Outstandings
equalling such Bank's Revolving Loan Commitment at such
time.
"Adjusted Total Available Revolving Loan Commit-
ment" shall mean at any time the Adjusted Total Revolving
Loan Commitment less the Blocked Amount at such time.
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"Adjusted Total Revolving Loan Commitment" shall
mean at any time the Total Revolving Loan Commitment less
the aggregate Revolving Loan Commitments of all Defaulting
Banks.
"Affiliate" shall mean, with respect to any Per-
son, any other Person (including, for purposes of Section
9.06 only, all directors, officers and partners of such
Person) directly or indirectly controlling, controlled by,
or under direct or indirect common control with, such
Person; provided, however, that for purposes of Section
9.06, an Affiliate of INTERCO shall include any Person that
directly or indirectly owns more than 5% of any class of
the capital stock of INTERCO and any officer or director of
INTERCO or any such Person. A Person shall be deemed to
control another Person if such Person possesses, directly
or indirectly, the power to direct or cause the direction
of the management and policies of such other Person,
whether through the ownership of voting securities, by
contract or otherwise.
"Agent" shall mean Bankers Trust Company, in its
capacity as Agent for the Banks hereunder, and shall
include any successor to the Agent appointed pursuant to
Section 12.09.
"Agreement" shall mean this Credit Agreement, as
modified, supplemented, amended, restated, extended,
renewed or replaced from time to time.
"Alternate Receivables Purchase Agreement" shall
mean that Receivables Purchase Agreement, dated as of
November 15, 1994, among the Receivables Subsidiary, as
Seller, and Credit Lyonnais, New York Branch as Purchaser
and Agent, as same may be amended, modified or supplemented
from time to time in compliance with Section 9.11, or as
replaced in compliance with the definition of Receivables
Facility.
"Anticipated Deferred Payment Amount" shall mean,
with respect to any Deferred Payment Election, the amount
specified in the Deferred Payment Notice delivered by
INTERCO in connection therewith as the amount of the
proceeds from the issuance or sale of equity of INTERCO
and/or its Restricted Subsidiaries that INTERCO intends to
use to pay all or any portion of the Converse Tax Liability
when same becomes payable.
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"Apollo Group" shall mean Apollo Advisors, L.P.
and Lion Advisors, L.P., both Delaware limited
partnerships.
"Apollo Management Agreement" shall mean the
consulting agreement, dated September 23, 1992, between
Apollo Advisors, L.P. and INTERCO.
"Applicable Margin" shall mean, (i) in the case
of Base Rate Loans, .75% and (ii) in the case of Eurodollar
Loans, 1.75%, in each case reduced (but not below zero) by
the Reduction Percentage, if any.
"Assignment and Assumption Agreement" shall mean
the Assignment and Assumption Agreement substantially in
the form of Exhibit K (appropriately completed).
"Atlantic" shall mean Atlantic Asset
Securitization Corp., a Delaware corporation.
"Atlantic Receivables Purchase Agreement" shall
mean the Receivables Purchase Agreement, dated as of
November 15, 1994, among the Receivables Subsidiary,
Atlantic, as Purchaser, and Credit Lyonnais, New York
Branch, as Agent, as same may be amended, modified or
supplemented from time to time in compliance with Section
9.11, or as replaced in compliance with the definition of
Receivables Facility.
"Attributed Receivables Facility Indebtedness" at
any time shall mean the aggregate Invested Amount of
Receivables Interests (as defined in the Receivables
Documents) under the Receivables Purchase Agreements (it
being the intent of the parties that the amount of
Attributed Receivables Facility Indebtedness at any time
outstanding approximate as closely as possible the
principal amount of indebtedness which would be outstanding
at such time under the Receivables Facility if same were
structured as a secured lending agreement rather than a
purchase agreement).
"Authorized Representative" shall mean, with
respect to (i) delivering Notices of Borrowing, Notices of
Conversion, Letter of Credit Requests and similar notices,
any person or persons that has or have been authorized by
the respective boards of the Borrowers to deliver such
notices pursuant to this Agreement and that has or have
appropriate signature cards on file with the Agent, BTCo
and each Issuing Bank; (ii) delivering financial
information and officer's certificates pursuant to this
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Agreement, any financial officer of INTERCO and (iii) any
other matter in connection with this Agreement or any other
Credit Document, any officer (or a person or persons so
designated by any two officers) of INTERCO.
"Available CapX Amount" shall mean for any date
of determination occurring in any Fiscal Year, (i) the
amounts set forth below opposite such Fiscal Year, plus
(ii) during any Fiscal Year (other than Fiscal Year 1994),
an amount equal to the lesser of (x) $15 million and (y)
the amount by which the amount set forth opposite the
Fiscal Year preceding such Fiscal Year below exceeded the
sum of (a) the amount of Capital Expenditures made by the
Borrowers and their Restricted Subsidiaries pursuant to
Section 9.07(a) during such preceding Fiscal Year plus (b)
the amount of Permitted Acquisitions made pursuant to
clause (v) of the definition of Available Permitted
Acquisition Amount during such preceding Fiscal Year, minus
(iii) the amount of Capital Expenditures made by the
Borrowers and their Restricted Subsidiaries pursuant to
Section 9.07(a) during such Fiscal Year, minus (iv) the
amount of Permitted Acquisitions made pursuant to clause
(v) of the definition of Available Permitted Acquisition
Amount during such Fiscal Year:
Fiscal Year Amount
1994 $ 5,000,000
1995 $35,000,000
1996 $35,000,000
1997 $35,000,000
1998 and
thereafter $40,000,000
"Available Net Income Amount" shall mean on any
date of determination an amount equal to zero, plus or
minus (i) an amount equal to the Consolidated Cumulative
Net Income Amount on such date, minus (ii) any Dividend
payments made by INTERCO pursuant to Section 9.03(ii)(B)(b)
on or prior to such date, minus (iii) any Investments made
by the Borrowers or their Restricted Subsidiaries pursuant
to Section 9.05(vii)(C), minus (iv) any Capital
Expenditures made by the Borrowers or their Restricted
Subsidiaries pursuant to Section 9.07(b)(ii)(y) on or prior
to such date, minus (v) any Restricted Junior Payments made
by INTERCO or its Restricted Subsidiaries pursuant to
Section 9.11 (a)(i)(y)(B), minus (vi) any Guaranty Payment
made by INTERCO pursuant to Section 9.11(b)(ii)(y)(B)(3) on
or prior to such date; provided that in any event, the
amount of the Available Net Income Amount shall never
exceed the then Available Retained Excess Cash Flow Amount
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(after giving effect to all prior and contemporaneous
reductions thereto).
"Available Permitted Acquisition Amount" shall
mean, at the time of determination thereof, an amount equal
to the sum of (A) the Available $10 Million Basket Amount
on such date (after giving effect to all prior and
contemporaneous reductions thereto), plus (B) (i) the
Available Unrestricted Proceeds Amount on such date (after
giving effect to all prior and contemporaneous reductions
thereto), plus (ii) the Net Cash Proceeds received from (x)
the issuance of Permitted Subordinated Indebtedness
retained by any of the Borrowers on or prior to such date
and not required to be used to repay Term Loans pursuant to
Section 4.02(e) as a result of clause (x)(ii) of the first
parenthetical of such Section 4.02(e) and (y) the issuance
of Disqualified Preferred Stock retained by the Borrowers
on or prior to such date and not required to be used to
repay Term Loans pursuant to Section 4.02(c) as a result of
the operation of clause (vi)(y) of the first parenthetical
of such Section 4.02(c), plus (iii) the Available Retained
Excess Cash Flow Amount on such date (after giving effect
to all prior and contemporaneous reductions thereto), plus
(iv) the aggregate amount of Net Cash Proceeds received
from (x) issuances of Permitted Unsecured Indebtedness and
the face amount of any Permitted Acquired Debt acquired by
the Borrowers and their Restricted Subsidiaries and (y) the
amount of Disqualified Preferred Stock issued pursuant to
Section 9.13(b)(ii), in each case after the Effective Date
and on or prior to such date, plus (v) the Available CapX
Amount on such date (after giving effect to all prior and
contemporaneous reductions thereto).
"Available Retained Excess Cash Flow Amount"
shall be on any date of determination an amount equal to
zero, (i) plus or minus an amount equal to the amount of
Excess Cash Flow permitted to be retained by the Borrowers
on or prior to such date with respect to any prior Excess
Cash Flow Payment Period (which shall be zero on any Excess
Cash Flow Payment Date occurring after a Trigger Date but
prior to the Trigger Termination Date relating thereto, and
shall be determined on a cumulative basis, but including at
the time of any determination of the Available Retained
Excess Cash Flow Amount, only those Excess Cash Flow
Payment Periods for which the respective Excess Cash Flow
Payment Date has occurred and any required repayment
pursuant to Section 4.02(g) has been made; provided, that,
if Excess Cash Flow is negative for any Excess Cash Flow
Payment Period, 100% of such negative amount shall be
included in determining the Borrowers' cumulative retained
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share of all Excess Cash Flow and not required to be
utilized to repay Term Loans pursuant to Section 4.02(g)),
minus (ii) any amounts used to effect Permitted
Acquisitions pursuant to clause (B)(iii) in the definition
of Available Permitted Acquisition Amount on or prior to
such date, minus (iii) all deductions to the Available Net
Income Amount made pursuant to clauses (ii), (iii), (iv),
(v) and (vi) of the definition thereof.
"Available $10 Million Basket Amount" shall mean
on any date of determination an amount equal to
(i) $10,000,000, minus (ii) the amount (not to exceed $10
million) by which the Converse Tax Liability exceeds the
Leverage Improvement Amount (x) for the period from the
Initial Borrowing Date until the date on which the
officer's certificate is delivered pursuant to Section
8.10(b), on the Initial Borrowing Date, (y) for the period
from the date of the delivery of such officer's certificate
until the Final Determination of the Converse Tax
Liability, on the date of the delivery of such officer's
certificate and (z) for any period thereafter, on the date
of the Final Determination thereof, minus (iii) any amounts
used to make Investments pursuant to Section 9.05(vii)(A)
on or prior to such date, minus (iv) any amounts used to
make Permitted Acquisitions pursuant to clause (A) of the
definition of Available Permitted Acquisition Amount on or
prior to such date, plus (v) the amount (not to exceed the
amount subtracted pursuant to clause (ii) above) by which
the Excess Recapture Amount has been increased after an ex-
tension of the Trigger Termination Date pursuant to clause
(y) of the definition thereof.
"Available Unrestricted Proceeds Amount" shall
mean, on any date of determination, an amount equal to
zero, plus (i) all amounts received by INTERCO from
issuances of equity by INTERCO (including pursuant to any
exercise of the INTERCO Warrants and the issuance of any
Preferred Stock) after the Effective Date and on or prior
to such date, and not required to be utilized to repay Term
Loans pursuant to Sections 4.02(c) and/or (d) or used to
make Guaranty Payments pursuant to Section
9.11(b)(ii)(y)(C) or applied pursuant to the second
paragraph of Section 4.02(c) minus (ii) any amounts used to
effect Permitted Acquisitions pursuant to clause (B)(i),
(B)(ii)(y) or (B)(iv)(y) of the definition of Available
Permitted Acquisition Amount on or prior to such date,
minus (iii) any Dividend payments made by INTERCO pursuant
to Section 9.03(ii)(B)(a), on or prior to such date, minus
(iv) any Investments by the Borrowers or their Restricted
Subsidiaries pursuant to Section 9.05(vii)(B), and by
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INTERCO in any Unrestricted Subsidiaries pursuant to
Section 9.05(viii), on or prior to such date, minus (v) any
Capital Expenditures made by the Borrowers and their
Restricted Subsidiaries pursuant to Section 9.07(b)(ii)(x)
on or prior to such date, minus (vi) any Restricted Junior
Payments made by INTERCO or its Restricted Subsidiaries
pursuant to Section 9.11(a)(i)(y)(A), minus (vii) Guaranty
Payments made by INTERCO pursuant to Section
9.11(b)(ii)(y)(B)(2).
"Bank" shall mean each financial institution
listed on Schedule I, as well as any Person which becomes a
"Bank" hereunder pursuant to 13.04(b).
"Bank Default" shall mean (i) the refusal (which
has not been retracted) of a Bank to make available its
portion of any Borrowing (including any Mandatory
Borrowing) or to fund its portion of any unreimbursed
payment under Section 2.03(c) or (ii) a Bank having
notified in writing the Borrowers and/or the Agent that it
does not intend to comply with its obligations under
Section 1.01(c) or Section 2 in the case of either clause
(i) or (ii), as a result of any takeover of such bank by
any regulatory authority or agency.
"Bankruptcy Code" shall have the meaning provided
in Section 10.05.
"Base Rate" at any time shall mean the highest of
(i) 1/2 of 1% in excess of the Adjusted Certificate of
Deposit Rate and (ii) the Prime Lending Rate.
"Base Rate Loan" shall mean (i) each Swingline
Loan and (ii) each Loan designated or deemed designated as
such by the Borrowers at the time of the incurrence thereof
or conversion thereto.
"Blocked Amount" shall mean an amount which ini-
tially shall be zero and which shall be (i) increased on
the date of each Deferred Payment Election by the amount
specified in the Deferred Payment Notice delivered in
connection therewith as the Anticipated Deferred Payment
Amount, (ii) decreased with respect to each Deferred
Payment Election (x) on each date after the occurrence of
such Deferred Payment Election and prior to the Deferred
Payment Prepayment Date with respect thereto on which
INTERCO delivers to the Agent a certificate signed by its
chief financial officer, stating that all or a specified
portion of the Anticipated Deferred Payment Amount which
gave rise to an increase in the Blocked Amount and relating
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to such Deferred Payment Election has been, or
contemporaneously with the delivery of such certificate is
being, used by INTERCO to make payments in respect of the
Converse Tax Liability, by the amount so used or being used
and (y) on the Deferred Payment Prepayment Date in respect
thereof, by the principal amount of the Loans actually
repaid on such date pursuant to the last sentence of the
second paragraph of Section 4.02(c).
"Borrowers" shall have the meaning provided in
the first paragraph of this Agreement.
"Borrowing" shall mean the borrowing of one Type
of Loan of a single Tranche from all the Banks having Com-
mitments of the respective Tranche (or from BTCo in the
case of Swingline Loans) on a given date (or resulting from
a conversion or conversions on such date) having in the
case of Eurodollar Loans the same Interest Period, provided
that Base Rate Loans incurred pursuant to Section 1.10(b)
shall be considered part of the related Borrowing of
Eurodollar Loans.
"Broyhill" shall have the meaning provided in the
first paragraph of this Agreement.
"BTCo" shall mean Bankers Trust Company in its
individual capacity.
"Business Day" shall mean (i) for all purposes
other than as covered by clause (ii) below, any day except
Saturday, Sunday and any day which shall be in New York
City a legal holiday or a day on which banking institutions
are authorized or required by law or other government
action to close and (ii) with respect to all notices and
determinations in connection with, and payments of
principal and interest on, Eurodollar Loans, any day which
is a Business Day described in clause (i) above and which
is also a day for trading by and between banks in the New
York interbank Eurodollar market.
"Capital Expenditures" shall mean, with respect
to any Person, all expenditures by such Person which should
be capitalized in accordance with generally accepted
accounting principles, including all such expenditures with
respect to fixed or capital assets (including, without
limitation, expenditures for maintenance and repairs which
should be capitalized in accordance with generally accepted
accounting principles) and the amount of Capitalized Lease
Obligations incurred by such Person.
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"Capitalized Lease Obligations" of any Person
shall mean all rental obligations which, under generally
accepted accounting principles, are or will be required to
be capitalized on the books of such Person, in each case
taken at the amount thereof accounted for as indebtedness
in accordance with such principles.
"Cash Equivalents" shall mean, as to any Person,
(i) securities issued or directly and fully guaranteed or
insured by the United States or any agency or instrumental-
ity thereof (provided that the full faith and credit of the
United States is pledged in support thereof) having matur-
ities of not more than one year from the date of acquisi-
tion, (ii) time deposits and certificates of deposit of any
commercial bank having, or which is the principal banking
subsidiary of a bank holding company organized under the
laws of the United States, any State thereof, the District
of Columbia or any foreign jurisdiction having capital,
surplus and undivided profits aggregating in excess of
$200,000,000, with maturities of not more than one year
from the date of acquisition by such Person, (iii) repur-
chase obligations with a term of not more than 90 days for
underlying securities of the types described in clause (i)
above entered into with any bank meeting the qualifications
specified in clause (ii) above, (iv) commercial paper
issued by any Person incorporated in the United States
rated at least A-1 or the equivalent thereof by Standard &
Poor's Corporation or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case
maturing not more than one year after the date of
acquisition by such Person, (v) investments in money market
funds substantially all of whose assets are comprised of
securities of the types described in clauses (i) through
(iv) above and (vi) demand deposit accounts maintained in
the ordinary course of business not in excess of $100,000
in the aggregate.
"Cash Management System" shall have the meaning
provided in Section 5.20.
"CERCLA" shall mean the Comprehensive Environ-
mental Response, Compensation, and Liability Act of 1980,
as the same may be amended from time to time, 42 U.S.C.
Sec. 9601 et seq.
"Change of Control" shall mean (i) INTERCO shall
at any time cease to own 100% of the capital stock of
either Broyhill or Lane, (ii) the board of directors of
INTERCO shall cease to consist of a majority of Continuing
Directors and (iii) any Person, entity or "group" (as such
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term is defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) (other than the Apollo
Group or a Controlled Account) is or becomes the beneficial
owner of an amount of outstanding Voting Stock of INTERCO
in excess of 25%, and the Apollo Group or a Controlled
Account own less than such Person, entity or group (as
defined above), of the total amount of fully diluted shares
of outstanding Voting Stock of INTERCO.
"Code" shall mean the Internal Revenue Code of
1986, as amended from time to time, and the regulations
promulgated and the rulings issued thereunder. Section
references to the Code are to the Code, as in effect at the
date of this Agreement, and to any subsequent provision of
the Code, amendatory thereof, supplemental thereto or sub-
stituted therefor.
"Collateral" shall mean all property (whether
real or personal) with respect to which any security
interests have been granted (or purported to be granted)
pursuant to any Security Document, including, without limi-
tation, all Pledge Agreement Collateral (which shall
include all capital stock of, and promissory notes issued
by, the Receivables Subsidiary, to the extent held by any
Credit Party), all Security Agreement Collateral (which
shall exclude all assets of the Receivables Subsidiary),
all Mortgaged Properties, all cash and Cash Equivalents de-
livered as collateral pursuant to Section 4.02 or 10 hereof
and all Additional Collateral, if any.
"Collateral Agent" shall mean the Agent acting as
collateral agent for the Secured Creditors pursuant to the
Security Documents.
"Collective Bargaining Agreements" shall have the
meaning provided in Section 5.05.
"Commitment" shall mean any of the commitments of
any Bank, i.e., whether the Term Loan Commitment or Revolv-
ing Loan Commitment.
"Commitment Commission" shall have the meaning
provided in Section 3.01(a).
"Concentration Account" shall have the meaning
provided in the Security Agreement.
"Consolidated Cumulative Net Income Amount" shall
mean, at any date an amount determined on a cumulative
basis equal to (i) the sum of 25% of Consolidated Net
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Income for all Consolidated Cumulative Net Income Periods
ending prior to such date of determination for which
Cumulative Net Income was a positive number, minus (ii)
100% of Consolidated Net Income for all Consolidated
Cumulative Net Income Periods ending prior to such date of
determination for which Cumulative Net Income was a
negative number.
"Consolidated Cumulative Net Income Period" shall
mean each period consisting of a fiscal quarter of INTERCO
ending after January 1, 1995.
"Consolidated Current Assets" shall mean, at any
time, the current assets of INTERCO and its Restricted
Subsidiaries determined on a combined basis.
"Consolidated Current Liabilities" shall mean, at
any time, the current liabilities of INTERCO and its Re-
stricted Subsidiaries determined on a combined basis at
such time, but excluding (i) the current portion of any
Indebtedness under this Agreement, any Attributed
Receivables Facility Indebtedness of the Receivables
Subsidiary and any other long-term Indebtedness which would
otherwise be included therein, (ii) accrued but unpaid
interest with respect to the Indebtedness described in
clause (i) and with respect to Capitalized Lease
Obligations, (iii) the current portion of Indebtedness
constituting Capitalized Lease Obligations and (iv) any
current portion of tax liabilities of such Persons.
"Consolidated Debt" shall mean all Indebtedness
of INTERCO and its Restricted Subsidiaries (including,
without limitation, the amount of Attributed Receivables
Facility Indebtedness) determined on a combined basis with
respect to borrowed money or other obligations of such
Persons which would appear on the balance sheet of such
Persons as indebtedness (including unreimbursed drawings
under Letters of Credit and unreimbursed payments under
Acceptances, but excluding Consolidated Current Liabilities
and deferred tax and pension liabilities) provided that for
any date of determination, the amount of Revolving Loans
and Swingline Loans included in the foregoing calculation
shall be the daily average utilization of Revolving Loans
and Swingline Loans for the period of (A) three months, if
such calculation is made within the first three months
following the Initial Borrowing Date, (B) six months, if
such calculation is made within the first six months
following the Initial Borrowing Date, (C) nine months, if
such calculation is made within the first nine months
following the Initial Borrowing Date and (D) twelve months
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thereafter, in each case, prior to such calculation, plus
(i) all Contingent Obligations of such Persons incurred
after the Effective Date (excluding as resulting from
extensions or renewals of the leases guaranteed by the
Surviving Guarantees made in compliance with this
Agreement), plus (ii) all Contingent Obligations with
respect to any Surviving Guaranty on and after the date on
which INTERCO made any payment in respect of such Surviving
Guaranty, plus (iii) the amount, if any, of all tax
liabilities shown as indebtedness on the consolidated
balance sheet of INTERCO and its Subsidiaries or incurred
by INTERCO as a result of (x) the Florsheim Disposition or
(y) the Converse Disposition, in an amount, in the case of
this clause (y), equal to the lesser of the Converse Tax
Liability and the Leverage Improvement Amount, in each case
on the Initial Borrowing Date, plus (iv) an amount equal to
the greater of the liquidation preference and the maximum
fixed repurchase price (excluding accrued Dividends) of any
outstanding Disqualified Preferred Stock.
"Consolidated EBIT" shall mean, for any period,
the Consolidated Net Income of INTERCO and its Restricted
Subsidiaries, determined on a combined basis, before
Consolidated Net Interest Expense (to the extent deducted
in arriving at Consolidated Net Income) and provision for
taxes or gains or losses from sales of assets other than
inventory sold in the ordinary course of business, in each
case that were included in arriving at Consolidated Net
Income.
"Consolidated EBITDA" shall mean, for any period,
Consolidated EBIT, adjusted by adding thereto the amount of
all amortization of intangibles and depreciation, in each
case that were deducted in arriving at Consolidated EBIT
for such period.
"Consolidated Net Income" shall mean, for any
period, the net after tax income of INTERCO and its
Restricted Subsidiaries determined on a combined basis,
minus Dividends paid in respect of Disqualified Preferred
Stock, without giving effect to any extraordinary gains or
losses, provided that no amount should be included in the
Consolidated Net Income of INTERCO for amounts under the
Services Agreement unless such amounts are paid in cash to
INTERCO.
"Consolidated Net Interest Coverage Ratio" for
any period shall mean the ratio of Adjusted Consolidated
EBITDA to Consolidated Net Interest Expense for such
period; provided that for any period which includes a
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period occurring before the Initial Borrowing Date, (x)
with respect to the calculation of Adjusted Consolidated
EBITDA, such calculation shall be adjusted, on a Pro Forma
Basis, to give effect to the Transaction and (y) with
respect to the calculation of Consolidated Net Interest
Expense, the amount thereof shall be an amount equal to (i)
Consolidated Net Interest Expense from January 1, 1995
through the last day of such period multiplied by (ii) (A)
4, in the case of the period ending March 31, 1995, (B) 2,
in the case of the period ending June 30, 1995 and (C)
1.333, in the case of the period ending September 30, 1995.
"Consolidated Net Interest Expense" shall mean,
for any period, the total consolidated interest expense of
INTERCO and its Restricted Subsidiaries for such period
(calculated without regard to any limitations on the
payment thereof) plus, without duplication, that portion of
Capitalized Lease Obligations of INTERCO and its Restricted
Subsidiaries representing the interest factor for such
period, and capitalized interest expense, plus, (i) all
cash fees, service charges and other costs, as well as all
collections or other amounts retained by the Receivables
Purchasers which are in excess of amounts paid to INTERCO
and its Restricted Subsidiaries under the Receivables
Facility by it for the purchase of receivables pursuant to
the Receivables Facility and (ii) the product of (x) the
amount of all cash Dividend requirements (whether or not
declared or paid) on Disqualified Preferred Stock paid,
accrued or scheduled to be paid or accrued during such
period times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current
effective consolidated Federal, state, local and foreign
tax rate (expressed as a decimal number between one and
zero) of INTERCO as reflected in the audited consolidated
financial statements of INTERCO for its most recently
completed Fiscal Year, which amounts described in the pre-
ceding clauses (i) and (ii) shall be treated as interest
expense of INTERCO and its Restricted Subsidiaries for
purposes of this definition regardless of the treatment of
such amounts under generally accepted accounting princi-
ples, in each case net of the total consolidated cash
interest income of INTERCO and its Restricted Subsidiaries
for such period, but excluding the amortization of any
deferred financing costs and all amounts in respect of the
Interest Rate Protection Agreements, all determined on a
combined basis.
"Contingent Obligation" shall mean, as to any
Person, any obligation of such Person guaranteeing or in-
tended to guarantee any Indebtedness, leases, dividends or
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other obligations ("primary obligations") of any other Per-
son (the "primary obligor") in any manner, whether directly
or indirectly, including, without limitation, any obliga-
tion of such Person, whether or not contingent, (i) to pur-
chase any such primary obligation or any property consti-
tuting direct or indirect security therefor, (ii) to
advance or supply funds (x) for the purchase or payment of
any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or other-
wise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to
make payment of such primary obligation or (iv) otherwise
to assure or hold harmless the holder of such primary obli-
gation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include en-
dorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made (or, if
less, the maximum amount of such primary obligation for
which such Person may be liable pursuant to the terms of
the instrument evidencing such Contingent Obligation) or,
if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by
such Person in good faith.
"Continuing Directors" shall mean the Directors
of INTERCO on the Initial Borrowing Date and each other
Director if such Director's nomination for election to the
Board of Directors of INTERCO is recommended by a majority
of the then Continuing Directors.
"Controlled Account" shall mean any account
managed by the Apollo Group for so long as the Apollo Group
exercises sole power of disposition and voting with respect
thereto.
"Converse" shall mean Converse Inc., a Delaware
corporation.
"Converse Application" shall have the meaning
provided in Section 5.08.
"Converse Disposition" shall have the meaning
provided in Section 5.08.
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"Converse Documents" shall mean all documents and
agreements related to the Converse Recapitalization.
"Converse Financing" has the meaning provided in
Section 5.08.
"Converse Recapitalization" shall mean, collect-
ively, (i) the Converse Financing, (ii) the Converse
Application and (iii) the Converse Disposition.
"Converse Tax Basket" shall mean the sum of (A)
the Leverage Improvement Amount plus (B) the amount (not to
exceed $10 million) by which (x) for the period from the
Initial Borrowing Date until the date on which the
officer's certificate is delivered pursuant to Section
8.10(b), the Converse Tax Liability exceeds the Leverage
Improvement Amount on the Initial Borrowing Date, (y) for
the period after the delivery of such officer's certificate
until the Final Determination of the Converse Tax
Liability, the Converse Tax Liability exceeds the Leverage
Improvement Amount on the date on which the officer's
certificate is delivered pursuant to Section 8.10(b) and
(z) for any period thereafter, the Converse Tax Liability
exceeds the Leverage Improvement Amount on the date of
Final Determination thereof.
"Converse Tax Liability" shall mean (x) prior to
the Final Determination thereof, an amount equal to the
maximum Federal, state and local tax liability that would
be incurred by INTERCO and/or its Restricted Subsidiaries
in connection with the Converse Disposition if the Converse
Disposition were a fully taxable transaction, as estimated
by the chief financial officer of INTERCO (in a manner
satisfactory to the Agent) (i) on the Initial Borrowing
Date and until the date on which the officer's certificate
is delivered pursuant to Section 8.10(b), on the basis set
forth in the certificate delivered pursuant to Section 5.21
and (ii) from and after the date on which the certificate
is delivered pursuant to Section 8.10(b) and until the
Final Determination thereof, on the basis set forth in such
certificate, and (y) after the Final Determination thereof,
an amount equal to the aggregate tax liability of INTERCO
and/or its Subsidiaries (including amounts previously paid
in respect thereof at such time) in connection with the
Converse Disposition.
"Credit Documents" shall mean this Agreement and,
after the execution and delivery thereof pursuant to the
terms of this Agreement, each Note, each Security Document
and the Subsidiary Guaranty and, after the execution and
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delivery thereof, each additional guaranty or security
document executed pursuant to Section 8.11.
"Credit Event" shall mean the making of any Loan
or the issuance of any Letter of Credit.
"Credit Party" shall mean the Borrowers and each
Subsidiary Guarantor.
"Currency Hedging Agreements" shall mean any
foreign exchange contracts, currency swap agreements or
other similar agreements or arrangements designed to
protect against the fluctuations in currency values.
"Default" shall mean any event, act or condition
which with notice or lapse of time, or both, would consti-
tute an Event of Default.
"Defaulting Bank" shall mean any Bank with
respect to which a Bank Default is in effect.
"Deferred Payment Election" shall have the
meaning provided in the second paragraph of Section
4.02(c).
"Deferred Payment Notice" shall mean a written
notice signed by the chief financial officer of INTERCO
stating that INTERCO, in good faith, intends and expects to
use all or a specified portion of the proceeds of the
issuance or sale of equity of INTERCO and/or its Restricted
Subsidiaries to pay all or any portion of the Converse Tax
Liability.
"Deferred Payment Prepayment Amount" shall mean,
with respect to any Deferred Payment Election, the amount,
if any, on the Deferred Payment Prepayment Date relating
thereto by which (a) the Anticipated Deferred Payment
Amount in respect of such Deferred Payment Election exceeds
(b) the aggregate amount by which the Blocked Amount has
been reduced pursuant to clause (ii)(x) of the definition
thereof as a result of the expenditure of such Anticipated
Deferred Payment Amount.
"Deferred Payment Prepayment Date" shall mean,
with respect to any Deferred Payment Election, the earlier
of (i) the date, if any, upon which the Agent, on behalf of
the Required Banks, shall have delivered a written
termination notice to INTERCO with respect to rights to
make such payments, provided that such notice may only be
given while an Event of Default exists and (ii) the date on
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which INTERCO shall have determined not to make any payment
on the Converse Tax Liability with the related Anticipated
Deferred Payment Amount.
"Disqualified Preferred Stock" means any
Preferred Stock of INTERCO which would be Qualified
Preferred Stock except that regular accruing dividends
thereon are required to be paid in cash, and so long as,
(i) based on calculations made by INTERCO on a Pro Forma
Basis after giving effect to the issuance of such
Disqualified Preferred Stock, no Default or Event of
Default will exist under, or would have existed under the
periods covered by, the financial covenants contained in
Sections 9.08 through 9.10, inclusive, of this Agreement,
(ii) based on good faith projections prepared by INTERCO
for the period from the date of the issuance of such
Disqualified Preferred Stock to the date which is one year
thereafter, the level of financial performance measured by
the covenants set forth in Sections 9.08 through 9.10 in-
clusive shall be better than or equal to such level as
would be required to provide that no Default or Event of
Default would exist under the financial covenants contained
in Sections 9.08 through 9.10, inclusive, of this Agreement
as compliance with such covenants would be required through
the date which is one year from the date of the issuance of
such Disqualified Preferred Stock, (iii) INTERCO shall
furnish to the Agent for distribution to each of the Banks
an officer's certificate by the chief financial officer or
treasurer of INTERCO certifying to the best of his
knowledge as to compliance with the requirements of the
preceding clauses (i) and (ii) and containing the pro forma
calculations and projections required by the preceding
clauses (i) and (ii), and (iv) such Disqualified Preferred
Stock shall not contain any provision in the documents
governing or evidencing the same which, in the opinion of
the Agent, are more restrictive than the provisions in the
Credit Documents.
"Dividend" with respect to any Person shall mean
that such Person has declared or paid a dividend or
returned any equity capital to its stockholders or
authorized or made any other distribution, payment or
delivery of property (other than common stock of such
Person or Qualified Preferred Stock of INTERCO paid as a
pay-in-kind Dividend on any Qualified Preferred Stock of
INTERCO) or cash to its stockholders as such, or redeemed,
retired, purchased or otherwise acquired, directly or
indirectly, for a consideration any shares of any class of
its capital stock outstanding on or after the Effective
Date (or any options or warrants issued by such Person with
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respect to its capital stock), or set aside any funds for
any of the foregoing purposes, or shall have permitted any
of its Subsidiaries to purchase or otherwise acquire for a
consideration any shares of any class of the capital stock
of such Person outstanding on or after the Effective Date
(or any options or warrants issued by such Person with re-
spect to its capital stock). Without limiting the forego-
ing, "Dividends" with respect to any Person shall also in-
clude all payments made or required to be made during any
period by such Person with respect to any stock apprecia-
tion rights, plans, equity incentive or achievement plans
or any similar plans or setting aside of any funds for the
foregoing purposes, except to the extent such payments have
reduced Consolidated EBITDA during the respective period.
"Documents" shall mean the Credit Documents, the
Receivables Documents and the Recapitalization Documents.
"Dollars" and the sign "$" shall each mean freely
transferable lawful money of the United States.
"Drawing" shall have the meaning provided in
Section 2.05(b).
"Effective Date" shall have the meaning provided
in Section 13.10.
"Eligible Transferee" shall mean and include a
commercial bank, mutual fund, financial institution or
other "accredited investor" (as defined in Regulation D of
the Securities Act).
"Employee Stock Option Plan" shall mean the
INTERCO Incorporated 1992 Stock Option Plan.
"Environmental Claims" means any and all adminis-
trative, regulatory or judicial actions, suits, demands,
demand letters, directives, claims, liens, notices of non-
compliance or violation, investigations or proceedings
relating in any way to any Environmental Law or any permit
issued, or any approval given, under any such Environmental
Law (hereafter, "Claims"), including, without limitation,
(a) any and all Claims by governmental or regulatory
authorities for enforcement, cleanup, removal, response,
remedial or other actions or damages pursuant to any
applicable Environmental Law, and (b) any and all Claims by
any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive
relief in connection with alleged injury or threat of
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injury to health, safety or the environment due to the
presence of Hazardous Materials.
"Environmental Law" means any applicable Federal,
state, foreign or local statute, law, rule, regulation,
ordinance, code, binding and enforceable guideline, binding
and enforceable written policy and rule of common law now
or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, includ-
ing any judicial or administrative order, consent decree or
judgment, to the extent binding on the Borrowers or any of
their respective Subsidiaries, relating to the environment,
employee health and safety or Hazardous Materials,
including, without limitation, CERCLA; RCRA; the Federal
Water Pollution Control Act, 33 U.S.C. Sec. 1251 et seq.;
the Toxic Substances Control Act, 15 U.S.C. Sec. 2601 et
seq.; the Clean Air Act, 42 U.S.C. Sec. 7401 et seq.; the
Safe Drinking Water Act, 42 U.S.C. Sec. 3803 et seq.; the
Oil Pollution Act of 1990, 33 U.S.C. Sec. 2701 et seq.; the
Emergency Planning and the Community Right-to-Know Act of
1986, 42 U.S.C. Sec. 11001 et seq., the Hazardous Material
Transportation Act, 49 U.S.C. Sec. 1801 et seq. and the
Occupational Safety and Health Act, 29 U.S.C. Sec. 651 et
seq. (to the extent it regulates occupational exposure to
Hazardous Materials); and any state and local or foreign
counterparts or equivalents, in each case as amended from
time to time.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
Section references to ERISA are to ERISA, as in effect at
the date of this Agreement and any subsequent provisions of
ERISA, amendatory thereof, supplemental thereto or substi-
tuted therefor.
"ERISA Affiliate" shall mean each person (as de-
fined in Section 3(9) of ERISA) which together with the
Borrowers or any Subsidiary of the Borrowers would be
deemed to be a "single employer" (i) within the meaning of
Section 414(b), (c), (m) or (o) of the Code or (ii) as a
result of the Borrowers or any Subsidiary of the Borrowers
being or having been a general partner of such person.
"Eurodollar Loan" shall mean each Loan (excluding
Swingline Loans) designated as such by the Borrowers at the
time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered
quotation to first-class banks in the New York interbank
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Eurodollar market by BTCo for Dollar deposits of amounts in
immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of BTCo with matur-
ities comparable to the Interest Period applicable to such
Eurodollar Loan commencing two Business Days thereafter as
of 10:00 A.M. (New York time) on the date which is two
Business Days prior to the commencement of such Interest
Period, divided (and rounded off to the nearest 1/16 of 1%)
by (b) a percentage equal to 100% minus the then stated
maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental,
special or other reserves required by applicable law)
applicable to any member bank of the Federal Reserve System
in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Event of Default" shall have the meaning
provided in Section 10.
"Excess Cash Flow" shall mean, for any period,
the remainder of (a) the sum of (i) Adjusted Consolidated
Net Income for such period, (ii) the decrease, if any, in
Adjusted Consolidated Working Capital from the first day to
the last day of such period and (iii) any net increases (or
minus any net decreases) in items classified as "Other
Liabilities" (excluding long term Indebtedness) during such
period as shown on the combined balance sheet of INTERCO
and its Restricted Subsidiaries covering such period, minus
(b) the sum of (i) the amount of Capital Expenditures made
by the Borrowers and its Restricted Subsidiaries on a
consolidated basis during such period pursuant to and in
accordance with Section 9.07(a) and (b)(ii)(y), and the
amount of Permitted Acquisitions made pursuant to clause
(v) of the definition of Available Permitted Acquisition
Amount, except in either case to the extent financed with
the proceeds of Indebtedness or pursuant to Capitalized
Lease Obligations, (ii) the aggregate amount of permanent
principal payments of Indebtedness for borrowed money of
the Borrowers and their Restricted Subsidiaries and the
permanent repayment of the principal component of
Capitalized Lease Obligations of the Borrowers and its Sub-
sidiaries (excluding (1) payments with proceeds of asset
sales, (2) payments pursuant to the Refinancing or with the
proceeds of other Indebtedness or equity and (3) payments
of Loans or other Obligations, provided that repayments of
Loans shall be deducted in determining Excess Cash Flow if
such repayments were (x) required as a result of a
Scheduled Repayment under Section 4.02(b) or (y) made as a
voluntary prepayment pursuant to Section 4.01 with
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internally generated funds (but in the case of a voluntary
prepayment of Revolving Loans, only to the extent
accompanied by a voluntary reduction to the Total Revolving
Loan Commitment)) during such period, (iii) the increase,
if any, in Adjusted Consolidated Working Capital from the
first day to the last day of such period and (iv) any net
increases (or minus any net decreases) in items classified
as "Other Assets" (excluding (i) any goodwill created in
connection with a Permitted Acquisition and (ii) debt
issuance costs created in connection with any incurrence of
Indebtedness permitted hereunder to the extent paid with
the proceeds thereof) during such period as shown on the
combined balance sheet of INTERCO and its Restricted
Subsidiaries covering such period.
"Excess Cash Flow Payment Date" shall mean (i)
with respect to any Excess Cash Flow Payment Period
selected by INTERCO pursuant to the proviso to the
definition thereof, the last day of such Excess Cash Flow
Payment Period and otherwise (ii) the date occurring on or
before 95 days after the last day of each Fiscal Year
(beginning with the Fiscal Year ended closest to December
31, 1995).
"Excess Cash Flow Payment Period" shall mean (i)
with respect to the repayment required on the first Excess
Cash Payment Date, the period beginning on the Initial
Borrowing Date and ending on December 31, 1995 and (ii) on
each Excess Cash Payment Date thereafter, the immediately
preceding Fiscal Year; provided that INTERCO may, at its
option during any period after a Trigger Date and before
the Trigger Termination Date relating thereto, elect to
have Excess Cash Flow Payment Periods which end on the last
day of any fiscal quarter of INTERCO ending on or before
December 31, 1995, which period will consist of a period
beginning on the later of (x) the end of any prior
quarterly period selected pursuant to this proviso and (y)
the Initial Borrowing Date and ending on such last day of
any fiscal quarter.
"Excess Recapture Amount" shall mean, at any time
(i) zero, plus (ii) (x) the aggregate amount of repayments
of Term Loans made at or prior to such time as required by
Sections 4.02(c) on or after the occurrence of a Trigger
Date and prior to any Trigger Termination Date related
thereto and (y) the aggregate amount of repayments of Term
Loans made at or prior to such time as required by Sections
4.02(d),(f) or (g) on or after the occurrence of a Trigger
Date and prior to any Trigger Termination Date related
thereto (and the resulting increase in the recapture
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percentages applicable to such repayments) to the extent,
in respect of all payments other than pursuant to Section
4.02(c), in excess of the proceeds which would have been
required to be applied to repay Term Loans if such Trigger
Date had not occurred.
"Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended.
"Excluded Assets" shall mean each of the assets
listed on Schedule XIV.
"Excluded Option Amount" shall mean, on the date
of determination thereof, (i) $1,500,000 plus (ii) an
amount equal to (x) $1,500,000 multiplied by (y) the number
of Fiscal Years completed after January 1, 1995 and through
such date of determination, minus (iii) the amount of all
proceeds received from the issuance of shares of INTERCO
Common Stock as a result of the exercise of options issued
pursuant to Employee Stock Option Plan and not applied as a
mandatory repayment of Term Loans pursuant to Section
4.02(c) from the Initial Borrowing Date and through such
date of determination.
"Existing Indebtedness" shall have the meaning
provided in Section 7.22.
"Existing Letters of Credit" shall mean the
letters of credit listed on Schedule XII and previously
issued under the Credit Agreement dated as of July 16, 1992
among INTERCO, certain of its subsidiaries and BT
Commercial Corporation, as same may be amended through the
Effective Date.
"Facing Fee" shall have the meaning provided in
Section 3.01(c).
"Federal Funds Rate" shall mean for any period, a
fluctuating interest rate equal for each day during such
period to the weighted average of the rates on overnight
Federal Funds transactions with members of the Federal
Reserve System arranged by Federal Funds brokers, as pub-
lished for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quota-
tions for such day on such transactions received by the
Agent from three Federal Funds brokers of recognized
standing selected by the Agent.
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"Fees" shall mean all amounts payable pursuant to
or referred to in Section 3.01.
"Final Determination" shall mean, with respect to
any determination of the amount of the Converse Tax
Liability (i) a decision of a court of competent
jurisdiction which decision has become final (i.e., when
all appeals allowable have been exhausted), (ii) the
expiration of the time for filing a claim for refund or, if
a refund claim has been timely filed, the expiration of the
time for instituting suit in respect of such refund claim
if no further adjustment to the items of income, gain,
deduction, loss or credit for such period may thereafter be
made, (iii) the execution by or on behalf of INTERCO and
the Internal Revenue Service of a closing agreement under
Section 7121 of the Code, (iv) the acceptance by the
Internal Revenue Service or its counsel of a tender
pursuant to an offer to compromise in accordance with
Section 7122 of the Code, (v) the execution of a Form
870AD, or (vi) any other final and irrevocable
determination of Federal income tax liability.
"Final Maturity Date" shall mean November 17,
2001.
"FIRREA" shall mean Financial Institution Reform,
Recovery and Enforcement Act of 1989.
"Fiscal Year" shall mean each fiscal year of
INTERCO ending on December 31 of each calendar year.
"Florsheim" shall mean The Florsheim Shoe
Company, a Delaware corporation.
"Florsheim Application" shall have the meaning
provided in Section 5.07.
"Florsheim Disposition" shall have the meaning
provided in Section 5.07.
"Florsheim Documents" shall mean all documents
and agreements related to the Florsheim Recapitalization.
"Florsheim Financing" shall have the meaning
provided in Section 5.07.
"Florsheim Recapitalization" shall mean, collec-
tively, (i) the Florsheim Application, (ii) the Florsheim
Financing and (iii) the Florsheim Disposition.
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"Foreign Pension Plan" means any plan, fund
(including, without limitation, any superannuation fund) or
other similar program established or maintained outside the
United States of America by any Borrower or any one or more
of their respective Subsidiaries primarily for the benefit
of employees of such Borrower or such Subsidiary residing
outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement
income, a deferral of income in contemplation of retirement
or payments to be made upon termination of employment, and
which plan is not subject to ERISA or the Code.
"Foreign Sales Corporation" shall mean a Wholly-
Owned Foreign Subsidiary of INTERCO and/or its Restricted
Subsidiaries created for the purpose of effecting sales of
goods and/or services in foreign countries.
"Foreign Subsidiary" shall mean each Subsidiary
of the Borrowers that is incorporated under the laws of any
jurisdiction other than the United States of America, any
State thereof, the United States Virgin Islands or Puerto
Rico.
"Guaranty Payments" shall have the meaning
provided in Section 9.11(b)(ii).
"Hazardous Materials" means (a) any petroleum or
petroleum products, radioactive materials, asbestos in any
form that is or could become friable, urea formaldehyde
foam insulation, transformers or other equipment that con-
tain dielectric fluid containing any level of
polychlorinated biphenyls, and radon gas; (b) any
chemicals, materials or substances defined as or included
in the definition of "hazardous substances," "hazardous
waste," "hazardous materials," "extremely hazardous
substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or
"pollutants," or words of similar import, under any
applicable Environmental Law; and (c) any other chemical,
material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority under
Environmental Laws.
"Indebtedness" shall mean, as to any Person,
without duplication, (i) all indebtedness (including prin-
cipal, interest, fees and charges) of such Person for bor-
rowed money or for the deferred purchase price of property
or services, (ii) the maximum amount available to be drawn
under all letters of credit issued for the account of such
Person and all unpaid drawings in respect of such letters
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of credit, (iii) all Indebtedness of the types described in
clause (i), (ii), (iv), (v), (vi) or (vii) of this
definition secured by any Lien on any property owned by
such Person, whether or not such Indebtedness has been
assumed by such Person (to the extent of the value of the
respective property), (iv) the aggregate amount required to
be capitalized under leases under which such Person is the
lessee, (v) all obligations of such person to pay a
specified purchase price for goods or services, whether or
not delivered or accepted, i.e., take-or-pay and similar
obligations, (vi) all Contingent Obligations of such Person
and (vii) all obligations under any Interest Rate
Protection Agreement or under any similar type of
agreement. In addition to the foregoing, all Attributed
Receivables Facility Indebtedness shall constitute
Indebtedness.
"Initial Borrowing Date" shall mean the date
occurring on or after the Effective Date on which the
initial Borrowing of Term Loans hereunder occurs.
"INTERCO" shall have the meaning provided in the
first paragraph of this Agreement.
"INTERCO Common Stock" shall mean the common
stock of INTERCO.
"INTERCO Warrants" shall mean warrants to
purchase shares of INTERCO Common Stock pursuant to the
Warrant Agreement, dated August 3, 1992, between INTERCO
and Society National Bank, as Warrant Agent.
"Interest Determination Date" shall mean, with
respect to any Eurodollar Loan, the second Business Day
prior to the commencement of any Interest Period relating
to such Eurodollar Loan.
"Interest Period" shall have the meaning provided
in Section 1.09.
"Interest Rate Protection Agreement" shall mean
any interest rate swap agreement, interest rate cap
agreement, interest collar agreement, interest rate hedging
agreement, interest rate floor agreement or other similar
agreement or arrangement.
"Investments" shall have the meaning provided in
Section 9.05.
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"Issuing Bank" shall mean BTCo and any Bank which
at the request of the Borrowers and with the consent of the
Agent agrees, in such Bank's sole discretion, to become an
Issuing Bank for the purpose of issuing Letters of Credit
pursuant to Section 2. The sole Issuing Bank on the
Initial Borrowing Date is BTCo.
"Lane" shall have the meaning provided in the
first paragraph of this Agreement.
"L/C Supportable Obligations" shall mean obliga-
tions of INTERCO or its Restricted Subsidiaries incurred in
the ordinary course of business with respect to insurance
obligations and workers' compensation, surety bonds and
other similar statutory obligations, and all obligations
customarily supported by Standby Letters of Credit and
satisfactory to the Agent.
"Leaseholds" of any Person means all the right,
title and interest of such Person as lessee or licensee in,
to and under leases or licenses of land, improvements
and/or fixtures.
"Letter of Credit" shall have the meaning
provided in Section 2.01(a) and shall include Trade Letters
of Credit and Standby Letters of Credit.
"Letter of Credit Facing Fee" shall have the
meaning provided in Section 3.01(c)(x).
"Letter of Credit Fee" shall have the meaning
provided in Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at
any time, the sum of (i) the aggregate Stated Amount of all
outstanding Letters of Credit which have not terminated and
Acceptances which have not matured or been prepaid and (ii)
the amount of all Unpaid Drawings.
"Letter of Credit Request" shall mean any request
for the issuance of a Letter of Credit made by the
Borrowers pursuant to Section 2.03(a), including Trade
Letter of Credit Requests and Standby Letter of Credit
Requests.
"Letter of Credit Service Agreement" shall have
the meaning provided in Section 2.03(a).
"Leverage Improvement Amount" shall mean the
amount (not to exceed $15,000,000), on the Initial
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Borrowing Date, by which (x) $403,000,000 exceeds (y) the
sum of (i) the principal amount of all Loans incurred
hereunder on such date, plus (ii) the amount of all
Attributed Receivables Facility Indebtedness on such date,
plus (iii) to the extent not paid on the Initial Borrowing
Date, the amount of fees and expenses estimated in good
faith by INTERCO to be paid in connection with the
Transaction minus (iv) the amount of any cash-on-hand of
INTERCO and its Restricted Subsidiaries on such date after
giving effect to the Transaction.
"Leverage Ratio" shall mean on any date the ratio
of (i) Consolidated Debt on such date to (ii) Adjusted
Consolidated EBITDA for the period of four consecutive
fiscal quarters most recently ended on or prior to such
date, in each case taken as one accounting period.
"Lien" shall mean any mortgage, pledge, hypothe-
cation, assignment, deposit arrangement, encumbrance, lien
(statutory or other), preference, priority or other securi-
ty agreement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or
notice filed under the UCC or any other similar recording
or notice statute, and any lease having substantially the
same effect as any of the foregoing).
"Loan" shall mean each Term Loan, each Revolving
Loan and each Swingline Loan.
"Mandatory Borrowing" shall have the meaning pro-
vided in Section 1.01(d).
"Margin Stock" shall have the meaning provided in
Regulation U.
"Maximum Swingline Amount" shall mean
$15,000,000.
"Mortgage" shall have the meaning provided in
Section 5.15 and, after the execution and delivery thereof,
shall include each Additional Mortgage.
"Mortgage Policies" shall have the meaning pro-
vided in Section 5.15.
"Mortgaged Property" shall have the meaning pro-
vided in Section 5.15 and, after the execution and delivery
of any Additional Mortgage, shall include the respective
Additional Mortgaged Property.
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"Net Cash Proceeds" shall mean for any event
requiring a repayment pursuant to Section 4.02, the gross
cash proceeds (including any cash received by way of
deferred payment pursuant to a promissory note, receivable
or otherwise, but only as and when received) received from
such event, net of reasonable transaction costs (including,
as applicable, any underwriting, brokerage or other
customary commissions and reasonable legal, advisory and
other fees and expenses associated therewith) received from
any such event.
"Net Sale Proceeds" shall mean for any sale of
assets, the gross cash proceeds (including any cash
received by way of deferred payment pursuant to a promis-
sory note, receivable or otherwise, but only as and when
received) received from any sale of assets, net of reason-
able transaction costs (including, without limitation, any
underwriting, brokerage or other customary selling
commissions and reasonable legal, advisory and other fees
and expenses, including title and recording expenses,
associated therewith) and payments of unassumed liabilities
relating to the assets sold at the time of, or within 30
days after, the date of such sale, the amount of such gross
cash proceeds required to be used to repay any Indebtedness
(other than Indebtedness of the Banks pursuant to this
Agreement) which is secured by the respective assets which
were sold, and the estimated marginal increase in income
taxes which will be payable by INTERCO's consolidated group
with respect to the fiscal year in which the sale occurs as
a result of such sale; but excluding any portion of any
such gross cash proceeds which INTERCO determines in good
faith should be reserved for post-closing adjustments (to
the extent INTERCO delivers to the Banks a certificate
signed by its chief financial officer, controller or chief
accounting officer as to such determination), it being
understood and agreed that on the day that all such post-
closing adjustments have been determined, (which shall not
be later than six months following the date of the respec-
tive asset sale), the amount (if any) by which the reserved
amount in respect of such sale or disposition exceeds the
actual post-closing adjustments payable by INTERCO or any
of its Restricted Subsidiaries shall constitute Net Sale
Proceeds on such date received by INTERCO and/or any of its
Restricted Subsidiaries from such sale, lease, transfer or
other disposition.
"Non-Defaulting Bank" shall mean and include each
Bank other than a Defaulting Bank.
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"Note" shall mean each Term Note, each Revolving
Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning pro-
vided in Section 1.03.
"Notice of Conversion" shall have the meaning
provided in Section 1.06.
"Notice Office" shall mean the office of the
Agent located at 130 Liberty Street, New York, New York
10006, Attention: Mary Kay Coyle or such other office as
the Agent may hereafter designate in writing as such to the
other parties hereto.
"Obligations" shall mean all amounts owing to the
Agent, the Collateral Agent, any Issuing Bank or any Bank
pursuant to the terms of this Agreement or any other Credit
Document.
"Participant" shall have the meaning provided in
Section 2.04(a).
"Pay-In-Kind Preferred Stock" means any Preferred
Stock where all dividends with respect thereto may, at the
option of the issuer thereof, be paid through the issuance
of additional shares of preferred stock of the same series.
"Payment Office" shall mean the office of the
Agent located at One Bankers Trust Plaza, New York, New
York 10006, or such other office as the Agent may hereafter
designate in writing as such to the other parties hereto.
"PBGC" shall mean the Pension Benefit Guaranty
Corporation established pursuant to Section 4002 of ERISA,
or any successor thereto.
"Percentage" of any Bank at any time shall mean a
fraction (expressed as a percentage) the numerator of which
is the Revolving Loan Commitment of such Bank at such time
and the denominator of which is the Total Revolving Loan
Commitment at such time, provided that if the Percentage of
any Bank is to be determined after the Total Revolving Loan
Commitment has been terminated, then the Percentages of the
Banks shall be determined immediately prior (and without
giving effect) to such termination.
"Permitted Acquired Debt" shall mean Permitted
Unsecured Indebtedness assumed or acquired in connection
with a Permitted Acquisition and other Indebtedness of such
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entity assumed or acquired after giving effect to such
Permitted Acquisition and as permitted under this
Agreement.
"Permitted Acquisition" shall mean the
acquisition by the Borrowers or any of their Restricted
Subsidiaries of assets constituting part of or an entire
business or division of any Person not already a Subsidiary
of the Borrowers or of 100% of the capital stock of any
such Person which Person shall, as a result of such
acquisition, become a Restricted Subsidiary, provided that
(A) the consideration paid by the Borrowers and/or their
Restricted Subsidiaries consists solely of cash or common
stock or Qualified Preferred Stock or Disqualified
Preferred Stock permitted pursuant to Section 9.13(b) of
INTERCO, the issuance of Indebtedness otherwise permitted
in Section 9.04 and the assumption/acquisition of any
Permitted Acquired Debt (calculated at face value) relating
to such business, division or Person, (B) the assets
acquired, or the business of the Person whose stock is
acquired, shall be in the same line of business in which
the Borrowers and their Restricted Subsidiaries are already
engaged, and (C) in the case of the acquisition of 100% of
the capital stock of any Person, such Person shall own no
capital stock of any other Person unless either (x) such
Person owns 100% of the capital stock of such other Person
or (y) (1) such Person and/or its Wholly-Owned Subsidiaries
own 80% of the consolidated assets of such Person and its
Subsidiaries and (2) any non-Wholly Owned Subsidiary of
such Person was non-Wholly Owned prior to the date of such
Permitted Acquisition of such Person (it being understood
and agreed that investments by Subsidiaries shall be
permitted in accordance with the provisions of Section
9.05). Notwithstanding anything to the contrary contained
in the immediately preceding sentence, any acquisition
shall be a Permitted Acquisition only if all requirements
of Sections 8.14 and 9.02(vii) applicable to Permitted
Acquisitions are met with respect thereto.
"Permitted Debt Agreements" shall have the
meaning provided in Section 5.05.
"Permitted Encumbrance" shall mean, with respect
to any Mortgaged Property, such exceptions to title as are
set forth in the title insurance policy or title commitment
delivered with respect thereto, all of which exceptions
must be acceptable to the Agent in its reasonable
discretion.
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"Permitted Liens" shall have the meaning provided
in Section 9.01.
"Permitted Subordinated Indebtedness" shall mean
any Indebtedness (including, without limitation, any
Permitted Subordinated Indebtedness incurred in connection
with the creation of a replacement Receivables Facility)
which is subordinated to all Obligations hereunder and any
other obligations secured pursuant to the Security
Documents and incurred by the Borrowers, so long as (i)
based on calculations made by the Borrowers on a Pro Forma
Basis after giving effect to the incurrence of such
Indebtedness, no Default or Event of Default will exist
under, or would have existed under the periods covered by,
the financial covenants contained in Sections 9.08 through
9.10, inclusive, of this Agreement, (ii) based on good
faith projections prepared by the Borrowers for the period
from the date of the incurrence of such Indebtedness to the
date which is one year thereafter, the level of financial
performance measured by the covenants set forth in Sections
9.08 through 9.10 inclusive shall be better than or equal
to such level as would be required to provide that no
Default or Event of Default would exist under the financial
covenants contained in Sections 9.08 through 9.10,
inclusive, of this Agreement as compliance with such
covenants would be required through the date which is one
year from the date of the incurrence of such Indebtedness,
(iii) INTERCO shall furnish to the Agent for distribution
to each of the Banks an officer's certificate by the chief
financial officer or treasurer of INTERCO certifying to the
best of his knowledge as to compliance with the require-
ments of the preceding clauses (i) and (ii) and containing
the pro forma calculations and projections required by the
preceding clauses (i) and (ii), (iv) such Indebtedness
shall require no amortization, sinking fund payment or any
other scheduled maturity of the principal amount thereof on
any date which is earlier than the date occurring one year
after the Final Maturity Date and (v) such Indebtedness
shall not contain any provision (including, without
limitation, covenants, defaults and remedies) in the docu-
ments governing or evidencing the same which, in the opi-
nion of the Agent, are more restrictive than the provisions
in the Credit Documents.
"Permitted Unsecured Indebtedness" shall mean any
general unsecured Indebtedness incurred by the Borrowers,
so long as (i) based on calculations made by the Borrowers
on a Pro Forma Basis after giving effect to the incurrence
of such Indebtedness, no Default or Event of Default will
exist under, or would have existed under the periods
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covered by, the financial covenants contained in Sections
9.08 through 9.10, inclusive, of this Agreement, (ii) based
on good faith projections prepared by the Borrowers for the
period from the date of the incurrence of such Indebtedness
to the date which is one year thereafter, the level of
financial performance measured by the covenants set forth
in Sections 9.08 through 9.10 inclusive shall be better
than or equal to such level as would be required to provide
that no Default or Event of Default would exist under the
financial covenants contained in Sections 9.08 through
9.10, inclusive, of this Agreement as compliance with such
covenants would be required through the date which is one
year from the date of the incurrence of such Indebtedness,
(iii) INTERCO shall furnish to the Agent for distribution
to each of the Banks an officer's certificate by the chief
financial officer or treasurer of INTERCO certifying to the
best of his knowledge as to compliance with the
requirements of the preceding clauses (i) and (ii) and
containing the pro forma calculations required by the
preceding clauses (i) and (ii), (iv) the average life of
such Indebtedness at the time of the incurrence thereof
shall be at least one year beyond the average life of the
Term Loans then outstanding and the Total Revolving
Commitments (assuming maximum utilization thereof) and (v)
such Indebtedness shall not contain any provision
(including, without limitation, covenants, defaults and
remedies) in the documents governing or evidencing the same
which, in the opinion of the Agent, are more restrictive
than the provisions in the Credit Documents.
"Person" shall mean any individual, partnership,
joint venture, firm, corporation, association, trust or
other enterprise or any government or political subdivision
or any agency, department or instrumentality thereof.
"Plan" shall mean any multiemployer or single-
employer plan, as defined in Section 4001 of ERISA, which
is maintained or contributed to by (or to which there is an
obligation to contribute of), the Borrowers or a Subsidiary
of the Borrowers or an ERISA Affiliate, and each such plan
for the five year period immediately following the latest
date on which the Borrowers, a Subsidiary of the Borrowers
or an ERISA Affiliate maintained, contributed or had an
obligation to contribute to such plan.
"Pledge Agreement" shall have the meaning
provided in Section 5.13.
"Pledge Agreement Collateral" shall mean all
"Collateral" as defined in the Pledge Agreement.
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"Pledged Securities" shall mean "Pledged Securi-
ties" as defined in the Pledge Agreement.
"Preferred Stock," as applied to the capital
stock of any Person, means capital stock of such Person
(other than common stock of such Person) of any class or
classes (however designed) that ranks prior, as to the
payment of dividends or as to the distribution of assets
upon any voluntary or involuntary liquidation, dissolution
or winding up of such Person, to shares of capital stock of
any other class of such Person, and shall include any
Qualified Preferred Stock and Disqualified Preferred Stock.
"Prime Lending Rate" shall mean the rate which
BTCo announces from time to time as its prime lending rate,
the Prime Lending Rate to change when and as such prime
lending rate changes. The Prime Lending Rate is a refer-
ence rate and does not necessarily represent the lowest or
best rate actually charged to any customer. BTCo may make
commercial loans or other loans at rates of interest at,
above or below the Prime Lending Rate.
"Pro Forma Basis" shall mean, as to any Person,
for any of the following events which occur subsequent to
the commencement of a period for which the financial effect
of such event is being calculated, and giving effect to the
event for which such calculation is being made, such
calculation as will give pro forma effect to such event as
if same had occurred at the beginning of such period of
calculation, and
(i) for purposes of the foregoing calculation,
the transaction giving rise to the need to calculate
the pro forma effect to any of the following events
shall be assumed to have occurred on the first day of
the four fiscal quarter period last ended before the
occurrence of the respective event for which such pro
forma effect is being determined (the "Reference
Period"), and
(ii) in making any determination with respect to
the incurrence or assumption of any Indebtedness or
issuance of any Disqualified Preferred Stock during
the Reference Period or subsequent to the Reference
Period and on or prior to the date of the transaction
referenced in clause (i) above (the "Transaction
Date"), (w) all Indebtedness or Disqualified Preferred
Stock (including the Indebtedness or Disqualified
Preferred Stock incurred or assumed and for which the
financial effect is being calculated) incurred or
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permanently repaid during the Reference Period shall
be deemed to have been incurred or repaid at the
beginning of such period, (x) Consolidated Net
Interest Expense of such Person attributable to
interest or dividends on any Indebtedness or
Disqualified Preferred Stock, as the case may be,
bearing floating interest rates should be computed on
a pro forma basis as if the rate in effect on the
Transaction Date had been the applicable rate for the
entire period, (y) Consolidated Net Interest Expense
of such Person attributable to interest on any Indebt-
edness under any revolving credit facility which was
in effect during the respective Reference Period shall
be computed on a pro forma basis based upon the
average daily balance of such Indebtedness outstanding
during the applicable period (or, if shorter, the
portion of the period during which the revolving
credit facility was in effect) and (z) Consolidated
Net Interest Expense will be increased or reduced by
the net cost (including amortization of discount) or
benefit (after giving effect to amortization of
discount) associated with the Interest Rate Protection
Agreements, which will remain in effect for the
twelve-month period after the Transaction Date and
which shall have the effect of fixing the interest
rate on the date of computation, and
(iii) in making any determination of
Consolidated EBITDA, pro forma effect shall be given
to any Permitted Acquisition or Significant
Divestiture which occurred during the Reference Period
or subsequent to the Reference Period and prior to the
Transaction Date, Consolidated EBITDA shall be
determined as if such Permitted Acquisition or
Significant Divestiture occurred on the first day of
the Reference Period, taking into account cost savings
and expenses which would otherwise be accounted for as
an adjustment pursuant to Article 11 of Regulation S-X
under the Securities Act, as if such cost savings or
expenses were realized on the first day of the
Reference Period.
"Projections" shall have the meaning provided in
Section 5.19(c).
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"Purchase and Contribution Agreement" shall mean
the Purchase and Contribution Agreement, dated as of
November 15, 1994, among Broyhill, Lane and Action and the
Receivables Subsidiary, as same may be amended, modified or
supplemented from time to time in compliance with Section
9.11, or as replaced in compliance with the definition of
Receivables Facility.
"Qualified Preferred Stock" means any Pay-In-Kind
Preferred Stock of INTERCO, or any other Preferred Stock of
INTERCO, the express terms of which shall provide that
Dividends thereon shall not be required to be paid in cash
at any time that such cash payment would be prohibited by
the terms of this Agreement (and any refinancings,
replacements or extensions hereof) and in either case
which, by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable),
or upon the happening of any event (including an event
which would constitute a Change of Control), cannot mature
(excluding any maturity as the result of an optional
redemption by the issuer thereof) and is not mandatorily
redeemable, pursuant to a sinking fund obligation or
otherwise, and is not redeemable, or required to be
repurchased, at the sole option of the holder thereof
(including, without limitation, upon the occurrence of an
event which would constitute a Change of Control), in whole
or in part, on or prior to the first anniversary of the
Final Maturity Date.
"Quarterly Payment Date" shall mean the last
Business Day of each June, September, December and March,
occurring after the Initial Borrowing Date.
"RCRA" shall mean the Resource Conservation and
Recovery Act, as the same may be amended from time to time,
42 U.S.C. Sec. 6901 et seq.
"Real Property" of any Person shall mean all the
right, title and interest of such Person in and to land,
improvements and fixtures, including Leaseholds.
"Recapitalization Documents" shall mean, collec-
tively, (i) the Florsheim Documents and (ii) the Converse
Documents and all other agreements and instruments entered
into in connection with the Recapitalizations.
"Recapitalizations" shall mean, collectively, (i)
the Florsheim Recapitalization and (ii) the Converse
Recapitalization.
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"Receivables Documents" shall mean the
Receivables Purchase Agreements, the Purchase and
Contribution Agreement and any related documentation
entered into by the Borrowers and their Restricted
Subsidiaries, the Receivables Subsidiary and/or the
Receivables Purchasers in connection with the Receivables
Facility.
"Receivables Facility" shall mean the arrangement
pursuant to which (x) each of Broyhill, Lane and Action and
its respective Subsidiaries will from time to time sell
accounts receivable to the Receivables Subsidiary and (y)
the Receivables Subsidiary shall sell interests in the
receivables to the Receivables Purchasers, as more fully
set forth in the Receivables Documents; provided, that the
Receivables Facility may be replaced after the date hereof
so long as the Agent is satisfied that the terms and
conditions of any replacement facility are as favorable or
more favorable to INTERCO and its Restricted Subsidiaries
and to the Banks (and in any event contains no greater
degree of recourse to INTERCO and its Restricted
Subsidiaries (other than the Receivables Subsidiary)) than
the terms and conditions of the current Receivables
Facility (in which event such replacement facility shall be
deemed to be the Receivables Facility hereunder).
"Receivables Purchase Agreements" shall mean and
include the Atlantic Receivables Purchase Agreement and the
Alternate Receivables Purchase Agreement.
"Receivables Purchaser" shall mean and include
(i) with respect to the Alternate Receivables Purchase
Agreement, Credit Lyonnais New York Branch, a Branch of
Credit Lyonnais, a French banking corporation and (ii) with
respect to the Atlantic Receivables Purchase Agreement,
Atlantic, and their respective successors and assigns (in
the event that the Receivables Facility is replaced, any
replacement receivables purchasers shall be deemed to be
the Receivables Purchasers hereunder).
"Receivables Subsidiary" shall mean INTERCO
Receivables Corp., the special purpose subsidiary formed
and owned by Broyhill, Lane and Action to purchase and
receive contributions of receivables from each of Broyhill,
Lane, Action and their respective other Restricted
Subsidiaries pursuant to the Receivables Facility.
"Recovery Event" shall mean the receipt by
INTERCO or any of its Restricted Subsidiaries of any cash
insurance proceeds or condemnation award payable (i) by
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reason of theft, loss, physical destruction or damage or
any other similar event with respect to any property or
assets of the Borrowers or any of its Subsidiaries and (ii)
under any policy of insurance required to be maintained
under Section 8.03.
"Reduction Percentage" shall mean (i) initially
zero and (ii) from and after each day of delivery of any
certificate delivered in accordance with the following sen-
tence indicating an entitlement to a Reduction Percentage
other than zero (each, a "Start Date") to and including the
applicable End Date described below, the percentage set
forth below opposite the Reduction Ratio indicated to have
been achieved in any certificate delivered in accordance
with the following sentence:
Reduction Interest
Ratio Reduction Discount
Equal to or .25%
greater than
2.75:1 but less
than 3.0:1
Equal to or .375%
greater than 2.5:1
but less than 2.75:1
Equal to or .50%
greater than 2.25:1
but less than 2.5:1
Equal to or greater .625%
than 2.0:1 but less than
2.25:1
Less than 2.0:1 .75%
The Reduction Ratio shall be determined based on the
delivery of a certificate of the Borrowers by an Authorized
Representative of the Borrowers to the Agent (with a copy
to be sent by the Borrowers to each Bank), within 30 days
of the last day of any fiscal quarter of INTERCO, which
certificate shall set forth the calculation of the
Reduction Ratio for the fiscal quarter ended immediately
prior to the relevant Start Date and the Reduction
Percentage which shall be thereafter applicable (until same
is changed or ceases to apply in accordance with the
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following sentences). The Reduction Percentage so
determined shall apply, except as set forth in the
succeeding sentence, from the Start Date to the earlier of
(x) the date on which the next certificate is delivered to
the Agent and (y) the date which is 30 days following the
last day of the fiscal quarter in which the previous Start
Date occurred (the "End Date"), at which time, if no
certificate has been delivered to the Agent indicating an
entitlement to a Reduction Percentage other than zero (and
thus commencing a new Start Date), the Reduction Percentage
shall be reduced to zero. Notwithstanding anything to the
contrary contained above in this definition, the Reduction
Percentage shall be reduced to zero at all times during
which there shall exist a Default or an Event of Default.
"Reduction Ratio" shall mean on any date the
ratio of (i) Consolidated Debt on such date to (ii)
Consolidated EBITDA for the period (with any calculation
for any such period which includes a period occurring
before the Initial Borrowing Date to be adjusted, on a Pro
Forma Basis, to give effect to the Transaction) of four
consecutive fiscal quarters most recently ended on or prior
to such date, in each case taken as one accounting period.
"Refinancing" shall mean the refinancing of
amounts outstanding and the termination of all commitments
under the Terminated Debt Agreements.
"Refinancing Documents" shall mean all documenta-
tion entered into with respect to the Refinancing.
"Register" shall have the meaning provided in
Section 13.17.
"Regulation D" shall mean Regulation D of the
Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a por-
tion thereof establishing reserve requirements.
"Regulation G" shall mean Regulation G of the
Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a por-
tion thereof.
"Regulation T" shall mean Regulation T of the
Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a por-
tion thereof.
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"Regulation U" shall mean Regulation U of the
Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a por-
tion thereof.
"Regulation X" shall mean Regulation X of the
Board of Governors of the Federal Reserve System as from
time to time in effect and any successor to all or a por-
tion thereof.
"Release" means any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escap-
ing, leaching, dumping, disposing or migration into the
environment.
"Replaced Bank" shall have the meaning provided
in Section 1.13.
"Replacement Bank" shall have the meaning
provided in Section 1.13.
"Reportable Event" shall mean an event described
in Section 4043(b) of ERISA with respect to a Plan other
than those events as to which the 30-day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of
PBGC Regulation Section 2615.
"Required Banks" shall mean Non-Defaulting Banks,
the sum of whose outstanding Term Loans (or, if prior to
the Initial Borrowing Date, Term Loan Commitments) and
Revolving Loan Commitments (or after the termination
thereof, outstanding Revolving Loans and Adjusted
Percentage of Swingline Loans and Letter of Credit
Outstandings) represent at least a majority of the sum of
all outstanding Term Loans (or, if prior to the Initial
Borrowing Date, Term Loan Commitments) of Non-Defaulting
Banks and the Adjusted Total Revolving Loan Commitment (or
after the termination thereof, the sum of the then total
outstanding Revolving Loans of Non-Defaulting Banks and the
aggregate Adjusted Percentages of all Non-Defaulting Banks
of the total outstanding Swingline Loans and Letter of
Credit Outstandings at such time).
"Residual Converse Tax Liability" shall mean, at
any time, an amount equal to (i) the Converse Tax Liability
at such time, minus (ii) the Converse Tax Basket at such
time, minus (iii) any proceeds of issuances of equity by
INTERCO and/or its Restricted Subsidiaries applied as
described in the second paragraph of Section 4.02(c), minus
(iv) the Excess Recapture Amount then in effect.
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"Restricted Junior Payment" shall have the
meaning provided in Section 9.11 (a)(i).
"Restricted Subsidiaries" shall mean, (x) all of
the Subsidiaries of the Borrowers and their respective
Subsidiaries in existence on the Initial Borrowing Date and
(y) any Subsidiary (other than an Unrestricted Subsidiary)
that is created, established or acquired after the
Effective Date.
"Returns" shall have the meaning provided in
Section 7.09.
"Revolving Loan" shall have the meaning provided
in Section 1.01(b).
"Revolving Loan Commitment" shall mean, for each
Bank, the amount set forth opposite such Bank's name in
Schedule I hereto directly below the column entitled
"Revolving Loan Commitment," as same may be (x) reduced
from time to time pursuant to Sections 3.02, 3.03, 4.02
and/or 10 or (y) adjusted from time to time as a result of
assignments to or from such Bank pursuant to Section 1.13
or 13.04(b).
"Revolving Note" shall have the meaning provided
in Section 1.05(a).
"Scheduled Repayments" shall have the meaning
provided in Section 4.02(b).
"SEC" shall have the meaning provided in Section
8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the
meaning provided in Section 4.04(b)(ii).
"Secured Creditors" shall have the meaning
assigned that term in the Security Documents.
"Securities Act" shall mean the Securities Act of
1933, as amended.
"Security Agreement" shall have the meaning
provided in Section 5.14.
"Security Agreement Collateral" shall mean all
"Collateral" as defined in the Security Agreement (which
shall exclude all assets of the Receivables Subsidiary).
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"Security Document" shall mean the Pledge Agree-
ment, the Security Agreement, each Mortgage and, after the
execution and delivery thereof, each Additional Mortgage
and each Additional Security Document.
"Services Agreement" shall mean each of the
separate services agreements entered into between (i)
INTERCO and Florsheim and (ii) INTERCO and Converse, in
each case, relating to the continuance of certain shared
management services and the allocation of expenses related
thereto and each dated as of November 17, 1994.
"Shareholders' Agreements" shall have the meaning
provided in Section 5.05.
"Significant Divestiture" shall mean any sale or
other disposition of assets by INTERCO and/or its
Restricted Subsidiaries, the fair market value of which
exceeds $500,000 for any transaction (or series of related
transactions).
"Standby Letter of Credit" shall mean any Standby
Letter of Credit or similar instrument issued or deemed
issued for the account of any Borrower pursuant to Section
2.01 for the purpose of supporting L/C Supportable
Obligations.
"Standby Letter of Credit Request" shall have the
meaning provided in Section 2.03(a).
"Stated Amount" of (x) each Letter of Credit
shall, at any time, mean the maximum amount available to be
drawn thereunder (in each case determined without regard to
whether any conditions to drawing could then be met) and
(y) each Acceptance shall mean the amount of each such
Acceptance.
"Subsidiary" shall mean, as to any Person, (i)
any corporation more than 50% of whose stock of any class
or classes having by the terms thereof ordinary voting
power to elect a majority of the directors of such corpora-
tion (irrespective of whether or not at the time stock of
any class or classes of such corporation shall have or
might have voting power by reason of the happening of any
contingency) is at the time owned by such Person and/or one
or more Subsidiaries of such Person and (ii) any partner-
ship, association, joint venture or other entity in which
such Person and/or one or more Subsidiaries of such Person
has more than a 50% equity interest at the time. As used
in this Agreement, the term "Subsidiary" shall include or
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apply to any Restricted Subsidiary and any Unrestricted
Subsidiary.
"Subsidiary Guarantor" shall mean Broyhill
Transport, Inc., a North Carolina corporation, Lane
Advertising, Inc., a Virginia corporation, Action
Industries, Inc., a Virginia corporation and Action
Transport, Inc., a Delaware corporation and any Restricted
Subsidiary of any Borrower which executes a guarantee after
the Initial Borrowing Date pursuant to Section 8.11, but
shall in any event exclude the Receivables Subsidiary and
Interfashions Industries, S.A. and its Subsidiaries.
"Subsidiary Guaranty" shall have the meaning
provided in Section 5.12.
"Supermajority Banks" of any Tranche shall mean
those Non-Defaulting Banks which would constitute the
Required Banks under, and as defined in, this Agreement if
(x) all outstanding Obligations of the other Tranches under
this Agreement were repaid in full and all Commitments with
respect thereto were terminated and (y) the percentage
"50%" contained therein were changed to "66-2/3%."
"Surviving Guaranties" shall mean the guarantee
obligations of INTERCO with respect to the leases described
in Schedule XV hereto.
"Swingline Expiry Date" shall mean the date which
is two Business Days prior to the Final Maturity Date.
"Swingline Loan" shall have the meaning provided
in Section 1.01(c).
"Swingline Note" shall have the meaning provided
in Section 1.05(a).
"Tax Sharing Agreement" shall mean any tax
sharing, disaffiliation or tax allocation agreement entered
into among the Borrowers, Converse and Florsheim and shall
cover, without limitation, ongoing tax matters including
matters arising related to prior periods, including those
arising as a result of the Converse Disposition and the
Florsheim Disposition.
"Taxes" shall have the meaning provided in
Section 4.04(a).
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"Terminated Debt Agreements" shall mean all debt
or other financing agreements or documents related to
Indebtedness of INTERCO and its Subsidiaries which has been
repaid, satisfied, discharged, extinguished or terminated
pursuant to the Refinancing.
"Term Loan" shall have the meaning provided in
Section 1.01(a).
"Term Loan Commitment" shall mean, for each Bank,
the amount set forth opposite such Bank's name in Schedule
I hereto directly below the column entitled "Term Loan
Commitment," as same may be (x) reduced from time to time
pursuant to Sections 3.03, 4.02 and/or 10 or (y) adjusted
from time to time as a result of assignments to or from
such Bank pursuant to Section 1.13 or 13.04.
"Term Note" shall have the meaning provided in
Section 1.05(a).
"Total Available Revolving Loan Commitment" shall
mean at any time an amount equal to the Total Revolving
Loan Commitment less the Blocked Amount at such time.
"Total Commitment" shall mean, at any time, the
sum of the Commitments of each of the Banks.
"Total Revolving Loan Commitment" shall mean, at
any time, the sum of the Revolving Loan Commitments of each
of the Banks.
"Total Term Loan Commitment" shall mean, at any
time, the sum of the Term Loan Commitments of each of the
Banks.
"Total Unutilized Revolving Loan Commitment"
shall mean, at any time, an amount equal to the remainder
of (x) the then Total Revolving Loan Commitment, less (y)
the sum of the aggregate principal amount of Revolving
Loans and Swingline Loans outstanding plus the then
aggregate amount of Letter of Credit Outstandings.
"Trade Letter of Credit" shall mean any Letter of
Credit or similar instrument issued for the account of any
Borrower pursuant to Section 2.01 for the purpose of
providing the primary payment mechanism in connection with
the purchase of any materials, goods or services by the
Borrowers or their Restricted Subsidiaries in the ordinary
course of business of the Borrowers or their Restricted
Subsidiaries.
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"Trade Letter of Credit Request" shall have the
meaning provided in Section 2.03(a).
"Tranche" shall mean the respective facility and
commitment utilized in making Loans, with there being three
separate Tranches, i.e., Term Loans, Revolving Loans and
Swingline Loans.
"Transaction" shall mean, collectively, (i) the
Recapitalizations, (ii) the Refinancing and (iii) the
entering into of the Credit Documents and the incurrence of
Loans hereunder on the Initial Borrowing Date.
"Transaction Documents" shall mean all Documents
(other than the Credit Documents) and agreements and
instruments entered into in connection with the
Transaction.
"Trigger Date" shall mean any date on which it is
determined (in a manner satisfactory to the Agent) that the
Residual Converse Tax Liability exceeds zero.
"Trigger Termination Date" shall mean (x) the
date on which it is determined (in a manner satisfactory to
the Agent) that the Residual Converse Tax Liability has
been reduced to an amount equal to or less than zero or (y)
if the event described in the foregoing clause (x) has
occurred, any date designated by INTERCO (at its sole
option); provided that if the amount of the event giving
rise to the occurrence of the Trigger Termination Date
pursuant to clause (x) above exceeds the amount of such
event needed to cause the occurrence of the Trigger
Termination Date, the Trigger Termination Date shall be
deemed to have occurred only for purposes of the
application of any such excess amount.
"Type" shall mean the type of Loan determined
with regard to the interest option applicable thereto,
i.e., whether a Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as
from time to time in effect in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan means
the amount, if any, by which the actuarial present value of
the accumulated benefits under the Plan as of the close of
its most recent plan year each exceeds the fair market
value of the assets allocable thereto, determined in
accordance with Statement of Financial Accounting Standards
No. 35, based upon the actuarial assumptions used by the
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Plan's actuary in the most recent annual valuation of the
Plan.
"United States" and "U.S." shall each mean the
United States of America.
"Unpaid Drawing" shall have the meaning provided
for in Section 2.05(a).
"Unrestricted Subsidiary" shall mean any Wholly-
Owned Subsidiary of INTERCO that is acquired or created
after the Initial Borrowing Date and designated by INTERCO
as an Unrestricted Subsidiary hereunder by written notice
to the Agent; provided that INTERCO shall only be permitted
to so designate a new Unrestricted Subsidiary after the
Initial Borrowing Date and so long as (i) no Default or
Event of Default exists or would result therefrom and (ii)
100% of the capital stock of such newly-designated
Unrestricted Subsidiary is owned by INTERCO or another
Unrestricted Subsidiary and all of the provisions of
Section 9.12 shall have been complied with in respect of
such newly-designated Unrestricted Subsidiary and
capitalized (to the extent capitalized by INTERCO or any of
its Restricted Subsidiaries) through Investments as
permitted by, and in compliance with, Section 9.05(viii),
with any assets owned by such Unrestricted Subsidiary at
the time of the initial designation thereof to be treated
as Investments made pursuant to Section 9.05(viii),
provided that at the time of the initial Investments by
INTERCO in such Subsidiary (x) INTERCO shall designate such
entity as an Unrestricted Subsidiary in a written notice to
the Agent and (y) such entity and the Borrowers shall have
entered into a Tax Sharing Agreement and Services Agreement
on a basis which is satisfactory to the Agent.
Additionally, INTERCO may not designate any Credit Party,
the Receivables Subsidiary or any Subsidiary created or
acquired pursuant to a Permitted Acquisition as an
Unrestricted Subsidiary.
"Unutilized Revolving Loan Commitment" with
respect to any Bank, at any time, shall mean such Bank's
Revolving Loan Commitment at such time less the sum of (i)
the aggregate outstanding principal amount of Revolving
Loans made by such Bank and (ii) such Bank's Adjusted
Percentage of the Letter of Credit Outstandings at such
time.
"Voting Stock" shall mean, as to any Person, any
class or classes of capital stock of such Person pursuant
to which the holders thereof have the general voting power
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under ordinary circumstances to elect at least a majority
of the Board of Directors of such Person.
"Wholly-Owned Subsidiary" shall mean, as to any
Person, (i) any corporation 100% of whose capital stock
(other than director's qualifying shares) is at the time
owned by such Person and/or one or more Wholly-Owned Sub-
sidiaries of such Person and (ii) any partnership, associa-
tion, joint venture or other entity in which such Person
and/or one or more Wholly-Owned Subsidiaries of such Person
has a 100% equity interest at such time.
SECTION 12. The Agent.
12.01 Appointment. The Banks hereby designate
BTCo as Agent (for purposes of this Section 12, the term
"Agent" shall include BTCo in its capacity as Collateral
Agent pursuant to the Security Documents) to act as
specified herein and in the other Credit Documents. Each
Bank hereby irrevocably authorizes, and each holder of any
Note by the acceptance of such Note shall be deemed
irrevocably to authorize, the Agent to take such action on
its behalf under the provisions of this Agreement, the
other Credit Documents and any other instruments and
agreements referred to herein or therein and to exercise
such powers and to perform such duties hereunder and
thereunder as are specifically delegated to or required of
the Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto. The Agent may
perform any of its duties hereunder by or through its
respective officers, directors, agents, employees or
affiliates.
12.02 Nature of Duties. The Agent shall not
have any duties or responsibilities except those expressly
set forth in this Agreement and the Security Documents.
Neither the Agent nor any of its respective officers,
directors, agents, employees or affiliates shall be liable
for any action taken or omitted by it or them hereunder or
under any other Credit Document or in connection herewith
or therewith, unless caused by its or their gross
negligence or willful misconduct. The duties of the Agent
shall be mechanical and administrative in nature; the Agent
shall not have by reason of this Agreement or any other
Credit Document a fiduciary relationship in respect of any
Bank or the holder of any Note; and nothing in this
Agreement or any other Credit Document, expressed or im-
plied, is intended to or shall be so construed as to impose
upon the Agent any obligations in respect of this Agreement
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or any other Credit Document except as expressly set forth
herein or therein.
12.03 Lack of Reliance on the Agent. Independ-
ently and without reliance upon the Agent, each Bank and
the holder of each Note, to the extent it deems appropri-
ate, has made and shall continue to make (i) its own inde-
pendent investigation of the financial condition and
affairs of INTERCO and its Subsidiaries in connection with
the making and the continuance of the Loans and the taking
or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of INTERCO and
its Subsidiaries and, except as expressly provided in this
Agreement, the Agent shall not have any duty or respon-
sibility, either initially or on a continuing basis, to
provide any Bank or the holder of any Note with any credit
or other information with respect thereto, whether coming
into its possession before the making of the Loans or at
any time or times thereafter. The Agent shall not be
responsible to any Bank or the holder of any Note for any
recitals, statements, information, representations or
warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execu-
tion, effectiveness, genuineness, validity, enforceability,
perfection, collectibility, priority or sufficiency of this
Agreement or any other Credit Document or the financial
condition of INTERCO and its Subsidiaries or be required to
make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of
this Agreement or any other Credit Document, or the
financial condition of INTERCO and its Subsidiaries or the
existence or possible existence of any Default or Event of
Default.
12.04 Certain Rights of the Agent. If the Agent
shall request instructions from the Required Banks or
Supermajority Banks with respect to any act or action
(including failure to act) in connection with this
Agreement or any other Credit Document, the Agent shall be
entitled to refrain from such act or taking such action
unless and until the Agent shall have received instructions
from the Required Banks; and the Agent shall not incur
liability to any Person by reason of so refraining.
Without limiting the foregoing, no Bank or holder of any
Note shall have any right of action whatsoever against the
Agent as a result of the Agent acting or refraining from
acting hereunder or under any other Credit Document in
accordance with the instructions of the Required Banks.
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12.05 Reliance. The Agent shall be entitled to
rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate,
telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message
signed, sent or made by any Person that the Agent believed
to be the proper Person, and, with respect to all legal
matters pertaining to this Agreement and any other Credit
Document and its duties hereunder and thereunder, upon
advice of counsel selected by the Agent (which may be
counsel for the Credit Parties).
12.06 Indemnification. To the extent the Agent
is not reimbursed and indemnified by the Borrowers, the
Banks will reimburse and indemnify the Agent, in proportion
to their respective "percentages" as used in determining
the Required Banks, for and against any and all
liabilities, obligations, losses, damages, penalties,
claims, actions, judgments, costs, expenses or dis-
bursements of whatsoever kind or nature which may be
imposed on, asserted against or incurred by the Agent in
performing its respective duties hereunder or under any
other Credit Document, in any way relating to or arising
out of this Agreement or any other Credit Document;
provided that no Bank shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful
misconduct.
12.07 The Agent in its Individual Capacity.
With respect to its obligation to make Loans and
participate in Letters of Credit under this Agreement, the
Agent shall have the rights and powers specified herein for
a "Bank" and may exercise the same rights and powers as
though it were not performing the duties specified herein;
and the term "Banks," "Required Banks," "holders of Notes"
or any similar terms shall, unless the context clearly
otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or
other business with any Credit Party or any Affiliate of
any Credit Party as if they were not performing the duties
specified herein, and may accept fees and other consider-
ation from the Borrowers or any other Credit Party for ser-
vices in connection with this Agreement and otherwise with-
out having to account for the same to the Banks.
12.08 Holders. The Agent may deem and treat the
payee of any Note as the owner thereof for all purposes
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hereof unless and until a written notice of the assignment,
transfer or endorsement thereof, as the case may be, shall
have been filed with the Agent. Any request, authority or
consent of any Person who, at the time of making such re-
quest or giving such authority or consent, is the holder of
any Note shall be conclusive and binding on any subsequent
holder, transferee, assignee or indorsee, as the case may
be, of such Note or of any Note or Notes issued in exchange
therefor.
12.09 Resignation by the Agent. (a) The Agent
may resign from the performance of all its functions and
duties hereunder and/or under the other Credit Documents at
any time by giving 15 Business Days' prior written notice
to the Borrowers and the Banks. Such resignation shall
take effect upon the appointment of a successor Agent
pursuant to clauses (b) and (c) below or as otherwise
provided below.
(b) Upon any such notice of resignation, the
Required Banks shall appoint a successor Agent hereunder or
thereunder who shall be a commercial bank or trust company
reasonably acceptable to the Borrowers.
(c) If a successor Agent shall not have been so
appointed within such 15 Business Day period, the Agent,
with the consent of the Borrowers, shall then appoint a
commercial bank or trust company with capital and surplus
of not less than $500 million as successor Agent who shall
serve as Agent hereunder or thereunder until such time, if
any, as the Required Banks appoint a successor Agent as
provided above.
(d) If no successor Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business
Day after the date such notice of resignation was given by
the Agent, the Agent's resignation shall become effective
and the Banks shall thereafter perform all the duties of
the Agent hereunder and/or under any other Credit Document
until such time, if any, as the Required Banks appoint a
successor Agent as provided above.
SECTION 13. Miscellaneous.
13.01 Payment of Expenses, etc. The Borrowers
jointly and severally shall: (i) whether or not the
transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and
disbursements of White & Case and local counsel) in connec-
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tion with the preparation, execution and delivery of this
Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein and any
amendment, waiver or consent relating hereto or thereto, of
the Agent in connection with its syndication efforts with
respect to this Agreement and of the Agent and, following
and during the continuation of an Event of Default, each of
the Banks in connection with the enforcement of this
Agreement and the other Credit Documents and the documents
and instruments referred to herein and therein (including,
without limitation, the reasonable fees and disbursements
of counsel for the Agent and, following and during the
continuation of an Event of Default, for each of the
Banks); (ii) pay and hold each of the Banks harmless from
and against any and all present and future stamp, excise
and other similar taxes with respect to the foregoing
matters and hold each of the Banks harmless from and
against any and all liabilities with respect to or
resulting from any delay or omission (other than to the ex-
tent attributable to such Bank) to pay such taxes; and
(iii) indemnify the Agent and each Bank (including in its
capacity as an Issuing Bank), and each of their respective
officers, directors, employees, representatives, affiliates
and agents from and hold each of them harmless against any
and all liabilities, obligations (including removal or
remedial actions), losses, damages, penalties, claims,
actions, judgments, suits, costs, expenses and dis-
bursements (including reasonable attorneys' and consult-
ants' fees and disbursements) incurred by, imposed on or
assessed against any of them as a result of, or arising out
of, or in any way related to, or by reason of, (a) any
investigation, litigation or other proceeding (whether or
not the Agent or any Bank is a party thereto) related to
the entering into and/or performance of this Agreement or
any other Credit Document or the use of any Letter of
Credit or the proceeds of any Loans hereunder or the
consummation of any transactions contemplated herein
(including, without limitation, the Transaction) or in any
other Credit Document or the exercise of any of their
rights or remedies provided herein or in the other Credit
Documents, or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or
groundwater or on the surface or subsurface of any Real
Property owned or at any time operated by INTERCO or any of
its Subsidiaries, the generation, storage, transportation,
handling or disposal of Hazardous Materials at any loca-
tion, whether or not owned or operated by INTERCO or any of
its Subsidiaries, the non-compliance of any Real Property
with foreign, federal, state and local laws, regulations,
and ordinances (including applicable permits thereunder)
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applicable to any Real Property, or any Environmental Claim
asserted against INTERCO, any of its Subsidiaries, or any
Real Property owned or at any time operated by INTERCO or
any of its Subsidiaries, including, in each case, without
limitation, the reasonable fees and disbursements of
counsel and other consultants incurred in connection with
any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or
expenses to the extent incurred by reason of the gross
negligence or willful misconduct of the Person to be
indemnified). To the extent that the undertaking to indem-
nify, pay or hold harmless the Agent or any Bank set forth
in the preceding sentence may be unenforceable because it
is violative of any law or public policy, the Borrowers
shall make the maximum contribution to the payment and
satisfaction of each of the indemnified liabilities which
is permissible under applicable law.
13.02 Right of Setoff. In addition to any
rights now or hereafter granted under applicable law or
otherwise, and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, each Bank is
hereby authorized at any time or from time to time, without
presentment, demand, protest or other notice of any kind to
the Borrowers or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any
other Indebtedness at any time held or owing by such Bank
(including, without limitation, by branches and agencies of
such Bank wherever located) to or for the credit or the
account of any Credit Party against and on account of the
Obligations and liabilities of all Credit Parties to such
Bank under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in
Obligations purchased by such Bank pursuant to Section
13.06(b), and all other claims of any nature or description
arising out of or connected with this Agreement or any
other Credit Document, irrespective of whether or not such
Bank shall have made any demand hereunder and although said
Obligations, liabilities or claims, or any of them, shall
be contingent or unmatured.
13.03 Notices. Except as otherwise expressly
provided herein, all notices and other communications pro-
vided for hereunder shall be in writing (including tele-
graphic, telex, telecopier or cable communication) and
mailed, telegraphed, telexed, telecopied, cabled or deliv-
ered: if to the Borrowers, at the Borrowers' address
specified opposite its signature below; if to any other
Credit Party, at such Credit Party's address set forth in
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any Credit Document; if to any Bank, at its address spec-
ified opposite its name on Schedule II below; and if to the
Agent, at its Notice Office; or, as to any Credit Party or
the Agent, at such other address as shall be designated by
such party in a written notice to the other parties hereto
and, as to each Bank, at such other address as shall be
designated by such Bank in a written notice to the
Borrowers and the Agent. All such notices and communi-
cations shall, when mailed, telegraphed, telexed, tele-
copied, or cabled or sent by overnight courier, be effec-
tive when deposited in the mails, delivered to the tele-
graph company, cable company or overnight courier, as the
case may be, or sent by telex or telecopier, except that
notices and communications to the Agent and the Borrowers
shall not be effective until received by the Agent or the
Borrowers, as the case may be.
13.04 Benefit of Agreement. (a) This Agreement
shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the
parties hereto; provided, however, no Borrower may assign
or transfer any of its rights, obligations or interest
hereunder or under any other Credit Document without the
prior written consent of all of the Banks and, provided
further, that, although any Bank may transfer, assign or
grant participations in its rights hereunder, such Bank
shall remain a "Bank" for all purposes hereunder (and may
not transfer or assign all or any portion of its Commit-
ments hereunder except as provided in Section 13.04(b)) and
the transferee, assignee or participant, as the case may
be, shall not constitute a "Bank" hereunder and, provided
further, that no Bank shall transfer or grant any partici-
pation under which the participant shall have rights to
approve any amendment to or waiver of this Agreement or any
other Credit Document except to the extent such amendment
or waiver would (i) extend the final scheduled maturity of
any Loan or Note or extend the expiry date of any Letter of
Credit in which such participant is participating beyond
the Final Maturity Date, or reduce the rate or extend the
time of payment of interest or Fees thereon (except in
connection with a waiver of applicability of any post-
default increase in interest rates) or reduce the principal
amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it
being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of
Default or of a mandatory reduction in the Total Commitment
shall not constitute a change in the terms of such partici-
pation, and that an increase in any Commitment or Loan
shall be permitted without the consent of any participant
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if the participant's participation is not increased as a
result thereof), (ii) consent to the assignment or transfer
by the Borrowers of any of their rights and obligations
under this Agreement or (iii) release all or substantially
all of the Collateral under all of the Security Documents
(except as expressly provided in the Credit Documents)
supporting the Loans and/or Letters of Credit hereunder in
which such participant is participating. In the case of
any such participation, the participant shall not have any
rights under this Agreement or any of the other Credit
Documents (the participant's rights against such Bank in
respect of such participation to be those set forth in the
agreement executed by such Bank in favor of the participant
relating thereto) and all amounts payable by the Borrowers
hereunder shall be determined as if such Bank had not sold
such participation.
(b) Notwithstanding the foregoing, any Bank (or
any Bank together with one or more other Banks) may (x)
assign all or a portion of its Revolving Loan Commitment
(and related outstanding Obligations hereunder) and/or its
outstanding Term Loans (or, if prior to the Initial
Borrowing Date, Term Loan Commitment) to its parent company
and/or any affiliate of such Bank which is at least 50%
owned by such Bank or its parent company or to one or more
Banks or (y) after providing notice to (but without
requiring the consent of) INTERCO, assign all, or if less
than all, a portion equal to at least $5,000,000 in the
aggregate for the assigning Bank or assigning Banks, of
such Revolving Loan Commitments and outstanding principal
amount of Term Loans (or, if prior to the Initial Borrowing
Date, Term Loan Commitment) hereunder to one or more
Eligible Transferees, each of which assignees shall become
a party to this Agreement as a Bank by execution of an
Assignment and Assumption Agreement, provided that, (i) at
such time Schedule I shall be deemed modified to reflect
the Commitments (and/or outstanding Term Loans, as the case
may be) of such new Bank and of the existing Banks, (ii)
upon surrender of the old Notes, new Notes will be issued,
at the Borrowers' expense, to such new Bank and to the
assigning Bank, such new Notes to be in conformity with the
requirements of Section 1.05 (with appropriate modifi-
cations) to the extent needed to reflect the revised
Commitments (and/or outstanding Term Loans, as the case may
be), (iii) the consent of the Agent and any Issuing Bank
shall be required in connection with any such assignment of
a Bank's Revolving Loan Commitment (which consent shall not
be unreasonably withheld or delayed) and (iv) the Agent
shall receive at the time of each such assignment (other
than in connection with an assignment by a Bank to an
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affiliate of such Bank), from the assigning or assignee
Bank, the payment of a non-refundable fee of $1,500 or in
the case of an assignment to an assignee which is not a
Bank, the payment of a non-refundable assignment fee of
$3,500 and, provided further, that such transfer or
assignment will not be effective until recorded by the
Agent on the Register pursuant to Section 13.17 hereof. To
the extent of any assignment pursuant to this Section
13.04(b), the assigning Bank shall be relieved of its
obligations hereunder with respect to its assigned
Commitments. At the time of each assignment pursuant to
this Section 13.04(b) to a Person which is not already a
Bank hereunder and which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code)
for Federal income tax purposes, the respective assignee
Bank shall provide to the Borrowers and the Agent the
appropriate Internal Revenue Service Forms (and, if appli-
cable a Section 4.04(b)(ii) Certificate) described in
Section 4.04(b). To the extent that an assignment of all
or any portion of a Bank's Commitments and related
outstanding Obligations pursuant to Section 1.13 or this
Section 13.04(b) would, at the time of such assignment,
result in increased costs under Section 1.10 or 1.11
greater than those being charged by the respective
assigning Bank prior to such assignment, then the Borrowers
shall not be obligated to pay such greater increased costs
(although the Borrowers shall be obligated to pay any other
increased costs of the type described above resulting from
changes after the date of the respective assignment).
(c) Nothing in this Agreement shall prevent or
prohibit any Bank from pledging its Loans and Notes
hereunder to a Federal Reserve Bank in support of
borrowings made by such Bank from such Federal Reserve
Bank.
13.05 No Waiver; Remedies Cumulative. No fail-
ure or delay on the part of the Agent or any Bank or any
holder of any Note in exercising any right, power or
privilege hereunder or under any other Credit Document and
no course of dealing between the Borrowers or any other
Credit Party and the Agent or any Bank or the holder of any
Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege
hereunder or under any other Credit Document preclude any
other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder.
The rights, powers and remedies herein or in any other
Credit Document expressly provided are cumulative and not
exclusive of any rights, powers or remedies which the Agent
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or any Bank or the holder of any Note would otherwise have.
No notice to or demand on any Credit Party in any case
shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or
constitute a waiver of the rights of the Agent or any Bank
or the holder of any Note to any other or further action in
any circumstances without notice or demand.
13.06 Payments Pro Rata. (a) Except as
otherwise provided in this Agreement, the Agent agrees that
promptly after its receipt of each payment from or on
behalf of the Borrowers in respect of any Obligations here-
under, it shall distribute such payment to the Banks (other
than any Bank that has consented in writing to waive its
pro rata share of any such payment) pro rata based upon
their respective shares, if any, of the Obligations with
respect to which such payment was received.
(b) Each of the Banks agrees that, if it should
receive any amount hereunder (whether by voluntary payment,
by realization upon security, by the exercise of the right
of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit
Documents, or otherwise), which is applicable to the pay-
ment of the principal of, or interest on, the Loans, Unpaid
Drawings, Commitment Commission or other Fees, of a sum
which with respect to the related sum or sums received by
other Banks is in a greater proportion than the total of
such Obligation then owed and due to such Bank bears to the
total of such Obligation then owed and due to all of the
Banks immediately prior to such receipt, then such Bank
receiving such excess payment shall purchase for cash with-
out recourse or warranty from the other Banks an interest
in the Obligations of the respective Credit Party to such
Banks in such amount as shall result in a proportional
participation by all the Banks in such amount; provided
that if all or any portion of such excess amount is there-
after recovered from such Bank, such purchase shall be
rescinded and the purchase price restored to the extent of
such recovery, but without interest.
(c) Notwithstanding anything to the contrary
contained herein, the provisions of the preceding Sections
13.06(a) and (b) shall be subject to the express provisions
of this Agreement which require, or permit, differing pay-
ments to be made to Non-Defaulting Banks as opposed to
Defaulting Banks.
13.07 Calculations; Computations. (a) The
financial statements to be furnished to the Banks pursuant
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hereto shall be made and prepared in accordance with gener-
ally accepted accounting principles in the United States
(or the equivalent thereof in any country in which a
Foreign Sales Corporation is doing business, as applicable)
consistently applied throughout the periods involved,
provided that, (i) except as otherwise specifically
provided herein, all computations of Excess Cash Flow,
Available $10 Million Basket Amount, Available CapX Amount,
Available Retained Excess Cash Flow Amount, Available
Unrestricted Proceeds Amount and Available Net Income
Amount and all computations determining compliance with
Sections 9.02 through 9.10, inclusive, shall utilize ac-
counting principles and policies in conformity with those
used to prepare the historical financial statements
delivered to the Banks pursuant to Section 7.05(a), (ii)
for all purposes of this Agreement, all Attributed
Receivables Facility Indebtedness of the Receivables
Subsidiary shall be included in the combined financial
statements of INTERCO and its Restricted Subsidiaries, and
shall be considered Indebtedness of a Restricted Subsidiary
of INTERCO hereunder, regardless of any differing treatment
pursuant to generally acceptable accounting principles,
(iii) for purposes of calculating financial terms, all
covenants and related definitions, all such calculations
based on the operations of INTERCO and its Restricted
Subsidiaries on a combined basis shall be made without
giving effect to the operations of any Unrestricted
Subsidiaries, and (iv) the amount of any tax liability
arising from the Florsheim Disposition, and the amount of
any Converse Tax Liability to the extent not paid, shall be
treated as Indebtedness (determined in the case of the
Converse Tax Liability in accordance with the definition of
Consolidated Debt) for all computations determining com-
pliance with Sections 9.08 through 9.10, inclusive, during
all periods which such liabilities remain unpaid, and shall
be deemed to accrue interest at a rate of 9% per annum for
all such periods.
(b) All computations of interest, Commitment
Commission and other Fees hereunder shall be made on the
basis of a year of 360 days for the actual number of days
(including the first day but excluding the last day)
occurring in the period for which such interest, Commitment
Commission or other Fees are payable.
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13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION;
VENUE; WAIVER OF JURY TRIAL. (a) THIS AGREEMENT AND THE
OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER AND THEREUNDER SHALL, EXCEPT AS
OTHERWISE PROVIDED IN CERTAIN OF THE MORTGAGES, BE CON-
STRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT MAY
BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND,
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWERS HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS. EACH OF THE
BORROWERS HEREBY IRREVOCABLY DESIGNATES, APPOINTS AND
EMPOWERS CT CORPORATION SYSTEM, WITH OFFICES ON THE DATE
HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019 AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND
ACKNOWLEDGE FOR AND ON ITS BEHALF, AND IN RESPECT OF ITS
PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE,
APPOINTEE AND AGENT SHALL CEASE TO BE AVAILABLE TO ACT AS
SUCH, EACH CREDIT PARTY AGREES TO DESIGNATE A NEW DESIGNEE,
APPOINTEE AND AGENT IN NEW YORK CITY ON THE TERMS AND FOR
THE PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT
UNDER THIS AGREEMENT. EACH OF THE BORROWERS FURTHER
IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS OUT OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ANY CREDIT PARTY AT ITS ADDRESS
SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE TO
BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT UNDER THIS
AGREEMENT, ANY BANK OR THE HOLDER OF ANY NOTE TO SERVE PRO-
CESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT
PARTY IN ANY OTHER JURISDICTION.
(b) EACH OF THE BORROWERS HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PRO-
CEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREE-
MENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS
REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY FURTHER IRRE-
VOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH
COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELAT-
ING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 Counterparts. This Agreement may be exe-
cuted in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of
which shall together constitute one and the same instru-
ment. A set of counterparts executed by all the parties
hereto shall be lodged with the Borrowers and the Agent.
13.10 Effectiveness. This Agreement shall
become effective on the date (the "Effective Date") on
which the Agent, the Borrowers and each of the Banks shall
have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same
to the Agent at its Notice Office or, in the case of the
Banks, shall have given to the Agent telephonic (confirmed
in writing), written or telex notice (actually received) at
such office that the same has been signed and mailed to it.
The Agent will give the Borrowers and each Bank prompt
written notice of the occurrence of the Effective Date.
13.11 Headings Descriptive. The headings of the
several sections and subsections of this Agreement are in-
serted for convenience only and shall not in any way affect
the meaning or construction of any provision of this Agree-
ment.
13.12 Amendment or Waiver; etc. (a) Neither
this Agreement nor any other Credit Document nor any terms
hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or ter-
mination is in writing signed by the respective Credit
Parties party thereto and the Required Banks, provided that
no such change, waiver, discharge or termination shall,
without the consent of each Bank (other than a Defaulting
Bank) with Obligations being directly affected thereby, (i)
extend the final scheduled maturity of any Loan or Note or
extend the stated maturity of any Letter of Credit beyond
the Final Maturity Date, or reduce the rate or extend the
time of payment of interest or Fees thereon, or reduce the
principal amount thereof (except to the extent repaid in
cash), (ii) release all or substantially all of the
Collateral under all the Security Documents (except as
expressly provided in the Credit Documents), (iii) amend,
modify or waive any provision of this Section 13.12, (iv)
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reduce the percentage specified in the definition of
Required Banks (it being understood that, with the consent
of the Required Banks, additional extensions of credit pur-
suant to this Agreement may be included in the determina-
tion of the Required Banks on substantially the same basis
as the extensions of Term Loans and Revolving Loan
Commitments are included on the Effective Date) or (v)
consent to the assignment or transfer by the Borrowers of
any of their rights and obligations under this Agreement;
provided further, that no such change, waiver, discharge or
termination shall (u) increase the Commitments of any Bank
over the amount thereof then in effect without the consent
of such Bank (it being understood that waivers or
modifications of conditions precedent, covenants, Defaults
or Events of Default or of a mandatory reduction in the
Total Commitment shall not constitute an increase of the
Commitment of any Bank, and that an increase in the
available portion of any Commitment of any Bank shall not
constitute an increase in the Commitment of such Bank), (v)
without the consent of the respective Issuing Bank or
Issuing Banks, amend, modify or waive any provision of
Section 2 with respect to Letters of Credit issued by it or
alter its rights or obligations with respect to Letters of
Credit or Acceptances, (w) without the consent of BTCo,
amend, modify or waive any provision of Sections 1.01(c)
and (d) or alter its rights and obligations with respect to
Swingline Loans, (x) without the consent of the Agent,
amend, modify or waive any provision of Section 12 as same
applies to such Agent or any other provision as same
relates to the rights or obligations of such Agent, (y)
without the consent of the Collateral Agent, amend, modify
or waive any provision relating to the rights or
obligations of the Collateral Agent and (z) without the
consent of the Supermajority Banks of the respective
Tranche (1) amend, modify or waive any Scheduled Repayment,
(2) release any significant portion of the Collateral under
the Security Documents (except as expressly provided in the
Credit Documents) or release any significant Subsidiary
Guarantor from its obligations under the Subsidiary
Guaranty (other than in connection with a transaction
permitted pursuant to Section 9.02); provided that no Col-
lateral shall constitute a significant portion of the Col-
lateral and no Subsidiary Guarantor shall constitute a
significant Subsidiary Guarantor if the fair market value
of the Collateral to be released plus the fair market value
of the assets owned or held by such Subsidiary Guarantor is
$20 million or less in the aggregate (based on a
certificate of the chief financial officer of INTERCO
taking into account all prior releases) or (3) reduce the
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percentage specified in the definition of Supermajority
Banks with respect to such Tranche.
(b) If, in connection with any proposed change,
waiver, discharge or termination to any of the provisions
of this Agreement as contemplated by clauses (i) through
(v), inclusive, of the first proviso to Section 13.12(a),
the consent of the Required Banks is obtained but the
consent of one or more of such other Banks whose consent is
required is not obtained, then the Borrowers shall have the
right, so long as all non-consenting Banks whose individual
consent is required are treated as described in either
clauses (A) or (B) below, to either (A) replace each such
non-consenting Bank or Banks (or, at the option of the
Borrowers if the respective Bank's consent is required with
respect to less than all Tranches of Loans (or related
Commitments), to replace only the respective Tranche or
Tranches of Commitments and/or Loans of the respective
non-consenting Bank which gave rise to the need to obtain
such Bank's individual consent) with one or more
Replacement Banks pursuant to Section 1.13 so long as at
the time of such replacement, each such Replacement Bank
consents to the proposed change, waiver, discharge or
termination or (B) terminate such non-consenting Bank's
Revolving Loan Commitment (if such Bank's consent is
required as a result of its Revolving Loan Commitment)
and/or repay outstanding Term Loans of such Bank which gave
rise to the need to obtain such Bank's consent, in accor-
dance with Sections 3.02(b) and/or 4.01(v), provided that,
unless the Commitments are terminated, and Loans repaid,
pursuant to the preceding clause (B) are immediately
replaced in full at such time through the addition of new
Banks or the increase of the Commitments and/or outstanding
Loans of existing Banks (who in each case must specifically
consent thereto), then in the case of any action pursuant
to preceding clause (B) the Required Banks (determined
before giving effect to the proposed action) shall
specifically consent thereto, provided further, that in any
event the Borrowers shall not have the right to replace a
Bank, terminate its Revolving Loan Commitment or repay its
Loans solely as a result of the exercise of such Bank's
rights (and the withholding of any required consent by such
Bank) pursuant to the second proviso to Section 13.12(a).
13.13 Survival. All indemnities set forth
herein including, without limitation, in Sections 1.10,
1.11, 2.06, 4.04, 13.01 and 13.06 shall, subject to Section
13.15 (to the extent applicable), survive the execution,
delivery and termination of this Agreement and the Notes
and the making and repayment of the Loans.
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13.14 Domicile of Loans. Each Bank may transfer
and carry its Loans at, to or for the account of any
office, Subsidiary or Affiliate of such Bank.
Notwithstanding anything to the contrary contained herein,
to the extent that a transfer of Loans pursuant to this
Section 13.14 would, at the time of such transfer, result
in increased costs under Section 1.10, 1.11, 2.06 or 4.04
from those being charged by the respective Bank prior to
such transfer, then the Borrowers shall not be obligated to
pay such increased costs (although the Borrowers shall be
obligated to pay any other increased costs of the type
described above resulting from changes after the date of
the respective transfer).
13.15 Limitation on Additional Amounts, etc.
Notwithstanding anything to the contrary contained in
Sections 1.10, 1.11, 2.06 or 4.04 of this Agreement, unless
a Bank gives notice to the Borrowers that it is obligated
to pay an amount under any such Section within one year
after the later of (x) the date the Bank incurs the respec-
tive increased costs, Taxes, loss, expense or liability,
reduction in amounts received or receivable or reduction in
return on capital or (y) the date such Bank has actual
knowledge of its incurrence of the respective increased
costs, Taxes, loss, expense or liability, reductions in
amounts received or receivable or reduction in return on
capital, then such Bank shall only be entitled to be
compensated for such amount jointly and severally by the
Borrowers pursuant to said Section 1.10, 1.11, 2.06 or
4.04, as the case may be, to the extent the costs, Taxes,
loss, expense or liability, reduction in amounts received
or receivable or reduction in return on capital are
incurred or suffered on or after the date which occurs one
year prior to such Bank giving notice to the Borrowers that
it is obligated to pay the respective amounts pursuant to
said Section 1.10, 1.11, 2.06 or 4.04, as the case may be.
This Section 13.15 shall have no applicability to any
Section of this Agreement other than said Sections 1.10,
1.11, 2.06 and 4.04.
13.16 Confidentiality. (a) Subject to the
provisions of clause (b) of this Section 13.16, each Bank
agrees that it will use its best efforts not to disclose
without the prior consent of the Borrowers (other than to
its employees, auditors, advisors or counsel or to another
Bank if the Bank or such Bank's holding or parent company
in its sole discretion determines that any such party
should have access to such information, provided such
Persons shall be subject to the provisions of this Section
13.16 to the same extent as such Bank) any information with
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respect to INTERCO or any of its Subsidiaries which is now
or in the future furnished pursuant to this Agreement or
any other Credit Document and which is designated by
INTERCO to the Banks in writing as confidential, provided
that any Bank may disclose any such information (a) as has
become generally available to the public, (b) as may be
required or appropriate in any report, statement or
testimony submitted to any municipal, state or Federal
regulatory body having or claiming to have jurisdiction
over such Bank or to the Federal Reserve Board or the
Federal Deposit Insurance Corporation or similar organiza-
tions (whether in the United States or elsewhere) or their
successors, (c) as may be required or appropriate in
respect to any summons or subpoena or in connection with
any litigation, (d) in order to comply with any law, order,
regulation or ruling applicable to such Bank, (e) to the
Agent or the Collateral Agent and (f) to any prospective or
actual transferee or participant in connection with any
contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Bank,
provided, that such prospective transferee executes an
agreement with such Bank containing provisions
substantially the same as to those contained in this
Section.
(b) Each of the Borrowers hereby acknowledges
and agrees that each Bank may share with any of its
affiliates any information related to INTERCO or any of its
Subsidiaries (including, without limitation, any nonpublic
customer information regarding the creditworthiness of
INTERCO and its Subsidiaries), provided such Persons shall
be subject to the provisions of this Section 13.16 to the
same extent as such Bank.
13.17 Register. The Borrowers hereby designate
the Agent to serve as the Borrowers' agent, solely for pur-
poses of this Section 13.17, to maintain a register (the
"Register") on which it will record the Commitments from
time to time of each of the Banks, the Loans made by each
of the Banks and each repayment in respect of the principal
amount of the Loans of each Bank. Failure to make any such
recordation, or any error in such recordation shall not
affect the Borrowers' obligations in respect of such Loans.
With respect to any Bank, the transfer of the Commitments
of such Bank and the rights to the principal of, and
interest on, any Loan made pursuant to such Commitments
shall not be effective until such transfer is recorded on
the Register maintained by the Agent with respect to
ownership of such Commitments and Loans and prior to such
recordation all amounts owing to the transferor with
-173-
respect to such Commitments and Loans shall remain owing to
the transferor. The registration of assignment or transfer
of all or part of any Commitments and Loans shall be
recorded by the Agent on the Register only upon the
acceptance by the Agent of a properly executed and
delivered Assignment and Assumption Agreement pursuant to
Section 13.04(b). Coincident with the delivery of such an
Assignment and Assumption Agreement to the Agent for
acceptance and registration of assignment or transfer of
all or part of a Loan, or as soon thereafter as
practicable, the assigning or transferor Bank shall
surrender the Note evidencing such Loan, and thereupon one
or more new Notes in the same aggregate principal amount
shall be issued to the assigning or transferor Bank and/or
the new Bank. The Borrowers jointly and severally agree to
indemnify the Agent from and against any and all losses,
claims, damages and liabilities of whatsoever nature which
may be imposed on, asserted against or incurred by the
Agent in performing its duties under this Section 13.17,
provided that the Borrowers shall have no obligation to
indemnify the Agent for any loss, claim, damage, liability
or expense which resulted primarily from the gross
negligence or wilful misconduct of the Agent.
-174-
IN WITNESS WHEREOF, the parties hereto have caused
their duly authorized officers to execute and deliver this
Agreement as of the date first above written.
Address:
101 South Hanley Road INTERCO INCORPORATED
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By David P. Howard
Title: Vice President
c/o INTERCO INCORPORATED BROYHILL FURNITURE
101 South Hanley Road INDUSTRIES, INC.
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By Duane A. Patterson
Title: Vice President
c/o INTERCO INCORPORATED THE LANE COMPANY,
101 South Hanley Road INCORPORATED
St. Louis, MO 63105
Tel: (314) 863-1100
Fax: (314) 863-5306
Attention: David P. Howard By Duane A. Patterson
Title: Vice President
One Bankers Trust Plaza BANKERS TRUST COMPANY,
130 Liberty Street Individually and as Agent
New York, NY 10006
Tel: (212) 250-1724
Fax: (212) 250-7200
Attention: Dana F. Klein By Dana Klein
Title: Vice President
-175-
BANK OF MONTREAL
By: Jonathan D. Hook
Title: Director
THE BANK OF NEW YORK
By: Natalie Egleston
Title: Vice President
BANK OF SCOTLAND
By: Catherine M. Oniffrey
Title: Vice President
BANQUE PARIBAS
By: Ann C. Pifer
Title: Assistant Vice
President
By: Richard G. Burrows
Title: Vice President
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By: Patricia M. Watson
Title: Vice President
CAISSE NATIONALE DE CREDIT
AGRICOLE
By: David Bouhl
Title: First Vice President
CREDIT LYONNAIS CAYMAN ISLAND
BRANCH
By: Raymond A. Whiteman
Title: Vice President
CREDIT LYONNAIS CHICAGO BRANCH
By: Mary Ann Klemm
Title: Vice President
DRESDNER BANK AG
Chicago Branch and Grand
Cayman Branch
By: E.R. Holder
Title: Senior Vice President
By: John H. Schaus
Title: First Vice President
FIRST AMERICAN NATIONAL
BANK
By: Kelli H. Ernst
Title: Corporate Bank Officer
-177-
THE FUJI BANK LIMITED
By: Peter L. Chinnici
Title: Joint General Manager
THE INDUSTRIAL BANK OF JAPAN,
LIMITED
By: Hiroaki Nakamura
Title: Joint General Manager
THE LONG-TERM CREDIT BANK
OF JAPAN, LTD.
By: Armund J. Schoen
Title: Vice President and
Deputy General Manager
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By: Arnold J. Conrad
Title: Vice President
NATIONAL CITY BANK
By: Robert C. Rowe
Title: Assistant Vice
President
-178-
NATIONAL WESTMINSTER
BANK USA
By: Gerard Painter
Title: Vice President
NBD BANK, N.A.
By: Robert Lawrence
Title: Vice President
THE SANWA BANK, LIMITED
By: Kenneth C. Eichwald
Title: Vice President &
Manager
SHAWMUT BANK CONNECTICUT,
N.A.
By: Peter F. Samson
Title: Assistant Vice
President
-179-
SCHEDULE I
COMMITMENTS
Term Loan Revolving Loan
Bank Commitment Commitment
Bankers Trust Company 19,395,833.32 5,104,166.68
Credit Lyonnais 19,395,833.32*/ 5,104,166.68*/
Bank of Montreal 17,416,666.67 4,583,333.33
The Bank of New York 17,416,666.67 4,583,333.33
The Boatmen's National 17,416,666.67 4,583,333.33
Bank of St. Louis
The Industrial Bank 17,416,666.67 4,583,333.33
of Japan, Limited
The Long-Term Credit 17,416,666.67 4,583,333.33
Bank of Japan, LTD
National City Bank 17,416,666.67 4,583,333.33
National Westminster 17,416,666.67 4,583,333.33
Bank USA
NBD Bank, N.A. 17,416,666.67 4,583,333.33
Bank of Scotland 11,875,000.00 3,125,000.00
Banque Paribas 11,875,000.00 3,125,000.00
Caisse Nationale de 11,875,000.00 3,125,000.00
Credit Agricole
Dresdner Bank AG 11,875,000.00 3,125,000.00
Chicago Branch and
Grand Cayman Branch
First American 11,875,000.00 3,125,000.00
National Bank
*/ Evidenced by two promissory notes which shall exist
contemporaneously; provided, however, that the aggregate
outstanding principal amount under both such promissory
notes shall not exceed such amount at any time.
SCHEDULE I
Page 2
Term Loan Revolving Loan
Bank Commitment Commitment
The Fuji Bank Limited 11,875,000.00 3,125,000.00
Mercantile Bank of 11,875,000.00 3,125,000.00
St. Louis National
Association
The Sanwa Bank, Limited 11,875,000.00 3,125,000.00
Shawmut Bank
Connecticut, N.A. 11,875,000.00 3,125,000.00
Total $285,000,000.00 $75,000,000.00
SCHEDULE II
BANK ADDRESSES
BANK OF MONTREAL
115 South LaSalle Street
Chicago, IL 60603
Tel: (312) 750-3888
Fax: (312) 750-4304
Attention: John Hook
THE BANK OF NEW YORK
1 Wall Street
New York, NY 10286
Tel: (212) 635-8448
Fax: (212) 635-1208
Attention: Natalie Egleston
BANK OF SCOTLAND
181 West Madison Street
Suite 4710
Chicago, IL 60602
Tel: (312) 263-4054
Fax: (312) 263-1143
Attention: Bruce Robertson
BANKERS TRUST COMPANY
130 Liberty Street
New York, New York 10006
Tel: (212) 250-2500
Fax: (212) 250-7200
Attention: Mary Kay Coyle
BANQUE PARIBAS
787 Seventh Avenue
32nd Floor
New York, NY 10019
Tel: (212) 841-2000
Fax: (212) 841-2333
Attention: Tim Deason
Ann Pifer
SCHEDULE II
Page 2
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
Boatmen's Center
1 Boatmen's Plaza
800 Market Street
14th Floor
St. Louis, MO 63101
Tel: (314) 466-6000
Fax: (314) 444-4651
Attention: Pat Watson
CAISSE NATIONALE DE CREDIT AGRICOLE
55 East Monroe Street
47th Floor
Chicago, IL 60603-5702
Tel: (312) 917-7440
Fax: (312) 372-3724
Attention: Roger Weis
CREDIT LYONNAIS
Credit Lyonnais Building
1301 Avenue of the Americas
New York, NY 10019
Tel: (212) 261-7876
Fax: (212) 459-3176
Attention: Raymond Whiteman
DRESDNER BANK AG CHICAGO BRANCH AND GRAND CAYMAN BRANCH
190 South LaSalle Street
Suite 2700
Chicago, IL 60603
Tel: (312) 444-1300
Fax: (312) 444-1305
Attention: John Schaus
FIRST AMERICAN NATIONAL BANK
First American Center
Nashville, TN 37237
Tel: (615) 748-2000
Fax: (615) 748-6072
Attention: Kelli Ernst
SCHEDULE II
Page 3
THE FUJI BANK LIMITED
225 West Wacker Drive
Suite 2000
Chicago, IL 60606
Tel: (312) 621-0397
Fax: (312) 621-0539
Attention: Mark McCracken
THE INDUSTRIAL BANK OF JAPAN, LIMITED
227 West Monroe Street
Suite 2600
Chicago, IL 60606
Tel: (312) 855-8258
Fax: (312) 855-8200
Attention: Chuck Smith
THE LONG-TERM CREDIT BANK OF JAPAN, LTD
190 South LaSalle Street
Suite 800
Chicago, IL 60603
Tel: (312) 704-5479
Fax: (312) 704-8505
Attention: Armund Schoen
MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION
Mercantile Tower Tram 10-6
7th & Washington Street
St. Louis, MO 63101
Tel: (314) 425-2049
Fax: (314) 425-2162
Attention: Elizabeth Vahlkamp
NATIONAL CITY BANK
1900 East Ninth Street
Cleveland, OH 44114
Tel: (216) 575-3163
Fax: (216) 696-3849
Attention: Robert Rowe
SCHEDULE II
Page 4
NATIONAL WESTMINSTER BANK USA
175 Water Street
New York, NY 10038
Tel: (212) 602-2559
Fax: (212) 602-2671
Attention: Gerard Painter
NBD BANK, N.A.
611 Woodward Avenue
Mezzanine Level
National Banking Division
Detroit, MI 48226
Tel: (313) 225-1000
Fax: (313) 225-2649
Attention: Kurt Price
THE SANWA BANK, LIMITED
10 South Wacker Drive
31st Floor
Chicago, IL 60606
Tel: (312) 368-3000
Fax: (312) 346-6677
Attention: Jerry Hullinger
SHAWMUT BANK CONNECTICUT, N.A.
MSN 203
777 Main Street
Hartford, CT 06115
Tel: (203) 728-2000
Fax: (203) 722-9378
Attention: Peter Sampson