CONFORMED COPY
CREDIT AGREEMENT
dated as of
April 22, 1998
among
PHILLIPS-VAN HEUSEN CORPORATION,
as Borrower,
The Lenders Party Hereto,
THE CHASE MANHATTAN BANK,
as Administrative Agent and Collateral Agent,
and
CITICORP USA, INC.,
as Documentation Agent
___________________________
CHASE SECURITIES INC.,
as Arranger
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . 1
SECTION 1.02. Classification of Loans and Borrowings. . . 16
SECTION 1.03. Terms Generally . . . . . . . . . . . . . . 16
SECTION 1.04. Accounting Terms; GAAP. . . . . . . . . . . 6
ARTICLE II
The Credits
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . 17
SECTION 2.02. Loans and Borrowings. . . . . . . . . . . . 17
SECTION 2.03. Requests for Borrowings . . . . . . . . . . 17
SECTION 2.04. Swingline Loans . . . . . . . . . . . . . . 18
SECTION 2.05. Letters of Credit . . . . . . . . . . . . . 19
SECTION 2.06. Funding of Borrowings . . . . . . . . . . . 23
SECTION 2.07. Interest Elections. . . . . . . . . . . . . 23
SECTION 2.08. Termination and Reduction of Commitments. . 24
SECTION 2.09. Repayment of Loans; Evidence of Debt. . . . 25
SECTION 2.10. Prepayment of Loans . . . . . . . . . . . . 25
SECTION 2.11. Fees. . . . . . . . . . . . . . . . . . . . 26
SECTION 2.12. Interest. . . . . . . . . . . . . . . . . . 27
SECTION 2.13. Alternate Rate of Interest. . . . . . . . . 27
SECTION 2.14. Increased Costs . . . . . . . . . . . . . . 28
SECTION 2.15. Break Funding Payments. . . . . . . . . . . 28
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . . 29
SECTION 2.17. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs . . . . . . . . . . . 30
SECTION 2.18. Mitigation Obligations; Replacement of Lenders 1
ARTICLE III
Representations and Warranties
SECTION 3.01. Organization; Powers. . . . . . . . . . . . 32
SECTION 3.02. Authorization; Enforceability . . . . . . . 32
SECTION 3.03. Governmental Approvals; No Conflicts. . . . 32
SECTION 3.04. Financial Condition; No Material Adverse
Change. . . . . . . . . . . . . . . . . . 32
SECTION 3.05. Properties. . . . . . . . . . . . . . . . . 33
SECTION 3.06. Litigation and Environmental Matters. . . . 33
SECTION 3.07. Compliance with Laws and Agreements . . . . 34
SECTION 3.08. Investment and Holding Company Status . . . 34
SECTION 3.09. Taxes . . . . . . . . . . . . . . . . . . . 34
SECTION 3.10. ERISA . . . . . . . . . . . . . . . . . . . 34
SECTION 3.11. Disclosure. . . . . . . . . . . . . . . . . 34
SECTION 3.12. Subsidiaries. . . . . . . . . . . . . . . . 35
SECTION 3.13. Insurance . . . . . . . . . . . . . . . . . 35
SECTION 3.14. Labor Matters . . . . . . . . . . . . . . . 35
SECTION 3.15. Solvency. . . . . . . . . . . . . . . . . . 35
SECTION 3.16. Security Documents. . . . . . . . . . . . . 35
SECTION 3.17. Federal Reserve Regulations . . . . . . . . 36
SECTION 3.18. Senior Indebtedness . . . . . . . . . . . . 36
SECTION 3.19. Year 2000 . . . . . . . . . . . . . . . . . 36
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. . . . . . . . . . . . . . . 36
SECTION 4.02. Each Credit Event . . . . . . . . . . . . . 39
ARTICLE V
Affirmative Covenants
SECTION 5.01. Financial Statements and Other Information. 40
SECTION 5.02. Notices of Material Events. . . . . . . . . 41
SECTION 5.03. Information Regarding Collateral. . . . . . 41
SECTION 5.04. Existence; Conduct of Business. . . . . . . 42
SECTION 5.05. Payment of Obligations. . . . . . . . . . . 42
SECTION 5.06. Maintenance of Properties . . . . . . . . . 42
SECTION 5.07. Insurance . . . . . . . . . . . . . . . . . 42
SECTION 5.08. Books and Records, Inspection and Audit
Rights. . . . . . . . . . . . . . . . . . 42
SECTION 5.09. Compliance with Laws. . . . . . . . . . . . 42
SECTION 5.10. Use of Proceeds and Letters of Credit . . . 42
SECTION 5.11. Additional Subsidiaries . . . . . . . . . . 43
SECTION 5.12. Further Assurances. . . . . . . . . . . . . 43
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness; Certain Equity Securities . . 44
SECTION 6.02. Liens . . . . . . . . . . . . . . . . . . . 45
SECTION 6.03. Fundamental Changes . . . . . . . . . . . . 45
SECTION 6.04. Investments, Loans, Advances, Guarantees
and Acquisitions. . . . . . . . . . . . . 46
SECTION 6.05. Asset Sales . . . . . . . . . . . . . . . . 47
SECTION 6.06. Sale and Lease-Back Transactions. . . . . . 47
SECTION 6.07. Hedging Agreements. . . . . . . . . . . . . 48
SECTION 6.08. Restricted Payments; Certain Payments of
Indebtedness. . . . . . . . . . . . . . . 48
SECTION 6.09. Transactions with Affiliates. . . . . . . . 48
SECTION 6.10. Restrictive Agreements. . . . . . . . . . . 49
SECTION 6.11. Amendment of Material Documents . . . . . . 49
SECTION 6.12. Capital Expenditures. . . . . . . . . . . . 49
SECTION 6.13. Leverage Ratio. . . . . . . . . . . . . . . 49
SECTION 6.14. Consolidated Net Interest Expense
Coverage Ratio . . . . . . . . . . . . . 50
SECTION 6.15. Current Asset Coverage Ratio. . . . . . . . 50
SECTION 6.16. Fiscal Year . . . . . . . . . . . . . . . . 50
SECTION 6.17 Subsidiaries. . . . . . . . . . . . . . . . 50
ARTICLE VII
Events of Default. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE VIII
The Administrative Agent and the Collateral Agent. . . . . . 52
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices . . . . . . . . . . . . . . . . . . 54
SECTION 9.02. Waivers; Amendments . . . . . . . . . . . . 54
SECTION 9.03. Expenses; Indemnity; Damage Waiver. . . . . 55
SECTION 9.04. Successors and Assigns. . . . . . . . . . . 56
SECTION 9.05. Survival. . . . . . . . . . . . . . . . . . 58
SECTION 9.06. Counterparts; Integration; Effectiveness. . 58
SECTION 9.07. Severability. . . . . . . . . . . . . . . . 59
SECTION 9.08. Right of Set-off. . . . . . . . . . . . . . 59
SECTION 9.09. Governing Law; Jurisdiction; Consent to
Service of Process. . . . . . . . . . . . 59
SECTION 9.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . 60
SECTION 9.11. Headings. . . . . . . . . . . . . . . . . . 60
SECTION 9.12. Confidentiality . . . . . . . . . . . . . . 60
SECTION 9.13. Interest Rate Limitation. . . . . . . . . . 60
ECTION 9.14. Release of Collateral . . . . . . . . . . . 61
SCHEDULES:
Schedule 1.01(a) -- Mortgaged Properties
Schedule 1.01(b) -- Existing Letters of Credit
Schedule 2.01 -- Commitments
Schedule 3.05 -- Real Property
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.16(d) -- Mortgage Filing Offices
Schedule 6.01 -- Existing Indebtedness
Schedule 6.02 -- Existing Liens
Schedule 6.04 -- Existing Investments
Schedule 6.10 -- Existing Restrictions
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Opinion of Borrower's Counsel
Exhibit C -- Form of Opinion of Local Counsel
Exhibit D -- Form of Guarantee Agreement
Exhibit E -- Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit F -- Form of Pledge Agreement
Exhibit G -- Form of Security Agreement
Exhibit H -- Form of Mortgage
Exhibit I -- Form of Issuing Bank Report
CREDIT AGREEMENT dated as of April 22,
1998, among PHILLIPS-VAN HEUSEN CORPORATION, a
Delaware corporation, the LENDERS party hereto,
THE CHASE MANHATTAN BANK, as Administrative
Agent and Collateral Agent, and CITICORP USA,
INC., as Documentation Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this
Agreement, the following terms have the meanings specified below:
"ABR", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.
"Adjusted LIBO Rate" means, with respect to any
Eurodollar Borrowing for any Interest Period, an interest rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%)
equal to (a) the LIBO Rate for such Interest Period multiplied by
(b) the Statutory Reserve Rate.
"Administrative Agent" means The Chase Manhattan
Bank, in its capacity as administrative agent for the Lenders
hereunder.
"Administrative Questionnaire" means an
Administrative Questionnaire in a form supplied by the
Administrative Agent.
"Affiliate" means, with respect to a specified
Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
"Alternate Base Rate" means, for any day, a rate
per annum equal to the greatest of (a) the Prime Rate in effect on
such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus
1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of
such change in the Prime Rate, the Base CD Rate or the Federal
Funds Effective Rate, respectively.
"Applicable Percentage" means, with respect to any
Lender, the percentage of the total Commitments represented by
such Lender's Commitment. If the Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon
the Commitments most recently in effect, giving effect to any
assignments.
"Applicable Rate" means, subject to the second
paragraph of this definition, for any day with respect to any ABR
Loan or Eurodollar Loan or with respect to the commitment fees
payable hereunder, as applicable, the applicable rate per annum
set forth below under the caption "ABR Spread", "Eurodollar
Spread" or "Commitment Fee Rate", as applicable, based upon (a)
the Consolidated Net Interest Expense Coverage Ratio for the
period of four consecutive fiscal quarters of the Borrower most
recently ended as of such day and (b) the Ratings as of such day:
Consolidated
Net Interest S&P/Moody's ABR Eurodollar Commitment
Category Expense Ratings Spread Spread Fee Rate
Coverage
Ratio
1 Less than Lower than 1.00% 2.00% 0.05%
2.00 to 1.00 BB- or Ba3
2 Equal to or Equal to or 0.05% 1.50% 0.40%
greater than better than
2.00 to 1.00 BB- or Ba3
but less than but lower than
3.00 to 1.00 BB or Ba2
3 Equal to or Equal to or 0.25% 1.25% 0.35%
greater than better than BB
3.00 to 1.00 or Ba2 but
but less than lower than
3.75 to 1.00 BB+ or Ba1
4 Equal to or Equal to or 0.00% 1.00% 0.30%
greater than better than
3.75 to 1.00 BB+ or Ba1
but less than but lower than
4.75 to 1.00 BBB- or Baa3
5 Equal to or Equal to or 0.00% 0.75% 0.25%
greater than better than
4.75 to 1.00 BBB- or Baa3
2
Notwithstanding anything to the contrary set forth above, until
the delivery to the Administrative Agent, pursuant to Section
5.01(b), of the Borrower's consolidated financial statements for
the Borrower's first full fiscal quarter ending after the
Effective Date, the "Applicable Rate" shall be the applicable rate
per annum set forth in Category 3.
For purposes of the foregoing, (a) the Applicable
Rate shall be determined at any time by reference to the more
favorable to the Borrower of (i) the Ratings at such time and
(ii) the Consolidated Net Interest Expense Coverage Ratio in
effect at such time, (b) the Consolidated Net Interest Expense
Coverage Ratio as described above shall be determined as of the
end of each fiscal quarter of the Borrower's fiscal year based
upon the Borrower's consolidated financial statements delivered
pursuant to Section 5.01(a) or (b), (c) each change in the
Applicable Rate resulting from a change in the Consolidated Net
Interest Expense Coverage Ratio shall be effective during the
period commencing on and including the third day (such day, the
"Applicable Rate Determination Date") after the date of delivery
to the Administrative Agent of such consolidated financial
statements indicating such change and ending on the date
immediately preceding the effective date of the next such change,
provided that the Consolidated Net Interest Expense Coverage Ratio
shall be deemed to be in Category 1 (i) at any time that an Event
of Default has occurred and is continuing or (ii) at the option of
the Administrative Agent or the Required Lenders, if the Borrower
fails to deliver the consolidated financial statements required to
be delivered by it pursuant to Section 5.01(a) or (b), during the
period from the expiration of the time for delivery thereof until
such consolidated financial statements are delivered, (d) if the
Ratings established by Moody's and S&P shall fall within different
Categories, the Applicable Rate shall be based on the higher of
the two Ratings unless one of the two Ratings is two or more
Categories lower than the other, in which case the Applicable Rate
shall be determined by reference to the Category next above that
of the lower of the two Ratings, (e) if any Rating established by
Moody's or S&P shall be changed (other than as a result of a
change in the rating system of either Moody's or S&P), such change
shall be effect as of the date on which such change is first
announced publicly by the rating agency making such change, (f) if
the rating system of either Moody's or S&P shall change, the
Borrower and the Lenders shall negotiate in good faith to amend
the references to specific ratings in this definition to reflect
such changed rating system and (g) if either Moody's or S&P shall
cease to be in the business of rating corporate debt obligations,
the Borrower and the Lenders shall negotiate in good faith to
agree upon a substitute rating agency and to amend the references
to specific ratings in this definition to reflect the ratings used
by such substitute rating agency and, pending such agreement, the
Applicable Rate shall be determined on the basis of the Ratings
provided by the other rating agency and the Consolidated Net
Interest Expense Coverage Ratio.
"Applicable Rate Determination Date" has the
meaning assigned to such term in the definition of the term
"Applicable Rate".
3
"Assessment Rate" means, for any day, the annual
assessment rate in effect on such day that is payable by a member
of the Bank Insurance Fund classified as "well-capitalized" and
within supervisory subgroup "B" (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars
at the offices of such member in the United States, provided that
if, as a result of any change in any law, rule or regulation, it
is no longer possible to determine the Assessment Rate as
aforesaid, then the Assessment Rate shall be such annual rate as
shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and
acceptance entered into by a Lender and an assignee (with the
consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A
or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month
Secondary CD Rate multiplied by the Statutory Reserve Rate plus
(b) the Assessment Rate.
"Board" means the Board of Governors of the Federal
Reserve System of the United States of America.
"Borrower" means Phillips-Van Heusen Corporation, a
Delaware corporation.
"Borrowing" means (a) Revolving Loans of the same
Class and Type made, converted or continued on the same date and,
in the case of Eurodollar Loans, having a common Interest Period,
or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower
for a Revolving Borrowing in accordance with Section 2.03.
"Business Day" means any day that is not a
Saturday, Sunday or other day on which commercial banks in New
York City are authorized or required by law to remain closed,
provided that, when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London interbank
market.
"Capital Expenditures" means, for any period, (a)
the additions to property, plant and equipment and other capital
expenditures of the Borrower and its consolidated Subsidiaries
that are (or would be) set forth in a consolidated statement of
cash flows of the Borrower for such period prepared in accordance
4
with GAAP and (b) Capital Lease Obligations incurred by the
Borrower and its consolidated Subsidiaries during such period.
"Capital Lease Obligations" of any Person means the
obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in
accordance with GAAP.
"CERCLA" means the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Sec. 9601 et
seq.
"Change in Control" means (a) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as
currently in effect) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly
or indirectly, of more than 30% of the total ordinary voting power
of the capital stock of the Borrower, (b) occupation of a majority
of the seats on the Board of Directors of the Borrower by Persons
who were neither (i) nominated by the Board of Directors of the
Borrower nor (ii) appointed by directors so nominated, (c) the
occurrence of any change in control or similar event (however
denominated) with respect to the Borrower under and as defined in
the Subordinated Debt Documents or any other indenture or
agreement in respect of Material Indebtedness to which the
Borrower or a Subsidiary is a party or (d) the acquisition of
direct or indirect Control of the Borrower by any Person or group.
"Change in Law" means (a) the adoption of any law,
rule or regulation after the date of this Agreement, (b) any
change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date
of this Agreement or (c) compliance by any Lender or any Issuing
Bank (or, for purposes of Section 2.14(b), by any lending office
of such Lender or by such Lender's or such Issuing Bank's holding
company, if any) with any request, guideline or directive (whether
or not having the force of law) of any Governmental Authority made
or issued after the date of this Agreement.
"Class", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are Revolving Loans or Swingline Loans.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
5
"Collateral" means any and all "Collateral", as
such term is defined in any applicable Security Document.
"Collateral Agent" means the "Collateral Agent", as
such term is defined in the Security Agreement.
"Commitment" means, with respect to each Lender,
the aggregate commitment of such Lender to make Revolving Loans
and to acquire participations in Letters of Credit and Swingline
Loans hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.08 and (b) reduced or increased from
time to time pursuant to assignments by or to such Lender pursuant
to Section 9.04. The initial amount of each Lender's Commitment
is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Commitment,
as applicable. The initial aggregate amount of the Lenders'
Commitments is $325,000,000.
"Consolidated EBITDA" means, for any
four-fiscal-quarter period, Consolidated Net Income for such
period, plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income for such period,
the sum of (a) the aggregate amount of Consolidated Net Interest
Expense for such period, (b) the aggregate amount of income tax
expense for such period, (c) all amounts attributable to
depreciation and amortization for such period, (d) a one-time,
non-recurring restructuring charge of $132,700,000 taken in 1997,
(e) one-time, non-recurring charges not to exceed $8,500,000,
$8,000,000 and $3,500,000 taken or to be taken in fiscal years
1998, 1999 and 2000, respectively, in connection with the
Borrower's "Year 2000 Project" (as such term is defined in the
confidential offering memorandum prepared in connection with the
private placement of the Subordinated Debt) and (f) premiums not
to exceed $1,100,000 paid in connection with the redemption by the
Borrower of its 7.85% Series A Senior Notes Due 2002, 7.02% Series
B Senior Notes Due 1999 and 7.75% Series C Senior Notes Due 2002,
all as determined on a consolidated basis with respect to the
Borrower and the Subsidiaries in accordance with GAAP.
"Consolidated Net Interest Expense" means, for any
four-fiscal-quarter period, (a) the sum of (i) interest expense
(net of interest income), both expensed and capitalized (including
the interest component in respect of Capital Lease Obligations),
accrued or paid by the Borrower and the Subsidiaries during such
period and (ii) the aggregate amount of letter of credit fees paid
during such period, minus (b) all amounts attributable to the
amortization of financing fees related to the Transactions for
such period, all determined on a consolidated basis in accordance
with GAAP.
"Consolidated Net Interest Expense Coverage Ratio"
means, with respect to any period, the ratio of (a) Consolidated
6
EBITDA for such period to (b) Consolidated Net Interest Expense
for such period, all determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, for any period,
net income or loss of the Borrower and the Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP,
provided that there shall be excluded from such net income or loss
(a) the income of any Person in which any other Person (other than
the Borrower or any of the Subsidiaries or any director holding
qualifying shares in compliance with applicable law) has a joint
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of the
Subsidiaries by such Person during such period and (b) the income
(or loss) of any Person accrued prior to the date it becomes a
Subsidiary or is merged into or consolidated with the Borrower or
any of the Subsidiaries or the date that Person's assets are
acquired by the Borrower or any of the Subsidiaries.
"Control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. The terms
"Controlling" and "Controlled" have meanings correlative thereto.
"Current Asset Coverage Ratio" means, for the
Borrower and the Subsidiaries on a consolidated basis at any date,
the ratio of, without duplication, (a) the sum of the aggregate
amount of (i) inventory and trade accounts receivable (as such
amounts appear on the balance sheet of the Borrower most recently
delivered to the Administrative Agent and each Lender pursuant to
Section 5.01) (less the amount of applicable reserves determined
in accordance with GAAP) and (ii) the Trade Letters of Credit
outstanding to (b) the sum of the aggregate amount of (i) the
Debentures outstanding (as such amount appears on the balance
sheet of the Borrower most recently delivered to the
Administrative Agent and each Lender pursuant to Section 5.01) and
(ii) the Loans, the Trade Letters of Credit and any unreimbursed
LC Disbursements outstanding hereunder on such date.
"Debentures" means the 7-3/4% Debentures Due 2023
of the Borrower issued under the Debentures Indenture.
"Debentures Indenture" means the Indenture dated as
of November 1, 1993, by and between the Borrower and The Bank of
New York, as Trustee, governing the Debentures.
"Debentures Trustee" means The Bank of New York, as
Trustee under the Debentures Indenture, and its successors in such
capacity.
7
"Default" means any event or condition that
constitutes an Event of Default or that upon notice, lapse of time
or both would, unless cured or waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and
proceedings and the environmental matters disclosed in Schedule
3.06.
"dollars" or "$" refers to lawful money of the
United States of America.
"Effective Date" means the date on which the
conditions specified in Section 4.01 are satisfied (or waived in
accordance with Section 9.02).
"Environmental Laws" means all laws, rules,
regulations, codes, ordinances, orders, decrees, judgments,
injunctions, notices or binding agreements issued, promulgated or
entered into by or with any Governmental Authority, relating in
any way to the environment, preservation or reclamation of natural
resources, handling, treatment, storage, disposal, Release or
threatened Release of any Hazardous Material or to health and
safety matters.
"Environmental Liability" means any liability,
contingent or otherwise (including any liability for damages,
natural resource damage, costs of environmental remediation,
administrative oversight costs, fines, penalties or indemnities),
of the Borrower or any Subsidiary directly or indirectly resulting
from or based upon (a) violation of any Environmental Law, (b) the
generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous
Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is
assumed or imposed with respect to any of the foregoing.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time.
"ERISA Affiliate" means any trade or business
(whether or not incorporated) that, together with the Borrower, is
treated as a single employer under Section 414(b) or (c) of the
Code or, solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414
of the Code.
"ERISA Event" means (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued
thereunder with respect to a Plan (other than an event for which
8
the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (c) the filing pursuant to Section 412(d)
of the Code or Section 303(d) of ERISA of an application for a
waiver of the minimum funding standard with respect to any Plan;
(d) the incurrence by the Borrower or any of its ERISA Affiliates
of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any
ERISA Affiliate from the PBGC or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or
to appoint a trustee to administer any Plan; (f) the incurrence by
the Borrower or any of its ERISA Affiliates of any liability with
respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any
ERISA Affiliate of any notice, or the receipt by any Multiemployer
Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be,
insolvent or in reorganization, within the meaning of Title IV of
ERISA.
"Eurodollar", when used in reference to any Loan or
Borrowing, refers to whether such Loan, or the Loans comprising
such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such
term in Article VII.
"Excluded Taxes" means, with respect to the
Administrative Agent, any Lender, any Issuing Bank or any other
recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United
States of America, or by the jurisdiction (or any political
subdivision thereof or taxing authority therein) under the laws of
which such recipient is organized or in which its principal office
is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any
other jurisdiction described in clause (a) above and (c) in the
case of a Foreign Lender (other than an assignee pursuant to a
request by the Borrower under Section 2.18(b)), any withholding
tax that (i) is in effect and would apply to amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a
party to this Agreement (or designates a new lending office),
except to the extent that such Foreign Lender (or its assignor, if
any) would have been entitled, at the time of designation of a new
lending office (or assignment), to receive additional amounts from
the Borrower with respect to any withholding tax pursuant to
Section 2.16(a) or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.17(e).
"Existing Credit Agreement" means the Credit
Agreement dated as of December 16, 1993, as amended, among the
Borrower, the financial institutions named therein and Bankers
Trust Company, as agent.
9
"Existing Issuing Bank" means each Lender that is
listed on Schedule 1.01(b) as an issuer of an Existing Letter of
Credit, in each case for so long as any Existing Letter of Credit
issued by such Existing Issuing Bank shall remain outstanding.
"Existing Letter of Credit" means any letter of
credit that (a) was issued under the Existing Credit Agreement by
an Existing Issuing Bank, (b) is outstanding on the Effective Date
and (c) is listed in Schedule 1.01(b).
"Federal Funds Effective Rate" means, for any day,
the weighted average (rounded upwards, if necessary, to the next
1/100 of 1%) of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the quotations
for such day for such transactions received by the Administrative
Agent from three Federal funds brokers of recognized standing
selected by it.
"Financial Officer" means the chief financial
officer, principal accounting officer, treasurer or controller of
the Borrower.
"Foreign Lender" means any Lender that is organized
under the laws of a jurisdiction other than the United States of
America or any State thereof or the District of Columbia.
"Foreign Subsidiary" means any Subsidiary that is
organized under the laws of a jurisdiction other than the United
States of America or any State thereof or the District of
Columbia.
"GAAP" means generally accepted accounting
principles in the United States of America.
"Governmental Authority" means the government of
the United States of America, any other nation or any political
subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank
or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or
pertaining to government.
"Guarantee" of or by any Person (the "guarantor")
means, without duplication, any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether
10
directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance
or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose
of assuring the owner of such Indebtedness or other obligation of
the payment thereof, (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of
the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to
support such Indebtedness or obligation, provided that the term
"Guarantee" shall not include endorsements for collection or
deposit in the ordinary course of business.
"Guarantee Agreement" means the Guarantee
Agreement, substantially in the form of Exhibit D, made by the
Subsidiary Loan Parties in favor of the Collateral Agent for the
benefit of the Secured Parties.
"Hazardous Materials" means all explosive or
radioactive substances or wastes and all hazardous or toxic
substances, wastes or other pollutants, including petroleum or
petroleum distillates, asbestos or asbestos containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated
pursuant to any Environmental Law, including any material listed
as a hazardous substance under Section 101(14) of CERCLA.
"Hedging Agreement" means any interest rate
protection agreement, foreign currency exchange agreement,
commodity price protection agreement or other interest or currency
exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without
duplication, (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds
(other than bonds of the type referred to in clause (d) of the
definition of the term "Permitted Encumbrance"), debentures, notes
or similar instruments, (c) all obligations of such Person under
conditional sale or other title retention agreements relating to
property acquired by such Person, (d) all obligations of such
Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the
ordinary course of business), (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any
Lien on property owned or acquired by such Person, whether or not
the Indebtedness secured thereby has been assumed, (f) all
Guarantees by such Person of Indebtedness of others, (g) all
Capital Lease Obligations of such Person, (h) all obligations,
contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all
obligations, contingent or otherwise, of such Person in respect of
bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any
11
partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's
ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded
Taxes.
"Indemnity, Subrogation and Contribution
Agreement" means the Indemnity, Subrogation and Contribution
Agreement, substantially in the form of Exhibit E, among the
Borrower, the Subsidiary Loan Parties and the Administrative
Agent.
"Information Memorandum" means the Confidential
Information Memorandum dated March 1998 relating to the Borrower
and the Transactions.
"Interest Election Request" means a request by the
Borrower to convert or continue a Revolving Borrowing in
accordance with Section 2.07.
"Interest Payment Date" means (a) with respect to
any ABR Loan (other than a Swingline Loan), the last day of each
January, April, July and October, (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to
the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three
months' duration, each day prior to the last day of such Interest
Period that occurs at intervals of three months' duration after
the first day of such Interest Period and (c) with respect to any
Swingline Loan, the day that such Loan is required to be repaid.
"Interest Period" means, with respect to any
Eurodollar Borrowing, the period commencing on the date of such
Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter,
as the Borrower may elect, provided that (a) if any Interest
Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on
the next preceding Business Day and (b) any Interest Period that
commences on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period.
For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be
the effective date of the most recent conversion or continuation
of such Borrowing.
"Issuing Bank" means (a) any Existing Issuing Bank,
(b) the Primary Issuing Bank and (c) any other Lender designated
by the Borrower from time to time with the consent of the
12
Administrative Agent (which consent shall not be unreasonably
withheld) and such Lender, provided that the total number of
Issuing Banks at any time under this Agreement shall not exceed
five. Each Issuing Bank may, with the consent of the Borrower
(which consent shall not be unreasonably withheld), arrange for
one or more Letters of Credit to be issued by Affiliates of such
Issuing Bank, in which case the term "Issuing Bank" shall include
any such Affiliate with respect to Letters of Credit issued by
such Affiliate.
"LC Availability Period" means the period from and
including the Effective Date to but excluding the earlier of (a)
the date that is five Business Days prior to the Maturity Date and
(b) the date of termination of the Commitments.
"LC Disbursement" means a payment made by any
Issuing Bank pursuant to a Letter of Credit issued by such Issuing
Bank.
"LC Exposure" means, at any time, the sum of (a)
the aggregate undrawn amount of all outstanding Letters of Credit
at such time plus (b) the aggregate amount of all LC Disbursements
that have not yet been reimbursed by or on behalf of the Borrower
at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01
and any other Person that shall have become a party hereto
pursuant to an Assignment and Acceptance, other than any such
Person that ceases to be a party hereto pursuant to an Assignment
and Acceptance. Unless the context otherwise requires, the term
"Lenders" includes the Swingline Lender.
"Letter of Credit" means any letter of credit
(whether a Stand-by Letter of Credit or a Trade Letter of Credit)
issued or deemed to have been issued pursuant to this Agreement,
including each Existing Letter of Credit.
"Leverage Ratio" means, with respect to any period,
the ratio of (a) Total Debt as of the last day of such period to
(b) Consolidated EBITDA for such period, all determined on a
consolidated basis in accordance with GAAP.
"LIBO Rate" means, with respect to any Eurodollar
Borrowing for any Interest Period, the rate appearing on Page 3750
of the Telerate Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided
on such page of such Service, as determined by the Administrative
Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London
interbank market) at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period,
as the rate for dollar deposits with a maturity comparable to such
13
Interest Period. In the event that such rate is not available at
such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Borrowing for such Interest Period shall be the
rate at which dollar deposits of $5,000,000 and for a maturity
comparable to such Interest Period are offered by the principal
London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any
mortgage, deed of trust, lien, pledge, hypothecation, encumbrance,
charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as
any of the foregoing) relating to such asset and (c) in the case
of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Loan Documents" means this Agreement, the Letters
of Credit, the Guarantee Agreement, the Indemnity, Subrogation and
Contribution Agreement and the Security Documents.
"Loan Parties" means the Borrower and the
Subsidiary Loan Parties.
"Loans" means the loans made by the Lenders to the
Borrower pursuant to this Agreement.
"Margin Stock" has the meaning assigned to such
term in Regulation U.
"Material Adverse Effect" means a material adverse
effect on (a) the business, assets, operations, properties,
condition (financial or otherwise), contingent liabilities or
material agreements of the Borrower and the Subsidiaries taken as
a whole, (b) the ability of any Loan Party to perform its
obligations under any Loan Document or (c) the rights of or
benefits available to the Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other
than the Loans and Letters of Credit), or obligations in respect
of one or more Hedging Agreements, of any one or more of the
Borrower and the Subsidiaries in an outstanding aggregate
principal amount exceeding $5,000,000. For purposes of
determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any
Hedging Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower
or such Subsidiary would be required to pay if such Hedging
Agreement were terminated at such time.
14
"Maturity Date" means April 22, 2003.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means a mortgage, deed of trust,
assignment of leases and rents, leasehold mortgage or other
security document granting a Lien on any Mortgaged Property to
secure the Obligations. Each Mortgage shall be satisfactory in
form and substance to the Collateral Agent.
"Mortgaged Property" means, initially, each parcel
of real property and the improvements thereto owned by a Loan
Party and identified on Schedule 1.01(a), and includes each other
parcel of real property and improvements thereto with respect to
which a Mortgage is granted pursuant to Section 5.11 or 5.12.
"Multiemployer Plan" means a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Note Purchase Agreements" means the Note Purchase
Agreements, dated as of October 1, 1992, as amended, originally
between the Borrower and each of the following purchasers: The
Equitable Life Assurance Society of the United States, Equitable
Variable Life Insurance Company, UNUM Life Insurance Company of
America, Nationwide Life Insurance Company, Employers Life
Insurance Company of Wausau and Lutheran Brotherhood.
"Obligations" has the meaning assigned to such term
in the Security Agreement.
"Other Taxes" means any and all current or future
recording, stamp, documentary, excise, transfer, sales, property
or similar taxes, charges or levies arising from any payment made
under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.
"PBGC" means the Pension Benefit Guaranty
Corporation referred to and defined in ERISA and any successor
entity performing similar functions.
"Perfection Certificate" means a certificate in the
form of Annex 1 to the Security Agreement or any other form
approved by the Collateral Agent.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet
due or are being contested in compliance with Section
5.04;
15
(b) carriers', warehousemen's, mechanics',
materialmen's, repairmen's and other like Liens imposed
by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than
30 days or are being contested in compliance with
Section 5.04;
(c) pledges and deposits made in the ordinary
course of business in compliance with workers'
compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety
and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the
ordinary course of business;
(e) judgment liens in respect of judgments that do
not constitute an Event of Default under clause (k) of
Article VII;
(f) easements, zoning restrictions, rights-of-way
and similar encumbrances on real property imposed by
law, granted or arising in the ordinary course of
business that do not secure any monetary obligations and
do not materially detract from the value of the affected
property or interfere with the ordinary conduct of
business of the Borrower or any Subsidiary;
(g) any interest of a landlord in or to property of
the tenant imposed by law, arising in the ordinary
course of business and securing lease obligations that
are not overdue by more than 60 days or are being
contested in compliance with Section 5.05, or any
possessory rights of a lessee to the leased property
under the provisions of any lease permitted by the terms
of this Agreement; and
(h) Liens of a collection bank arising in the
ordinary course of business under Sec. 4-208 of the
Uniform
Commercial Code in effect in the relevant jurisdiction,
provided that the term "Permitted Encumbrances" shall not include
any Lien securing Indebtedness.
"Permitted Investments" means:
(a) direct obligations of, or obligations the
principal of and interest on which are unconditionally
guaranteed by, the United States of America (or by any
agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of
America), in each case maturing within one year from the
date of acquisition thereof;
16
(b) investments in commercial paper maturing within
270 days from the date of acquisition thereof and
having, at such date of acquisition, the highest credit
rating obtainable from S&P or from Moody's;
(c) investments in certificates of deposit,
banker's acceptances and time deposits maturing within
180 days from the date of acquisition thereof issued or
guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of
any commercial bank organized under the laws of the
United States of America or any State thereof that has a
combined capital and surplus and undivided profits of
not less than $500,000,000;
(d) fully collateralized repurchase agreements with
a term of not more than 30 days for securities described
in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause
(c) above; and
(e) shares of funds registered under the Investment
Company Act of 1940, as amended, that have assets of at
least $500,000,000 and invest only in obligations
described in clauses (a) through (d) above to the extent
that such shares are rated by Moody's or S&P in one of
the two highest rating categories assigned by such
agency for shares of such nature.
"Person" means any natural person, corporation,
limited liability company, trust, joint venture, association,
company, partnership, Governmental Authority or other entity.
"Plan" means any employee pension benefit plan
(other than a Multiemployer Plan) subject to the provisions of
Title IV of ERISA or Section 412 of the Code or Section 302 of
ERISA, and in respect of which the Borrower or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"Pledge Agreement" means the Pledge Agreement,
substantially in the form of Exhibit F, among the Borrower, the
Subsidiaries party thereto and the Collateral Agent for the
benefit of the Secured Parties.
"Primary Issuing Bank" means (a) The Chase
Manhattan Bank, in its capacity as issuer of Letters of Credit
hereunder, and (b) any Lender or Lenders becoming its successor or
successors in such capacity as provided in Section 2.05(i).
"Prime Rate" means the rate of interest per annum
publicly announced from time to time by The Chase Manhattan Bank
as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being
effective.
17
"Pyramid Partners" means Pyramid Partners AB, a
Swedish corporation.
"Ratings" means the rating by each of S&P and
Moody's applicable to the Borrower's senior, unsecured,
non-credit-enhanced long-term debt for borrowed money (or, in the
absence of such rated debt, the corporate credit ratings
established by S&P and Moody's for the Borrower).
"Register" has the meaning set forth in Section
9.04.
"Regulation T" means Regulation T of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as
from time to time in effect and all official rulings and
interpretations thereunder or thereof.
"Related Parties" means, with respect to any
specified Person, such Person's Affiliates and the respective
directors, officers, employees, agents and advisors of such Person
and such Person's Affiliates.
"Release" has the meaning set forth in Section
101(22) of CERCLA.
"Required Lenders" means, at any time, Lenders
having Revolving Exposures and unused Commitments representing
more than 50% of the sum of the total Revolving Exposures and
unused Commitments at such time.
"Restricted Payment" means any dividend or other
distribution (whether in cash, securities or other property) with
respect to any shares of any class of capital stock of the
Borrower or any Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any such
shares of capital stock of the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such shares of
capital stock of the Borrower or any Subsidiary.
"Revolving Availability Period" means the period
from and including the Effective Date to but excluding the earlier
of the Maturity Date and the date of termination of the
Commitments.
18
"Revolving Exposure" means, with respect to any
Lender at any time, the sum of the outstanding principal amount of
such Lender's Revolving Loans and its LC Exposure and Swingline
Exposure at such time.
"Revolving Loan" means a loan made pursuant to
Section 2.01.
"S&P" means Standard & Poor's Ratings Service.
"Secured Parties" has the meaning assigned to such
term in the Security Agreement.
"Security Agreement" means the Security Agreement,
substantially in the form of Exhibit G, among the Borrower, the
Subsidiary Loan Parties and the Collateral Agent for the benefit
of the Secured Parties.
"Security Documents" means the Security Agreement,
the Pledge Agreement, the Mortgages and each other security
agreement, mortgage or other instrument or document executed and
delivered pursuant to Section 5.11 or 5.12 to secure any of the
Obligations.
"Senior Notes" means the 7.85% Series A Senior
Notes Due 2002 of the Borrower, the 7.02% Series B Senior Notes
Due 1999 of the Borrower and the 7.75% Series C Senior Notes Due
2002 of the Borrower issued pursuant to the Note Purchase
Agreements.
"Stand-by LC Disbursement" means a payment made by
any Issuing Bank pursuant to a Stand-by Letter of Credit issued by
such Issuing Bank.
"Stand-by LC Exposure" means, at any time, the sum
of (a) the aggregate undrawn amount of all outstanding Stand-by
Letters of Credit at such time plus (b) the aggregate amount of
all Stand-by LC Disbursements that have not yet been reimbursed by
or on behalf of the Borrower at such time.
"Stand-by Letter of Credit" means a Letter of
Credit other than a Trade Letter of Credit.
"Statutory Reserve Rate" means a fraction
(expressed as a decimal), the numerator of which is the number one
and the denominator of which is the number one minus the aggregate
of the maximum reserve percentages (including any marginal,
special, emergency or supplemental reserves) expressed as a
decimal established by the Board to which the Administrative Agent
is subject (a) with respect to the Base CD Rate, for new
negotiable nonpersonal time deposits in dollars of over $100,000
with maturities approximately equal to three months and (b) with
respect to the Adjusted LIBO Rate, for eurocurrency funding
19
(currently referred to as "Eurocurrency Liabilities" in Regulation
D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be
deemed to constitute eurocurrency funding and to be subject to
such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time
to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in any
reserve percentage.
"Subordinated Debt" means (a) the unsecured
subordinated notes to be issued by the Borrower on or prior to the
Effective Date in the aggregate principal amount of $150,000,000
and (b) the Indebtedness represented thereby.
"Subordinated Debt Documents" means the indenture
under which the Subordinated Debt is issued and all other
instruments, agreements and other documents evidencing or
governing the Subordinated Debt or providing for any Guarantee or
other right in respect thereof.
"subsidiary" means, with respect to any Person (the
"parent") at any date, any corporation, limited liability company,
partnership, association or other entity the accounts of which
would be consolidated with those of the parent in the parent's
consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other
ownership interests representing more than 50% of the equity or
more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held, or (b) that is,
as of such date, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower,
provided that the term "Subsidiary" shall not include (a) Pyramid
Partners prior to such time as the Borrower shall own, directly or
indirectly, more than 50% of the share capital of Pyramid Partners
and (b) Productos Textilos S.A., a Honduras joint venture.
"Subsidiary Loan Party" means any Subsidiary that
is not a Foreign Subsidiary.
"Swingline Exposure" means, at any time, the
aggregate principal amount of all Swingline Loans outstanding at
such time. The Swingline Exposure of any Lender at any time shall
be its Applicable Percentage of the total Swingline Exposure at
such time.
"Swingline Lender" means The Chase Manhattan Bank,
in its capacity as lender of Swingline Loans hereunder.
20
"Swingline Loan" means a loan made pursuant to
Section 2.04.
"Taxes" means any and all current or future taxes,
levies, imposts, duties, deductions, charges or withholdings
imposed by any Governmental Authority.
"Three-Month Secondary CD Rate" means, for any day,
the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day is not a
Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current
practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day)
or, if such rate is not so reported on such day or such next
preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money
center banks in New York City received at approximately 10:00
a.m., New York City time, on such day (or, if such day is not a
Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Total Debt" means, as of any date of
determination, without duplication, (a) the aggregate principal
amount of Indebtedness of the Borrower and the Subsidiaries
outstanding as of such date, determined on a consolidated basis in
accordance with GAAP (other than (i) Indebtedness of the type
referred to in clause (h) of the definition of the term
"Indebtedness", except to the extent of any unreimbursed drawings
thereunder, and (ii) the aggregate principal amount of Revolving
Loans and Swingline Loans outstanding as of such date), plus (b)
the average principal amount of Revolving Loans and Swingline
Loans outstanding as of the last day of each fiscal month of the
Borrower during the 12-fiscal-month period immediately preceding
or ending on such date, provided that for purposes of calculating
the amounts determined pursuant to this clause (b) as of the last
day of each of the fiscal quarters of the Borrower ending July
1998, October 1998 and January 1999, the principal amount of
Revolving Loans and Swingline Loans outstanding as of the end of
August 1997, September 1997, October 1997, November 1997, December
1997, January 1998, February 1998, March 1998 and April 1998 shall
be deemed to be $67,200,000, $83,200,000, $85,200,000,
$68,400,000, $400,000, $7,900,000, $66,300,000, $60,400,000 and
$74,400,000, respectively.
"Trade Letter of Credit" means any Letter of Credit
that (a) is issued in support of trade obligations incurred in the
ordinary course of business and (b) includes, as a condition to
drawing thereunder, the presentation to the applicable Issuing
Bank of negotiable bills of lading, invoices and related documents
sufficient, in the judgment of such Issuing Bank, to create a
valid and perfected security interest in the goods covered
thereby.
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"Transactions" means the execution, delivery and
performance by each Loan Party of the Loan Documents to which it
is to be a party, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder and the
issuance of the Subordinated Debt and the use of the proceeds
thereof.
"Type", when used in reference to any Loan or
Borrowing, refers to whether the rate of interest on such Loan, or
on the Loans comprising such Borrowing, is determined by reference
to the Adjusted LIBO Rate or the Alternate Base Rate.
"Withdrawal Liability" means liability to a
Multiemployer Plan as a result of a complete or partial withdrawal
from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and
Borrowings. For purposes of this Agreement, Loans may be
classified and referred to by Class (e.g., a "Revolving Loan") or
by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a
"Eurodollar Revolving Loan"). Borrowings also may be classified
and referred to by Class (e.g., a "Revolving Borrowing") or by
Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g.,
a "Eurodollar Revolving Borrowing").
SECTION 1.03. Terms Generally. The definitions of
terms herein shall apply equally to the singular and plural forms
of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and
neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation".
The word "will" shall be construed to have the same meaning and
effect as the word "shall". Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set
forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c) the
words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules
shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning
and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as
otherwise expressly provided herein, all terms of an accounting or
financial nature shall be construed in accordance with GAAP, as in
22
effect from time to time, provided that, if the Borrower notifies
the Administrative Agent that the Borrower requests an amendment
to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application
thereof on the operation of such provision (or if the
Administrative Agent notifies the Borrower that the Required
Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such
provision shall be interpreted on the basis of GAAP as in effect
and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such
provision amended in accordance herewith.
ARTICLE II
The Credits
SECTION 2.01. Commitments. Subject to the terms
and conditions set forth herein, each Lender agrees to make
Revolving Loans to the Borrower from time to time during the
Revolving Availability Period in an aggregate principal amount
that will not result in such Lender's Revolving Exposure exceeding
such Lender's Commitment. Within the foregoing limits and subject
to the terms and conditions set forth herein, the Borrower may
borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each
Loan (other than a Swingline Loan) shall be made as part of a
Borrowing consisting of Loans of the same Type made by the Lenders
ratably in accordance with their respective Commitments. The
failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder,
provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make
Loans as required.
(b) Subject to Section 2.13, each Revolving
Borrowing shall be comprised entirely of ABR Loans or Eurodollar
Loans as the Borrower may request in accordance herewith.
Notwithstanding anything to the contrary contained herein, all
Borrowings made on the Effective Date shall be ABR Borrowings.
Each Swingline Loan shall be an ABR Loan. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan,
provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with
the terms of this Agreement.
(c) At the commencement of each Interest Period
for any Eurodollar Borrowing, such Borrowing shall be in an
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aggregate amount that is an integral multiple of $100,000 and not
less than $5,000,000. At the time that each ABR Revolving
Borrowing is made, such Borrowing shall be in an aggregate amount
that is an integral multiple of $100,000 and not less than
$1,000,000 provided that an ABR Revolving Borrowing may be in an
aggregate amount that is equal to the entire unused balance of the
total Commitments or that is required to finance the reimbursement
of an LC Disbursement as contemplated by Section 2.05(e). Each
Swingline Loan shall be in an amount that is an integral multiple
of $100,000 and not less than $200,000, provided that a Swingline
Loan may be in an aggregate amount that is, subject to Section
2.04(a) and Section 2.05(b), equal to the entire unused balance of
the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Borrowings of more than one Type and Class may be
outstanding at the same time, provided that there shall not at any
time be more than a total of 10 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to
elect to convert or continue, any Borrowing if the Interest Period
requested with respect thereto would end after the Maturity Date.
SECTION 2.03. Requests for Borrowings. To
request a Revolving Borrowing, the Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case
of a Eurodollar Borrowing, not later than 11:00 a.m., New York
City time, three Business Days before the date of the proposed
Borrowing or (b) in the case of an ABR Borrowing, not later than
11:00 a.m., New York City time, one Business Day before the date
of the proposed Borrowing, provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC
Disbursement as contemplated by Section 2.05(e) may be given not
later than 12:00 noon, New York City time, on the date of the
proposed Borrowing. Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing
Request in a form approved by the Administrative Agent and signed
by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with
Section 2.02:
(i) the aggregate amount of such Borrowing;
(ii) the date of such Borrowing, which shall be a
Business Day;
(iii) subject to the second sentence of Section
2.02(b), whether such Borrowing is to be an ABR
Borrowing or a Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the
initial Interest Period to be applicable thereto, which
shall be a period contemplated by the definition of the
term "Interest Period"; and
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(v) the location and number of the Borrower's
account to which funds are to be disbursed, which shall
comply with the requirements of Section 2.06.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest
Period is specified with respect to any requested Eurodollar
Revolving Borrowing, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the
details thereof and of the amount of such Lender's Loan to be made
as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to
the terms and conditions set forth herein, the Swingline Lender
agrees to make Swingline Loans to the Borrower from time to time
during the Revolving Availability Period, in an aggregate
principal amount at any time outstanding that will not result in
(i) the aggregate principal amount of outstanding Swingline Loans
exceeding $10,000,000 or (ii) the sum of the total Revolving
Exposures exceeding the total Commitments, provided that the
Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing
limits and subject to the terms and conditions set forth herein,
the Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower
shall notify the Administrative Agent of such request by telephone
(confirmed by telecopy), not later than 2:00 p.m., New York City
time, on the day of a proposed Swingline Loan. Each such notice
shall be irrevocable and shall specify the requested date (which
shall be a Business Day) and amount of the requested Swingline
Loan. The Administrative Agent will promptly advise the Swingline
Lender of any such notice received from the Borrower. The
Swingline Lender shall make each Swingline Loan available to the
Borrower by means of a credit to the general deposit account of
the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e), by remittance to the
applicable Issuing Bank) by 3:00 p.m., New York City time, on the
requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice
given to the Administrative Agent not later than 2:00 p.m., New
York City time, on any Business Day require the Lenders to acquire
participations on such Business Day in all or a portion of the
Swingline Loans outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Lenders will
participate. Promptly upon receipt of such notice, the
25
Administrative Agent will give notice thereof to each Lender,
specifying in such notice such Lender's Applicable Percentage of
such Swingline Loan or Loans. Each Lender hereby absolutely and
unconditionally agrees, upon receipt of notice as provided above,
to pay to the Administrative Agent, for the account of the
Swingline Lender, such Lender's Applicable Percentage of such
Swingline Loan or Loans. Each Lender acknowledges and agrees that
its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional and shall
not be affected by any circumstance whatsoever, including the
occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction
whatsoever. Each Lender shall comply with its obligation under
this paragraph by wire transfer of immediately available funds, in
the same manner as provided in Section 2.06 with respect to Loans
made by such Lender (and Section 2.06 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Swingline Lender
the amounts so received by it from the Lenders. The
Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline
Loan shall be made to the Administrative Agent and not to the
Swingline Lender. Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in
respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts
received by the Administrative Agent shall be promptly remitted by
the Administrative Agent to the Lenders that shall have made their
payments pursuant to this paragraph and to the Swingline Lender,
as their interests may appear. The purchase of participations in
a Swingline Loan pursuant to this paragraph shall not relieve the
Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General.
Subject to and upon the terms and conditions set forth herein, (i)
each of the Existing Letters of Credit shall, upon the initial
funding of Loans on the Effective Date and without any further
action on the part of the applicable Issuing Bank or any other
Person, be deemed for all purposes to have been issued by such
Issuing Bank on the Effective Date as a Letter of Credit
hereunder, (ii) each Issuing Bank agrees to issue, amend, renew or
extend Letters of Credit for the account of the Borrower from time
to time during the LC Availability Period, provided that (and upon
issuance, amendment, renewal or extension of each Letter of Credit
the Borrower shall be deemed to represent and warrant that), after
giving effect to such issuance, amendment, renewal or extension
(A) the LC Exposure shall not exceed $250,000,000, (B) the
Stand-by LC Exposure shall not exceed $25,000,000 and (C) the
total Revolving Exposures shall not exceed the total Commitments
and (iii) the Borrower may request the issuance of, and each
Issuing Bank will issue, Letters of Credit for the Borrower's
account, in a form reasonably acceptable to the applicable Issuing
Bank, at any time and from time to time during the LC Availability
Period. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any
form of letter of credit application or other agreement submitted
by the Borrower to, or entered into by the Borrower with, an
Issuing Bank relating to any Letter of Credit, the terms and
conditions of this Agreement shall control.
26
(b) Notice of Issuance, Amendment, Renewal,
Extension; Certain Conditions. To request the issuance of a Trade
Letter of Credit (or the amendment, renewal or extension of an
outstanding Trade Letter of Credit), the Borrower shall transmit
by electronic communication (or hand deliver or telecopy) to the
applicable Issuing Bank a notice requesting the issuance of a
Trade Letter of Credit, or identifying the Trade Letter of Credit
to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a
Business Day), the date on which such Trade Letter of Credit is to
expire (which shall comply with paragraph (c) of this Section),
the amount of such Trade Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Trade Letter of
Credit. To request the issuance of a Stand-by Letter of Credit
(or the amendment, renewal or extension of an outstanding Stand-by
Letter of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so
have been approved by the applicable Issuing Bank) to the
applicable Issuing Bank and the Administrative Agent (reasonably
in advance of the requested date of issuance, amendment, renewal
or extension) a notice requesting the issuance of a Stand-by
Letter of Credit, or identifying the Stand-by Letter of Credit to
be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a
Business Day), the date on which such Stand-by Letter of Credit is
to expire (which shall comply with paragraph (c) of this Section),
the amount of such Letter of Credit, the name and address of the
beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Stand-by Letter
of Credit. With respect to any Letter of Credit, if requested by
the applicable Issuing Bank, the Borrower also shall submit a
letter of credit application on such Issuing Bank's standard form
in connection with any request for a Letter of Credit.
(c) Expiration Date. Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i)
the date one year after the date of the issuance of such Letter of
Credit (or, in the case of any renewal or extension thereof, one
year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Maturity Date.
(d) Participations. By the issuance (or, in the
case of the Existing Letters of Credit, deemed issuance) of a
Letter of Credit (or an amendment to a Letter of Credit increasing
the amount thereof) and without any further action on the part of
the applicable Issuing Bank or the Lenders, such Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from
such Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender
hereby absolutely and unconditionally agrees to pay to the
Administrative Agent, for the account of the applicable Issuing
Bank, such Lender's Applicable Percentage of each LC Disbursement
27
made by such Issuing Bank and not reimbursed by the Borrower on
the date due as provided in paragraph (e) of this Section, or of
any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and
shall not be affected by any circumstance whatsoever, including
any amendment, renewal or extension of any Letter of Credit or the
occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If the applicable Issuing Bank
shall make any LC Disbursement in respect of a Letter of Credit,
the Borrower shall reimburse such LC Disbursement by paying to the
applicable Issuing Bank an amount equal to such LC Disbursement
not later than the close of business on the date that such LC
Disbursement is made, if the Borrower shall have received notice
of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the
Borrower prior to 10:00 a.m., New York City time, on such date,
then not later than the close of business on (i) the Business Day
that the Borrower receives such notice, if such notice is received
prior to 10:00 a.m., New York City time, on the day of receipt, or
(ii) the Business Day immediately following the day that the
Borrower receives such notice, if such notice is not received
prior to 10:00 a.m., New York City time, on the day of receipt,
provided that the Borrower may, subject to the conditions to
borrowing set forth herein, request in accordance with Section
2.03 or 2.04 that such LC Disbursement be reimbursed with an ABR
Revolving Borrowing or Swingline Loan in an equivalent amount and,
to the extent so financed, the Borrower's obligation to make such
payment shall be discharged and replaced by the resulting ABR
Revolving Borrowing or Swingline Loan. If the Borrower fails to
make such payment when due, the applicable Issuing Bank shall
notify the Administrative Agent, which shall notify each Lender of
the applicable LC Disbursement, the payment then due from the
Borrower in respect thereof and such Lender's Applicable
Percentage thereof. Promptly following receipt of such notice,
each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.06 with respect to Loans made by
such Lender (and Section 2.06 shall apply, mutatis mutandis, to
the payment obligations of the Lenders), and the Administrative
Agent shall promptly pay to the applicable Issuing Bank the
amounts so received by it from the Lenders. Promptly following
receipt by the Administrative Agent of any payment from the
Borrower pursuant to this paragraph, the Administrative Agent
shall distribute such payment to the applicable Issuing Bank or,
to the extent that Lenders have made payments pursuant to this
paragraph to reimburse such Issuing Bank, then to such Lenders and
such Issuing Bank as their interests may appear. Any payment made
by a Lender pursuant to this paragraph to reimburse any Issuing
28
Bank for any LC Disbursement (other than the funding of ABR
Revolving Loans or a Swingline Loan as contemplated above) shall
not constitute a Loan and shall not relieve the Borrower of its
obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's
obligation to reimburse LC Disbursements as provided in paragraph
(e) of this Section shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with
the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or
enforceability of any Letter of Credit or this Agreement, or any
term or provision therein, (ii) any draft or other document
presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein
being untrue or inaccurate in any respect, (iii) payment by the
applicable Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event
or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section,
constitute a legal or equitable discharge of, or provide a right
of set-off against, the Borrower's obligations hereunder. None of
the Administrative Agent, the Lenders, any Issuing Bank or any of
their Related Parties shall have any liability or responsibility
by reason of or in connection with the issuance or transfer of any
Letter of Credit or any payment or failure to make any payment
thereunder (irrespective of any of the circumstances referred to
in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence
arising from causes beyond the control of such Issuing Bank,
provided that the foregoing shall not be construed to excuse the
applicable Issuing Bank from liability to the Borrower to the
extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to
the extent permitted by applicable law) suffered by the Borrower
that are caused by such Issuing Bank's failure to exercise care
when determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of the applicable
Issuing Bank (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised
care in each such determination. In furtherance of the foregoing
and without limiting the generality thereof, the parties agree
that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of
Credit, the applicable Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice
or information to the contrary, or refuse to accept and make
payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.
29
(g) Disbursement Procedures. Each Issuing Bank
shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under a
Letter of Credit. The applicable Issuing Bank shall promptly
notify the Borrower by electronic communication, or by telephone
(confirmed by telecopy), of such demand for payment and whether
such Issuing Bank has made or will make an LC Disbursement
thereunder, provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to
reimburse such Issuing Bank and the Lenders with respect to any
such LC Disbursement.
(h) Interim Interest. If any Issuing Bank shall
make any LC Disbursement, then, unless the Borrower shall
reimburse such LC Disbursement in full on the date such LC
Disbursement is made, the unpaid amount thereof shall bear
interest, for each day from and including the date such LC
Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then
applicable to ABR Revolving Loans, provided that, if the Borrower
fails to reimburse such LC Disbursement when due pursuant to
paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the
account of the applicable Issuing Bank, except that interest
accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse such Issuing Bank shall
be for the account of such Lender to the extent of such payment.
(i) Replacement of the Primary Issuing Bank. The
Primary Issuing Bank may be replaced at any time by written
agreement among the Borrower, the Administrative Agent and the
successor Primary Issuing Bank. The Administrative Agent shall
notify the Lenders of any such replacement of the Primary Issuing
Bank. At the time any such replacement shall become effective,
the Borrower shall pay all unpaid fees accrued for the account of
the replaced Primary Issuing Bank pursuant to Section 2.11(b).
From and after the effective date of any such replacement, (i) the
successor Primary Issuing Bank shall have all the rights and
obligations of the Primary Issuing Bank under this Agreement with
respect to Letters of Credit to be issued thereafter and (ii)
references herein to the term "Primary Issuing Bank" shall be
deemed to refer to such successor or to any previous Primary
Issuing Bank, or to such successor and all previous Primary
Issuing Banks, as the context shall require. After the
replacement of a Primary Issuing Bank hereunder, the replaced
Primary Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of a Primary
Issuing Bank under this Agreement with respect to Letters of
Credit issued by it prior to such replacement, but shall not be
required to amend to increase the principal amount of, extend
beyond the expiration date or renew existing, or to issue
additional, Letters of Credit.
(j) Resignation of Issuing Banks. Any Issuing
Bank (other than the Primary Issuing Bank) may resign at any time
upon not less than 30 days' prior written notice to the Borrower
30
and the Administrative Agent. At the time any such resignation
shall become effective, the Borrower shall pay all unpaid fees
accrued for the account of the resigning Issuing Bank pursuant to
Section 2.11(b). After the resignation of an Issuing Bank
hereunder, such Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by
it prior to such resignation, but shall not be required to amend
to increase the principal amount of, extend beyond the expiration
date or renew existing, or to issue additional, Letters of Credit.
(k) Cash Collateralization. If any Event of
Default shall occur and be continuing, on the Business Day that
the Borrower receives notice from the Administrative Agent or the
Required Lenders (or, if the maturity of the Loans has been
accelerated, Lenders with LC Exposure representing greater than
50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit
in an account with the Administrative Agent, in the name of the
Administrative Agent and for the benefit of the Lenders, an amount
in cash equal to 100% of the LC Exposure as of such date plus any
accrued and unpaid interest thereon, provided that the obligation
to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and
payable, without demand or other notice of any kind, upon the
occurrence of any Event of Default with respect to the Borrower
described in clause (h) or (i) of Article VII. Each such deposit
shall be held by the Administrative Agent as collateral for the
payment and performance of the obligations of the Borrower under
this Agreement. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal,
over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made, to
the extent practicable, at the written request of the Borrower at
the Borrower's risk and expense, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the applicable
Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for
the satisfaction of the reimbursement obligations of the Borrower
for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with
LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower
under this Agreement. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business
Days after all Events of Default have been cured or waived.
(l) Issuing Bank Reporting Requirements. Each
Issuing Bank agrees to provide to the Borrower and the
Administrative Agent (i) no later than the close of business on
the first Business Day of each week, a written notice of the
31
information required by Exhibit H as of each day during the
previous week (or, at the request of the Administrative Agent, no
later than the close of business of each Business Day, a written
notice of the information required by Exhibit H as of the previous
Business Day), (ii) no later than the close of business on the
first Business Day after the end of each fiscal quarter of the
Borrower, a written notice of the information required by Exhibit
H as of any day during such fiscal quarter not previously included
in a written notice delivered pursuant to clause (i) and (iii) any
other information the Administrative Agent may reasonably request
from time to time with respect to Letters of Credit issued by such
Issuing Bank.
SECTION 2.06. Funding of Borrowings. (a) Each
Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available
funds by 12:00 noon, New York City time (or 2:00 p.m., New York
City time, in the case of any ABR Revolving Loan made to reimburse
a LC Disbursement in accordance with Section 2.05(e)), to the
account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders, provided that Swingline
Loans shall be made as provided in Section 2.04. The
Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like
funds, to an account of the Borrower maintained with the
Administrative Agent in New York City and designated by the
Borrower in the applicable Borrowing Request, provided that ABR
Revolving Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.05(e) shall upon the
Borrower's written request be remitted by the Administrative Agent
to the applicable Issuing Bank.
(b) Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any
Borrowing that such Lender will not make available to the
Administrative Agent such Lender's share of such Borrowing, the
Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of
this Section and may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. In such event,
if a Lender has not in fact made its share of the applicable
Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from and including the date
such amount is made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of
such Lender, the greater of the Federal Funds Effective Rate and a
rate reasonably determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation
or (ii) in the case of the Borrower, the interest rate applicable
to ABR Loans. If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each
Revolving Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a Eurodollar
32
Borrowing, shall have an initial Interest Period as specified in
such Borrowing Request. Thereafter, the Borrower may elect to
convert such Borrowing to a different Type or to continue such
Borrowing and, in the case of a Eurodollar Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The
Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the
Loans comprising such Borrowing, and the Loans comprising each
such portion shall be considered a separate Borrowing. This
Section shall not apply to Swingline Borrowings, which may not be
converted or continued.
(b) To make an election pursuant to this Section,
the Borrower shall notify the Administrative Agent of such
election by telephone by the time that a Borrowing Request would
be required under Section 2.03 if the Borrower were requesting a
Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic
Interest Election Request shall be irrevocable and shall be
confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election
Request shall specify the following information in compliance with
Section 2.02:
(i) the Borrowing to which such Interest Election
Request applies and, if different options are being
elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);
(ii) the effective date of the election made
pursuant to such Interest Election Request, which shall
be a Business Day;
(iii) whether the resulting Borrowing is to be an
ABR Borrowing or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar
Borrowing, the Interest Period to be applicable thereto
after giving effect to such election, which shall be a
period contemplated by the definition of the term
"Interest Period".
If any such Interest Election Request requests a Eurodollar
Borrowing but does not specify an Interest Period, then the
Borrower shall be deemed to have selected an Interest Period of
one month's duration.
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(d) Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each
Lender of the details thereof and of such Lender's portion of each
resulting Borrowing.
(e) If the Borrower fails to deliver a timely
Interest Election Request with respect to a Eurodollar Borrowing
prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of
such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an
Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so
notifies the Borrower, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or
continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto.
(f) A Borrowing may not be converted to or
continued as a Eurodollar Borrowing if after giving effect thereto
the Interest Period therefor would end after the Maturity Date.
SECTION 2.08. Termination and Reduction of
Commitments. (a) Unless previously terminated, the Commitments
shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or
from time to time reduce, the Commitments, provided that (i) each
reduction of the Commitments shall be in an amount that is an
integral multiple of $5,000,000 and not less than $5,000,000 and
(ii) the Borrower shall not terminate or reduce the Commitments
if, after giving effect to any concurrent prepayment of the
Revolving Loans in accordance with Section 2.10, the sum of the
Revolving Exposures would exceed the total Commitments.
(c) The Borrower shall notify the Administrative
Agent of any election to terminate or reduce the Commitments under
paragraph (b) of this Section at least three Business Days prior
to the effective date of such termination or reduction, specifying
such election and the effective date thereof. Promptly following
receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable, provided
that a notice of termination of the Commitments delivered by the
Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such
notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date)
if such condition is not satisfied. Any termination or reduction
of the Commitments shall be permanent. Each reduction of the
Commitments shall be made ratably among the Lenders in accordance
with their respective Commitments.
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SECTION 2.09. Repayment of Loans, Evidence of
Debt. (a) The Borrower hereby unconditionally promises to pay (i)
to the Administrative Agent for the account of each Lender the
then unpaid principal amount of each Revolving Loan of such Lender
on the Maturity Date and (ii) to the Swingline Lender the then
unpaid principal amount of each Swingline Loan on the earlier of
the Maturity Date and the first date after such Swingline Loan is
made that is the 15th day or the Business Day that is prior to the
last day of a calendar month, provided that on each date that a
Revolving Borrowing is made, the Borrower shall repay all
Swingline Loans then outstanding.
(b) Each Lender shall maintain in accordance with
its usual practice an account or accounts evidencing the
indebtedness of the Borrower to such Lender resulting from each
Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain
accounts in which it shall record (i) the amount of each Loan made
hereunder, the Class and Type thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders
and each Lender's share thereof.
(d) The entries made in the accounts maintained
pursuant to paragraph (b) or (c) of this Section shall be prima
facie evidence of the existence and amounts of the obligations
recorded therein, provided that the failure of any Lender or the
Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the
Borrower to repay the Loans in accordance with the terms of this
Agreement.
(e) Any Lender may request that Loans made by it
be evidenced by a single promissory note. In such event, the
Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and
interest thereon shall at all times (including after assignment
pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee
and its registered assigns).
SECTION 2.10. Prepayment of Loans. (a) The
Borrower shall have the right at any time and from time to time to
prepay any Borrowing in whole or in part, subject to the
requirements of this Section.
35
(b) Prior to any prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings
to be prepaid and shall specify such selection in the notice of
such prepayment pursuant to paragraph (c) of this Section.
(c) The Borrower shall notify the Administrative
Agent (and, in the case of prepayment of a Swingline Loan, the
Swingline Lender) by telephone (confirmed by telecopy) of any
prepayment hereunder (i) in the case of prepayment of a Eurodollar
Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of prepayment, (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New
York City time, one Business Day before the date of prepayment or
(iii) in the case of prepayment of a Swingline Loan, not later
than 2:00 p.m., New York City time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion
thereof to be prepaid, provided that, if a notice of prepayment of
any Loan is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.08,
then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.08. Promptly
following receipt of any such notice (other than a notice relating
solely to Swingline Loans), the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of
any Borrowing shall be in an amount that would be permitted in the
case of an advance of a Borrowing of the same Type as provided in
Section 2.02. Each prepayment of a Borrowing shall be applied
ratably to the Loans included in the prepaid Borrowing.
Prepayments shall be accompanied by accrued interest to the extent
required by Section 2.12.
SECTION 2.11. Fees. (a) The Borrower agrees to
pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the Applicable Rate on the
average daily unused amount of the Commitment of such Lender
during the period from and including the Effective Date to but
excluding the date on which such Commitment terminates. Accrued
commitment fees shall be payable in arrears on the last day of
January, April, July and October of each year and on the date on
which the Commitments terminate, commencing on the first such date
to occur after the date hereof. All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable
for the actual number of days elapsed (including the first day but
excluding the last day). For purposes of computing commitment
fees, a Commitment of a Lender shall be deemed to be used to the
extent of the outstanding Revolving Loans and LC Exposure of such
Lender (and the Swingline Exposure of such Lender shall be
disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the
Administrative Agent for the account of each Lender a
participation fee with respect to its participations in Letters of
Credit, which shall accrue (A) in the case of standby Letters of
Credit, at the same Applicable Rate as is used to determine the
rate of interest on Eurodollar Revolving Loans and (B) in the case
36
of Trade Letters of Credit, at 50% of such Applicable Rate, in
each case on the average daily amount of such Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Effective
Date to but excluding the later of the date on which such Lender's
Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to each Issuing Bank, a fronting
fee, which shall accrue at the rate or rates per annum separately
agreed upon between the Borrower and such Issuing Bank on the
average daily amount of the LC Exposure (excluding any portion
thereof attributable to unreimbursed LC Disbursements)
attributable to Letters of Credit issued by such Issuing Bank, in
each case during the period from and including the Effective Date
to but excluding the later of the date of termination of the
Commitments and the date on which there ceases to be any LC
Exposure, as well as such Issuing Bank's standard fees with
respect to the issuance, amendment, renewal or extension of any
Letter of Credit or processing of drawings thereunder.
Participation fees and fronting fees accrued through and including
the last day of January, April, July and October shall be payable
on the third Business Day following such last day, commencing on
the first such date to occur after the Effective Date, provided
that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on
which the Commitments terminate shall be payable on demand. Any
other fees payable to an Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. All participation
fees and fronting fees shall be computed on the basis of a year of
360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the
amounts and at the times separately agreed upon between the
Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on
the dates due, in immediately available funds, to the
Administrative Agent (or to the applicable Issuing Bank, in the
case of fees payable to such Issuing Bank) for distribution, in
the case of commitment fees and participation fees, to the Lenders
entitled thereto. Fees paid shall not be refundable under any
circumstances.
SECTION 2.12. Interest. (a) The Loans comprising
each ABR Borrowing (including each Swingline Loan) shall bear
interest at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing
shall bear interest at the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any
principal of or interest on any Loan or any fee or other amount
37
payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue
amount shall bear interest, after as well as before judgment, at a
rate per annum equal to (i) in the case of overdue principal of
any Loan, 2% plus the rate (including margin) otherwise applicable
to such Loan as provided in the preceding paragraphs of this
Section or (ii) in the case of any other amount, 2% plus the rate
(including margin) applicable to ABR Revolving Loans as provided
in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable
in arrears on each Interest Payment Date for such Loan and upon
termination of the Commitments, provided that (A) interest accrued
pursuant to paragraph (c) of this Section shall be payable on
demand, (B) in the event of any repayment or prepayment of any
Loan (other than a prepayment of an ABR Revolving Loan prior to
the end of the Revolving Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the
date of such repayment or prepayment and (C) in the event of any
conversion of any Eurodollar Loan prior to the end of the current
Interest Period therefor, accrued interest on such Loan shall be
payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on
the basis of a year of 360 days, except that interest computed by
reference to the Alternate Base Rate at times when the Alternate
Base Rate is based on the Prime Rate shall be computed on the
basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). The
applicable Alternate Base Rate or Adjusted LIBO Rate shall be
determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error.
SECTION 2.13. Alternate Rate of Interest. If
prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
(a) the Administrative Agent determines (which
determination shall be conclusive absent manifest error)
that adequate and reasonable means do not exist for
ascertaining the Adjusted LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the
Required Lenders that they have determined in good
faith that the Adjusted LIBO Rate for such Interest
Period will not adequately and fairly reflect the cost
to such Lenders (or Lender) of making or maintaining
their Loans (or its Loan) included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the
Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter (which notice shall be confirmed in writing
38
and shall include a reasonably detailed explanation of the
circumstances giving rise to such determination) and, until the
Administrative Agent notifies the Borrower and the Lenders that
the circumstances giving rise to such notice no longer exist, (i)
any Interest Election Request that requests the conversion of any
Borrowing to, or continuation of any Borrowing as, a Eurodollar
Borrowing shall be ineffective and (ii) if any Borrowing Request
requests a Eurodollar Borrowing, such Borrowing shall be made as
an ABR Borrowing.
SECTION 2.14. Increased Costs. (a) If any Change
in Law shall:
(i) impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets
of, deposits with or for the account of, or credit
extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or any
Issuing Bank; or
(ii) impose on any Lender or any Issuing Bank or
the London interbank market any other condition
affecting this Agreement or Eurodollar Loans made by
such Lender or any Letter of Credit or participation
therein;
and the result of any of the foregoing shall be to increase the
cost to such Lender of making or maintaining any Eurodollar Loan
(or of maintaining its obligation to make any such Loan) or to
increase the cost to such Lender or such Issuing Bank of
participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such
Lender or such Issuing Bank in respect thereof (whether of
principal, interest or otherwise), then the Borrower will pay to
such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or
such Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered.
(b) If any Lender or any Issuing Bank determines
that any Change in Law regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender's or
such Issuing Bank's capital or on the capital of such Lender's or
such Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by
such Issuing Bank, to a level below that which such Lender or such
Issuing Bank or such Lender's or such Issuing Bank's holding
company could have achieved but for such Change in Law (taking
into consideration such Lender's or such Issuing Bank's policies
and the policies of such Lender's or such Issuing Bank's holding
company with respect to capital adequacy), then from time to time
the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate
such Lender or such Issuing Bank or such Lender's or such Issuing
Bank's holding company for any such reduction suffered.
39
(c) A certificate of a Lender or an Issuing Bank
setting forth the amount or amounts necessary to compensate such
Lender or such Issuing Bank or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section shall
be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or such
Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.
(d) Failure or delay on the part of any Lender or
any Issuing Bank to demand compensation pursuant to this Section
shall not constitute a waiver of such Lender's or such Issuing
Bank's right to demand such compensation, provided that the
Borrower shall not be required to compensate a Lender or an
Issuing Bank pursuant to this Section for any increased costs or
reductions incurred more than 180 days prior to the date that such
Lender or such Issuing Bank, as the case may be, notifies the
Borrower of the Change in Law giving rise to such increased costs
or reductions and of such Lender's or such Issuing Bank's
intention to claim compensation therefor, and provided further
that if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive
effect thereof.
SECTION 2.15. Break Funding Payments. In the
event of (a) the payment of any principal of any Eurodollar Loan
other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the
conversion of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Revolving Loan on the date
specified in any notice delivered pursuant hereto (regardless of
whether such notice may be revoked under Section 2.10(c) and is
revoked in accordance therewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period
applicable thereto as a result of a request by the Borrower
pursuant to Section 2.18, then, in any such event, the Borrower
shall compensate each Lender for the loss, cost and expense
attributable to such event. In the case of a Eurodollar Loan,
such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest that would have accrued on the
principal amount of such Loan had such event not occurred, at the
Adjusted LIBO Rate that would have been applicable to such Loan,
for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount
of interest that would accrue on such principal amount for such
period at the interest rate that such Lender would bid were it to
bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or
amounts that such Lender is entitled to receive pursuant to this
40
Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender the
amount shown as due on any such certificate within 10 days after
receipt thereof.
SECTION 2.16. Taxes. (a) Any and all payments by
or on account of any obligation of the Borrower hereunder or under
any other Loan Document shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes,
provided that if the Borrower shall be required to deduct any
Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making
all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other
Taxes to the relevant Governmental Authority in accordance with
applicable law (to the extent not otherwise paid by others
hereunder and reimbursed by the Borrower).
(c) The Borrower shall indemnify the
Administrative Agent, each Lender and each Issuing Bank, within 10
days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or such Issuing Bank, as the case may be, on or with
respect to any payment by or on account of any obligation of the
Borrower hereunder or under any other Loan Document (including
Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or
with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender
or an Issuing Bank, or by the Administrative Agent on its own
behalf or on behalf of a Lender or an Issuing Bank, shall be
conclusive absent manifest error.
(d) As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental
Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the
return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Each Foreign Lender, and any Issuing Bank that
is not a "United States person" within the meaning of Section
7701(a)(30) of the Code (together with the Foreign Lenders, the
"Non-U.S. Lenders"), shall deliver to the Borrower (with a copy to
41
the Administrative Agent) two copies of either United States
Internal Revenue Service Form 1001 or Form 4224, or, in the case
of a Non-U.S. Lender claiming exemption from U.S. Federal
withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such
Non-U.S. Lender delivers a Form W-8, a certificate representing
that such Non-U.S. Lender is not a bank for purposes of Section
881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and
is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly
completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or reduced rate of, U.S. Federal
withholding tax on payments by the Borrower under this Agreement
or any other Loan Document. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this
Agreement or designates a new lending office. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the
obsolescence, expiration or invalidity of any form previously
delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.16, a Non-U.S. Lender shall not be
required to deliver any form pursuant to this Section 2.16(e) that
such Non-U.S. Lender is not legally able to deliver.
SECTION 2.17. Payments Generally; Pro Rata
Treatment; Sharing of Set-offs. (a) The Borrower shall make each
payment required to be made by it hereunder or under any other
Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under
Section 2.14, 2.15 or 2.16, or otherwise) prior to 12:00 noon (or,
in the case of any reimbursement of LC Disbursements only, prior
to the close of business), New York City time, on the date when
due, in immediately available funds, without set-off or
counterclaim. Any amounts received after such time on any date
may, in the discretion of the Administrative Agent, be deemed to
have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall
be made to the Administrative Agent at its offices at 270 Park
Avenue, New York, New York, except payments to be made directly to
an Issuing Bank or the Swingline Lender as expressly provided
herein and except that payments pursuant to Sections 2.14, 2.15,
2.16 and 9.03 shall be made directly to the Persons entitled
thereto and payments pursuant to other Loan Documents shall be
made to the Persons specified therein. The Administrative Agent
shall distribute any such payments received by it for the account
of any other Person to the appropriate recipient promptly
following receipt thereof. If any payment under any Loan Document
shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day,
and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension. All
payments under each Loan Document shall be made in dollars.
42
(b) If at any time insufficient funds are received
by and available to the Administrative Agent to pay fully all
amounts of principal, unreimbursed LC Disbursements, interest and
fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts
of interest and fees then due to such parties, and (ii) second,
towards payment of principal and unreimbursed LC Disbursements
then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right
of set-off or counterclaim or otherwise, obtain payment in respect
of any principal of or interest on any of its Revolving Loans or
participations in LC Disbursements or Swingline Loans resulting in
such Lender receiving payment of a greater proportion of the
aggregate amount of its Revolving Loans and participations in LC
Disbursements and Swingline Loans and accrued interest thereon
than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face
value) participations in the Revolving Loans and participations in
LC Disbursements and Swingline Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be
shared by the Lenders ratably in accordance with the aggregate
amount of principal of and accrued interest on their respective
Revolving Loans and participations in LC Disbursements and
Swingline Loans, provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph shall
not be construed to apply to any payment made by the Borrower
pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans
or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph
shall apply). The Borrower consents to the foregoing and agrees,
to the extent it may effectively do so under applicable law, that
any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off
and counterclaim with respect to such participation as fully as if
such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any
payment is due to the Administrative Agent for the account of the
Lenders or any Issuing Bank hereunder that the Borrower will not
make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith
and may, in reliance upon such assumption, distribute to the
Lenders or the applicable Issuing Bank, as the case may be, the
amount due. In such event, if the Borrower has not in fact made
such payment, then each of the Lenders or such Issuing Bank, as
43
the case may be, severally agrees to repay to the Administrative
Agent forthwith on demand the amount so distributed to such Lender
or Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate reasonably
determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.04(c), 2.05(d) or
(e), 2.06(b), 2.17(d) or 9.03(c), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision
hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy
such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.18. Mitigation Obligations; Replacement
of Lenders. (a) If any Lender requests compensation under
Section 2.14, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.16, then such Lender shall use
reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or
affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 2.14 or 2.16, as the case may be, in
the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay
all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
(b) If any Lender requests compensation under
Section 2.14, or if the Borrower is required to pay any additional
amount to any Lender or any Governmental Authority for the account
of any Lender pursuant to Section 2.16, or if any Lender defaults
in its obligation to fund Loans hereunder, then the Borrower may,
at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights
and obligations under this Agreement to an assignee that shall
assume such obligations (which assignee may be another Lender, if
a Lender accepts such assignment), provided that (i) the Borrower
shall have received the prior written consent of the
Administrative Agent, each Issuing Bank and the Swingline Lender),
which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in LC Disbursements and
Swingline Loans, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and
44
fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for
compensation under Section 2.14 or payments required to be made
pursuant to Section 2.16, such assignment will result in a
material reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation
if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to the Lenders
that:
SECTION 3.01. Organization; Powers. The Borrower
and each of the Subsidiaries is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, has all requisite power and authority to carry on
its business as now conducted and, except where the failure to do
so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to
do business in, and is in good standing in, every jurisdiction
where such qualification is required.
SECTION 3.02. Authorization; Enforceability. The
Transactions to be entered into by each Loan Party are within such
Loan Party's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. This
Agreement has been duly executed and delivered by the Borrower and
constitutes, and each other Loan Document to which any Loan Party
is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the
Borrower or such Loan Party (as the case may be), enforceable in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No
Conflicts. The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by,
any Governmental Authority, except such as have been obtained or
made and are in full force and effect and except filings necessary
to perfect Liens created under the Loan Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws
or other organizational documents of the Borrower or any of the
Subsidiaries or any order of any Governmental Authority, (c) will
not violate or result in a default under any indenture, agreement
45
or other instrument binding upon the Borrower or any of the
Subsidiaries or its assets, or give rise to a right thereunder to
require any payment to be made by the Borrower or any of the
Subsidiaries, and (d) will not result in the creation or
imposition of any Lien (other than any Lien expressly permitted by
Section 6.02) on any asset of the Borrower or any of the
Subsidiaries, except Liens created under the Loan Documents.
SECTION 3.04. Financial Condition; No Material
Adverse Change. (a) The Borrower has heretofore furnished to
the Lenders its consolidated balance sheets and related statements
of income, stockholders' equity and cash flows as of and for the
five fiscal years ended February 1, 1998, reported on by Ernst &
Young LLP, independent public accountants. Such financial
statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Borrower
and the consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP.
(b) The Borrower has heretofore furnished to the
Lenders its pro forma consolidated balance sheet as of the
Effective Date, prepared giving effect to the Transactions as if
the Transactions had occurred on such date. Such pro forma
consolidated balance sheet (i) has been prepared in good faith
based on the same assumptions used to prepare the pro forma
financial statements included in the Information Memorandum (which
assumptions are believed by the Borrower to be reasonable), (ii)
is based on the best information available to the Borrower after
due inquiry, (iii) accurately reflects all adjustments necessary
to give effect to the Transactions and (iv) presents fairly, in
all material respects, the pro forma financial position of the
Borrower and the consolidated Subsidiaries as of the Effective
Date as if the Transactions had occurred on such date.
(c) Except as publicly disclosed by the Borrower
prior to the date hereof or as disclosed in the Information
Memorandum and except for the Disclosed Matters, after giving
effect to the Transactions, none of the Borrower or any of the
Subsidiaries has, as of the Effective Date, any material
contingent liabilities, unusual long-term commitments or
unrealized losses.
(d) Except as publicly disclosed by the Borrower
prior to the date hereof or as disclosed in the Information
Memorandum and except for the Disclosed Matters, since February 1,
1998, there has been no material adverse change in the business,
assets, operations, properties, condition (financial or
otherwise), contingent liabilities, or material agreements of the
Borrower and the Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the
Borrower and the Subsidiaries has good title to, or valid
leasehold interests in, all its real and personal property
material to its business (including its Mortgaged Properties),
46
except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes.
(b) Each of the Borrower and the Subsidiaries
owns, or is licensed to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to
its business, and the use thereof by the Borrower and the
Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a
Material Adverse Effect.
(c) Schedule 3.05 sets forth the address of each
real property that is owned or leased by the Borrower or any of
the Subsidiaries as of the Effective Date.
(d) As of the Effective Date, neither the Borrower
nor any of the Subsidiaries has received notice of, or has
knowledge of, any pending or contemplated condemnation proceeding
affecting any Mortgaged Property that, if determined adversely to
the Borrower, would materially impair the value of such Mortgaged
Property, or any sale or disposition thereof in lieu of
condemnation. Neither any Mortgaged Property nor any interest
therein is subject to any right of first refusal, option or other
contractual right to purchase such Mortgaged Property or interest
therein.
SECTION 3.06. Litigation and Environmental
Matters. (a) There are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against
or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of the Subsidiaries (i) as to which
there is a reasonable possibility of an adverse determination and
that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve any
of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except
with respect to any other matters that, individually or in the
aggregate, could not reasonably be expected to result in a
Material Adverse Effect, none of the Borrower or any of the
Subsidiaries (i) has failed to comply with any Environmental Law
or to obtain, maintain or comply with any permit, license or other
approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice
of any claim with respect to any Environmental Liability or (iv)
knows of any basis for any Environmental Liability.
(c) Since the date of this Agreement, there has
been no change in the status of the Disclosed Matters that,
individually or in the aggregate, has resulted in, or materially
increased the likelihood of, a Material Adverse Effect.
47
SECTION 3.07. Compliance with Laws and Agreements.
The Borrower and each of the Subsidiaries is in compliance with
all laws, regulations and orders of any Governmental Authority
applicable to it or its property and all indentures, agreements
and other instruments binding upon it or its property, except
where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company
Status. None of the Borrower or any of the Subsidiaries is (a) an
"investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940 or (b) a "holding
company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. The Borrower and each of the
Subsidiaries has timely filed or caused to be filed all Tax
returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it,
except (a) any Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate
reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred
or is reasonably expected to occur that, when taken together with
all other such ERISA Events for which liability is reasonably
expected to occur, could reasonably be expected to result in a
Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial
statements reflecting such amounts, exceed by more than $2,000,000
the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded
Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of
the most recent financial statements reflecting such amounts,
exceed the fair market value of the assets of all such underfunded
Plans by an amount that would be reasonably likely to result in a
Material Adverse Effect.
SECTION 3.11. Disclosure. The Borrower has made
available to the Lenders all agreements, instruments and corporate
or other restrictions to which the Borrower or any of the
Subsidiaries is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial
statements, certificates or other information furnished by or on
behalf of any Loan Party to the Administrative Agent or any Lender
48
in connection with the negotiation of this Agreement or any other
Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished) contains any
material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, provided
that, with respect to projected financial information, the
Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the
time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets
forth the name of, and the ownership interest of the Borrower in,
each Subsidiary of the Borrower and identifies each Subsidiary
that is a Subsidiary Loan Party, in each case as of the Effective
Date.
SECTION 3.13. Insurance. Each of the Borrower and
the Subsidiaries maintains, with financially sound and reputable
insurance companies (a) adequate insurance for its insurable
properties, all to such extent and against such risks, including
fire, casualty and other risks insured against by extended
coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations and (b) such
other insurance as is required pursuant to the terms of any
Security Document. As of the Effective Date, all premiums in
respect of such insurance that are due and payable have been paid.
SECTION 3.14. Labor Matters. As of the Effective
Date, there are no strikes, lockouts or slowdowns against the
Borrower or any Subsidiary pending or, to the knowledge of the
Borrower, threatened, except for such strikes, lockouts or
slowdowns that could not reasonably be expected to result in a
Material Adverse Effect. The hours worked by and payments made to
employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters,
except where any such violations, individually or in the
aggregate, would not be reasonably likely to result in a Material
Adverse Effect. All material payments due from the Borrower or
any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee
health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such
Subsidiary. The consummation of the Transactions will not give
rise to any right of termination or right of renegotiation on the
part of any union under any collective bargaining agreement to
which the Borrower or any Subsidiary is bound.
SECTION 3.15. Solvency. Immediately after the
consummation of the Transactions to occur on the Effective Date
and immediately following the making of each Loan made on the
Effective Date and after giving effect to the application of the
proceeds of such Loans, (a) the fair value of the assets of the
Borrower on a consolidated basis, at a fair valuation, will exceed
49
its debts and liabilities, subordinated, contingent or otherwise;
(b) the present fair saleable value of the property of the
Borrower on a consolidated basis will be greater than the amount
that will be required to pay the probable liability of its debts
and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (c)
the Borrower on a consolidated basis will be able to pay its debts
and liabilities, subordinated, contingent or otherwise, as such
debts and liabilities become absolute and matured; and (d) the
Borrower on a consolidated basis will not have unreasonably small
capital with which to conduct the business in which it is engaged
as such business is now conducted and is proposed to be conducted
following the Effective Date.
SECTION 3.16. Security Documents. (a) The Pledge
Agreement is effective to create in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, a legal, valid and
enforceable security interest in the Collateral (as defined in the
Pledge Agreement) and, when the Collateral is delivered to the
Collateral Agent, the Pledge Agreement shall constitute a fully
perfected first priority Lien on, and security interest in, all
right, title and interest of the pledgor thereunder in such
Collateral, in each case prior and superior in right to any other
person.
(b) The Security Agreement is effective to create
in favor of the Collateral Agent, for the ratable benefit of the
Secured Parties, a legal, valid and enforceable security interest
in the Collateral (as defined in the Security Agreement) and, when
financing statements in appropriate form are filed in the offices
specified on Schedule 6 to the Perfection Certificate, the
Security Agreement shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the
grantors thereunder in such Collateral (other than the
Intellectual Property (as defined in the Security Agreement)), in
each case prior and superior in right to any other person, other
than with respect to Liens expressly permitted by Section 6.02.
(c) When the Security Agreement is filed in the
United States Patent and Trademark Office and the United States
Copyright Office, the Security Agreement shall constitute a fully
perfected Lien on, and security interest in, all right, title and
interest of the Loan Parties in the Intellectual Property (as
defined in the Security Agreement) in which a security interest
may be perfected by filing, recording or registering a security
agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to
any other person other than Liens expressly permitted by Section
6.02 (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright
Office may be necessary to perfect a Lien on registered
trademarks, trademark applications and copyrights acquired by the
Loan Parties after the date hereof).
(d) The Mortgages are effective to create, subject
to the exceptions listed in each title insurance policy covering
such Mortgage, in favor of the Collateral Agent, for the ratable
benefit of the Secured Parties, a legal, valid and enforceable
50
Lien on all of the Loan Parties' right, title and interest in and
to the Mortgaged Properties thereunder and the proceeds thereof,
and when the Mortgages are filed in the offices specified on
Schedule 3.16(d), the Mortgages shall constitute a Lien on, and
security interest in, all right, title and interest of the Loan
Parties in such Mortgaged Properties and the proceeds thereof, in
each case prior and superior in right to any other person, other
than with respect to the rights of persons pursuant to Liens
expressly permitted by Section 6.02.
SECTION 3.17. Federal Reserve Regulations. (a)
Neither the Borrower nor any of the Subsidiaries is engaged
principally, or as one of its important activities, in the
business of extending credit for the purpose of buying or carrying
Margin Stock.
(b) No part of the proceeds of any Loan or any
Letter of Credit will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately, for any purpose
that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation
T, U or X.
SECTION 3.18. Senior Indebtedness. The monetary
Obligations constitute "Senior Debt" under and as defined in the
Subordinated Debt Documents.
SECTION 3.19. Year 2000. The Borrower has planned
and budgeted for measures, including systems and equipment
testing, to effect the reprogramming necessary to permit the
proper functioning, in and following the year 2000, of (a) the
computer systems of the Borrower and the Subsidiaries and (b) to
the extent reasonably practicable, other equipment containing
embedded microchips (including systems and equipment supplied by
others) and, to the extent reasonably practicable, the Borrower is
monitoring such reprogramming of systems of others with which the
systems of the Borrower and the Subsidiaries interface. Neither
the costs to the Borrower and the Subsidiaries of such
reprogramming and testing, nor the reasonably foreseeable
consequences of the occurrence of the year 2000 on such systems
and equipment (including reasonably discoverable reprogramming
errors and the reasonably foreseeable failures of others' systems
equipment) could reasonably be expected to result in a Default or
a Material Adverse Effect. Subject to such of the reprogramming
referred to in the immediately preceding sentence as may be
necessary, the computer and management information systems of the
Borrower and the Subsidiaries are, and (with ordinary course
upgrading and maintenance) will continue for the term of this
Agreement to be sufficient to permit the Borrower and the
Subsidiaries to conduct their business without causing a Material
Adverse Effect.
51
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of
the Lenders to make Loans and of any Issuing Bank to issue Letters
of Credit hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in
accordance with Section 9.02):
(a) The Administrative Agent (or its counsel)
shall have received from each party hereto either (i) a
counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy
transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of
this Agreement.
(b) The Administrative Agent shall have received a
favorable written opinion (addressed to the
Administrative Agent and the Lenders and dated the
Effective Date) of each of (i) Rosenman & Colin LLP,
counsel for the Borrower, substantially in the form of
Exhibit B, and (ii) local counsel in each jurisdiction
where a Mortgaged Property is located, substantially in
the form of Exhibit C, and, in the case of each such
opinion required by this paragraph, covering such other
matters relating to the Loan Parties, the Loan Documents
or the Transactions as the Required Lenders shall
reasonably request. The Borrower hereby requests such
counsel to deliver such opinions.
(c) The Administrative Agent shall have received
such documents and certificates as the Administrative
Agent or its counsel may reasonably request relating to
the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and
any other legal matters relating to the Loan Parties,
the Loan Documents or the Transactions, all in form and
substance satisfactory to the Administrative Agent and
its counsel.
(d) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the
Chairman of the Board, President, a Vice President or a
Financial Officer of the Borrower, confirming compliance
with the conditions set forth in paragraphs (a) and (b)
of Section 4.02.
(e) The Administrative Agent shall have received
all fees and other amounts due and payable on or prior
to the Effective Date, including, to the extent
invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by any Loan
Party hereunder or under any other Loan Document.
52
(f) The Administrative Agent shall have received
counterparts of the Pledge Agreement signed on behalf of
the Borrower and each Subsidiary Loan Party thereto,
together with stock certificates representing all the
outstanding shares of capital stock of each Subsidiary
owned by or on behalf of any Loan Party as of the
Effective Date after giving effect to the Transactions
(except that stock certificates representing shares of
common stock of a Foreign Subsidiary may be limited to
65% of the outstanding shares of common stock of such
Foreign Subsidiary), any promissory notes evidencing
intercompany Indebtedness owed to any Loan Party by the
Borrower or any Subsidiary as of the Effective Date
after giving effect to the Transactions and stock powers
and instruments of transfer, endorsed in blank, with
respect to such stock certificates and promissory notes.
(g) The Administrative Agent shall have received
counterparts of the Security Agreement signed on behalf
of the Borrower and each Subsidiary Loan Party, together
with the following:
(i) all documents and instruments, including
Uniform Commercial Code financing statements,
required by law or reasonably requested by the
Administrative Agent to be filed, registered or
recorded to create or perfect the Liens intended to
be created under the Security Agreement; and
(ii) a completed Perfection Certificate dated the
Effective Date and signed by an executive officer
or Financial Officer of the Borrower, together with
all attachments contemplated thereby, including the
results of a search of the Uniform Commercial Code
(or equivalent) filings made with respect to the
Loan Parties in the jurisdictions contemplated by
the Perfection Certificate and copies of the
financing statements (or similar documents)
disclosed by such search and evidence reasonably
satisfactory to the Administrative Agent that the
Liens indicated by such financing statements (or
similar documents) are permitted by Section 6.02 or
have been released.
(h) The Administrative Agent shall have received
(i) counterparts of a Mortgage with respect to each
Mortgaged Property signed on behalf of the record owner
or lessee of such Mortgaged Property, together with a
legal property description thereof and (ii) a policy of
title insurance issued by a nationally recognized title
insurance Company, insuring the Lien of the Mortgage on
the Jonesville, North Carolina property as a valid first
Lien on the Mortgaged Property described therein, free
of any other Liens except as permitted by Section 6.02,
in form and substance reasonably acceptable to the
Collateral Agent, together with such endorsements,
coinsurance and reinsurance as the Collateral Agent or
the Required Lenders may reasonably request.
53
(i) The Administrative Agent shall have received
(i) counterparts of the Guarantee Agreement signed on
behalf of each Subsidiary Loan Party and (ii)
counterparts of the Indemnity, Subrogation and
Contribution Agreement signed on behalf of the Borrower
and each Subsidiary Loan Party.
(j) The Administrative Agent shall have received
evidence satisfactory to it that the insurance required
by Section 5.07 is in effect.
(k) The Borrower shall have received not less than
$[149,229,000] in gross cash proceeds from the issuance
of the Subordinated Debt. The terms and conditions of
the Subordinated Debt (including but not limited to
terms and conditions relating to the interest rate,
fees, amortization, maturity, subordination, covenants,
events of defaults and remedies) shall be reasonably
satisfactory in all respects to the Administrative
Agent.
(l) The Administrative Agent shall have received
satisfactory evidence that (i) all loans outstanding
under, and all other amounts due in respect of, the
Existing Credit Agreement have been repaid in full and
the commitments thereunder have been permanently
terminated, (ii) the Borrower has redeemed all the
Senior Notes in accordance with the provisions of the
Note Purchase Agreements applicable to the Senior Notes
and (iii) the Borrower and the Subsidiaries have
outstanding no Indebtedness or shares of preferred stock
other than (A) the Loans and other extensions of credit
hereunder, (B) the Debentures, (C) the Subordinated Debt
and (iv) Indebtedness set forth in Schedule 6.01.
(m) The Lenders shall have received the audited and
unaudited financial statements referred to in Section
3.04(a), which audited and unaudited financial
statements shall not be materially inconsistent with the
financial statements or forecasts previously provided to
the Lenders.
(n) The Lenders shall have received the pro forma
consolidated balance sheet of the Borrower referred to
in Section 3.04(b), which balance sheet shall be
consistent in all material respects with the forecasts
previously provided to the Lenders.
(o) The Lenders shall be reasonably satisfied as to
the amount and nature of any Environmental Liabilities
and any employee health and safety exposures to which
the Borrower and the Subsidiaries may be subject and the
54
Lenders shall have received environmental assessments
satisfactory to the Administrative Agent from an
environmental consulting firm satisfactory to the
Administrative Agent.
(p) There shall be no litigation or administrative
proceeding that would reasonably be expected to have a
Material Adverse Effect.
(q) The consummation of the Transactions and the
other transactions contemplated hereby shall not (a)
violate any applicable law, statute, rule or regulation
or (b) breach, or result in a default or event of
default under, any material agreement of the Borrower or
any of the Subsidiaries, and the Lenders shall have
received one or more legal opinions to such effect,
satisfactory to the Lenders, from counsel to the
Borrower satisfactory to the Lenders.
(r) All requisite material Governmental Authorities
and third parties shall have approved or consented to
the transactions contemplated hereby to the extent
required, all applicable appeal periods shall have
expired and there shall be no action by any Governmental
Authority, actual or threatened, that could reasonably
be expected to restrain, prevent or impose burdensome
conditions on the Transactions or the other transactions
contemplated hereby.
(s) The Administrative Agent shall have received a
Borrowing Request executed by the Borrower.
(t) The Administrative Agent shall have received
copies of all Schedules referred to in this Agreement,
which Schedules shall be reasonably responsive to the
information requirements of the Administrative Agent.
(u) Except as publicly disclosed by the Borrower
prior to the date hereof or as disclosed in the
Information Memorandum and except for the Disclosed
Matters, since February 1, 1998, there has been no
material adverse change in the business, assets,
operations, properties, condition (financial or
otherwise), contingent liabilities, prospects or
material agreements of the Borrower and the
Subsidiaries, taken as a whole.
The Administrative Agent shall notify the Borrower and the Lenders
of the Effective Date, and such notice shall be conclusive and
binding. Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of any Issuing Bank to issue Letters of
Credit hereunder shall not become effective unless each of the
foregoing conditions is satisfied (or waived pursuant to Section
9.02) at or prior to 3:00 p.m., New York City time, on May 15,
1998 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation
of each Lender to make a Loan on the occasion of any Borrowing,
55
and of any Issuing Bank to issue, amend, renew or extend any
Letter of Credit, is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of each
Loan Party set forth in the Loan Documents shall be true
and correct on and as of the date of such Borrowing or
the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable, except to the
extent such representations and warranties expressly
relate to an earlier date in which case such
representations and warranties shall be true and correct
as of such earlier date.
(b) At the time of and immediately after giving
effect to such Borrowing or the issuance, amendment,
renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be
continuing.
Each Borrowing and each issuance, amendment, renewal or extension
of a Letter of Credit shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as
to the matters specified in paragraphs (a) and (b) of this
Section.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been
terminated and the principal of and interest on each Loan and all
fees payable hereunder shall have been paid in full and all
Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants
and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other
Information. The Borrower will furnish to the Administrative
Agent and each Lender:
(a) within 90 days after the end of each fiscal
year of the Borrower, its audited consolidated balance
sheet and related statements of operations,
stockholders' equity and cash flows as of the end of and
for such year, setting forth in each case in comparative
form the figures for the previous fiscal year, all
reported on by Ernst & Young LLP or other independent
public accountants of recognized national standing
(without a "going concern" or like qualification or
exception and without any qualification or exception as
to the scope of such audit) to the effect that such
consolidated financial statements present fairly in all
material respects the financial condition and results of
operations of the Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with
GAAP consistently applied;
56
(b) within 50 days after the end of each of the
first three fiscal quarters of each fiscal year of the
Borrower, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash
flows as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting
forth in each case in comparative form the figures for
the corresponding period or periods of (or, in the case
of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects
the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments
and the absence of footnotes;
(c) concurrently with any delivery of financial
statements under clause (a) or (b) above, a certificate
of a Financial Officer of the Borrower (i) certifying as
to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii)
beginning with the delivery of financial statements for
the fiscal quarter of the Borrower ending on or about
July 31, 1998, setting forth reasonably detailed
calculations demonstrating compliance with Sections
6.12, 6.13, 6.14 and 6.15 and (iii) stating whether any
change in GAAP or in the application thereof has
occurred since the date of the Borrower's audited
financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of
such change on the financial statements accompanying
such certificate;
(d) concurrently with any delivery of financial
statements under clause (a) above, a certificate of the
accounting firm that reported on such financial
statements stating whether they obtained knowledge
during the course of their examination of such financial
statements of any Default (which certificate may be
limited to the extent required by accounting rules or
guidelines);
(e) no later than April 15 of each fiscal year of
the Borrower, a detailed consolidated budget for such
fiscal year (including (i) a projected consolidated
balance sheet and related statements of projected
operations and cash flow as of the end of and for such
fiscal year and (ii) a statement of the assumptions upon
which such budget is based) and, promptly when
available, any significant revisions of such budget;
(f) promptly after the same become publicly
available, copies of all periodic and other reports,
proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said
Commission, or with any national securities exchange, as
the case may be; and
57
(g) promptly following any request therefor, such
other information regarding the operations, business
affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may
reasonably request.
SECTION 5.02. Notices of Material Events. The
Borrower will furnish to the Administrative Agent and each Lender
written notice of the occurrence of any of the following events
promptly upon the occurrence of any such event coming to the
attention of any responsible officer of the Borrower:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit
or proceeding by or before any arbitrator or
Governmental Authority against or affecting the Borrower
or any Affiliate thereof that, if adversely determined,
could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any ERISA Event that, alone
or together with any other ERISA Events that have
occurred, could reasonably be expected to result in a
Material Adverse Effect; and
(d) any other development that results in, or could
reasonably be expected to result in, a Material Adverse
Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the
Borrower setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken
with respect thereto.
SECTION 5.03. Information Regarding Collateral.
(a) The Borrower will furnish to the Administrative Agent prompt
written notice of any change (i) in any Loan Party's corporate
name or in any trade name used to identify it in the conduct of
its business or in the ownership of its properties, (ii) in the
location of any Loan Party's chief executive office, its principal
place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or
facility at which Collateral owned by it having a fair market
value in excess of $10,000,000 is located (including the
establishment of any such new office or facility), (iii) in any
Loan Party's identity or corporate structure or (iv) in any Loan
Party's Federal Taxpayer Identification Number. The Borrower
agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the
Uniform Commercial Code or otherwise that are required in order
for the Administrative Agent to continue at all times following
58
such change to have a valid, legal and perfected security interest
in all the Collateral. The Borrower also agrees promptly to
notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual
financial statements with respect to the preceding fiscal year
pursuant to clause (a) of Section 5.01, the Borrower shall deliver
to the Administrative Agent a certificate of a Financial Officer
of the Borrower (i) setting forth the information required
pursuant to Section 2 of the Perfection Certificate or confirming
that there has been no change in such information since the date
of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this
Section and (ii) certifying that all Uniform Commercial Code
financing statements (including fixture filings, as applicable) or
other appropriate filings, recordings or registrations, including
all refiling, rerecording and reregistrations, containing a
description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent
necessary to protect and perfect the security interests under the
Security Agreement for a period of not less than 18 months after
the date of such certificate (except as noted therein with respect
to any continuation statements to be filed within such period).
SECTION 5.04. Existence; Conduct of Business. The
Borrower will, and will cause each of the Subsidiaries to, do or
cause to be done all things necessary to preserve, renew and keep
in full force and effect its legal existence and the rights,
licenses, permits, privileges, franchises, patents, copyrights,
trademarks and trade names material to the conduct of its
business, provided that the foregoing shall not prohibit any
merger, consolidation, liquidation or dissolution permitted under
Section 6.03.
SECTION 5.05. Payment of Obligations. The
Borrower will, and will cause each of the Subsidiaries to, pay its
Indebtedness and other obligations, including Tax liabilities,
before the same shall become delinquent or in default, except
where (a) the validity or amount thereof is being contested in
good faith through appropriate measures, (b) the Borrower or such
Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest
effectively suspends collection of the contested obligation and
the enforcement of any Lien securing such obligation and (d) the
failure to make payment pending such contest could not reasonably
be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. The
Borrower will, and will cause each of the Subsidiaries to, keep
and maintain all property material to the conduct of its business
in good working order and condition, ordinary wear and tear
excepted.
SECTION 5.07. Insurance. (a) The Borrower will,
and will cause each of the Subsidiaries to, maintain, with
financially sound and reputable insurance companies (i) adequate
59
insurance for its insurable properties, all to such extent and
against such risks, including fire, casualty and other risks
insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same
or similar locations and (ii) such other insurance as is required
pursuant to the terms of any Security Document.
SECTION 5.08. Books and Records; Inspection and
Audit Rights. The Borrower will, and will cause each of the
Subsidiaries to, keep proper books of record and account in which
full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The
Borrower will, and will cause each of the Subsidiaries to, permit
any representatives designated by the Administrative Agent or any
Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with
its officers and independent accountants, all at such reasonable
times and as often as reasonably requested.
SECTION 5.09. Compliance with Laws. The Borrower
will, and will cause each of the Subsidiaries to, comply with all
laws, rules, regulations and orders of any Governmental Authority
applicable to it or its property, except where the failure to do
so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.10. Use of Proceeds and Letters of
Credit. The proceeds of up to $75,000,000 in principal amount of
Revolving Loans will be used on the Effective Date only (a) to the
extent necessary following the application of the net proceeds of
the Subordinated Debt, to repay any remaining loans outstanding
under, and any other amounts due in respect of, the Existing
Credit Agreement, (b) for general corporate purposes and (c) for
the payment of fees and expenses payable in connection with the
Transactions. The proceeds of the Revolving Loans (other than
Revolving Loans referred to in the immediately preceding sentence)
and Swingline Loans will be used only (a) for general corporate
purposes, including the financing of acquisitions permitted by
this Agreement, and (b) to pay the consideration for any share
capital of Pyramid Partners acquired by the Borrower in accordance
with Section 6.04(a) . No part of the proceeds of any Loan will
be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board,
including Regulations T, U and X. Letters of Credit will be
issued only for general corporate purposes.
SECTION 5.11. Additional Subsidiaries. If any
additional Subsidiary is formed or acquired after the Effective
Date, the Borrower will notify the Administrative Agent and the
Lenders thereof and (a) if such Subsidiary is a Subsidiary Loan
Party, the Borrower will cause such Subsidiary to become a party
to the Guarantee Agreement, the Indemnity, Subrogation and
60
Contribution Agreement and each applicable Security Document in
the manner provided therein within 15 Business Days after such
Subsidiary is formed or acquired and promptly take such actions to
create and perfect Liens on such Subsidiary's assets to secure the
Obligations as the Administrative Agent or the Required Lenders
shall reasonably request and (b) if any shares of capital stock or
Indebtedness of such Subsidiary are owned by or on behalf of any
Loan Party, the Borrower will cause such shares and promissory
notes evidencing such Indebtedness to be pledged pursuant to the
Pledge Agreement within 15 Business Days after such Subsidiary is
formed or acquired (except that, if such Subsidiary is a Foreign
Subsidiary, shares of common stock of such Subsidiary to be
pledged pursuant to the Pledge Agreement may be limited to 65% of
the outstanding shares of common stock of such Subsidiary).
SECTION 5.12. Further Assurances. (a) The
Borrower will, and will cause each Subsidiary Loan Party to,
execute any and all further documents, financing statements,
agreements and instruments, and take all such further actions
(including the filing and recording of financing statements,
fixture filings, mortgages, deeds of trust and other documents),
that may be required under any applicable law, or which the
Administrative Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan
Documents or to grant, preserve, protect or perfect the Liens
created or intended to be created by the Security Documents or the
validity or priority of any such Lien, all at the expense of the
Loan Parties. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon request, evidence
reasonably satisfactory to the Administrative Agent as to the
perfection and priority of the Liens created or intended to be
created by the Security Documents.
(b) If any assets with a fair market value in
excess of $500,000 (including any real property or improvements
thereto or any interest therein other than leasehold interests in
real property) are acquired in a single transaction or a series of
related transactions by the Borrower or any Subsidiary Loan Party
after the Effective Date (other than (i) assets constituting
Collateral under the Security Agreement that become subject to the
Lien of the Security Agreement upon acquisition thereof and (ii)
equipment purchased by the Borrower or any Subsidiary Loan Party
that is to be and is transferred in accordance with the provisions
of Article VI to any Foreign Subsidiary within 30 days of the date
of delivery of such equipment), the Borrower will notify the
Administrative Agent and the Lenders thereof, and, if requested by
the Administrative Agent or the Required Lenders, the Borrower
will cause such assets to be subjected to a Lien securing the
Obligations and will take, and cause the Subsidiary Loan Parties
to take, such actions as shall be necessary or reasonably
requested by the Administrative Agent to grant and perfect such
Liens, including actions described in paragraph (a) of this
Section, all at the expense of the Loan Parties.
(c) On or before the date that is 60 days after
the date of this Agreement, the Administrative Agent shall have
61
received (i) a policy or policies of title insurance issued by a
nationally recognized title insurance company, insuring the Lien
of each such Mortgage as a valid first Lien on the Mortgaged
Property described therein, free of any other Liens except as
permitted by Section 6.02, in form and substance reasonably
acceptable to the Collateral Agent, together with such
endorsements, coinsurance and reinsurance as the Collateral Agent
or the Required Lenders may reasonably request, (ii) such current
certified surveys as may be required pursuant to the Mortgages
with respect to each Mortgaged Property or as the Administrative
Agent or the Required Lenders may reasonably request, (iii) a copy
of the original permanent certificate or temporary certificate of
occupancy as the same may have been amended or issued from time to
time, covering each improvement located upon the Mortgaged
Properties, that were required to have been issued by the
appropriate Governmental Authority for such improvement and (iv)
written confirmation from the applicable zoning commission or
other appropriate Governmental Authority stating that with respect
to each Mortgaged Property as built it complies with existing land
use and zoning ordinances, regulations and restrictions applicable
to such Mortgaged Property.
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated
and the principal of and interest on each Loan and all fees
payable hereunder have been paid in full and all Letters of Credit
have expired or terminated and all LC Disbursements shall have
been reimbursed, the Borrower covenants and agrees with the
Lenders that:
SECTION 6.01. Indebtedness; Certain Equity
Securities. (a) The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) the Subordinated Debt and the Debentures;
(iii) other Indebtedness existing on the date
hereof and set forth in Schedule 6.01 and extensions,
renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof
or result in an earlier maturity date or decreased
weighted average life thereof;
(iv) Indebtedness of the Borrower to any Subsidiary
and of any Subsidiary to the Borrower or any other
Subsidiary, provided that Indebtedness of any Subsidiary
that is not a Loan Party to the Borrower or any
Subsidiary Loan Party shall be subject to Section
6.04(d), (e) and (f);
62
(v) Guarantees by the Borrower of Indebtedness of
any Subsidiary and by any Subsidiary of Indebtedness of
the Borrower or any other Subsidiary, provided that (A)
Guarantees by the Borrower or any Subsidiary Loan Party
of Indebtedness of any Subsidiary that is not a Loan
Party shall be subject to Section 6.04(d), (e) and (f),
(B) any Guarantee of the Subordinated Debt shall be
subject to Section 6.04(f) and (C) any such Guarantee
shall be permitted only to the extent that such
Guarantee would be permitted under the Subordinated Debt
Documents;
(vi) Indebtedness of the Borrower incurred to
finance the acquisition, construction or improvement of
any fixed or capital assets, including Capital Lease
Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a
Lien on any such assets prior to the acquisition
thereof, and extensions, renewals and replacements of
any such Indebtedness that do not increase the
outstanding principal amount thereof or result in an
earlier maturity date or decreased weighted average life
thereof, provided that (A) such Indebtedness is incurred
prior to or within 90 days after such acquisition or the
completion of such construction or improvement and (B)
the aggregate principal amount of Indebtedness permitted
by this clause (vi) shall not exceed $10,000,000 at any
time outstanding;
(vii) Indebtedness of any Person that becomes a
Subsidiary after the date hereof, provided that (A) such
Indebtedness exists at the time such Person becomes a
Subsidiary and is not created in contemplation of or in
connection with such Person becoming a Subsidiary and
(B) the aggregate principal amount of Indebtedness
permitted by this clause (vii) shall not exceed
$5,000,000 at any time outstanding, provided that up to
$3,000,000 aggregate principal amount of additional
Indebtedness shall be permitted under this clause (vii)
in connection with investments by the Borrower pursuant
to Section 6.04(a) ;
(viii) other unsecured Indebtedness in an aggregate
principal amount not exceeding $10,000,000 at any time
outstanding, provided that the aggregate principal
amount of Indebtedness of the Borrower's Subsidiaries
that are not Loan Parties permitted by this clause
(viii) shall not exceed $5,000,000 at any time
outstanding; and
(ix) Indebtedness of the Borrower under Hedging
Agreements entered into in accordance with Section 6.07,
provided that any Indebtedness of or Guarantee by a Subsidiary
under clause (iii), clause (iv), clause (v) or clause (viii) of
this Section 6.01(a) shall be permitted only to the extent that
such Indebtedness or Guarantee would be permitted under the
Debentures Indenture.
63
(b) The Borrower will not, nor will it permit any
Subsidiary to, issue any preferred stock or be or become liable in
respect of any obligation (contingent or otherwise) to purchase,
redeem, retire, acquire or make any other payment in respect of
any shares of capital stock of the Borrower or any Subsidiary or
any option, warrant or other right to acquire any such shares of
capital stock except for any obligation of the Borrower to issue
preferred stock pursuant to the Rights Agreement, dated as of June
10, 1986, originally between the Borrower and The Chase Manhattan
Bank.
SECTION 6.02. Liens. The Borrower will not, and
will not permit any Subsidiary to, create, incur, assume or permit
to exist any Lien on any property or asset now owned or hereafter
acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any
thereof, except:
(a) Liens securing the Obligations;
(b) Permitted Encumbrances;
(c) any Lien on any property or asset of the
Borrower or any Subsidiary existing on the date hereof
and set forth in Schedule 6.02, provided that (i) such
Lien shall not apply to any other property or asset of
the Borrower or any Subsidiary, (ii) such Lien shall
secure only those obligations that it secures on the
date hereof and extensions, renewals and replacements
thereof that do not increase the principal amount
secured thereby and (iii) any such Lien shall be
permitted only to the extent that such Lien would be
permitted under the Debentures Indenture;
(d) any Lien existing on any property or asset
prior to the acquisition thereof by the Borrower or any
Subsidiary or existing on any property or asset of any
Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary,
provided that (A) such Lien is not created in
contemplation of or in connection with such acquisition
or such Person becoming a Subsidiary, as the case may
be, (B) such Lien shall not apply to any other property
or assets of the Borrower or any Subsidiary and (C) such
Lien shall secure only those obligations that it secures
on the date of such acquisition or the date such Person
becomes a Subsidiary, as the case may be, and
extensions, renewals and replacements thereof that do
not increase the principal amount secured thereby;
(e) Liens on fixed or capital assets acquired,
constructed or improved by the Borrower or any
Subsidiary, provided that (A) such security interests
secure Indebtedness permitted by clause (vi) of Section
6.01(a), (B) such security interests and the
64
Indebtedness secured thereby are incurred prior to or
within 90 days after such acquisition or the completion
of such construction or improvement, (C) the
Indebtedness secured thereby does not exceed 100% of the
cost of acquiring, constructing or improving such fixed
or capital assets and (D) such security interests shall
not apply to any other property or assets of the
Borrower or any Subsidiary; and
(f) Liens (other than those permitted by paragraphs
(a) through (e) above) securing Indebtedness permitted
hereunder in an aggregate amount not exceeding
$2,000,000 at any time outstanding, provided that any
such Lien shall be permitted only to the extent that
such Lien would be permitted under the Debentures
Indenture.
SECTION 6.03. Fundamental Changes. (a) The
Borrower will not and will not permit any Subsidiary to, merge
into or consolidate with any other Person, or permit any other
Person to merge into or consolidate with it, or liquidate or
dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be
continuing (i) any Subsidiary may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation,
(ii) any Subsidiary may merge into any Subsidiary Loan Party in a
transaction in which the surviving entity is a Subsidiary Loan
Party, (iii) any Subsidiary that is not a Loan Party may merge
into any Subsidiary that is not a Loan Party and (iv) any
Subsidiary may liquidate or dissolve if the Borrower determines in
good faith that such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to
the Lenders, provided in each case that any such merger involving
a Person that is not a wholly owned Subsidiary immediately prior
to such merger shall not be permitted unless also permitted by
Section 6.04.
(b) The Borrower will not, and will not permit any
of the Subsidiaries to, engage to any material extent in any
business other than businesses substantially of the type conducted
by the Borrower and the Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
SECTION 6.04. Investments, Loans, Advances,
Guarantees and Acquisitions. The Borrower will not, and will not
permit any of the Subsidiaries to, purchase, hold or acquire
(including pursuant to any merger with any Person that was not a
wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any
option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee
any obligations of, or make or permit to exist any investment or
any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any
assets of any other Person constituting a business unit, except:
(a) investments by the Borrower in all or a portion
of the share capital of Pyramid Partners not owned by
the Borrower on the date hereof, provided that (i) such
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share capital shall be purchased (A) free of all Liens
and encumbrances, (B) in one or more transactions the
first of which results in the Borrower owning at least
51% of the issued and outstanding share capital of
Pyramid Partners and (C) at the per-share "Earn-Out
Price" set forth in Amendment No. 1, dated as of January
1, 1997, to the Purchaser's Option Agreement, dated as
of January 10, 1996, among the Borrower and the other
parties thereto (or to the extent that the per-share
purchase price for such share capital is more than 10%
greater than it would have been had it been calculated
pursuant to such per-share Earn-Out Price, on financial
terms reasonably acceptable to the Required Lenders),
(ii) at the time of such investment and after giving pro
forma effect thereto, (A) no Default or Event of Default
shall have occurred or be continuing and (B) the
Borrower shall be in compliance with Section 6.13,
Section 6.14 and Section 6.15 and (iii) the Borrower
shall comply with the applicable provisions of Section
5.11;
(b) Permitted Investments;
(c) investments existing on the date hereof and set
forth on Schedule 6.04;
(d) investments by any Loan Party made after the
Effective Date in the capital stock of the Subsidiaries
(including any Subsidiary acquired after the date
hereof), provided that (i) any such shares of capital
stock shall be pledged pursuant to the Pledge Agreement
(subject to the limitations applicable to common stock
of a Foreign Subsidiary referred to in Section 5.11) and
(ii) the amount of investments by the Borrower in
Subsidiaries that are not Loan Parties under this clause
(d), together with loans and advances under
Section 6.04(e) and Guarantees under Section 6.04(f),
shall not exceed $10,000,000 in the aggregate at any
time outstanding;
(e) loans or advances made by the Borrower to any
Subsidiary and made by any Subsidiary to the Borrower or
any other Subsidiary, provided that (i) if any such
loans and advances made by a Loan Party are evidenced by
a promissory note, such promissory note shall be pledged
pursuant to the Pledge Agreement and (ii) the amount of
all such loans and advances by Loan Parties to
Subsidiaries that are not Loan Parties under this clause
(e), together with investments under Section 6.04(d) and
Guarantees under Section 6.04(f), shall not exceed
$10,000,000 in the aggregate at any time outstanding;
(f) Guarantees constituting Indebtedness permitted
by Section 6.01, provided that (i) a Subsidiary shall
not Guarantee the Subordinated Debt unless (A) such
Subsidiary also has Guaranteed the Obligations pursuant
to the Guarantee Agreement, (B) such Guarantee of the
Subordinated Debt is subordinated to such Guarantee of
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the Obligations on terms no less favorable to the
Lenders than the subordination provisions of the
Subordinated Debt and (C) such Guarantee of the
Subordinated Debt provides for the release and
termination thereof, without action by any party, upon
any release and termination of such Guarantee of the
Obligations and (ii) the amount of Indebtedness that is
(A) outstanding with respect to Subsidiaries that are
not Loan Parties and (B) Guaranteed by any Loan Party
under this clause (f), together with investments under
Section 6.04(d) and loans and advances under Section
6.04(e), shall not exceed $10,000,000 in the aggregate
at any time outstanding;
(g) loans to employees and officers of the Borrower
and the Subsidiaries in their capacity as such, in an
aggregate principal amount not to exceed $2,000,000 at
any time outstanding;
(h) Hedging Agreements permitted under Section
6.07;
(i) investments received in connection with the
bankruptcy or reorganization of, or settlement of
delinquent accounts and disputes with, customers and
suppliers, in each case in the ordinary course of
business; and
(j) investments (other than those permitted by
paragraphs (a) through (i) above) in an aggregate amount
not to exceed $15,000,000 at any time outstanding.
SECTION 6.05. Asset Sales. The Borrower will not,
and will not permit any of the Subsidiaries to, sell, transfer,
lease or otherwise dispose of any asset, including any capital
stock, nor will the Borrower permit any of the Subsidiaries to
issue any additional shares of its capital stock or other
ownership interest in such Subsidiary, except:
(a) sales of inventory, used or surplus equipment,
surplus leasehold improvements in connection with store
closings and Permitted Investments in the ordinary
course of business;
(b) sales of inventory, used or surplus equipment
and real property in connection with the closing of the
Borrower's warehouse and manufacturing facilities in
Wilton, Maine, Reading, Pennsylvania, Augusta, Arkansas,
Brinkley, Arkansas, and Geneva, Alabama;
(c) sales, transfers and dispositions to the
Borrower or a Subsidiary, provided that any such sales,
transfers or dispositions involving a Subsidiary that is
not a Loan Party shall be made in compliance with
Section 6.09; and
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(d) sales, transfers and dispositions of assets
(other than capital stock of a Subsidiary) that are not
permitted by any other clause of this Section, provided
that the aggregate fair market value of all assets sold,
transferred or otherwise disposed of in reliance upon
this clause (c) shall not exceed (i) $20,000,000 with
respect to any one such sale, transfer or disposition
and (ii) $25,000,000 in the aggregate with respect to
all such sales, transfers and dispositions during the
term of this Agreement,
provided that all sales, transfers, leases and other dispositions
permitted hereby shall be made for fair value and for at least 85%
cash consideration.
SECTION 6.06. Sale and Lease-Back Transactions.
The Borrower will not, and will not permit any of the Subsidiaries
to, enter into any arrangement, directly or indirectly, with any
person whereby it shall sell or transfer any property, real or
personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same
purpose or purposes as the property being sold or transferred,
provided that the Borrower and the Subsidiaries may enter into any
such transaction to the extent (a) such transaction would be
permitted by Section 6.05(d), (b) the Capital Lease Obligation and
Liens associated therewith would be permitted by Sections
6.01(a)(vi) and 6.02(e) and (c) such transaction would be
permitted under the Debentures Indenture.
SECTION 6.07. Hedging Agreements. The Borrower
will not, and will not permit any of the Subsidiaries to, enter
into any Hedging Agreement, other than Hedging Agreements entered
into in the ordinary course of business to hedge or mitigate risks
to which the Borrower or any Subsidiary is exposed in the conduct
of its business or the management of its liabilities.
SECTION 6.08. Restricted Payments; Certain
Payments of Indebtedness. (a) The Borrower will not, and will not
permit any Subsidiary to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payment, except (i)
the Borrower may declare and pay dividends with respect to its
capital stock payable solely in additional shares of its common
stock, (ii) Subsidiaries may declare and pay dividends ratably
with respect to their capital stock, (iii) the Borrower may make
Restricted Payments, not exceeding $5,000,000 during any fiscal
year, pursuant to and in accordance with stock option plans or
other benefit plans for management or employees of the Borrower
and the Subsidiaries and (iv) the Borrower may declare and pay
cash dividends with respect to its capital stock in an aggregate
amount of up to $6,000,000 in any fiscal year; provided, however,
that the Borrower may not pay cash dividends pursuant to this
clause (iv) in any fiscal quarter to the extent that the payment
of such dividends would not be permitted in such fiscal quarter
under the Subordinated Debt Documents.
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(b) The Borrower will not, and will not permit any
Subsidiary to, make or agree to pay or make, directly or
indirectly, any payment or other distribution (whether in cash
securities or other property) of or in respect of principal of or
interest on any Indebtedness, or any payment or other distribution
(whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancelation or termination of
any Indebtedness, except:
(i) payment of regularly scheduled interest and
principal payments as and when due in respect of any
Indebtedness, other than payments in respect of the
Subordinated Debt prohibited by the subordination
provisions thereof;
(ii) refinancings of Indebtedness to the extent
permitted by Section 6.01; and
(iii) payment of secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the
property or assets securing such Indebtedness.
SECTION 6.09. Transactions with Affiliates. The
Borrower will not, and will not permit any Subsidiary to, sell,
lease or otherwise transfer any property or assets to, or
purchase, lease or otherwise acquire any property or assets from,
or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of
business that are at prices and on terms and conditions not less
favorable to the Borrower or such Subsidiary than could be
obtained on an arm's-length basis from unrelated third parties,
provided that any transaction (i) between the Borrower and any
Foreign Subsidiary or (ii) between any Subsidiary Loan Party and
any Foreign Subsidiary, in each case may be at prices and on terms
and conditions less favorable to such Foreign Subsidiary then
could be obtained on an arms-length basis from unrelated third
parties, (b) transactions between or among the Borrower and the
Subsidiary Loan Parties not involving any other Affiliate and (c)
any Restricted Payment permitted by Section 6.08.
SECTION 6.10. Restrictive Agreements. The
Borrower will not, and will not permit any Subsidiary to,
directly or indirectly, enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or
imposes any condition upon (a) the ability of the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any
of its property or assets, or (b) the ability of any Subsidiary to
pay dividends or other distributions with respect to any shares of
its capital stock or to make or repay loans or advances to the
Borrower or any other Subsidiary or to Guarantee Indebtedness of
the Borrower or any other Subsidiary, provided that (i) the
foregoing shall not apply to restrictions and conditions imposed
by law or by any Loan Document, Subordinated Debt Document or the
Debentures, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.10
(or any extension or renewal of any such restriction or condition
on terms no less favorable to Borrower), but shall apply to any
amendment or modification expanding the scope of any such
69
restriction or condition, (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided
such restrictions and conditions apply only to the Subsidiary that
is to be sold and such sale is permitted hereunder, (iv) clause
(a) of the foregoing shall not apply to restrictions or conditions
imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness
and (v) clause (a) of the foregoing shall not apply to customary
provisions in leases restricting the assignment thereof.
SECTION 6.11. Amendment of Material Documents.
The Borrower will not, and will not permit any Subsidiary to,
amend, modify or waive any of its rights under (i) its certificate
of incorporation, by-laws or other organizational documents, (ii)
any Subordinated Debt Document or (iii) the Debentures Indenture,
in each case to the extent that such amendment, modification or
waiver would be adverse to the interests of the Lenders.
SECTION 6.12. Capital Expenditures. The Borrower
will not permit the aggregate amount of Capital Expenditures made
by the Borrower and the Subsidiaries in any fiscal year to exceed
the amount set forth below opposite such year, provided that for
any period set forth below, the dates constituting the beginning
and end of such period shall refer to the first and last day of
the fiscal year of the Borrower beginning and ending,
respectively, on or about such dates:
Fiscal Year Amount
Effective Date--January 31, 1999 $50,000,000
February 1, 1999--January 31, 2000 $27,500,000
February 1, 2000--January 31, 2001 $24,000,000
February 1, 2001--January 31, 2002 $30,000,000
February 1, 2002--January 31, 2003 $30,000,000
The amount of permitted Capital Expenditures set forth in the
immediately preceding sentence in respect of any fiscal year shall
be increased by (a) 25% of the amount of unused permitted Capital
Expenditures for the immediately preceding fiscal year less (b) an
amount equal to unused Capital Expenditures carried forward to
such preceding fiscal year.
SECTION 6.13. Leverage Ratio. The Borrower will
not permit the Leverage Ratio for any four-fiscal-quarter period
ending during any period set forth below to be in excess of the
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ratio set forth below opposite such period, provided that for any
period set forth below, the dates constituting the beginning and
end of such period shall refer to the last day of the fiscal
period of the Borrower ending on or about such dates:
Period Ratio
July 31, --October 31, 1998 5.00 to 1.00
November 1, 1998--January 31, 1999 4.75 to 1.00
February 1, 1999--January 31, 2000 4.00 to 1.00
February 1, 2000--January 31, 2001 3.25 to 1.00
Thereafter 3.00 to 1.00
SECTION 6.14. Consolidated Net Interest Expense
Coverage Ratio. The Borrower will not permit the Consolidated Net
Interest Expense Coverage Ratio for any four-fiscal-quarter period
ending during any period set forth below to be less than the ratio
set forth below opposite such period, provided that for any period
set forth below, the dates constituting the beginning and end of
such period shall refer to the last day of the fiscal period of
the Borrower ending on or about such dates:
Period Ratio
July 31, 1998--October 31, 1998 2.40 to 1.00
November 1, 1998--January 31, 1999 2.50 to 1.00
February 1, 1999--January 31, 2000 2.75 to 1.00
February 1, 2000--January 31, 2001 3.50 to 1.00
Thereafter 3.75 to 1.00
SECTION 6.15. Current Asset Coverage Ratio. The
Borrower will not permit the Current Asset Coverage Ratio as of
the end of any fiscal quarter to be less than 1.4 to 1.00.
SECTION 6.16. Fiscal Year. The Borrower will not,
and will not permit the Subsidiaries to, change the financial
reporting convention by which the Borrower and the Subsidiaries
determine the dates on which their fiscal years and fiscal
quarters will end.
SECTION 6.17. Subsidiaries. The Borrower will
not, and will not permit the Subsidiaries to, create, acquire or
permit to exist any Subsidiary other than (a) any Subsidiary all
the outstanding capital stock of which is owned by the Borrower or
one of its Subsidiaries and (b) Pyramid.
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ARTICLE VII
Events of Default
If any of the following events ("Events of
Default") shall occur:
(a) the Borrower shall fail to pay any principal of
any Loan or any reimbursement obligation in respect of
any LC Disbursement when and as the same shall become
due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on
any Loan or any fee or any other amount (other than an
amount referred to in clause (a) of this Article)
payable under this Agreement or any other Loan Document,
when and as the same shall become due and payable, and
such failure shall continue unremedied for a period of
five days;
(c) any representation or warranty made or deemed
made by or on behalf of the Borrower or any Subsidiary
in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder,
or in any report, certificate, financial statement or
other document furnished pursuant to or in connection
with any Loan Document or any amendment or modification
thereof or waiver thereunder, shall prove to have been
incorrect in any material respect when made or deemed
made;
(d) the Borrower shall fail to observe or perform
any covenant, condition or agreement contained in
Section 5.02, 5.04 (with respect to the existence of
the Borrower), 5.11 or in Article VI;
(e) any Loan Party shall fail to observe or perform
any covenant, condition or agreement contained in any
Loan Document (other than those specified in clause (a),
(b) or (d) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice
thereof from the Administrative Agent to the Borrower
(which notice will be given at the request of any
Lender);
(f) the Borrower or any Subsidiary shall fail to
make any payment (whether of principal or interest and
regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and
payable;
(g) any event or condition occurs that results in
any Material Indebtedness becoming due prior to its
scheduled maturity or, after giving effect to any
applicable grace period, that enables or permits the
72
holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any
Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity, provided that
this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or
an involuntary petition shall be filed seeking (i)
liquidation, reorganization or other relief in respect
of the Borrower or any Subsidiary or its debts, or of a
substantial part of its assets, under any Federal,
state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an
order or decree approving or ordering any of the
foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition
seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter
in effect, (ii) consent to the institution of, or fail
to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this
Article, (iii) apply for or consent to the appointment
of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of its assets, (iv)
file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v)
make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any
of the foregoing;
(j) the Borrower or any Subsidiary shall become
unable, admit in writing its inability or fail generally
to pay its debts as they become due;
(k) one or more judgments for the payment of money
in an aggregate amount in excess of $5,000,000 shall be
rendered against the Borrower, any Subsidiary or any
combination thereof and the same shall remain
undischarged for a period of 60 consecutive days during
which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to
attach or levy upon any material assets of the Borrower
or any Subsidiary to enforce any such judgment;
(l) there shall have occurred and be continuing an
ERISA Event that, in the opinion of the Required
73
Lenders, when taken together with all other ERISA Events
that have occurred and are continuing, could reasonably
be expected to result in a Material Adverse Effect;
(m) (i) any Lien purported to be created under any
Security Document shall cease to be a valid and
perfected Lien on any Collateral with a fair market
value, individually or in the aggregate, in excess of
$1,000,000, with the priority required by the applicable
Security Document, or any such Lien shall be contested
by a Loan Party, except (A) as a result of the sale or
other disposition of the applicable Collateral in a
transaction permitted under the Loan Documents or (B) as
a result of the Administrative Agent's failure to
maintain possession of any stock certificates,
promissory notes or other instruments delivered to it
under the Pledge Agreement, or (ii) the provisions of
Section 7 of the Security Agreement shall cease to be in
full force and effect or any such provision shall be
contested by a Loan Party;
(n) the Debentures Trustee or "Holders" (as such
term is defined in the Debentures Indenture) of not less
than 66 2/3% in aggregate principal amount of the
"Outstanding Securities" (as such term is defined in the
Debentures Indenture) shall contest (i) the validity of
the Lien purported to be created under the Security
Agreement in favor of the Collateral Agent for the
benefit of the Secured Parties on the Collateral
described therein or (ii) the provisions of Section 7 of
the Security Agreement;
(o) the subordination provisions of the
Subordinated Debt shall cease to be in full force and
effect or any such provision shall be contested by the
Trustee under the Subordinated Debt Documents or the
"Holders" (as such term is defined in the Subordinated
Debt Documents) of a majority in aggregate principal
amount of the "Outstanding Notes" (as such term is
defined in the Subordinated Debt Documents); or
(p) a Change in Control shall occur;
then, and in every such event (other than an event with respect to
the Borrower described in clause (h) or (i) of this Article), and
at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required
Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i)
terminate the Commitments, and thereupon the Commitments shall
terminate immediately, and (ii) declare the Loans then outstanding
to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be
declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall become due and payable
74
immediately, without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitments shall
automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees
and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby
waived by the Borrower.
ARTICLE VIII
The Administrative Agent and the Collateral Agent
Each of the Lenders and each Issuing Bank hereby
irrevocably appoints The Chase Manhattan Bank as Administrative
Agent and Collateral Agent (for purposes of this Article VIII,
collectively, the "Agent") and authorizes the Agent to take such
actions on its behalf and to exercise such powers as are delegated
to the Agent by the terms of the Loan Documents, together with
such actions and powers as are reasonably incidental thereto.
The bank serving as the Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any
other Lender and may exercise the same as though it were not the
Agent, and such bank and its Affiliates may accept deposits from,
lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it
were not the Agent hereunder.
The Agent shall not have any duties or obligations
except those expressly set forth in the Loan Documents. Without
limiting the generality of the foregoing, (a) the Agent shall not
be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing, (b) the Agent
shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and
powers expressly contemplated by the Loan Documents that the Agent
is required to exercise in writing by the Required Lenders (or
such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02),
and (c) except as expressly set forth in the Loan Documents, and
subject to applicable law, the Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrower or any of the Subsidiaries
that is communicated to or obtained by the bank serving as Agent
or any of its Affiliates in any capacity. The Agent shall not be
liable for any action taken or not taken by it with the consent or
at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of
its own gross negligence or wilful misconduct. The Agent shall
not be deemed to have knowledge of any Default unless and until
written notice thereof is given to the Agent by the Borrower or a
75
Lender, and the Agent shall not be responsible for or have any
duty to ascertain or inquire into (a) any statement, warranty or
representation made in or in connection with any Loan Document,
(b) the contents of any certificate, report or other document
delivered thereunder or in connection therewith, (c) the
performance or observance of any of the covenants, agreements or
other terms or conditions set forth in any Loan Document, (d) the
validity, enforceability, effectiveness or genuineness of any Loan
Document or any other agreement, instrument or document or (e) the
satisfaction of any condition set forth in Article IV or elsewhere
in any Loan Document, other than to confirm receipt of items
expressly required to be delivered to the Agent.
The Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or
sent by the proper Person. The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to
be made by the proper Person, and shall not incur any liability
for relying thereon. The Agent may consult with legal counsel
(who may be counsel for the Borrower), independent accountants and
other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
The Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more
sub-agents appointed by the Agent. The Agent and any such
sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of each Agent and
any such sub-agent, and shall apply to their respective activities
in connection with the syndication of the credit facilities
provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a
successor to the Agent as provided in this paragraph, the Agent
may resign at any time by notifying the Lenders, each Issuing Bank
and the Borrower. Upon any such resignation, the Required Lenders
shall have the right, with the consent of the Borrower, not to be
unreasonably withheld, to appoint a successor. If no successor
shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring
Agent gives notice of its resignation, then the retiring Agent
may, on behalf of the Lenders and each Issuing Bank, appoint a
successor Agent that shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance
of its appointment as Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrower to a successor Agent
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shall be the same as those payable to its predecessor unless
otherwise agreed between the Borrower and such successor. After
the Agent's resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by
any of them while it was acting as Agent.
Each Lender acknowledges that it has, independently
and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will,
independently and without reliance upon the Agent or any other
Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own
decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices. Except in the case of
notices and other communications expressly permitted to be given
by telephone, all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail
or sent by telecopy, as follows:
(a) if to the Borrower, to it at Phillips-Van
Heusen Corporation, 1290 Avenue of the Americas, New
York, NY 10104, Attention of Treasurer (Telecopy No.
(212) 468-7231);
(b) if to the Administrative Agent, the Collateral
Agent, the Primary Issuing Bank or the Swingline Lender,
to The Chase Manhattan Bank, Loan and Agency Services
Group, One Chase Manhattan, 8th Floor, New York, New
York 10081, Attention of Janet Belden (Telecopy No.
(212) 552-5658), with a copy to The Chase Manhattan
Bank, 270 Park Avenue, New York 10017, Attention of
Margaret Lane (Telecopy No. (212) 270-5646); and
(c) if to any other Lender or Issuing Bank, to it
at its address (or telecopy number) set forth in its
Administrative Questionnaire.
Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other
parties hereto. All notices and other communications given to any
party hereto in accordance with the provisions of this Agreement
shall be deemed to have been given on the date of receipt.
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SECTION 9.02. Waivers; Amendments. (a) No
failure or delay by the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender in exercising any right or
power hereunder or under any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps
to enforce such a right or power, preclude any other or further
exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Collateral
Agent, the Issuing Banks and the Lenders hereunder and under the
other Loan Documents are cumulative and are not exclusive of any
rights or remedies that they would otherwise have. No waiver of
any provision of any Loan Document or consent to any departure by
any Loan Party therefrom shall in any event be effective unless
the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. Without
limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver
of any Default, regardless of whether the Administrative Agent,
the Collateral Agent, any Lender or any Issuing Bank may have had
notice or knowledge of such Default at the time.
(b) Neither this Agreement nor any other Loan
Document nor any provision hereof or thereof may be waived,
amended or modified except, in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by
the Borrower and the Required Lenders or, in the case of any other
Loan Document, pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan
Parties that are parties thereto, in each case with the consent of
the Required Lenders, provided that no such agreement shall (i)
increase the Commitment of any Lender without the written consent
of such Lender, (ii) reduce the principal amount of any Loan or LC
Disbursement or reduce the rate of interest thereon, or reduce any
fees payable hereunder, without the written consent of each Lender
affected thereby, (iii) postpone the scheduled date of payment of
the principal amount of any Loan or LC Disbursement, or any
interest thereon, or any fees payable hereunder, or reduce the
amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the
written consent of each Lender affected thereby, (iv) change
Section 2.17(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent
of each Lender, (v) change any of the provisions of this Section
or the definition of the term "Required Lenders" or any other
provision of any Loan Document specifying the number or percentage
of Lenders required to waive, amend or modify any rights
thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vi)
release any Subsidiary Loan Party from its Guarantee under the
Guarantee Agreement (except as expressly provided in such
Guarantee Agreement or as a result of the termination of the
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existence of such Subsidiary Loan Party in a transaction permitted
by Section 6.03), or limit its liability in respect of such
Guarantee, without the written consent of each Lender or (vii)
release all or substantially all of the Collateral from the Liens
of the Security Documents (except as expressly provided in such
Security Documents or Section 9.14), without the written consent
of each Lender, and provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the
Administrative Agent, the Collateral Agent, any Issuing Bank or
the Swingline Lender without the prior written consent of the
Administrative Agent, the Collateral Agent, such Issuing Bank or
the Swingline Lender, as the case may be.
SECTION 9.03. Expenses; Indemnity; Damage Waiver.
(a) The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent, the Collateral
Agent, and their Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent
and the Collateral Agent in connection with the syndication of the
credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments,
modifications or waivers of the provisions thereof (whether or not
the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred
by any Issuing Bank in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for
payment thereunder, in each case as agreed upon with such Issuing
Bank, and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, the Collateral Agent, any Issuing Bank or
any Lender, including the reasonable fees, charges and
disbursements of any counsel for the Administrative Agent, the
Collateral Agent, any Issuing Bank or any Lender, in connection
with the enforcement or protection of its rights in connection
with the Loan Documents, including its rights under this Section,
or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of
such Loans or Letters of Credit.
(b) The Borrower shall indemnify the
Administrative Agent, the Collateral Agent, each Issuing Bank and
each Lender, and each Related Party of any of the foregoing
Persons (each such Person being called an "Indemnitee") against,
and hold each Indemnitee harmless from, any and all losses,
claims, damages, liabilities and related expenses, including the
fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery
of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan
Documents of their respective obligations thereunder or the
consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by an Issuing
Bank to honor a demand for payment under a Letter of Credit issued
by such Issuing Bank if the documents presented in connection with
such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any Mortgaged Property or any other
property currently or formerly owned or operated by the Borrower
or any of the Subsidiaries, or any Environmental Liability related
in any way to the Borrower or any of the Subsidiaries, or (iv) any
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actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any
Indemnitee is a party thereto, provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses resulted
from the gross negligence or wilful misconduct of such Indemnitee
or any Affiliate of such Indemnitee (or of any officer, director,
employee, advisor or agent of such Indemnitee or any of such
Indemnitee's Affiliates).
(c) To the extent that the Borrower fails to pay
any amount required to be paid by it to the Administrative Agent,
the Collateral Agent, any Issuing Bank or the Swingline Lender
under paragraph (a) or (b) of this Section, each Lender severally
agrees to pay to the Administrative Agent, the Collateral Agent,
the applicable Issuing Bank or the Swingline Lender, as the case
may be, such Lender's pro rata share (determined as of the time
that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against
the Administrative Agent, the Collateral Agent, such Issuing Bank
or the Swingline Lender in its capacity as such. For purposes
hereof, a Lender's "pro rata share" shall be determined based upon
its share of the sum of the total Revolving Exposures, and unused
Commitments at the time.
(d) To the extent permitted by applicable law, the
Borrower shall not assert, and each hereby waives, any claim
against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct
or actual damages) arising out of, in connection with, or as a
result of, this Agreement or any agreement or instrument
contemplated hereby, the Transactions, any Loan or Letter of
Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be
payable promptly after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns permitted hereby (including any Affiliate of any
Issuing Bank that issues any Letter of Credit), except that the
Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void). Nothing in this
Agreement, expressed or implied, shall be construed to confer upon
any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate
of any Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each
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of the Administrative Agent, the Collateral Agent, any Issuing
Bank and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees
all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the
Loans at the time owing to it), provided that (i) except in the
case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent must give their
prior written consent to such assignment (which consent shall not
be unreasonably withheld), (ii) except in the case of an
assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning
Lender's Commitment or Loans, the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000 unless each of the
Borrower and the Administrative Agent otherwise consent, (iii)
each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance, together with a processing and
recordation fee of $3,500, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire, and provided further that any
consent of the Borrower otherwise required under this paragraph
shall not be required if an Event of Default under clause (a),
(b),(h) or (i) of Article VII has occurred and is continuing.
Subject to acceptance and recording thereof pursuant to paragraph
(d) of this Section, from and after the effective date specified
in each Assignment and Acceptance the assignee thereunder shall be
a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder
shall, to the extent of the interest assigned by such Assignment
and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all of the assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections
2.14, 2.15, 2.16 and 9.03). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not
comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such
rights and obligations in accordance with paragraph (e) of this
Section.
(c) The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its
offices in The City of New York a copy of each Assignment and
Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and
principal amount of the Loans and LC Disbursements owing to, each
Lender pursuant to the terms hereof from time to time (the
"Register"). Absent manifest error, the entries in
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the Register shall be conclusive, and the Borrower, the
Administrative Agent, the Collateral Agent, any Issuing Bank and
the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the
contrary. The Register shall be available for inspection by the
Borrower, any Issuing Bank and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed
Assignment and Acceptance executed by an assigning Lender and an
assignee, the assignee's completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the
processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required
by paragraph (b) of this Section, the Administrative Agent shall
accept such Assignment and Acceptance and record the information
contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the
Borrower, the Administrative Agent, any Issuing Bank or the
Swingline Lender, sell participations to one or more banks or
other entities (a "Participant") in all or a portion of such
Lender's rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans owing to it),
provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent,
any Issuing Bank and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole
right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents,
provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to
any amendment, modification or waiver described in the first
proviso to Section 9.02(b) that affects such Participant. Subject
to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.14,
2.15 and 2.16 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant
also shall be entitled to the benefits of Section 9.08 as though
it were a Lender, provided such Participant agrees to be subject
to Section 2.17(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive
any greater payment under Section 2.14 or 2.16 than the applicable
Lender would have been entitled to receive with respect to the
participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign
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Lender if it were a Lender shall not be entitled to the benefits
of Section 2.16 unless the Borrower is notified of the
participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section
2.16(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a
security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section shall not apply to any such pledge or
assignment of a security interest, provided that no such pledge or
assignment of a security interest shall release a Lender from any
of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants,
agreements, representations and warranties made by the Loan
Parties in the Loan Documents and in the certificates or other
instruments delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have
been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any
Loans and issuance of any Letters of Credit, regardless of any
investigation made by any such other party or on its behalf and
notwithstanding that the Administrative Agent, any Issuing Bank or
any Lender may have had notice or knowledge of any Default or
incorrect representation or warranty at the time any credit is
extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated. The
provisions of Sections 2.14, 2.15, 2.16 and 9.03 and Article VIII
shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the
repayment of the Loans, the expiration or termination of the
Letters of Credit and the Commitments or the termination of this
Agreement or any provision hereof.
SECTION 9.06. Counterparts; Integration;
Effectiveness. This Agreement may be executed in counterparts
(and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Agreement, the
other Loan Document and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the
entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have
received counterparts hereof that, when taken together, bear the
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signatures of each of the other parties hereto, and thereafter
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. Delivery of
an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this
Agreement held to be invalid, illegal or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the
remaining provisions hereof; and the invalidity of a particular
provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction.
SECTION 9.08. Right of Set-off. If an Event of
Default shall have occurred and be continuing, each Lender and
each of its Affiliates is hereby authorized at any time and from
time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other
obligations at any time owing by such Lender or Affiliate to or
for the credit or the account of the Borrower against any of and
all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement
and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) that such Lender may
have.
SECTION 9.09. Governing Law; Jurisdiction; Consent
to Service of Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
(b) The Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of
or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the
Administrative Agent, the Collateral Agent, any Issuing Bank or
any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or any other Loan Document against the
Borrower or its properties in the courts of any jurisdiction.
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(c) The Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in
any court referred to in paragraph (b) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices
in Section 9.01. Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY
HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section
headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in
interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the
Administrative Agent, the Issuing Banks and the Lenders agrees to
maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and
its Affiliates' directors, officers, employees and agents,
including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will
be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent
required by applicable laws or regulations or by any subpoena or
similar legal process, provided that, to the extent reasonably
practicable and not prohibited by applicable laws or regulations
or by any judicial or administrative order, such Person will
provide the Borrower with prior notice of such disclosure, (d) to
any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or
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proceeding relating to this Agreement or any other Loan Document
or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or
any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement, (g) with the consent of the
Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, the
Collateral Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For
the purposes of this Section, the term "Information" means all
information received from the Borrower relating to the Borrower or
its business, other than any such information that is available to
the Administrative Agent, the Collateral Agent, any Issuing Bank
or any Lender on a nonconfidential basis prior to disclosure by
the Borrower. Any Person required to maintain the confidentiality
of Information as provided in this Section shall be considered to
have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality
of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation.
Notwithstanding anything herein to the contrary, if at any time
the interest rate applicable to any Loan, together with all fees,
charges and other amounts that are treated as interest on such
Loan under applicable law (collectively, the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") that may be
contracted for, charged, taken, received or reserved by the Lender
holding such Loan in accordance with applicable law, the rate of
interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be
cumulated and the interest and Charges payable to such Lender in
respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount,
together with interest thereon at the Federal Funds Effective Rate
to the date of repayment, shall have been received by such Lender.
SECTION 9.14. Release of Collateral. (a) Upon the
occurrence of any sale, transfer or disposition of assets
permitted by, and consummated in accordance with, the provisions
of this Agreement, the Collateral Agent shall release from the
lien of the Security Documents the assets so sold, transferred or
otherwise disposed.
(b) Notwithstanding any provision of this Agreement
or any other Loan Document to the contrary, so long as no Default
or Event of Default has occurred and is continuing, the security
interests in all the Collateral under all the Security Documents
shall be released and the Security Documents shall be terminated
(and each of the Lenders (x) hereby consents to such release and
termination and (y) hereby authorizes the execution and delivery
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by the Administrative Agent and the Collateral Agent of the
documents and instruments and the delivery of the Collateral in
the possession of the Collateral Agent, in each case as
contemplated by paragraph (c) below) upon the request of the
Borrower if, at the time of such request, (i) the Ratings are BBB-
and Baa3, respectively or (ii)(A) one such Rating set forth in the
preceding clause (i) is in effect, (B) the Consolidated Net
Interest Expense Coverage Ratio as of the period of four
consecutive fiscal quarters of the Borrower most recently ended
and for which consolidated financial statements required to be
delivered to the Administrative Agent pursuant to Section 5.01(a)
or Section 5.01(b) have been delivered is greater than 5.50 to
1.00 and (C) the Leverage Ratio as of the period of four
consecutive fiscal quarters of the Borrower most recently ended
and for which consolidated financial statements required to be
delivered to the Administrative Agent pursuant to Section 5.01(a)
or Section 5.01(b) have been delivered is less than 2.50 to 1.00.
Notwithstanding anything in this Agreement to the contrary, the
Borrower shall not be entitled to request the release of all the
Collateral pursuant to this paragraph (b) unless, simultaneously
with the release of the security interests in all the Collateral
as contemplated by this paragraph (b), all security interests in
all the Collateral for the benefit of the Debentures are released.
(c) In connection with the above-described release
and termination, the Collateral Agent shall deliver to the
Borrower any Collateral in the Collateral Agent's possession and
the Administrative Agent and the Collateral Agent shall execute
and deliver, at the Borrower's expense, all documents and
instruments as the Borrower or any other Loan Party may reasonably
request to evidence such release and termination. Any such
execution and delivery of such documents or instruments shall be
without recourse to the Administrative Agent and the Collateral
Agent. Nothing in this Section 9.14 shall be construed to affect
the provisions of Section 6.02.
87
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
PHILLIPS-VAN HEUSEN CORPORATION,
by
/s/ Pamela N. Hootkin
Name: Pamela N. Hootkin
Title: Vice President
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent and Collateral Agent,
by
/s/ Marian N. Schulman
Name: Marian N. Schulman
Title: Vice President
CITICORP USA, INC., individually and
as Documentation Agent,
by
/s/ Allen Fisher
Name: Allen Fisher
Title: Vice President-
Attorney In Fact
AT&T COMMERCIAL FINANCE CORPORATION,
by
/s/ Paul Seidenwar
Name: Paul Seidenwar
Title: Assistant Vice
President
88
BANKBOSTON, N.A.,
by
/s/ Peter Griswold
Name: Peter Griswold
Title: Director
BANK LEUMI USA,
by
/s/ John Koenigsberg
Name: John Koenigsberg
Title: Vice President
by
/s/ Paul Tine
Name: Paul Tine
Title: Vice President
THE BANK OF NEW YORK
by
/s/ Joanne Collett
Name: Joanne Collett
Title: Vice President
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK,
by
/s/ Norah McCann
Name: Norah McCann
Title: Senior Vice President
by
/s/ Karen A. Brinkman
Name: Karen A. Brinkman
Title: Vice President
89
FLEET BANK, N.A.,
by
/s/ Stephen M. Leavenworth
Name: Stephen M. Leavenworth
Title: Vice President
NATIONSBANK, N.A.,
by
/s/ E. Phifer Helms
Name: E. Phifer Helms
Title: Senior Vice President
PNC BANK, NATIONAL ASSOCIATION
by
/s/ Donald V. Davis
Name: Donald V. Davis
Title: Vice President
STANDARD CHARTERED BANK
by
/s/ David D. Cutting
Name: David D. Cutting
Title: Senior Vice President
by
/s/ Kristina McDavid
Name: Kristina McDavid
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
by
/s/ Cecilia M. Valente
Name: Cecilia M. Valente
Title: Senior Vice President
90
EXHIBIT D
[Form of]
GUARANTEE AGREEMENT dated as of April 22,
1998, among each of the subsidiaries listed on
Schedule I hereto (each such subsidiary,
individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors") of
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware
corporation (the "Borrower"), and THE CHASE
MANHATTAN BANK, a New York banking corporation,
as collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
Reference is made to the Credit Agreement dated as of April
22, 1998 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among the Borrower, the lenders
from time to time party thereto (the "Lenders") and The Chase
Manhattan Bank, as administrative agent for the Lenders (in such
capacity, the "Administrative Agent") and as Collateral Agent.
Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and
the Issuing Banks have agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement.
Each of the Subsidiary Guarantors is a wholly owned Subsidiary of
the Borrower and acknowledges that it will derive substantial
benefit from the making of the Loans by the Lenders, and the
issuance of the Letters of Credit by the Issuing Banks. The
obligations of the Lenders to make Loans and of the Issuing Banks
to issue Letters of Credit are conditioned on, among other things,
the execution and delivery by the Subsidiary Guarantors of a
Guarantee Agreement in the form hereof. As consideration therefor
and in order to induce the Lenders to make Loans and the Issuing
Banks to issue Letters of Credit, the Subsidiary Guarantors are
willing to execute this Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Each Subsidiary Guarantor
unconditionally guarantees (the "Guarantee"), jointly with the
other Subsidiary Guarantors and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment by
the Borrower of (i) the principal of and premium, if any, and
interest (including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether such interest is allowed or allowable as a
claim in such proceeding) on the Loans, when and as due, whether
at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by
the Borrower under the Credit Agreement in respect of any Letter
of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations
to provide cash collateral, and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities,
whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of
any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether such monetary obligations are
allowed or allowable as a claim in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement and the
other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower
under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each
Loan Party under or pursuant to this Agreement and the other Loan
Documents, (d) the due and punctual payment and performance of all
obligations of the Borrower under each Hedging Agreement entered
into with any counterparty that was a Lender (or an Affiliate
thereof) at the time such Hedging Agreement was entered into and
(e) the due and punctual payment and performance of all
obligations in respect of overdrafts and related liabilities owed
to the Administrative Agent or any of its Affiliates and arising
from treasury, depository and cash management services in
connection with any automated clearing house transfers of funds
(all the monetary and other obligations described in the preceding
clauses (a) through (e) being collectively called the
"Obligations"). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will
remain bound upon the Guarantee notwithstanding any extension or
renewal of any Obligation.
Anything contained in this Agreement to the contrary
notwithstanding, the obligations of each Subsidiary Guarantor
hereunder shall be limited to a maximum aggregate amount equal to
the greatest amount that would not render such Subsidiary
Guarantor's obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of
the United States Code or any provisions of applicable state law
(collectively, the "Fraudulent Transfer Laws"), in each case after
giving effect to all other liabilities of such Subsidiary
Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any
liabilities of such Subsidiary Guarantor (a) in respect of
2
intercompany indebtedness to the Borrower or Affiliates of the
Borrower to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by such Subsidiary Guarantor
hereunder and (b) under any guarantee of senior unsecured
indebtedness or Indebtedness subordinated in right of payment to
the Obligations, which guarantee contains a limitation as to
maximum amount similar to that set forth in this paragraph,
pursuant to which the liability of such Subsidiary Guarantor
hereunder is included in the liabilities taken into account in
determining such maximum amount) and after giving effect as assets
to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights of such
Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such
Subsidiary Guarantor and other Affiliates of the Borrower of
obligations arising under Guarantees by such parties (including
the Indemnity, Subrogation and Contribution Agreement).
SECTION 2. Obligations Not Waived. To the fullest extent
permitted by applicable law, each Subsidiary Guarantor waives
presentment to, demand of payment from and protest to the Borrower
of any of the Obligations, and also waives notice of acceptance of
the Guarantee and notice of protest for nonpayment. To the
fullest extent permitted by applicable law, the obligations of
each Subsidiary Guarantor hereunder shall not be affected by (a)
the failure of the Collateral Agent or any other Secured Party to
assert any claim or demand or to enforce or exercise any right or
remedy against the Borrower or any other Subsidiary Guarantor
under the provisions of the Credit Agreement, any other Loan
Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or
provisions of this Agreement, any other Loan Document, any
Guarantee or any other agreement, including with respect to any
other Subsidiary Guarantor under this Agreement, or (c) the
failure to perfect any security interest in, or the release of,
any of the security held by or on behalf of the Collateral Agent
or any other Secured Party.
SECTION 3. Security. Each of the Subsidiary Guarantors
authorizes the Collateral Agent and each of the other Secured
Parties to (a) take and hold security for the payment of the
Guarantee and the Obligations and exchange, enforce, waive and
release any such security, (b) apply such security and direct the
order or manner of sale thereof as they in their sole discretion
may determine and (c) release or substitute any one or more
endorsees, other Subsidiary Guarantors or other obligors; in each
case, pursuant to the provisions of the Security Agreement..
SECTION 4. Guarantee of Payment. Each Subsidiary Guarantor
further agrees that the Guarantee constitutes a guarantee of
payment when due and not of collection, and waives any right to
require that any resort be had by the Collateral Agent or any
other Secured Party to any of the security held for payment of the
Obligations or to any balance of any deposit account or credit on
the books of the Collateral Agent or any other Secured Party in
favor of the Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. To
the fullest extent permitted by applicable law, the obligations of
each Subsidiary Guarantor hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason
3
(other than the indefeasible payment in full in cash of the
Obligations), including any claim of waiver, release, surrender,
alteration or compromise of any of the Obligations, and shall not
be subject to any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without
limiting the generality of the foregoing, the obligations of each
Subsidiary Guarantor hereunder shall not be discharged or impaired
or otherwise affected by the failure of the Collateral Agent or
any other Secured Party to assert any claim or demand or to
enforce any remedy under the Credit Agreement, any other Loan
Document or any other agreement, by any waiver or modification of
any provision of any thereof, by any default, failure or delay,
wilful or otherwise, in the performance of the Obligations, or by
any other act or omission that may or might in any manner or to
any extent vary the risk of any Subsidiary Guarantor or that would
otherwise operate as a discharge of each Subsidiary Guarantor as a
matter of law or equity (other than the indefeasible payment in
full in cash of all the Obligations).
SECTION 6. Defenses of Borrower Waived. To the fullest
extent permitted by applicable law, each of the Subsidiary
Guarantors waives any defense based on or arising out of any
defense of the Borrower or the unenforceability of the Obligations
or any part thereof from any cause, or the cessation from any
cause of the liability of the Borrower, other than the
indefeasible payment in full in cash of all the Obligations. The
Collateral Agent and the other Secured Parties may, at their
election, foreclose in accordance with the provision of the
Security Agreement and the Pledge Agreement on any security held
by one or more of them by one or more judicial or nonjudicial
sales, accept an assignment of any such security in lieu of
foreclosure, compromise or adjust any part of the Obligations,
make any other accommodation with the Borrower or any other
Subsidiary Guarantor or exercise any other right or remedy
available to them against the Borrower or any other Subsidiary
Guarantor, without affecting or impairing in any way the liability
of any Subsidiary Guarantor hereunder except to the extent that
all the Obligations have been indefeasibly paid in full in cash.
To the fullest extent permitted by applicable law, each of the
Subsidiary Guarantors waives any defense arising out of any such
election even though such election operates, pursuant to
applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such
Subsidiary Guarantor against the Borrower or any other Subsidiary
Guarantor or Subsidiary Guarantors, as the case may be, or any
security.
SECTION 7. Agreement to Pay; Subordination. In furtherance
of the foregoing and not in limitation of any other right that the
Collateral Agent or any other Secured Party has at law or in
equity against any Subsidiary Guarantor by virtue hereof, upon the
failure of the Borrower or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or
otherwise, each Subsidiary Guarantor hereby promises to and will
forthwith pay, or cause to be paid, to the Collateral Agent or
such other Secured Party as designated thereby in cash the amount
4
of such unpaid Obligations. Upon payment by any Subsidiary
Guarantor of any sums to the Collateral Agent or any Secured Party
as provided above, all rights of such Subsidiary Guarantor against
the Borrower arising as a result thereof by way of right of
subrogation, contribution, reimbursement, indemnity or otherwise
shall in all respects be subordinate and junior in right of
payment to the prior indefeasible payment in full in cash of all
the Obligations. In addition, any indebtedness of the Borrower
now or hereafter held by any Subsidiary Guarantor is hereby
subordinated in right of payment to the prior payment in full of
the Obligations. If any amount shall erroneously be paid to any
Subsidiary Guarantor on account of (a) such subrogation,
contribution, reimbursement, indemnity or similar right or (b) any
such indebtedness of the Borrower, such amount shall be held in
trust for the benefit of the Secured Parties and shall forthwith
be paid to the Collateral Agent to be credited against the payment
of the Obligations, whether matured or unmatured, in accordance
with the terms of the Loan Documents.
SECTION 8. Information. Each of the Subsidiary Guarantors
assumes all responsibility for being and keeping itself informed
of the Borrower's financial condition and assets, and of all other
circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees
that none of the Collateral Agent or the other Secured Parties
will have any duty to advise any of the Subsidiary Guarantors of
information known to it or any of them regarding such
circumstances or risks.
SECTION 9. Representations and Warranties. Each of the
Subsidiary Guarantors represents and warrants as to itself that
all representations and warranties relating to it contained in the
Credit Agreement are true and correct.
SECTION 10. Termination. The Guarantees (a) shall
terminate when all the Obligations have been indefeasibly paid in
full and the Lenders have no further commitment to lend under the
Credit Agreement, the LC Exposure has been reduced to zero and the
Issuing Banks have no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by any Secured Party or any Subsidiary
Guarantor upon the bankruptcy or reorganization of the Borrower,
any Subsidiary Guarantor or otherwise.
SECTION 11. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and
assigns of such party, and all covenants, promises and agreements
by or on behalf of the Subsidiary Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This
Agreement shall become effective as to any Subsidiary Guarantor
5
when a counterpart hereof executed on behalf of such Subsidiary
Guarantor shall have been delivered to the Collateral Agent, and a
counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such
Subsidiary Guarantor and the Collateral Agent and their respective
successors and assigns, and shall inure to the benefit of such
Subsidiary Guarantor, the Collateral Agent and the other Secured
Parties, and their respective successors and assigns, except that
no Subsidiary Guarantor shall have the right to assign its rights
or obligations hereunder or any interest herein (and any such
attempted assignment shall be void). If all of the capital stock
of a Subsidiary Guarantor is sold, transferred or otherwise
disposed of pursuant to a transaction permitted by Section 6.05 of
the Credit Agreement, such Subsidiary Guarantor shall be released
from its obligations under this Agreement without further action.
This Agreement shall be construed as a separate agreement with
respect to each Subsidiary Guarantor and may be amended, modified,
supplemented, waived or released with respect to any Subsidiary
Guarantor without the approval of any other Subsidiary Guarantor
and without affecting the obligations of any other Subsidiary
Guarantor hereunder.
SECTION 12. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of
any other right or power. The rights and remedies of the
Collateral Agent hereunder and of the other Secured Parties under
the other Loan Documents are cumulative and are not exclusive of
any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by
any Subsidiary Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and
then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice
or demand on any Subsidiary Guarantor in any case shall entitle
such Subsidiary Guarantor to any other or further notice or demand
in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement
entered into between the Subsidiary Guarantors with respect to
which such waiver, amendment or modification relates and the
Collateral Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
SECTION 13. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
6
SECTION 14. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section
9.01 of the Credit Agreement. All communications and notices
hereunder to each Subsidiary Guarantor shall be given to it in
care of the Borrower.
SECTION 15. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by the
Subsidiary Guarantors herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered
to have been relied upon by the Collateral Agent and the other
Secured Parties and shall survive the making by the Lenders of the
Loans and the issuance of the Letters of Credit by the Issuing
Banks regardless of any investigation made by the Secured Parties
or on their behalf, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or
any other fee or amount payable under this Agreement or any other
Loan Document is outstanding and unpaid or the LC Exposure does
not equal zero and as long as the Commitments have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and
of itself affect the validity of such provision in any other
jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 16. Counterparts. This Agreement may be executed
in counterparts, each of which shall constitute an original, but
all of which when taken together shall constitute a single
contract, and shall become effective as provided in Section 11.
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 17. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement.
SECTION 18. Jurisdiction; Consent to Service of Process.
(a) Each Subsidiary Guarantor hereby irrevocably and
unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District
Court of the Southern District of New York, and any appellate
7
court from any thereof, in any action or proceeding arising out of
or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be
heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan
Document shall affect any right that the Collateral Agent or any
other Secured Party may otherwise have to bring any action or
proceeding relating to this Agreement or any other Loan Document
against any Subsidiary Guarantor or its properties in the courts
of any jurisdiction.
(b) Each Subsidiary Guarantor irrevocably and
unconditionally waives, to the fullest extent it may legally and
effectively do so, any objection that it may now or hereafter have
to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any other Loan Document in
any court referred to in paragraph (a) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
14. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 19. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 19.
SECTION 20. Additional Subsidiary Guarantors. Pursuant to
Section 5.11 of the Credit Agreement, each Subsidiary Loan Party
that was not in existence or not a Subsidiary Loan Party on the
date of the Credit Agreement is required to enter into this
8
Agreement as a Subsidiary Guarantor upon becoming a Subsidiary
Loan Party. Upon execution and delivery after the date hereof by
the Collateral Agent and such a Subsidiary Loan Party of an
instrument in the form of Annex 1, such Subsidiary Loan Party
shall become a Subsidiary Guarantor hereunder with the same force
and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any instrument adding an
additional Subsidiary Guarantor as a party to this Agreement shall
not require the consent of any other Subsidiary Guarantor
hereunder. The rights and obligations of each Subsidiary
Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a
party to this Agreement.
SECTION 21. Right of Set-off. If an Event of Default shall
have occurred and be continuing, each Secured Party is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any
time held and other Indebtedness at any time owing by such Secured
Party to or for the credit or the account of any Subsidiary
Guarantor against any or all the obligations of such Subsidiary
Guarantor now or hereafter existing under this Agreement and the
other Loan Documents held by such Secured Party, irrespective of
whether or not such Secured Party shall have made any demand under
this Agreement or any other Loan Document and although such
obligations may be unmatured. The rights of each Secured Party
under this Section 21 are in addition to other rights and remedies
(including other rights of set-off) that such Secured Party may
have.
9
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO,
by
Name:
Title: Authorized Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
10
SCHEDULE I TO THE
Guarantee Agreement
Subsidiary Guarantor Address
Annex 1 to the
Guarantee Agreement
SUPPLEMENT NO. dated as of
, to the Guarantee Agreement dated as of April
22, 1998, among each of the subsidiaries listed
on Schedule I thereto (each such subsidiary,
individually, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors") of
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware
corporation (the "Borrower"), and THE CHASE
MANHATTAN BANK, a New York banking corporation,
as collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
A. Reference is made to the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
The Chase Manhattan Bank, as administrative agent for the Lenders
(in such capacity the "Administrative Agent") and as Collateral
Agent. Capitalized terms used herein and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the
Guarantee Agreement and the Credit Agreement.
C. The Subsidiary Guarantors have entered into the
Guarantee Agreement in order to induce the Lenders to make Loans
and the Issuing Banks to issue Letters of Credit. Pursuant to
Section 5.11 of the Credit Agreement, each Subsidiary Loan Party
that was not in existence or not a Subsidiary Loan Party on the
date of the Credit Agreement is required to enter into the
Guarantee Agreement as a Subsidiary Guarantor upon becoming a
Subsidiary Loan Party. Section 20 of the Guarantee Agreement
provides that additional Subsidiary Loan Parties of the Borrower
may become Subsidiary Guarantors under the Guarantee Agreement by
execution and delivery of an instrument in the form of this
Supplement. The undersigned Subsidiary Loan Party (the "New
Subsidiary Guarantor") is executing this Supplement in accordance
with the requirements of the Credit Agreement to become Subsidiary
Guarantor under the Guarantee Agreement in order to induce the
Lenders to make additional Loans and the Issuing Banks to issue
additional Letters of Credit and as consideration for Loans
previously made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Subsidiary
Guarantor agree as follows:
SECTION 1. In accordance with Section 20 of the Guarantee
Agreement, the New Subsidiary Guarantor by its signature below
becomes a Subsidiary Guarantor under the Guarantee Agreement with
the same force and effect as if originally named therein as a
Subsidiary Guarantor and the New Subsidiary Guarantor hereby (a)
agrees to all the terms and provisions of the Guarantee Agreement
applicable to it as a Subsidiary Guarantor thereunder and (b)
represents and warrants that the representations and warranties
made by it as a Subsidiary Guarantor thereunder are true and
correct on and as of the date hereof. Each reference to a
"Subsidiary Guarantor" in the Guarantee Agreement shall be deemed
to include the New Subsidiary Guarantor. The Guarantee Agreement
is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Guarantor represents and
warrants to the Collateral Agent and the other Secured Parties
that this Supplement has been duly authorized, executed and
delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This
Supplement shall become effective when the Collateral Agent shall
have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Subsidiary Guarantor and
the Collateral Agent. Delivery of an executed signature page to
this Supplement by facsimile transmission shall be as effective as
delivery of a manually executed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Guarantee Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and in
the Guarantee Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any
other jurisdiction). The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 7. All communications and notices hereunder shall
be in writing and given as provided in Section 14 of the Guarantee
Agreement. All communications and notices hereunder to the New
2
Subsidiary Guarantor shall be given to it at the address set forth
under its signature below, with a copy to the Borrower.
SECTION 8. The New Subsidiary Guarantor agrees to reimburse
the Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral
Agent.
3
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the
Collateral Agent have duly executed this Supplement to the
Guarantee Agreement as of the day and year first above written.
[Name Of New Subsidiary Guarantor],
by
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
4
EXHIBIT E
[Form of]
INDEMNITY, SUBROGATION and CONTRIBUTION
AGREEMENT dated as of April 22, 1998, among
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware
corporation (the "Borrower"), each Subsidiary of
the Borrower listed on Schedule I hereto (the
"Guarantors") and THE CHASE MANHATTAN BANK, a
New York banking corporation ("Chase"), as
collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined in the Credit Agreement referred to
below).
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent") and Collateral Agent, and (b) the
Guarantee Agreement dated as of April 22, 1998 between the
Guarantors and the Collateral Agent (the "Guarantee Agreement").
Capitalized terms used herein and not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.
The Lenders have agreed to make Loans to the Borrower, and
the Issuing Banks have agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement. The
Guarantors have guaranteed such Loans and the other Obligations
(as defined in the Guarantee Agreement) of the Borrower under the
Credit Agreement pursuant to the Guarantee Agreement; certain
Guarantors have granted Liens on and security interests in certain
of their assets to secure such guarantees. The obligations of the
Lenders to make Loans and of the Issuing Banks to issue Letters of
Credit are conditioned on, among other things, the execution and
delivery by the Borrower and the Guarantors of an agreement in the
form hereof.
Accordingly, the Borrower, each Guarantor and the Collateral
Agent agree as follows:
SECTION 1. Indemnity and Subrogation. In addition to all
such rights of indemnity and subrogation as the Guarantors may
have under applicable law (but subject to Section 3), the Borrower
agrees that (a) in the event a payment shall be made by any
Guarantor under the Guarantee Agreement, such Guarantor shall be
subrogated to the rights of the Person to whom such payment shall
have been made to the extent of such payment and the Borrower
shall indemnify such Guarantor for the full amount of such payment
and (b) in the event any assets of any Guarantor shall be sold
pursuant to any Security Document to satisfy a claim of any
Secured Party, the Borrower shall indemnify such Guarantor in an
amount equal to the greater of (i) the book value of the assets so
sold and (ii) the fair market value of the assets so sold.
SECTION 2. Contribution and Subrogation. Each Guarantor (a
"Contributing Guarantor") agrees (subject to Section 3) that, in
the event a payment shall be made by any other Guarantor under the
Guarantee Agreement or assets of any other Guarantor shall be sold
pursuant to any Security Document to satisfy a claim of any
Secured Party and such other Guarantor (the "Claiming Guarantor")
shall not have been fully indemnified by the Borrower as provided
in Sec tion 1, the Contributing Guarantor shall indemnify the
Claiming Guarantor in an amount equal to the amount of such
payment or the greater of (i) the book value of the assets so sold
and (ii) the fair market value of such assets, as the case may be,
in each case multiplied by a fraction of which the numerator shall
be the net worth of the Contributing Guarantor on the date hereof
and the denominator shall be the aggregate net worth of all the
Guarantors on the date hereof (or, in the case of any Guarantor
becoming a party hereto pursuant to Section 12, the date of the
Supplement hereto executed and delivered by such Guarantor). Any
Contributing Guarantor making any payment to a Claiming Guarantor
pursuant to this Section 2 shall be subrogated to the rights of
such Claiming Guarantor under Section 1 to the extent of such
payment.
SECTION 3. Subordination. Notwithstanding any provision of
this Agreement to the contrary, all rights of the Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution
or subrogation under applicable law or otherwise shall be fully
subordinated to the indefeasible payment in full in cash of the
Obligations. No failure on the part of the Borrower or any
Guarantor to make the payments required by Sections 1 and 2 (or
any other payments required under applicable law or otherwise)
shall in any respect limit the obligations and liabilities of any
Guarantor with respect to its obligations hereunder, and each
Guarantor shall remain liable for the full amount of the
obligations of such Guarantor hereunder.
SECTION 4. Termination. This Agreement shall survive and
be in full force and effect so long as any Obligation is
outstanding and has not been indefeasibly paid in full in cash,
and so long as the LC Exposure has not been reduced to zero or any
of the Commitments under the Credit Agreement have not been
terminated, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment, or any part thereof,
of any Obligation is rescinded or must otherwise be restored by
any Secured Party or any Guarantor upon the bankruptcy or
reorganization of the Borrower, any Guarantor or otherwise.
SECTION 5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
2
SECTION 6. No Waiver; Amendment. (a) No failure on the
part of the Collateral Agent or any Guarantor to exercise, and no
delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy by the Collateral
Agent or any Guarantor preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. All
remedies hereunder are cumulative and are not exclusive of any
other remedies provided by law. None of the Collateral Agent or
any of the Guarantors shall be deemed to have waived any rights
hereunder unless such waiver shall be in writing and signed by
such parties.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement
entered into between the Borrower, the Guarantors and the
Collateral Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).
SECTION 7. Notices. All communications and notices
hereunder shall be in writing and given as provided in the
Guarantee Agreement and addressed as specified therein.
SECTION 8. Binding Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of
such party, and all covenants, promises and agreements by or on
behalf of the parties that are contained in this Agreement shall
bind and inure to the benefit of their respective successors and
assigns. Neither the Borrower nor any Guarantor may assign or
transfer any of its rights or obligations hereunder (and any such
attempted assignment or transfer shall be void) without the prior
written consent of the Required Lenders. Notwithstanding the
foregoing, at the time any Guarantor is released from its
obligations under the Guarantee Agreement in accordance with such
Guarantee Agreement and the Credit Agreement, such Guarantor will
cease to have any rights or obligations under this Agreement
except with respect to any payments made under this Agreement but
not reimbursed pursuant hereto.
SECTION 9. Survival of Agreement; Severability. (a) All
covenants and agreements made by the Borrower and each Guarantor
herein and in the certificates or other instruments prepared or
delivered in connection with this Agreement or the other Loan
Documents shall be considered to have been relied upon by the
Collateral Agent, the other Secured Parties and each Guarantor and
shall survive the making by the Lenders of the Loans and the
issuance of the Letters of Credit by the Issuing Banks, and shall
continue in full force and effect as long as the principal of or
any accrued interest on any Loans or any other fee or amount
payable under the Credit Agreement or this Agreement or under any
of the other Loan Documents is outstanding and unpaid or the LC
Exposure does not equal zero and as long as the Commitments have
not been terminated.
3
(b) In case any one or more of the provisions contained in
this Agreement should be held invalid, illegal or unenforceable in
any respect, no party hereto shall be required to comply with such
provision for so long as such provision is held to be invalid,
illegal or unenforceable, but the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.
SECTION 10. Counterparts. This Agreement may be executed
in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all
of which when taken together shall constitute a single contract.
This Agreement shall be effective with respect to any Guarantor
when a counterpart bearing the signature of such Guarantor shall
have been delivered to the Collateral Agent. Delivery of an
executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually
signed counterpart of this Agreement.
SECTION 11. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement.
SECTION 12. Additional Guarantors. Pursuant to Section
5.11 of the Credit Agreement, each Subsidiary Loan Party that was
not in existence or not a Subsidiary Loan Party on the date of the
Credit Agreement is required to enter into the Guarantee Agreement
as a Guarantor upon becoming a Subsidiary Loan Party. Upon
execution and delivery, after the date hereof, by the Collateral
Agent and such a Subsidiary Loan Party of an instrument in the
form of Annex 1 hereto, such Subsidiary Loan Party shall become a
Guarantor hereunder with the same force and effect as if
originally named as a Guarantor hereunder. The execution and
delivery of any instrument adding an additional Guarantor as a
party to this Agreement shall not require the consent of any
Guarantor hereunder. The rights and obligations of each Guarantor
hereunder shall remain in full force and effect notwithstanding
the addition of any new Guarantor as a party to this Agreement.
4
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the date first appearing above.
PHILIPS-VAN HEUSEN CORPORATION,
by
Name:
Title:
EACH OF THE SUBSIDIARIES LISTED ON
SCHEDULE I HERETO, as a Guarantor,
by
Name:
Title: Authorized Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
5
SCHEDULE I
to the Indemnity Subrogation
and Contribution Agreement
Guarantors
Name Address
Annex 1 to
the Indemnity, Subrogation and
Contribution Agreement
SUPPLEMENT NO. dated as of ,
to the Indemnity, Subrogation and Contribution
Agreement dated as of April 22, 1998 (as the
same may be amended, supplemented or otherwise
modified from time to time, the "Indemnity,
Subrogation and Contribution Agreement"), among
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware
corporation (the "Borrower"), each Subsidiary of
the Borrower listed on Schedule I thereto (the
"Guarantors") and THE CHASE MANHATTAN BANK, a
New York banking corporation ("Chase"), as
collateral agent (the "Collateral Agent") for
the Secured Parties (as defined in the Credit
Agreement referred to below).
A. Reference is made to (a) the Credit Agreement dated as
of April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent for the Lenders (in such capacity,
the "Administrative Agent") and Collateral Agent, and (b) the
Guarantee Agreement dated as of April 22, 1998, among the
Guarantors and the Collateral Agent (the "Guarantee Agreement").
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the
Indemnity, Subrogation and Contribution Agreement and the Credit
Agreement.
C. The Borrower and the Guarantors have entered into the
Indemnity, Subrogation and Contribution Agreement in order to
induce the Lenders to make Loans and the Issuing Banks to issue
Letters of Credit. Pursuant to Section 5.11 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or
not such a Subsidiary Loan Party on the date of the Credit
Agreement is required to enter into the Guarantee Agreement as a
Guarantor upon becoming a Subsidiary Loan Party. Section 12 of
the Indemnity, Subrogation and Contribution Agreement provides
that additional Subsidiary Loan Parties of the Borrower may become
Guarantors under the Indemnity, Subrogation and Contribution
Agreement by execution and delivery of an instrument in the form
of this Supplement. The undersigned Subsidiary Loan Party of the
Borrower (the "New Guarantor") is executing this Supplement in
accordance with the require ments of the Credit Agreement to
become a Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make
additional Loans and the Issuing Banks to issue additional Letters
of Credit and as consideration for Loans previously made and
Letters of Credit previously issued.
Accordingly, the Collateral Agent and the New Guarantor
agree as follows:
SECTION 1. In accordance with Section 12 of the Indemnity,
Subrogation and Contribution Agreement, the New Guarantor by its
signature below becomes a Guarantor under the Indemnity,
Subrogation and Contribution Agreement with the same force and
effect as if originally named therein as a Guarantor and the New
Guarantor hereby agrees to all the terms and provisions of the
Indemnity, Subrogation and Contribution Agreement applicable to it
as a Guarantor thereunder. Each reference to a "Guarantor" in the
Indemnity, Subrogation and Contribution Agreement shall be deemed
to include the New Guarantor. The Indemnity, Subrogation and
Contribution Agreement is hereby incorporated herein by reference.
SECTION 2. The New Guarantor represents and warrants to the
Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement
shall become effective when the Collateral Agent shall have
received counterparts of this Supplement that, when taken
together, bear the signatures of the New Guarantor and the
Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Supplement.
SECTION 4. Except as expressly supplemented hereby, the
Indemnity, Subrogation and Contribution Agreement shall remain in
full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, neither party hereto shall be
required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and
Contribution Agreement shall not in any way be affected or
impaired. The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
2
SECTION 7. All communications and notices hereunder shall
be in writing and given as provided in Section 7 of the Indemnity,
Subrogation and Contribution Agreement. All communications and
notices hereunder to the New Guarantor shall be given to it at the
address set forth under its signature.
SECTION 8. The New Guarantor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral
Agent.
IN WITNESS WHEREOF, the New Guarantor and the Collateral
Agent have duly executed this Supplement to the Indemnity,
Subrogation and Contribution Agreement as of the day and year
first above written.
[Name Of New Guarantor],
by
Name:
Title:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
3
SCHEDULE I
to Supplement No.___ to the Indemnity
Subrogation and Contribution Agreement
Guarantors
Name Address
EXHIBIT F
[Form of]
PLEDGE AGREEMENT dated as of April
22, 1998, among PHILLIPS-VAN HEUSEN
CORPORATION, a Delaware corporation (the
"Borrower"), each Subsidiary of the
Borrower listed on Schedule I hereto (each
such Subsidiary, individually, a
"Subsidiary Pledgor" and, collectively,
the "Subsidiary Pledgors"; the Borrower
and the Subsidiary Pledgors are referred
to collectively herein as the "Pledgors")
and THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as
collateral agent (in such capacity, the
"Collateral Agent") for the Secured
Parties (as defined in the Credit
Agreement referred to below).
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent for the Lenders and as Collateral
Agent, (b) the Guarantee Agreement dated as of April 22, 1998 (as
amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement"), among the Subsidiary Guarantors and the
Collateral Agent and (c) the Indenture dated as of November 1,
1993, by and between the Borrower and The Bank of New York, as
Trustee for the holders (the "Debenture Holders") of the Company's
7-3/4% Debentures Due 2023.
The Lenders have agreed to make Loans to the Borrower and
the Issuing Banks have agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement. The
Subsidiary Guarantors have agreed to guarantee, among other
things, all the obligations of the Borrower under the Credit
Agreement. The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit are conditioned upon,
among other things, the execution and delivery by the Pledgors of
a Pledge Agreement in the form hereof to secure (a) the due and
punctual payment by the Borrower of (i) the principal of and
premium, if any, and interest (including interest accruing during
the pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether such interest is allowed
or allowable as a claim in such proceeding) on the Loans, when and
as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise, (ii) each payment required
to be made by the Borrower under the Credit Agreement in respect
of any Letter of Credit, when and as due, including payments in
respect of reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed
or otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other
similar proceeding, regardless of whether such monetary
obligations are allowed or allowable as a claim in such
proceeding), of the Borrower to the Secured Parties under the
Credit Agreement and the other Loan Documents, (b) the due and
punctual performance of all covenants, agreements, obligations and
liabilities of the Borrower under or pursuant to the Credit
Agreement and the other Loan Documents, (c) the due and punctual
payment and performance of all the covenants, agreements,
obligations and liabilities of each Loan Party under or pursuant
to this Agreement and the other Loan Documents, (d) the due and
punctual payment and performance of all obligations of the
Borrower under each Hedging Agreement entered into with any
counter party that was a Lender (or an Affiliate thereof) at the
time such Hedging Agreement was entered into, (e) the due and
punctual payment and performance of all obligations in respect of
overdrafts and related liabilities owed to the Administrative
Agent or any of its Affiliates and arising from treasury,
depository and cash management services in connection with any
automated clearing house transfers of funds and (f) the due and
punctual payment by the Company of all obligations and liabilities
of the Company in respect of the Debentures, when and as due,
whether at maturity, by acceleration, upon one or more dates set
for prepayment or otherwise (all the monetary and other
obligations described in the preceding clauses (a) through (f)
being collectively called the "Obligations"). Capitalized terms
used herein and not defined herein shall have meanings assigned to
such terms in the Credit Agreement.
Accordingly, the Pledgors and the Collateral Agent, on
behalf of itself and each Secured Party (and each of their
respective successors or assigns), hereby agree as follows:
SECTION 1. Pledge. As security for the payment and
performance, as the case may be, in full of the Obligations, each
Pledgor hereby transfers, grants, bargains, sells, conveys,
hypothecates, pledges, sets over and delivers unto the Collateral
Agent, its successors and assigns, and hereby grants to the
Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest in all of the
Pledgor's right, title and interest in, to and under (a) the
shares of capital stock or other equity interest (including any
equity interest in any joint venture listed on Schedule III hereto
(the "Joint Ventures")) owned by it and listed on Schedule II
hereto and any shares of capital stock or other equity interest of
or any Subsidiary or Joint Ventures obtained in the future by the
Pledgor and the certificates representing all such shares or
equity interest (the "Pledged Stock"), provided that the Pledged
Stock shall not include (i) more than 65% of the issued and
outstanding shares of stock of any Foreign Subsidiary or (ii) to
the extent that applicable law requires that a Subsidiary of the
Pledgor issue directors' qualifying shares, such qualifying
shares; (b)(i) the debt securities listed opposite the name of the
2
Pledgor on Schedule II hereto, (ii) any debt securities in the
future issued to the Pledgor and (iii) the promissory notes and
any other instruments evidencing such debt securities other than
such promissory notes and instruments which in the aggregate do
not exceed $250,000 (the "Pledged Debt Securities"); (c) all other
property that may be delivered to and held by the Collateral Agent
pursuant to the terms hereof; (d) subject to Section 5, all
payments of principal or interest, dividends, cash, instruments
and other property from time to time received, receivable or
otherwise distributed, in respect of, in exchange for or upon the
conversion of the securities referred to in clauses (a) and (b)
above; (e) subject to Section 5, all rights and privileges of the
Pledgor with respect to the securities and other property referred
to in clauses (a), (b), (c) and (d) above; and (f) all proceeds of
any of the foregoing (the items referred to in clauses (a) through
(f) above being collectively referred to as the "Collateral").
Upon delivery to the Collateral Agent, (a) any stock certificates,
notes or other securities now or hereafter included in the
Collateral (the "Pledged Securities") shall be accompanied by
stock powers duly executed in blank or other instruments of
transfer satisfactory to the Collateral Agent and by such other
instruments and documents as the Collateral Agent may reasonably
request and (b) all other property comprising part of the
Collateral shall be accompanied by proper instruments of
assignment duly executed by the applicable Pledgor and such other
instruments or documents as the Collateral Agent may reasonably
request. Each delivery of Pledged Securities shall be accompanied
by a schedule describing the securities theretofore and then being
pledged hereunder, which schedule shall be attached hereto as
Schedule II and made a part hereof. Each schedule so delivered
shall supersede any prior schedules so delivered.
TO HAVE AND TO HOLD the Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or
incidental thereto, unto the Collateral Agent, its successors and
assigns, for the ratable benefit of the Secured Parties, forever;
subject, however, to the terms, covenants and conditions
hereinafter set forth.
SECTION 2. Delivery of the Collateral. Each Pledgor agrees
promptly to deliver or cause to be delivered to the Collateral
Agent any and all Pledged Securities, and any and all certificates
or other instruments or documents representing the Collateral.
SECTION 3. Representations, Warranties and Covenants. Each
Pledgor hereby represents, warrants and covenants, as to itself
and the Collateral pledged by it hereunder, to and with the
Collateral Agent that:
(a) the Pledged Stock represents that percentage set
forth on Schedule II of the issued and outstanding shares of
each class of the capital stock or other equity interest of
the issuer with respect thereto;
3
(b) except for the security interest granted
hereunder, the Pledgor (i) is and will at all times continue
to be the direct owner, beneficially and of record, of the
Pledged Securities indicated on Schedule II, (ii) holds the
same free and clear of all Liens, (iii) will make no
assignment, pledge, hypothecation or transfer of, or create
or permit to exist any security interest in or other Lien
on, the Collateral, other than pursuant hereto, and (iv)
subject to Section 5, will cause any and all Collateral,
whether for value paid by the Pledgor or otherwise, to be
forthwith deposited with the Collateral Agent and pledged or
assigned hereunder;
(c) the Pledgor (i) has the power and authority to
pledge the Collateral in the manner hereby done or
contemplated and (ii) will defend its title or interest
thereto or therein against any and all Liens (other than the
Lien created by this Agreement), however arising, of all
persons whomsoever;
(d) no consent of any other person (including
stockholders or creditors of any Pledgor) and no consent or
approval of any Governmental Authority or any securities
exchange was or is necessary to the validity of the pledge
effected hereby other than such consents and approvals that
have been obtained;
(e) by virtue of the execution and delivery by the
Pledgors of this Agreement, when the Pledged Securities,
certificates or other documents representing or evidencing
the Collateral are delivered to the Collateral Agent in
accordance with this Agreement, the Collateral Agent will
obtain a valid and perfected first lien upon and security
interest in such Pledged Securities as security for the
payment and performance of the Obligations;
(f) the pledge effected hereby is effective to vest in
the Collateral Agent, on behalf of the Secured Parties, the
rights of the Collateral Agent in the Collateral as set
forth herein;
(g) all the Pledged Stock has been duly authorized and
validly issued and is fully paid and nonassessable;
(h) all information set forth herein relating to the
Pledged Stock is accurate and complete in all material
respects as of the date hereof; and
(i) the pledge of the Pledged Stock pursuant to this
Agreement does not violate Regulation T, U or X or any
successor thereto as of the date hereof.
SECTION 4. Registration in Nominee Name; Denominations.
The Collateral Agent, on behalf of the Secured Parties, shall have
the right (in its sole and absolute discretion) to hold the
Pledged Securities in its own name as pledgee, the name of its
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nominee (as pledgee or as sub-agent) or the name of the Pledgors,
endorsed or assigned in blank or in favor of the Collateral Agent.
Each Pledgor will promptly give to the Collateral Agent copies of
any notices or other communications received by it with respect to
Pledged Securities registered in the name of such Pledgor. The
Collateral Agent shall at all times have the right to exchange the
certificates representing Pledged Securities for certificates of
smaller or larger denominations for any purpose consistent with
this Agreement.
SECTION 5. Voting Rights; Dividends and Interest, etc. (a)
Unless and until an Event of Default shall have occurred and be
continuing:
(i) Each Pledgor shall be entitled to exercise any and
all voting and/or other consensual rights and powers inuring
to an owner of Pledged Securities or any part thereof for
any purpose consistent with the terms of this Agreement, the
Credit Agreement and the other Loan Documents; provided,
however, that such Pledgor will not be entitled to exercise
any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the
Pledged Securities or the rights and remedies of any of the
Secured Parties under this Agreement or the Credit Agreement
or any other Loan Document or the ability of the Secured
Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to
each Pledgor, or cause to be executed and delivered to each
Pledgor, all such proxies, powers of attorney and other
instruments as such Pledgor may reasonably request for the
purpose of enabling such Pledgor to exercise the voting
and/or consensual rights and powers it is entitled to
exercise pursuant to subparagraph (i) above and to receive
the cash dividends it is entitled to receive pursuant to
subparagraph (iii) below.
(iii) Each Pledgor shall be entitled to receive and
retain any and all cash dividends, interest and principal
paid on the Pledged Securities to the extent and only to the
extent that such cash dividends, interest and principal are
permitted by, and otherwise paid in accordance with, the
terms and conditions of the Credit Agreement, the other Loan
Documents and applicable laws. All noncash dividends,
interest and principal, and all dividends, interest and
principal paid or payable in cash or otherwise in connection
with a partial or total liquidation or dissolution, return
of capital, capital surplus or paid-in surplus, and all
other distributions (other than distributions referred to in
the preceding sentence) made on or in respect of the Pledged
Securities, whether paid or payable in cash or otherwise,
whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of the
issuer of any Pledged Securities or received in exchange for
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Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which such issuer
may be a party or otherwise, shall be and become part of the
Collateral, and, if received by any Pledgor, shall not be
commingled by such Pledgor with any of its other funds or
property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Collateral
Agent and shall be forthwith delivered to the Collateral
Agent in the same form as so received (with any necessary
endorsement).
(b) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to dividends, interest
or principal that such Pledgor is authorized to receive pursuant
to paragraph (a)(iii) above shall cease, and all such rights shall
thereupon become vested in the Collateral Agent, which shall have
the sole and exclusive right and authority to receive and retain
such dividends, interest or principal. All dividends, interest or
principal received by the Pledgor contrary to the provisions of
this Section 5 shall be held in trust for the benefit of the
Collateral Agent, shall be segregated from other property or funds
of such Pledgor and shall be forthwith delivered to the Collateral
Agent upon demand in the same form as so received (with any
necessary endorsement). Any and all money and other property paid
over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the
Collateral Agent in an account to be established by the Collateral
Agent upon receipt of such money or other property and shall be
applied in accordance with the provisions of Section 7. After all
Events of Default have been cured or waived, the Collateral Agent
shall, within five Business Days after all such Events of Default
have been cured or waived, repay to each Pledgor all cash
dividends, interest or principal (without interest), that such
Pledgor would otherwise be permitted to retain pursuant to the
terms of paragraph (a)(iii) above and which remain in such
account.
(c) Upon the occurrence and during the continuance of an
Event of Default, all rights of any Pledgor to exercise the voting
and consensual rights and powers it is entitled to exercise
pursuant to paragraph (a)(i) of this Section 5, and the
obligations of the Collateral Agent under paragraph (a)(ii) of
this Section 5, shall cease, and all such rights shall thereupon
become vested in the Collateral Agent, which shall have the sole
and exclusive right and authority to exercise such voting and
consensual rights and powers, provided that, unless otherwise
directed by the Required Lenders, the Collateral Agent shall have
the right from time to time following and during the continuance
of an Event of Default to permit the Pledgors to exercise such
rights. After all Events of Default have been cured or waived,
such Pledgor will have the right to exercise the voting and
consensual rights and powers that it would otherwise be entitled
to exercise pursuant to the terms of paragraph (a)(i) above.
SECTION 6. Remedies upon Default. Upon the occurrence and
during the continuance of an Event of Default, subject to
applicable regulatory and legal requirements, the Collateral Agent
may sell the Collateral, or any part thereof, at public or private
sale or at any broker's board or on any securities exchange, for
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cash, upon credit or for future delivery as the Collateral Agent
shall deem appropriate. The Collateral Agent shall be authorized
at any such sale (if it deems it advisable to do so) to restrict
the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the
distribution or sale thereof, and upon consummation of any such
sale the Collateral Agent shall have the right to assign, transfer
and deliver to the purchaser or purchasers thereof the Collateral
so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part
of any Pledgor, and, to the extent permitted by applicable law,
the Pledgors hereby waive all rights of redemption, stay,
valuation and appraisal any Pledgor now has or may at any time in
the future have under any rule of law or statute now existing or
hereafter enacted.
The Collateral Agent shall give a Pledgor 10 days' prior
written notice (which each Pledgor agrees is reasonable notice
within the meaning of Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its equivalent in
other jurisdictions) of the Collateral Agent's intention to make
any sale of such Pledgor's Collateral. Such notice, in the case
of a public sale, shall state the time and place for such sale
and, in the case of a sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is
to be made and the day on which the Collateral, or portion
thereof, will first be offered for sale at such board or exchange.
Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the
Collateral Agent may fix and state in the notice of such sale. At
any such sale, the Collateral, or portion thereof, to be sold may
be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same
to be adjourned from time to time by announcement at the time and
place fixed for sale, and such sale may, without further notice,
be made at the time and place to which the same was so adjourned.
In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the sale price is paid in
full by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent
permitted by applicable law, private) sale made pursuant to this
Section 6, any Secured Party may bid for or purchase, free from
any right of redemption, stay or appraisal on the part of any
Pledgor (all said rights being also hereby waived and released),
the Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable
to it from such Pledgor as a credit against the purchase price,
and it may, upon compliance with the terms of sale, hold, retain
7
and dispose of such property without further accountability to
such Pledgor therefor. For purposes hereof, (a) a written
agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof, (b) the Collateral Agent shall be
free to carry out such sale pursuant to such agreement and (c)
such Pledgor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact
that after the Collateral Agent shall have entered into such an
agreement all Events of Default shall have been remedied and the
Obligations paid in full. As an alternative to exercising the
power of sale herein conferred upon it, the Collateral Agent may
proceed by a suit or suits at law or in equity to foreclose upon
the Collateral and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having
competent jurisdiction or pursuant to a proceeding by a
court-appointed receiver. Any sale pursuant to the provisions of
this Section 6 shall be deemed to conform to the commercially
reasonable standards as provided in Section 9-504(3) of the
Uniform Commercial Code as in effect in the State of New York or
its equivalent in other jurisdictions.
SECTION 7. Intercreditor Agreements; Collateral Agent. (a)
By acceptance of the benefits of this Agreement, each of the
Secured Parties shall be deemed to have agreed to be bound by the
terms hereof. The provisions of this Section 7 are, and are
intended, solely to establish certain rights as between the
Secured Parties and shall not create, and shall not be construed
as creating, any rights enforceable by any Pledgor, any Subsidiary
or any Affiliate of any Pledgor (regardless of whether such
Pledgor, Subsidiary or Affiliate is a Secured Party).
(b) By acceptance of the benefits of this Agreement, each
of the Secured Parties shall be deemed irrevocably (i) to consent
to the appointment of the Collateral Agent as its agent hereunder,
(ii) to confirm that the Collateral Agent shall have the authority
to act as the exclusive agent of such Secured Party for
enforcement of any provisions of this Agreement against any
Pledgor or the exercise of remedies hereunder and (iii) to agree
that such Secured Party shall not take any action to enforce any
provisions of this Agreement against any Pledgor or to exercise
any remedy hereunder.
(c) The Collateral Agent may act or refrain from acting
hereunder, and shall not incur any liability to the Secured
Parties for acting or refraining from acting hereunder, in
accordance with any such consent, direction or request of the
Required Lenders as shall be required or permitted under the
Credit Agreement. The Debenture Holders as Secured Parties shall
not be entitled to, and shall not, (i) direct the actions of the
Collateral Agent hereunder, (ii) take any action, or commence any
legal proceeding seeking, to require, compel or cause the
Collateral Agent to enforce any provisions of this Agreement
against any Pledgor or to exercise any remedy hereunder, (iii)
take any action, or commence any legal proceeding seeking, to
8
prevent or enjoin the Collateral Agent from taking any action
(including, without limitation, the enforcement of any provisions
of this Agreement against any Pledgor, the exercise of any remedy
hereunder, the release of any Collateral hereunder or the consent
to any amendment or modification of this Agreement or the grant of
any waiver hereunder), or refraining from taking any such action,
in accordance with this Agreement or (iv) take any action, or
commence any legal proceeding seeking, to delay, hinder or
otherwise impair the Collateral Agent in taking any such action in
accordance with this Agreement. By acceptance of the benefits
under this Agreement, the Debenture Holders as Secured Parties
will be deemed to have acknowledged and agreed that the provisions
of the preceding sentence are intended to induce the Lenders to
permit the Debenture Holders to be Secured Parties under this
Agreement and are being relied upon by the Lenders as
consideration therefor.
(d) THE COLLATERAL AGENT HAS CONSENTED TO SERVE AS
COLLATERAL AGENT HEREUNDER ON THE EXPRESS UNDERSTANDING, AND THE
DEBENTURE HOLDERS AS SECURED PARTIES, BY ACCEPTING THE BENEFITS OF
THIS AGREEMENT, SHALL BE DEEMED TO HAVE AGREED, THAT THE
COLLATERAL AGENT SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR
RESPONSIBILITY (FIDUCIARY OR OTHERWISE) TO THE DEBENTURE HOLDERS
AS SECURED PARTIES, OTHER THAN THE DUTY TO PERFORM ITS EXPRESS
OBLIGATIONS UNDER THIS AGREEMENT IN ACCORDANCE WITH THEIR TERMS,
SUBJECT IN ALL EVENTS TO THE PROVISIONS OF SECTIONS 8 AND 9 AND
THE OTHER PROVISIONS OF THIS AGREEMENT LIMITING THE RESPONSIBILITY
OR LIABILITY OF THE COLLATERAL AGENT HEREUNDER.
(e) Each Secured Party shall, ratably in accordance with
the amount of Secured Obligations owed to it, indemnify the
Collateral Agent (to the extent it shall not have been reimbursed
by the Pledgors) against any expense or liability that the
Collateral Agent would be entitled to recover from the Pledgors
pursuant to Section 9. Any amount so owed by a Secured Party can
be withheld by the Collateral Agent from any amount owed to such
Secured Party.
SECTION 8. Application of Proceeds of Sale. The proceeds
of any sale of Collateral pursuant to Section 6, as well as any
Collateral consisting of cash, shall be applied by the Collateral
Agent as follows:
FIRST, to the payment of all costs and expenses
incurred by the Collateral Agent in connection with such
sale or otherwise in connection with this Agreement, any
other Loan Document or any of the Obligations, including all
court costs and the reasonable fees and expenses of its
agents and legal counsel, the repayment of all advances made
by the Collateral Agent hereunder or under any other Loan
Document on behalf of any Pledgor and any other costs or
expenses incurred in connection with the exercise of any
right or remedy hereunder or under any other Loan Document;
9
SECOND, to the payment in full of the Obligations (the
amounts so applied to be distributed among the Secured
Parties pro rata in accordance with the amounts of the
Obligations owed to them on the date of any such
distribution); and
THIRD, to the Pledgors, their successors or assigns,
or as a court of competent jurisdiction may otherwise
direct.
The Collateral Agent shall have absolute discretion as to
the time of application of any such proceeds, moneys or balances
in accordance with this Agreement. Upon any sale of the
Collateral by the Collateral Agent (including pursuant to a power
of sale granted by statute or under a judicial proceeding), the
receipt of the purchase money by the Collateral Agent or of the
officer making the sale shall be a sufficient discharge to the
purchaser or purchasers of the Collateral so sold and such
purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the
Collateral Agent or such officer or be answerable in any way for
the misapplication thereof.
SECTION 9. Reimbursement of Collateral Agent; Indemnity.
(a) Each Pledgor agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the
reasonable fees, other charges and disbursements of its counsel
and of any experts or agents, that the Collateral Agent may incur
in connection with (i) the administration of this Agreement, (ii)
the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral
Agent hereunder or (iv) the failure by such Pledgor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Pledgor agrees to indemnify
the Collateral Agent and the Indemnitees (as defined in Section
9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel fees, other
charges and disbursements, incurred by or asserted against any
Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or any
other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or
(ii) any claim, litigation, investigation or proceeding relating
10
to any of the foregoing, whether or not any Indemnitee is a party
thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any
Affiliate of such Indemnitee (or of any officer, director,
employee, advisor or agent of such Indemnitee or any of such
Indemnitee's Affiliates).
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security
Documents. The provisions of this Section 9 shall remain
operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the
Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of the Collateral Agent or any
other Secured Party. All amounts due under this Section 9 shall
be payable on written demand therefor and shall bear interest at
the rate specified in Section 2.13 of the Credit Agreement.
SECTION 10. Collateral Agent Appointed Attorney-in-Fact.
Each Pledgor hereby appoints the Collateral Agent the
attorney-in-fact of such Pledgor for the purpose of carrying out
the provisions of this Agreement and taking any action and
executing any instrument that the Collateral Agent may deem
necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without
limiting the generality of the foregoing, the Collateral Agent
shall have the right, upon the occurrence and during the
continuance of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name
of such Pledgor, to ask for, demand, sue for, collect, receive and
give acquittance for any and all moneys due or to become due under
and by virtue of any Collateral, to endorse checks, drafts, orders
and other instruments for the payment of money payable to the
Pledgor representing any interest or dividend or other
distribution payable in respect of the Collateral or any part
thereof or on account thereof and to give full discharge for the
same, to settle, compromise, prosecute or defend any action, claim
or proceeding with respect thereto, and to sell, assign, endorse,
pledge, transfer and to make any agreement respecting, or
otherwise deal with, the same; provided, however, that nothing
herein contained shall be construed as requiring or obligating the
Collateral Agent to make any commitment or to make any inquiry as
to the nature or sufficiency of any payment received by the
Collateral Agent, or to present or file any claim or notice, or to
take any action with respect to the Collateral or any part thereof
or the moneys due or to become due in respect thereof or any
property covered thereby. The Collateral Agent and the other
Secured Parties shall be accountable only for amounts actually
received as a result of the exercise of the powers granted to them
herein, and neither they nor their officers, directors, employees
or agents shall be responsible to any Pledgor for any act or
failure to act hereunder, except for their own gross negligence or
wilful misconduct.
SECTION 11. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude
11
any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent
hereunder and of the other Secured Parties under the other Loan
Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any
provisions of this Agreement or consent to any departure by any
Pledgor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Pledgor
in any case shall entitle such Pledgor to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement
entered into between the Collateral Agent and the Pledgor or
Pledgors with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
SECTION 12. Securities Act, etc. In view of the position
of the Pledgors in relation to the Pledged Securities, or because
of other current or future circumstances, a question may arise
under the Securities Act of 1933, as now or hereafter in effect,
or any similar statute hereafter enacted analogous in purpose or
effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect
to any disposition of the Pledged Securities permitted hereunder.
Each Pledgor understands that compliance with the Federal
Securities Laws might very strictly limit the course of conduct of
the Collateral Agent if the Collateral Agent were to attempt to
dispose of all or any part of the Pledged Securities, and might
also limit the extent to which or the manner in which any
subsequent transferee of any Pledged Securities could dispose of
the same. Similarly, there may be other legal restrictions or
limitations affecting the Collateral Agent in any attempt to
dispose of all or part of the Pledged Securities under applicable
Blue Sky or other state securities laws or similar laws analogous
in purpose or effect. Each Pledgor recognizes that in light of
such restrictions and limitations the Collateral Agent may, with
respect to any sale of the Pledged Securities, limit the
purchasers to those who will agree, among other things, to acquire
such Pledged Securities for their own account, for investment, and
not with a view to the distribution or resale thereof. Each
Pledgor acknowledges and agrees that in light of such restrictions
and limitations, the Collateral Agent, in its sole and absolute
discretion, (a) may proceed in compliance with applicable law to
make such a sale whether or not a registration statement for the
purpose of registering such Pledged Securities or part thereof
shall have been filed under the Federal Securities Laws and (b)
may approach and negotiate with a single potential purchaser to
effect such sale. Each Pledgor acknowledges and agrees that any
such sale might result in prices and other terms less favorable to
the seller than if such sale were a public sale without such
restrictions. In the event of any such sale, the Collateral Agent
shall incur no responsibility or liability to Pledgor for selling
all or any part of the Pledged Securities at a price that the
12
Collateral Agent, in its sole and absolute discretion, may in good
faith deem reasonable under the circumstances, notwithstanding the
possibility that a substantially higher price might have been
realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The
provisions of this Section 12 will apply notwithstanding the
existence of a public or private market upon which the quotations
or sales prices may exceed substantially the price at which the
Collateral Agent sells.
SECTION 13. Registration, etc. Each Pledgor agrees that,
upon the occurrence and during the continuance of an Event of
Default hereunder, if for any reason the Collateral Agent desires
to sell any of the Pledged Securities of the Borrower at a public
sale, it will, at any time and from time to time, upon the written
request of the Collateral Agent, use its best efforts to take or
to cause the issuer of such Pledged Securities to take such action
and prepare, distribute and/or file such documents, as are
required or advisable in the reasonable opinion of counsel for the
Collateral Agent to permit the public sale of such Pledged
Securities. Each Pledgor further agrees to indemnify, defend and
hold harmless the Collateral Agent, each other Secured Party, any
underwriter and their respective officers, directors, affiliates
and controlling persons from and against all loss, liability,
expenses, costs of counsel (including reasonable fees and expenses
to the Collateral Agent of legal counsel), and claims (including
the costs of investigation) that they may incur insofar as such
loss, liability, expense or claim arises out of or is based upon
any alleged untrue statement of a material fact contained in any
prospectus (or any amendment or supplement thereto) or in any
notification or offering circular, or arises out of or is based
upon any alleged omission to state a material fact required to be
stated therein or necessary to make the statements in any thereof
not misleading, except insofar as the same may have been caused by
any untrue statement or omission based upon information furnished
in writing to such Pledgor or the issuer of such Pledged
Securities by the Collateral Agent or any other Secured Party
expressly for use therein. Each Pledgor further agrees, upon such
written request referred to above, but only so long as the Event
of Default is continuing, to use its best efforts to qualify, file
or register, or cause the issuer of such Pledged Securities to
qualify, file or register, any of the Pledged Securities under the
Blue Sky or other securities laws of such states as may be
requested by the Collateral Agent and keep effective, or cause to
be kept effective, all such qualifications, filings or
registrations. Each Pledgor will bear all costs and expenses of
carrying out its obligations under this Section 13. Each Pledgor
acknowledges that there is no adequate remedy at law for failure
by it to comply with the provisions of this Section 13 and that
such failure would not be adequately compensable in damages, and
therefore agrees that its agreements contained in this Section 13
may be specifically enforced.
SECTION 14. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the grant of a security interest in
the Collateral and all obligations of each Pledgor hereunder,
13
shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other
Loan Document, any agreement with respect to any of the
Obligations or any other agreement or instrument relating to any
of the foregoing, (b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to
any departure from the Credit Agreement, any other Loan Document
or any other agreement or instrument relating to any of the
foregoing, (c) any exchange, release or nonperfection of any other
collateral, or any release or amendment or waiver of or consent to
or departure from any guaranty, for all or any of the Obligations
or (d) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, any Pledgor in respect of
the Obligations or in respect of this Agreement (other than the
indefeasible payment in full of all the Obligations).
SECTION 15. Termination or Release. (a) This Agreement
and the security interests granted hereby shall terminate when (i)
all the Obligations have been indefeasibly paid in full in cash
and the Lenders have no further commitment to lend under the
Credit Agreement, the LC Exposure has been reduced to zero and the
Issuing Banks have no further obligation to issue Letters of
Credit under the Credit Agreement or (ii) upon the earlier
occurrence of the conditions for release and termination set forth
in Section 9.14 of the Credit Agreement.
(b) Upon any sale or other transfer by any Pledgor of any
Collateral that is permitted under the Credit Agreement to any
person that is not a Pledgor, or, upon the effectiveness of any
written consent to the release of the security interest granted
hereby in any Collateral pursuant to Section 9.02(b) of the Credit
Agreement, the security interest in such Collateral shall be
automatically released.
(c) In connection with any termination or release pursuant
to paragraph (a) or (b) above, the Collateral Agent shall promptly
deliver to Pledgor all items of Collateral in its possession or
control and execute and deliver to any Pledgor, at such Pledgor's
expense, all documents that such Pledgor shall reasonably request
to evidence such termination or release. Any execution and
delivery of documents pursuant to this Section 15 shall be without
recourse to or warranty by the Collateral Agent, except in respect
of the Collateral Agent's gross negligence or willful misconduct.
SECTION 16. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section
9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Pledgor shall be given to it at the
address for notices set forth on Schedule I (in care of the
Borrower). All communications and notices hereunder to the
14
Debenture Holders shall be given to such Debenture Holders (c/o
the Trustee) at: The Bank of New York, 101 Barclay Street, 21st
Floor West, New York, NY 10286, Attention: Corporate Trust
Administration.
SECTION 17. Further Assurances. Each Pledgor agrees to do
such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments,
as the Collateral Agent may at any time reasonably request in
connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or
in order better to assure and confirm unto the Collateral Agent
its rights and remedies hereunder.
SECTION 18. Binding Effect; Several Agreement; Assignments.
Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and
assigns of such party, and all covenants, promises and agreements
by or on behalf of any Pledgor that are contained in this
Agreement shall bind and inure to the benefit of its successors
and assigns. This Agreement shall become effective as to any
Pledgor when a counterpart hereof executed on behalf of such
Pledgor shall have been delivered to the Collateral Agent and a
counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such
Pledgor and the Collateral Agent and their respective successors
and assigns, and shall inure to the benefit of such Pledgor, the
Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Pledgor shall
have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement
or the other Loan Documents. If all the capital stock of a
Pledgor is sold, transferred or otherwise disposed of to a person
that is not an Affiliate of the Borrower pursuant to a transaction
permitted by Section 6.05 of the Credit Agreement, such Pledgor
shall be released from its obligations under this Agreement
without further action. This Agreement shall be construed as a
separate agreement with respect to each Pledgor and may be
amended, modified, supplemented, waived or released with respect
to any Pledgor without the approval of any other Pledgor and
without affecting the obligations of any other Pledgor hereunder.
SECTION 19. Survival of Agreement; Severability. (a) All
covenants, agreements, representations and warranties made by each
Pledgor herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have
been relied upon by the Collateral Agent and the other Secured
Parties and shall survive the making by the Lenders of the Loans
and the issuance of the Letters of Credit by the Issuing Banks,
regardless of any investigation made by the Secured Parties or on
their behalf, and shall continue in full force and effect as long
15
as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or the LC Exposure does not
equal zero and as long as the Commitments have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The
parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 20. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 21. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute
a single contract, and shall become effective as provided in
Section 16. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 22. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement. Section headings used
herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting this Agreement.
SECTION 23. Jurisdiction; Consent to Service of Process.
(a) Each Pledgor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
16
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Collateral
Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan
Document against any Pledgor or its properties in the courts of
any jurisdiction.
(b) Each Pledgor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to
in paragraph (a) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
16. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 24. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 24.
SECTION 25. Additional Pledgors. Pursuant to Section 5.11
of the Credit Agreement, each Subsidiary Loan Party that was not
in existence or not a Subsidiary Loan Party on the date of the
Credit Agreement is required to enter in this Agreement as a
Subsidiary Pledgor upon becoming a Subsidiary Loan Party. Upon
execution and delivery by the Collateral Agent and a Subsidiary
Loan Party of an instrument in the form of Annex 1, such
Subsidiary Loan Party shall become a Subsidiary Pledgor hereunder
with the same force and effect as if originally named as a
Subsidiary Pledgor herein. The execution and delivery of such
instrument shall not require the consent of any Pledgor hereunder.
The rights and obligations of each Pledgor hereunder shall remain
in full force and effect notwithstanding the addition of any new
Subsidiary Pledgor as a party to this Agreement.
17
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
PHILLIPS-VAN HEUSEN CORPORATION,
by
Name:
Title:
THE SUBSIDIARY PLEDGORS LISTED ON
SCHEDULE I HERETO,
by
Name:
Title: Authorized Officer
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
18
Schedule I to the
Pledge Agreement
SUBSIDIARY PLEDGORS
Name Address
Schedule II to the
Pledge Agreement
CAPITAL STOCK
Number of Registered Number and Percentage
Issuer Certificate Owner Class of Shares of Shares
DEBT SECURITIES
Issuer Principal Date of Note Maturity Date
Amount
Schedule III to the
Pledge Agreement
JOINT VENTURES
Name Description
Annex 1 to the
Pledge Agreement
SUPPLEMENT NO. dated as of , to the
PLEDGE AGREEMENT dated as of April 22, 1998,
among PHILLIPS-VAN HEUSEN CORPORATION, a
Delaware corporation (the "Borrower"), each
subsidiary of the Borrower listed on Schedule I
hereto (each such subsidiary, individually, a
"Subsidiary Pledgor" and, collectively, the
"Subsidiary Pledgors"; the Borrower and the
Subsidiary Pledgors are referred to collectively
herein as the "Pledgors") and THE CHASE
MANHATTAN BANK, a New York banking corporation
("Chase"), as collateral agent (in such
capacity, the "Collateral Agent") for the
Secured Parties (as defined in the Credit
Agreement referred to below)
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders"),
Chase, as administrative agent for the Lenders and as Collateral
Agent, (b) the Guarantee Agreement dated as of April 22, 1998 (as
amended, supplemented or otherwise modified from time to time, the
"Guarantee Agreement") among the Subsidiary Guarantors and the
Collateral Agent and (c) the Indenture dated as of November 1,
1993, by and between the Borrower and The Bank of New York, as
Trustee for the holders (the "Debenture Holders") of the Company's
7-3/4% Debentures Due 2023.
B. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the
Credit Agreement.
C. The Pledgors have entered into the Pledge Agreement in
order to induce the Lenders to make Loans and the Issuing Banks to
issue Letters of Credit. Pursuant to Section 5.11 of the Credit
Agreement, each Subsidiary Loan Party that was not in existence or
not a Subsidiary on the date of the Credit Agreement is required
to enter into the Pledge Agreement as a Subsidiary Pledgor upon
becoming a Subsidiary Loan Party. Section 25 of the Pledge
Agreement provides that such Subsidiary Loan Parties may become
Subsidiary Pledgors under the Pledge Agreement by execution and
delivery of an instrument in the form of this Supplement. The
undersigned Subsidiary Loan Party (the "New Pledgor") is executing
this Supplement in accordance with the requirements of the Credit
Agreement to become a Subsidiary Pledgor under the Pledge
Agreement in order to induce the Lenders to make additional Loans
and the Issuing Banks to issue additional Letters of Credit and as
consideration for Loans previously made and Letters of Credit
previously issued.
Accordingly, the Collateral Agent and the New Pledgor agree
as follows:
SECTION 1. In accordance with Section 25 of the Pledge
Agreement, the New Pledgor by its signature below becomes a
Pledgor under the Pledge Agreement with the same force and effect
as if originally named therein as a Pledgor and the New Pledgor
hereby (a) agrees to all the terms and provisions of the Pledge
Agreement applicable to it as a Pledgor thereunder and (b)
represents and warrants that the representations and warranties
made by it as a Pledgor thereunder are true and correct on and as
of the date hereof. In furtherance of the foregoing, the New
Pledgor, as security for the payment and performance in full of
the Obligations (as defined in the Pledge Agreement), does hereby
create and grant to the Collateral Agent, its successors and
assigns, for the benefit of the Secured Parties, their successors
and assigns, a security interest in and lien on all the New
Pledgor's right, title and interest in and to the Collateral (as
defined in the Pledge Agreement) of the New Pledgor. Each
reference to a "Subsidiary Pledgor" or a "Pledgor" in the Pledge
Agreement shall be deemed to include the New Pledgor. The Pledge
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to the
Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts,
each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This
Supplement shall become effective when the Collateral Agent shall
have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Pledgor and the
Collateral Agent. Delivery of an executed signature page to this
Supplement by facsimile transmission shall be as effective as
delivery of a manually signed counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants
that set forth on Schedule I attached hereto is a true and correct
schedule of all its Pledged Securities.
SECTION 5. Except as expressly supplemented hereby, the
Pledge Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, neither party hereto shall be
3
required to comply with such provision for so long as such
provision is held to be invalid, illegal or unenforceable, but the
validity, legality and enforceability of the remaining provisions
contained herein and in the Pledge Agreement shall not in any way
be affected or impaired. The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall
be in writing and given as provided in Section 16 of the Pledge
Agreement. All communications and notices hereunder to the New
Pledgor shall be given to it at the address set forth under its
signature hereto (in care of the Borrower).
SECTION 9. The New Pledgor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral
Agent.
IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent
have duly executed this Supplement to the Pledge Agreement as of
the day and year first above written.
[Name of New Pledgor],
by
Name:
Title:
Address:
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
4
Schedule I to
Supplement No.
to the Pledge Agreement
Pledged Securities of the New Pledgor
CAPITAL STOCK
Issuer Number of Registered Number and Percentage
Certificate Owner Class of Shares of Shares
DEBT SECURITIES
Issuer Principal Date of Note Maturity Date
Amount
EXHIBIT G
[Form of]
SECURITY AGREEMENT dated as of April 22,
1998, among PHILLIPS-VAN HEUSEN CORPORATION, a
Delaware corporation (the "Borrower"), each
Subsidiary of the Borrower listed on Schedule I
hereto (each such Subsidiary, individually, a
"Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors"; the Borrower and the
Subsidiary Guarantors are referred to
collectively herein as the "Grantors") and THE
CHASE MANHATTAN BANK, a New York banking
corporation ("Chase"), as collateral agent (in
such capacity the "Collateral Agent") for the
Secured Parties (as defined below).
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent (in such capacity, the
"Administrative Agent"), (b) the Guarantee Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Guarantee Agreement"), among the
Subsidiary Guarantors and the Collateral Agent and (c) the
Indenture dated as of November 1, 1993, by and between the
Borrower and The Bank of New York, as Trustee for the holders (the
"Debenture Holders") of the Borrower's 7-3/4% Debentures due 2023.
The Lenders have agreed to make Loans to the Borrower, and
the Issuing Banks have agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement.
Each of the Subsidiary Guarantors has agreed to guarantee, among
other things, all the obligations of the Borrower under the Credit
Agreement. The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit are conditioned upon,
among other things, the execution and delivery by the Grantors of
an agreement in the form hereof to secure (a) the due and punctual
payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower
under the Credit Agreement in respect of any Letter of Credit,
when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement and the
other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower
under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each
Loan Party under or pursuant to this Agreement and the other Loan
Documents, (d) the due and punctual payment and performance of all
obligations of the Borrower under each Hedging Agreement entered
into with any counterparty that was a Lender or an affiliate
thereof at the time such Hedging Agreement was entered into, (e)
the due and punctual payment and performance of all obligations in
respect of overdrafts and related liabilities owed to the
Administrative Agent or any of its Affiliates and arising from
treasury, depository and cash management services in connection
with any automated clearing house transfers of funds and (f) the
due and punctual payment by the Borrower of all obligations and
liabilities of the Borrower in respect of the Debentures, when and
as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise (all the monetary and other
obligations described in the preceding clauses (a) through (f)
being collectively called the "Obligations").
Accordingly, each of the parties hereto hereby agrees as
follows:
ARTICLE I
Definitions
SECTION 1.01. Definition of Terms Used Herein. Unless the
context otherwise requires, all capitalized terms used but not
defined herein shall have the meanings set forth in the Credit
Agreement.
SECTION 1.02. Definition of Certain Terms Used Herein. As
used herein, the following terms shall have the following
meanings:
"Account Debtor" shall mean any person who is or who may
become obligated to any Grantor under, with respect to or on
account of an Account.
"Accounts" shall mean any and all right, title and interest
of any Grantor to payment for goods and services sold or leased,
including any such right evidenced by chattel paper, whether due
or to become due, whether or not it has been earned by
performance, and whether now or hereafter acquired or arising in
the future, including accounts receivable from Affiliates of the
Grantors.
2
"Accounts Receivable" shall mean all Accounts and all right,
title and interest in any returned goods, together with all
rights, titles, securities and guarantees with respect thereto,
including any rights to stoppage in transit, replevin, reclamation
and resales, and all related security interests, liens and
pledges, whether voluntary or involuntary, in each case whether
now existing or owned or hereafter arising or acquired.
"Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory,
(f) cash and cash accounts, (g) Investment Property and (h)
Proceeds.
"Commodity Account" shall mean an account maintained by a
Commodity Intermediary in which a Commodity Contract is carried
out for a Commodity Customer.
"Commodity Contract" shall mean a commodity futures
contract, an option on a commodity futures contract, a commodity
option or any other contract that, in each case, is (a) traded on
or subject to the rules of a board of trade that has been
designated as a contract market for such a contract pursuant to
the federal commodities laws or (b) traded on a foreign commodity
board of trade, exchange or market, and is carried on the books of
a Commodity Intermediary for a Commodity Customer.
"Commodity Customer" shall mean a person for whom a
Commodity Intermediary carries a Commodity Contract on its books.
"Commodity Intermediary" shall mean (a) a person who is
registered as a futures commission merchant under the federal
commodities laws or (b) a person who in the ordinary course of its
business provides clearance or settlement services for a board of
trade that has been designated as a contract market pursuant to
federal commodities laws.
"Copyright License" shall mean any written agreement, now
or hereafter in effect, granting any right to any third party
under any Copyright now or hereafter owned by any Grantor or which
such Grantor otherwise has the right to license, or granting any
right to such Grantor under any Copyright now or hereafter owned
by any third party, and all rights of such Grantor under any such
agreement.
"Copyrights" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all copyright rights in
any work subject to the copyright laws of the United States or any
other country, whether as author, assignee, transferee or
otherwise; and (b) all registrations and applications for
3
registration of any such copyright in the United States or any
other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the
United States Copyright Office, including those listed on Schedule
II.
"Credit Agreement" shall have the meaning assigned to such
term in the preliminary statement of this Agreement.
"Depository Agreement" shall mean a Depository Agreement
substantially in the form of Annex 1 hereto or otherwise
reasonably satisfactory to the Collateral Agent among the
Borrower, the Collateral Agent and each bank or financial
institution referenced in Section 5.01.
"Documents" shall mean all instruments, files, records,
ledger sheets and documents covering or relating to any of the
Collateral.
"Entitlement Holder" shall mean a person identified in the
records of a Securities Intermediary as the person having a
Security Entitlement against the Securities Intermediary. If a
person acquires a Security Entitlement by virtue of Section
8-501(b)(2) or (3) of the Uniform Commercial Code, such person is
the Entitlement Holder.
"Equipment" shall mean all equipment, furniture and
furnishings, and all tangible personal property similar to any of
the foregoing, including tools, parts and supplies of every kind
and description, and all improvements, accessions or appurtenances
thereto, that are now or hereafter owned by any Grantor. The term
Equipment shall include Fixtures.
"Financial Asset" shall mean (a) a Security, (b) an
obligation of a person or a share, participation or other interest
in a person or in property or an enterprise of a person, which
is, or is of a type, dealt with in or traded on financial markets,
or which is recognized in any area in which it is issued or dealt
in as a medium for investment or (c) any property that is held by
a Securities Intermediary for another person in a Securities
Account if the Securities Intermediary has expressly agreed with
the other person that the property is to be treated as a Financial
Asset under Article 8 of the Uniform Commercial Code. As the
context requires, the term Financial Asset shall mean either the
interest itself or the means by which a person's claim to it is
evidenced, including a certificated or uncertificated Security, a
certificate representing a Security or a Security Entitlement.
"Fixtures" shall mean all items of Equipment, whether now
owned or hereafter acquired, of any Grantor that become so related
to particular real estate that an interest in them arises under
any real estate law applicable thereto.
"General Intangibles" shall mean all choses in action and
causes of action and all other assignable intangible personal
property of any Grantor of every kind and nature (other than
4
Accounts Receivable) now owned or hereafter acquired by any
Grantor, including corporate or other business records,
indemnification claims, contract rights (including rights under
leases, whether entered into as lessor or lessee, Hedging
Agreements, and other agreements), Intellectual Property,
goodwill, registrations and franchises.
"Intellectual Property" shall mean all intellectual and
similar property of any Grantor of every kind and nature now owned
or hereafter acquired by any Grantor, including inventions,
designs, Patents, Copyrights, Licenses, Trademarks, trade secrets,
confidential or proprietary technical and business information,
know-how, show-how or other data or information, software and
databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing
or used in connection with, any of the foregoing.
"Inventory" shall mean all goods of any Grantor, whether now
owned or hereafter acquired, held for sale or lease, or furnished
or to be furnished by any Grantor under contracts of service, or
consumed in any Grantor's business, including raw materials,
intermediates, work in process, packaging materials, finished
goods, semi-finished inventory, scrap inventory, manufacturing
supplies and spare parts, and all such goods that have been
returned to or repossessed by or on behalf of any Grantor.
"Investment Property" shall mean all Securities (whether
certificated or uncertificated), Security Entitlements, Securities
Accounts, Commodity Contracts and Commodity Accounts of any
Grantor, whether now owned or hereafter acquired by any Grantor.
"License" shall mean any Patent License, Trademark License,
Copyright License or other license or sublicense to which any
Grantor is a party, including those listed on Schedule III (other
than those license agreements in existence on the date hereof and
listed on Schedule III and those license agreements entered into
after the date hereof, which by their terms prohibit assignment or
a grant of a security interest by such Grantor as licensee
thereunder).
"Net Proceeds" shall mean, with respect to any event (a) the
cash proceeds received in respect of such event including (i) any
cash received in respect of any non-cash proceeds, but only as and
when received, (ii) in the case of a casualty, insurance proceeds,
and (iii) in the case of a condemnation or similar event,
condemnation awards and similar payments, net of (b) the sum of
(i) all reasonable fees and out-of-pocket expenses paid by the
Borrower and the Subsidiaries to third parties (other than
Affiliates) in connection with such event, (ii) in the case of a
sale or other disposition of an asset (including pursuant to a
casualty or condemnation), the amount of all payments required to
be made by the Borrower and the Subsidiaries as a result of such
event to repay Indebtedness (other than Loans) secured by such
5
asset or otherwise subject to mandatory prepayment as a result of
such event, and (iii) the amount of all taxes paid (or reasonably
estimated to be payable) the Borrower and the Subsidiaries, and
the amount of any reserves established by the Borrower and the
Subsidiaries to fund contingent liabilities reasonably estimated
to be payable, in each case during the year that such event
occurred or the next succeeding year and that are directly
attributable to such event (as determined reasonably and in good
faith by the chief financial officer of the Borrower).
"Obligations" shall have the meaning assigned to such term
in the preliminary statement of this Agreement.
"Patent License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to
make, use or sell any invention on which a Patent, now or
hereafter owned by any Grantor or which any Grantor otherwise has
the right to license, is in existence, or granting to any Grantor
any right to make, use or sell any invention on which a Patent,
now or hereafter owned by any third party, is in existence, and
all rights of any Grantor under any such agreement.
"Patents" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all letters patent of the
United States or any other country, all registrations and
recordings thereof, and all applications for letters patent of the
United States or any other country, including registrations,
recordings and pending applications in the United States Patent
and Trademark Office or any similar offices in any other country,
including those listed on Schedule IV; and (b) all reissues,
continuations, divisions, continuations-in-part, renewals or
extensions thereof, and the inventions disclosed or claimed
therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.
"Perfection Certificate" shall mean a certificate
substantially in the form of Annex 2 hereto, completed and
supplemented with the schedules and attachments contemplated
thereby, and duly executed by a Financial Officer and the chief
legal officer of the Borrower.
"Proceeds" shall mean any consideration received from the
sale, exchange, license, lease or other disposition of any asset
or property that constitutes Collateral, any value received as a
consequence of the possession of any Collateral and any payment
received from any insurer or other person or entity as a result of
the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any asset or property which
constitutes Collateral, and shall include (a) any claim of any
Grantor against any third party for (and the right to sue and
recover for and the rights to damages or profits due or accrued
arising out of or in connection with) (i) past, present or future
infringement of any Patent now or hereafter owned by any Grantor,
or licensed under a Patent License, (ii) past, present or future
infringement or dilution of any Trademark now or hereafter owned
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by any Grantor or licensed under a Trademark License or injury to
the goodwill associated with or symbolized by any Trademark now or
hereafter owned by any Grantor, (iii) past, present or future
breach of any License and (iv) past, present or future
infringement of any Copyright now or hereafter owned by any
Grantor or licensed under a Copyright License and (b) any and all
other amounts from time to time paid or payable under or in
connection with any of the Collateral.
"Secured Parties" shall mean (a) the Lenders, (b) the
Administrative Agent, (c) the Collateral Agent, (d) the Issuing
Banks, (e) each counterparty to a Hedging Agreement entered into
with the Borrower if such counterparty was a Lender (or an
Affiliate thereof) at the time the Hedging Agreement was entered
into, (f) the beneficiaries of each indemnification obligation
undertaken by any Grantor under any Loan Document, (g) the
Debenture Holders and (h) the successors and assigns of each of
the foregoing.
"Securities" shall mean any obligations of an issuer or any
shares, participations or other interests in an issuer or in
property or an enterprise of an issuer which (a) are represented
by a certificate representing a security in bearer or registered
form, or the transfer of which may be registered upon books
maintained for that purpose by or on behalf of the issuer, (b) are
one of a class or series or by its terms is divisible into a class
or series of shares, participations, interests or obligations and
(c)(i) are, or are of a type, dealt with or traded on securities
exchanges or securities markets or (ii) are a medium for
investment and by their terms expressly provide that they are a
security governed by Article 8 of the Uniform Commercial Code.
"Securities Account" shall mean an account to which a
Financial Asset is or may be credited in accordance with an
agreement under which the person maintaining the account
undertakes to treat the person for whom the account is maintained
as entitled to exercise rights that comprise the Financial Asset.
"Security Entitlements" shall mean the rights and property
interests of an Entitlement Holder with respect to a Financial
Asset.
"Security Interest" shall have the meaning assigned to such
term in Section 2.01.
"Securities Intermediary" shall mean (a) a clearing
corporation or (b) a person, including a bank or broker, that in
the ordinary course of its business maintains securities accounts
for others and is acting in that capacity.
"Trademark License" shall mean any written agreement, now or
hereafter in effect, granting to any third party any right to use
any Trademark now or hereafter owned by any Grantor or which any
Grantor otherwise has the right to license, or granting to any
Grantor any right to use any Trademark now or hereafter owned by
any third party, and all rights of any Grantor under any such
agreement.
"Trademarks" shall mean all of the following now owned or
hereafter acquired by any Grantor: (a) all trademarks and service
marks, and the good will appurtenant to each, trade names,
7
corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or
business identifiers, designs and general intangibles of like
nature, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all registration and
recording applications filed in connection therewith, including
registrations and registration applications in the United States
Patent and Trademark Office, any State of the United States or any
similar offices in any other country or any political subdivision
thereof, and all extensions or renewals thereof, including those
listed on Schedule V; (b) all goodwill associated therewith or
symbolized thereby; and (c) all other assets, rights and interests
that uniquely reflect or embody such goodwill.
ARTICLE II
Security Interests
SECTION 2.01. Security Interest. As security for the
payment or performance, as the case may be, in full of the
Obligations, each Grantor hereby bargains, sells, conveys,
assigns, sets over, mortgages, pledges, hypothecates and transfers
to the Collateral Agent and its successors and assigns, for the
ratable benefit of the Secured Parties, and hereby grants to the
Collateral Agent and its successors and assigns, for the ratable
benefit of the Secured Parties, a first-priority (subject to
Section 3.03 hereof) security interest in, all of such Grantor's
right, title and interest in, to and under the Collateral (the
"Security Interest"). Without limiting the foregoing, the
Collateral Agent is hereby authorized to file one or more
financing statements (including fixture filings), continuation
statements, filings with the United States Patent and Trademark
Office or United States Copyright Office (or any successor office
or any similar office in any State of the United States or in any
other country) or other documents for the purpose of perfecting,
confirming, continuing, enforcing or protecting the Security
Interest granted by each Grantor, without the signature of any
Grantor, and naming any Grantor or the Grantors as debtors and the
Collateral Agent as secured party.
SECTION 2.02. No Assumption of Liability. The Security
Interest is granted as security only and shall not subject the
Collateral Agent or any other Secured Party to, or in any way
alter or modify, any obligation or liability of any Grantor with
respect to or arising out of the Collateral.
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ARTICLE III
Representations and Warranties
The Grantors jointly and severally represent and warrant to
the Collateral Agent and the Secured Parties that:
SECTION 3.01. Title and Authority. Each Grantor has good
and valid rights in and title to the Collateral with respect to
which it has purported to grant a Security Interest hereunder and
has full power and authority to grant to the Collateral Agent the
Security Interest in such Collateral pursuant hereto and to
execute, deliver and perform its obligations in accordance with
the terms of this Agreement, without the consent or approval of
any other person other than any consent or approval that has been
obtained and is in full force and effect.
SECTION 3.02. Filings. (a) The Perfection Certificate has
been duly prepared, completed and executed and the information set
forth therein is correct and complete. Fully executed Uniform
Commercial Code financing statements (including fixture filings,
as applicable) or other appropriate filings, recordings or
registrations containing a description of the Collateral have been
delivered to the Collateral Agent for filing in each governmental,
municipal or other office specified in Schedule 6 to the
Perfection Certificate, which are all the filings, recordings and
registrations (other than filings required to be made in the
United States Patent and Trademark Office and the United States
Copyright Office in order to perfect the Security Interest in
Collateral consisting of United States Patents, Trademarks and
Copyrights) that are necessary to publish notice of and protect
the validity of and to establish a legal, valid and perfected
first-priority security interest in favor of the Collateral Agent
(for the ratable benefit of the Secured Parties) in respect of all
Collateral in which a security interest may be perfected by
filing, recording or registration in the United States (or any
political subdivision thereof) and its territories and
possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under
applicable law with respect to the filing of continuation
statements.
(b) Each Grantor represents and warrants that fully executed
security agreements in the form hereof and containing a
description of all Collateral consisting of Intellectual Property
with respect to United States Patents and United States registered
Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights,
if any, have been delivered to the Collateral Agent for recording
by the United States Patent and Trademark Office and the United
States Copyright Office pursuant to 35 U.S.C. Sec. 261, 15 U.S.C.
Sec. 1060 or 17 U.S.C. Sec. 205 and the regulations thereunder, as
applicable, and otherwise as may be required pursuant to the laws
of any other necessary jurisdiction, to protect the validity of
and to establish a legal, valid and perfected first-priority
9
security interest in favor of the Collateral Agent (for the
ratable benefit of the Secured Parties) in respect of all
Collateral consisting of Patents, Trademarks and Copyrights to the
extent registered in the United States Copyright Office in which a
security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision
thereof) and its territories and possessions, or in any other
necessary jurisdiction, and no further or subsequent filing,
refiling, recording, rerecording, registration or reregistration
is necessary (other than such actions as are necessary to perfect
the Security Interest with respect to any Collateral consisting of
Patents, Trademarks and such Copyrights (or registration or
application for registration thereof) acquired or developed after
the date hereof). Each Grantor has advised the Collateral Agent
that none of its Copyrights have been so registered with the
United States Copyright Office.
SECTION 3.03. Validity of Security Interest. The Security
Interest constitutes (a) a legal and valid security interest in
all the Collateral securing the payment and performance of the
Obligations, (b) subject to the filings described in Section 3.02
above, a perfected security interest in all Collateral in which a
security interest may be perfected by filing, recording or
registering a financing statement or analogous document in the
United States (or any political subdivision thereof) and its
territories and possessions pursuant to the Uniform Commercial
Code or other applicable law in such jurisdictions and (c) a
security interest that shall be perfected in all Collateral in
which a security interest may be perfected upon the receipt and
recording of this Agreement with the United States Patent and
Trademark Office and the United States Copyright Office, as
applicable. The Security Interest is and shall be prior to any
other Lien on any of the Collateral, other than Liens expressly
permitted to be prior to the Security Interest pursuant to Section
6.02 of the Credit Agreement.
SECTION 3.04. Absence of Other Liens. The Collateral is
owned by the Grantors free and clear of any Lien, except for Liens
expressly permitted pursuant to Section 6.02 of the Credit
Agreement. The Grantor has not filed or consented to the filing
of (a) any financing statement or analogous document under the
Uniform Commercial Code or any other applicable laws covering any
Collateral, (b) any assignment in which any Grantor assigns any
Collateral or any security agreement or similar instrument
covering any Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or (c) any
assignment in which any Grantor assigns any Collateral or any
security agreement or similar instrument covering any Collateral
with any foreign governmental, municipal or other office, which
financing statement or analogous document, assignment, security
agreement or similar instrument is still in effect, except, in
each case, for Liens expressly permitted pursuant to Section 6.02
of the Credit Agreement.
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ARTICLE IV
Covenants
SECTION 4.01. Change of Name; Location of Collateral;
Records; Place of Business. (a) Each Grantor agrees promptly to
notify the Collateral Agent in writing of any change (i) in its
corporate name or in any trade name used to identify it in the
conduct of its business or in the ownership of its properties,
(ii) in the location of its chief executive office, its principal
place of business, any office in which it maintains books or
records relating to Collateral owned by it or any office or
facility at which Collateral owned by it is located (including the
establishment of any such new office or facility), (iii) in its
identity or corporate structure or (iv) in its Federal Taxpayer
Identification Number. Each Grantor agrees not to effect or
permit any change referred to in the preceding sentence unless
prior written notice has been delivered to the Collateral Agent.
Each Grantor agrees to take all actions reasonably requested by
the Collateral Agent in order to ensure that all filings are made
in a timely manner under the Uniform Commercial Code or otherwise
that are required in order for the Collateral Agent to continue at
all times following such change to have a valid, legal and
perfected first-priority security interest in all the Collateral.
Each Grantor agrees promptly to notify the Collateral Agent if any
material portion of the Collateral owned or held by such Grantor
is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and
expense, such complete and accurate records with respect to the
Collateral owned by it as is consistent with its current practices
and in accordance with such prudent and standard practices used in
industries that are the same as or similar to those in which such
Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received
with respect to any part of the Collateral, and, at such time or
times as the Collateral Agent may reasonably request, promptly to
prepare and deliver to the Collateral Agent a duly certified
schedule or schedules in form and detail reasonably satisfactory
to the Collateral Agent showing the identity, amount and location
of any and all Collateral.
SECTION 4.02. Periodic Certification. Each year, at the
time of delivery of annual financial statements with respect to
the preceding fiscal year pursuant to Section 5.01 of the Credit
Agreement, the Borrower shall deliver to the Collateral Agent a
certificate executed by a Financial Officer of the Borrower (a)
setting forth the information required pursuant to Section 2 of
the Perfection Certificate or confirming that there has been no
change in such information since the date of such certificate or
the date of the most recent certificate delivered pursuant to this
Section 4.02 and (b) certifying that all Uniform Commercial Code
financing statements (including fixture filings, as applicable) or
other appropriate filings, recordings or registrations, including
all refilings, rerecordings and reregistrations, containing a
description of the Collateral that have been reasonably requested
by the Collateral Agent have been duly executed and delivered to
the Collateral Agent for filing of record in each governmental,
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municipal or other appropriate office in each jurisdiction
identified pursuant to clause (a) above to the extent necessary to
protect and perfect the Security Interest for a period of not less
than 18 months after the date of such certificate (except as noted
therein with respect to any continuation statements to be filed
within such period). Each certificate delivered pursuant to this
Section 4.02 shall identify in the format of Schedule II, III, IV
or V, as applicable, all Intellectual Property of any Grantor in
existence on the date thereof and not then listed on such
Schedules or previously so identified to the Collateral Agent.
SECTION 4.03. Protection of Security. Each Grantor shall,
at its own cost and expense, take any and all actions reasonably
necessary to defend title to the Collateral against all persons
and to defend the Security Interest of the Collateral Agent in the
Collateral and the priority thereof against any Lien not expressly
permitted pursuant to Section 6.02 of the Credit Agreement.
SECTION 4.04. Further Assurances. Each Grantor agrees, at
its own expense, to execute, acknowledge, deliver and cause to be
duly filed all such further instruments and documents and take all
such actions as the Collateral Agent may from time to time
reasonably request to better assure, preserve, protect and perfect
the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection
with the execution and delivery of this Agreement, the granting of
the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection
herewith or therewith. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced
by any promissory note or other instrument, such note or
instrument shall be immediately pledged and delivered to the
Collateral Agent, duly endorsed in a manner satisfactory to the
Collateral Agent (except for such notes or instruments the
aggregate amount of which at any time shall not exceed $250,000).
Without limiting the generality of the foregoing, each
Grantor hereby authorizes the Collateral Agent, with prompt notice
thereof to the Grantors, to supplement this Agreement by
supplementing Schedule II, III, IV or V hereto or adding
additional schedules hereto to specifically identify any asset or
item that may constitute Copyrights with respect to which
registrations have been made by a Grantor in the United States
Copyright Office, Licenses, Patents or Trademarks; provided,
however, that any Grantor shall have the right, exercisable within
30 days after it has been notified by the Collateral Agent of the
specific identification of such Collateral, to advise the
Collateral Agent in writing of any errors in such supplement or
inaccuracy of the representations and warranties made by such
Grantor hereunder with respect to such Collateral. Each Grantor
agrees that it will use its best efforts to take such action as
shall be necessary in order that all representations and
12
warranties hereunder shall be true and correct with respect to
such Collateral (after giving effect to the correction of any such
errors) within such 30 days after the date it has been notified by
the Collateral Agent of the specific identification of such
Collateral. No Default or Event of Default shall be deemed to
arise as the result of any such inaccuracy during such 30 day
period.
SECTION 4.05. Inspection and Verification. The Collateral
Agent and such persons as the Collateral Agent may reasonably
designate shall have the right, at the Grantors' own cost and
expense, (during normal business hours on not less than two (2)
business days notice, unless an Event of Default has occurred and
is continuing, in which case, no such notice shall be required) to
inspect the Collateral, all records related thereto (and to make
extracts and copies from such records) and the premises upon which
any of the Collateral is located, to discuss the Grantors' affairs
with the officers of the Grantors and their independent
accountants and to verify under reasonable procedures the
validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Collateral, including, in
the case of Accounts or Collateral in the possession of any third
person, by contacting Account Debtors or the third person
possessing such Collateral for the purpose of making such a
verification. The Collateral Agent shall have the absolute right
to share any information it gains from such inspection or
verification with any Secured Party, its advisors, authorized
agents and representatives, but not with any other Person.
SECTION 4.06. Taxes; Encumbrances. At its option, the
Collateral Agent may discharge past due taxes, assessments,
charges, fees, Liens, security interests or other encumbrances at
any time levied or placed on the Collateral and not permitted
pursuant to Section 6.02 of the Credit Agreement, and may pay for
the maintenance and preservation of the Collateral to the extent
any Grantor fails to do so as required by the Credit Agreement or
this Agreement, and each Grantor jointly and severally agrees to
reimburse the Collateral Agent on demand for any payment made or
any expense incurred by the Collateral Agent pursuant to the
foregoing authorization; provided, however, that nothing in this
Section 4.06 shall be interpreted as excusing any Grantor from the
performance of, or imposing any obligation on the Collateral Agent
or any other Secured Party to cure or perform, any covenants or
other promises of any Grantor with respect to taxes, assessments,
charges, fees, liens, security interests or other encumbrances and
maintenance as set forth herein or in the other Loan Documents.
SECTION 4.07. Assignment of Security Interest. If at any
time any Grantor shall take a security interest in any property of
an Account Debtor or any other person to secure payment and
performance of an Account, such Grantor shall promptly assign such
security interest to the Collateral Agent. Such assignment need
not be filed of public record unless necessary to continue the
perfected status of the security interest against creditors of and
transferees from the Account Debtor or other person granting the
security interest.
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SECTION 4.08. Continuing Obligations of the Grantors. Each
Grantor shall remain liable to observe and perform all the
conditions and obligations to be observed and performed by it
under each contract, agreement or instrument relating to the
Collateral, all in accordance with the terms and conditions
thereof, and the Grantors jointly and severally agree to indemnify
and hold harmless the Collateral Agent and the other Secured
Parties from and against any and all liability for such
performance.
SECTION 4.09. Use and Disposition of Collateral. None of
the Grantors shall make or permit to be made an assignment, pledge
or hypothecation of the Collateral or shall grant any other Lien
in respect of the Collateral, except as expressly permitted by
Section 6.02 of the Credit Agreement. None of the Grantors shall
make or permit to be made any transfer of the Collateral and each
Grantor shall remain at all times in possession of the Collateral
owned by it, except that (a) Inventory may be sold in the ordinary
course of business and (b) unless and until the Collateral Agent
shall notify the Grantors that an Event of Default shall have
occurred and be continuing and that during the continuance thereof
the Grantors shall not sell, convey, lease, assign, transfer or
otherwise dispose of any Collateral (which notice may be given by
telephone if promptly confirmed in writing), the Grantors may use
and dispose of the Collateral in any lawful manner not
inconsistent with the provisions of this Agreement, the Credit
Agreement or any other Loan Document. Without limiting the
generality of the foregoing, each Grantor agrees that it shall not
permit any Inventory (other than Inventory which in the aggregate
does not exceed $[7,500,000] in wholesale value) to be in the
possession or control of any warehouseman, bailee, agent or
processor at any time unless such warehouseman, bailee, agent or
processor shall have been notified of the Security Interest and
shall have agreed in writing to hold the Inventory subject to the
Security Interest and the instructions of the Collateral Agent and
to waive and release any Lien held by it with respect to such
Inventory, whether arising by operation of law or otherwise.
SECTION 4.10. Limitation on Modification of Accounts. None
of the Grantors will, without the prior written consent of the
Collateral Agent, grant any extension of the time of payment of
any of the Accounts Receivable, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or
partly, any person liable for the payment thereof or allow any
credit or discount whatsoever thereon, other than extensions,
credits, discounts, compromises or settlements granted or made in
the ordinary course of business and consistent with its current
practices and in accordance with such prudent and standard
practices used in industries that are the same as or similar to
those in which such Grantor is engaged.
14
SECTION 4.11. Insurance. (a) The Grantors, at their own
expense, shall maintain or cause to be maintained and shall cause
each of the other Subsidiaries to maintain, with financially sound
and reputable insurance companies:
(i) fire and extended coverage insurance, on a
replacement cost basis, with respect to all personal
property and improvements to real property, in such amounts
as are customarily maintained by companies in the same or
similar business operating in the same or similar locations;
(ii) commercial general liability insurance against
claims for bodily injury, death or property damage occurring
upon, about or in connection with the use of any properties
owned, occupied or controlled by it, providing coverage on
an occurrence basis with a combined single limit of not less
than $2,000,000 and including the broad form CGL
endorsement;
(iii) business interruption insurance, insuring
against loss of gross earnings for a period of not less than
12 months arising from any risks or occurrences required to
be covered by insurance pursuant to clause (i) above; and
(iv) such other insurance as may be required by law.
Deductibles or self-insured retention shall be in amounts carried
by the Borrower in the ordinary course of business consistent with
its present practice and prudent business practice.
(b) Fire and extended coverage policies (and any policies
required to be maintained pursuant to paragraph (c) below)
maintained with respect to any Collateral shall be endorsed or
otherwise amended to include (i) a non-contributing mortgage
clause (regarding improvements to real property) and lenders' loss
payable clause (regarding personal property), in each case in
favor of the Administrative Agent and providing for losses
thereunder to be payable to the Administrative Agent or its
designee, (ii) a provision to the effect that neither the
Borrower, the Administrative Agent nor any other party shall be a
coinsurer and (iii) such other provisions as the Administrative
Agent may reasonably require from time to time to protect the
interests of the Lenders. Commercial general liability policies
shall be endorsed to name the Administrative Agent as an
additional insured. Business interruption policies shall name the
Administrative Agent as loss payee. Each such policy referred to
in this paragraph also shall provide that it shall not be
canceled, materially modified or not renewed (i) by reason of
nonpayment of premium except upon not less than 10 days' prior
written notice thereof by the insurer to the Administrative Agent
(giving the Administrative Agent the right to cure defaults in the
15
payment of premiums) or (ii) for any other reason except upon not
less than 30 days' prior written notice thereof by the insurer to
the Administrative Agent. The Borrower shall deliver to the
Administrative Agent, prior to the cancelation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or
replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent) together with
evidence satisfactory to the Administrative Agent of payment of
the premium therefor.
(c) If at any time the area in which any Mortgaged Property
is located is designated (i) a "flood hazard area" in any Flood
Insurance Rate Map published by the Federal Emergency Management
Agency (or any successor agency), the Borrower shall obtain flood
insurance in such total amount as the Administrative Agent or the
Required Lenders may from time to time reasonably require, and
otherwise comply with the National Flood Insurance Program as set
forth in the Flood Disaster Protection Act of 1973, as amended
from time to time, or (ii) a "Zone 1" area, the Borrower shall
obtain earthquake insurance in such total amount as the
Administrative Agent or the Required Lenders may from time to time
require.
(d) Each Grantor irrevocably makes, constitutes and
appoints the Collateral Agent (and all officers, employees or
agents designated by the Collateral Agent) as such Grantor's true
and lawful agent (and attorney-in-fact) for the purpose, during
the continuance of an Event of Default, of making, settling and
adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of such Grantor on any check, draft,
instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and
decisions with respect thereto. In the event that any Grantor at
any time or times shall fail to obtain or maintain any of the
policies of insurance required hereby or to pay any premium in
whole or part relating thereto, the Collateral Agent may, without
waiving or releasing any obligation or liability of the Grantors
hereunder or any Event of Default, in its sole discretion, obtain
and maintain such policies of insurance and pay such premium and
take any other actions with respect thereto as the Collateral
Agent deems advisable. All sums disbursed by the Collateral Agent
in connection with this Section 4.11(d), including reasonable
attorneys' fees, court costs, expenses and other charges relating
thereto, shall be payable, upon demand, by the Grantors to the
Collateral Agent and shall be additional Obligations secured
hereby.
SECTION 4.12. Casualty and Condemnation. (a) The Borrower
will furnish to the Administrative Agent and the Lenders prompt
written notice of any casualty or other insured damage in excess
of $100,000 to any portion of any Collateral or the commencement
of any action or proceeding for the taking of any Collateral or
any part thereof or interest therein under power of eminent domain
or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section
results in Net Proceeds (whether in the form of insurance
proceeds, condemnation award or otherwise), the Administrative
Agent is authorized to collect such Net Proceeds and, if received
16
by the Borrower or any Subsidiary, such Net Proceeds shall be paid
over to the Administrative Agent; provided that (i) if the
aggregate Net Proceeds in respect of such event (other than
proceeds of business interruption insurance) are less than
$5,000,000, such Net Proceeds shall be promptly paid over to the
Borrower unless a Default has occurred and is continuing, and (ii)
all proceeds of business interruption insurance shall be promptly
paid over to the Borrower unless a Default has occurred and is
continuing. All such Net Proceeds retained by or paid over to the
Administrative Agent shall be held by the Administrative Agent and
released from time to time to pay the costs of repairing,
restoring or replacing the affected property in accordance with
the terms of this Agreement, subject to the provisions of this
Agreement regarding application of such Net Proceeds during a
Default. Upon written request from the Borrower and at the
Borrower's risk and expense, such Net Proceeds shall be invested
pursuant to reasonable instructions of the Borrower, provided that
such investments are permitted under the Credit Agreement. At any
time upon written request from the Borrower to the Administrative
Agent, any such Net Proceeds retained by or paid over to the
Administrative Agent may be applied, together with any amounts
earned through the investments of Net Proceeds pursuant to Section
4.12(b) hereof, to prepay Borrowings in accordance with the Credit
Agreement.
(c) If any Net Proceeds retained by or paid over to the
Administrative Agent as provided above continue to be held by the
Administrative Agent on the date that is 360 days after the
occurrence of the event resulting in such Net Proceeds, then such
Net Proceeds shall be applied, together with any amounts earned
through the investments of Net Proceeds pursuant to Section
4.12(b) hereof, to prepay Borrowings in accordance with the Credit
Agreement.
SECTION 4.13. Legend. If an Event of Default has occurred
and is continuing, each Grantor shall legend, as may be reasonably
requested by the Collateral Agent and in form and manner
satisfactory to the Collateral Agent, its Accounts Receivable and
its books, records and documents evidencing or pertaining thereto
with an appropriate reference to the fact that such Accounts
Receivable have been assigned to the Collateral Agent for the
benefit of the Secured Parties and that the Collateral Agent has a
first-priority security interest therein.
SECTION 4.14. Covenants Regarding Patent, Trademark and
Copyright Collateral. (a) Each Grantor agrees that it will not,
nor will it permit any of its licensees to, do any act, or omit to
do any act, whereby any Patent that is material to the conduct of
such Grantor's business may become invalidated or dedicated to the
public, and agrees that consistent with its present practice and
prudent business practice it shall continue to mark any products
covered by a Patent with the relevant patent number as necessary
and sufficient to establish and preserve its maximum rights under
applicable patent laws.
17
(b) Each Grantor (either itself or through its licensees or
its sublicensees) will, for each Trademark material to the conduct
of such Grantor's business, (i) maintain such Trademark in full
force free from any claim of abandonment or invalidity for
non-use, (ii) maintain the quality of products and services
offered under such Trademark, (iii) display such Trademark with
notice of Federal or foreign registration to the extent necessary
and sufficient to establish and preserve its maximum rights under
applicable law and (iv) not knowingly use or knowingly permit the
use of such Trademark in violation of any third party rights.
(c) Each Grantor (either itself or through licensees) will,
for each work covered by a material Copyright, continue to
publish, reproduce, display, adopt and distribute the work with
appropriate copyright notice as necessary and sufficient to
establish and preserve its maximum rights under applicable
copyright laws.
(d) Each Grantor shall notify the Collateral Agent
immediately if it knows or has reason to know that any Patent,
Trademark or Copyright material to the conduct of its business may
become abandoned, lost or dedicated to the public, or of any
adverse determination or development (including the institution
of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, United States
Copyright Office or any court or similar office of any country)
regarding such Grantor's ownership of any Patent, Trademark or
Copyright, its right to register the same, or its right to keep
and maintain the same.
(e) In no event shall any Grantor, either itself or through
any agent, employee, licensee or designee, file an application for
any Patent, Trademark or Copyright (or for the registration of any
Trademark or Copyright) with the United States Patent and
Trademark Office, United States Copyright Office or any office or
agency in any political subdivision of the United States or in any
other country or any political subdivision thereof, unless it
promptly informs the Collateral Agent and, upon request of the
Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Collateral Agent may
request to evidence the Collateral Agent's Security Interest in
such Patent, Trademark or Copyright, and each Grantor hereby
appoints the Collateral Agent as its attorney-in-fact to execute
and file such writings for the foregoing purposes, all acts of
such attorney being hereby ratified and confirmed; such power,
being coupled with an interest, is irrevocable.
(f) Each Grantor will take all necessary steps that are
consistent with the practice in any proceeding before the United
States Patent and Trademark Office, United States Copyright Office
or any office or agency in any political subdivision of the United
States or in any other country or any political subdivision
thereof, to maintain and pursue each material application relating
to the Patents, Trademarks and/or Copyrights (and to obtain the
relevant grant or registration) and to maintain each issued Patent
18
and each registration of the Trademarks and Copyrights that is
material to the conduct of any Grantor's business, including
timely filings of applications for renewal, affidavits of use,
affidavits of incontestability and payment of maintenance fees,
and, if consistent with good business judgment, to initiate
opposition, interference and cancelation proceedings against third
parties.
(g) In the event that any Grantor has reason to believe
that any Collateral consisting of a Patent, Trademark or Copyright
material to the conduct of any Grantor's business has been or is
about to be infringed, misappropriated or diluted by a third
party, such Grantor promptly shall notify the Collateral Agent and
shall, if consistent with good business judgment, promptly sue for
infringement, misappropriation or dilution and to recover any and
all damages for such infringement, misappropriation or dilution,
and take such other actions as are appropriate under the
circumstances to protect such Collateral.
(h) Upon and during the continuance of an Event of Default,
each Grantor shall use its best efforts to obtain all requisite
consents or approvals by the licensor of each Copyright License,
Patent License or Trademark License to effect the assignment of
all of such Grantor's right, title and interest thereunder to the
Collateral Agent or its designee.
ARTICLE V
Collections
SECTION 5.01. Depositary Agreement. No later than 60 days
after the Effective Date, each Grantor shall have entered into a
Depository Agreement with each bank or financial institution with
which it maintains a deposit account or other similar account (a
"Deposit Account").
SECTION 5.02. Lockbox System. Upon the occurrence of an
Event of Default, the Grantors shall, at the option of the
Collateral Agent or the Required Lenders, establish a system of
lockboxes and related deposit accounts satisfactory in all
respects to the Collateral Agent.
SECTION 5.03. Power of Attorney. Each Grantor irrevocably
makes, constitutes and appoints the Collateral Agent (and all
officers, employees or agents designated by the Collateral Agent)
as such Grantor's true and lawful agent and attorney-in-fact, and
in such capacity the Collateral Agent shall have the right, with
power of substitution for each Grantor and in each Grantor's name
or otherwise, for the use and benefit of the Collateral Agent and
the Secured Parties, upon the occurrence and during the
continuance of an Event of Default (a) to receive, endorse, assign
and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the
Collateral or any part thereof; (b) to demand, collect, receive
payment of, give receipt for and give discharges and releases of
all or any of the Collateral; (c) to sign the name of any Grantor
on any invoice or bill of lading relating to any of the
Collateral; (d) to send verifications of Accounts Receivable to
any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or
any of the Collateral or to enforce any rights in respect of any
Collateral; (f) to settle, compromise, compound, adjust or defend
19
any actions, suits or proceedings relating to all or any of the
Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent;
and (h) to use, sell, assign, transfer, pledge, make any agreement
with respect to or otherwise deal with all or any of the
Collateral, and to do all other acts and things necessary to carry
out the purposes of this Agreement, as fully and completely as
though the Collateral Agent were the absolute owner of the
Collateral for all purposes; provided, however, that nothing
herein contained shall be construed as requiring or obligating the
Collateral Agent or any Secured Party to make any commitment or to
make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent or any Secured Party, or to
present or file any claim or notice, or to take any action with
respect to the Collateral or any part thereof or the moneys due or
to become due in respect thereof or any property covered thereby,
and no action taken or omitted to be taken by the Collateral Agent
or any Secured Party with respect to the Collateral or any part
thereof shall give rise to any defense, counterclaim or offset in
favor of any Grantor or to any claim or action against the
Collateral Agent or any Secured Party. It is understood and
agreed that the appointment of the Collateral Agent as the agent
and attorney-in-fact of the Grantors for the purposes set forth
above is coupled with an interest and is irrevocable. The
provisions of this Section shall in no event relieve any Grantor
of any of its obligations hereunder or under any other Loan
Document with respect to the Collateral or any part thereof or
impose any obligation on the Collateral Agent or any Secured Party
to proceed in any particular manner with respect to the Collateral
or any part thereof, or in any way limit the exercise by the
Collateral Agent or any Secured Party of any other or further
right which it may have on the date of this Agreement or
hereafter, whether hereunder, under any other Loan Document, by
law or otherwise.
ARTICLE VI
Remedies
SECTION 6.01. Remedies upon Default. Upon the occurrence
and during the continuance of an Event of Default, each Grantor
agrees to deliver each item of Collateral to the Collateral Agent
on demand, and it is agreed that the Collateral Agent shall have
the right to take any of or all the following actions at the same
or different times: (a) with respect to any Collateral consisting
of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any
20
of or all such Collateral by the applicable Grantors to the
Collateral Agent, or to license or sublicense, whether general,
special or otherwise, and whether on an exclusive or non-exclusive
basis, any such Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent shall
determine (other than in violation of any then-existing licensing
arrangements to the extent that waivers cannot be obtained), and
(b) with or without legal process and with or without prior notice
or demand for performance, to take possession of the Collateral
and without liability to Grantor for trespass to enter any
premises where the Collateral may be located for the purpose of
taking possession of or removing the Collateral and, generally, to
exercise any and all rights afforded to a secured party under the
Uniform Commercial Code or other applicable law. Without limiting
the generality of the foregoing, each Grantor agrees that the
Collateral Agent shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of
all or any part of the Collateral, at public or private sale or at
any broker's board or on any securities exchange, for cash, upon
credit or for future delivery as the Collateral Agent shall deem
appropriate. The Collateral Agent shall be authorized at any such
sale (if it deems it advisable to do so) to restrict the
prospective bidders or purchasers to persons who will represent
and agree that they are purchasing the Collateral for their own
account for investment and not with a view to the distribution or
sale thereof, and upon consummation of any such sale the
Collateral Agent shall have the right to assign, transfer and
deliver to the purchaser or purchasers thereof the Collateral so
sold. Each such purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part
of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal
which such Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter
enacted.
The Collateral Agent shall give the Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice
within the meaning of Section 9-504(3) of the Uniform Commercial
Code as in effect in the State of New York or its equivalent in
other jurisdictions) of the Collateral Agent's intention to make
any sale of Collateral. Such notice, in the case of a public
sale, shall state the time and place for such sale and, in the
case of a sale at a broker's board or on a securities exchange,
shall state the board or exchange at which such sale is to be made
and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such
public sale shall be held at such time or times within ordinary
business hours and at such place or places as the Collateral Agent
may fix and state in the notice (if any) of such sale. At any
such sale, the Collateral, or portion thereof, to be sold may be
sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may (in its sole and absolute discretion)
determine. The Collateral Agent shall not be obligated to make
any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral
shall have been given. The Collateral Agent may, without notice
or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time
and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so
adjourned. In case any sale of all or any part of the Collateral
is made on credit or for future delivery, the Collateral so sold
21
may be retained by the Collateral Agent until the sale price is
paid by the purchaser or purchasers thereof, but the Collateral
Agent shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold
again upon like notice. At any public (or, to the extent
permitted by law, private) sale made pursuant to this Section, any
Secured Party may bid for or purchase, free (to the extent
permitted by law) from any right of redemption, stay, valuation or
appraisal on the part of any Grantor (all said rights being also
hereby waived and released to the extent permitted by law), the
Collateral or any part thereof offered for sale and may make
payment on account thereof by using any claim then due and payable
to such Secured Party from any Grantor as a credit against the
purchase price, and such Secured Party may, upon compliance with
the terms of sale, hold, retain and dispose of such property
without further accountability to any Grantor therefor. For
purposes hereof, a written agreement to purchase the Collateral or
any portion thereof shall be treated as a sale thereof; the
Collateral Agent shall be free to carry out such sale pursuant to
such agreement and no Grantor shall be entitled to the return of
the Collateral or any portion thereof subject thereto,
notwithstanding the fact that after the Collateral Agent shall
have entered into such an agreement all Events of Default shall
have been remedied and the Obligations paid in full. As an
alternative to exercising the power of sale herein conferred upon
it, the Collateral Agent may proceed by a suit or suits at law or
in equity to foreclose this Agreement and to sell the Collateral
or any portion thereof pursuant to a judgment or decree of a court
or courts having competent jurisdiction or pursuant to a
proceeding by a court-appointed receiver.
SECTION 6.02. Application of Proceeds. The Collateral
Agent shall apply the proceeds of any collection or sale of the
Collateral, as well as any Collateral consisting of cash, as
follows:
FIRST, to the payment of all costs and expenses incurred by
the Administrative Agent or the Collateral Agent (in its capacity
as such hereunder or under any other Loan Document) in connection
with such collection or sale or otherwise in connection with this
Agreement or any of the Obligations, including all court costs and
the fees and expenses of its agents and legal counsel, the
repayment of all advances made by the Collateral Agent hereunder
or under any other Loan Document on behalf of any Grantor and any
other costs or expenses incurred in connection with the exercise
of any right or remedy hereunder or under any other Loan Document;
22
SECOND, to the payment in full of the Obligations (the
amounts so applied to be distributed among the Secured Parties pro
rata in accordance with the amounts of the Obligations owed to
them on the date of any such distribution); and
THIRD, to the Grantors, their successors or assigns, or as a
court of competent jurisdiction may otherwise direct.
The Collateral Agent shall have absolute discretion as to the time
of application of any such proceeds, moneys or balances in
accordance with this Agreement. Upon any sale of the Collateral
by the Collateral Agent (including pursuant to a power of sale
granted by statute or under a judicial proceeding), the receipt of
the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not be
obligated to see to the application of any part of the purchase
money paid over to the Collateral Agent or such officer or be
answerable in any way for the misapplication thereof.
SECTION 6.03. Grant of License to Use Intellectual
Property. For the purpose of enabling the Collateral Agent to
exercise rights and remedies under this Article at such time as
the Collateral Agent shall be lawfully entitled to exercise such
rights and remedies, each Grantor hereby grants to the Collateral
Agent an irrevocable, non-exclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use,
license or sub-license any of the Collateral consisting of
Intellectual Property now owned or hereafter acquired by such
Grantor, and wherever the same may be located, and including in
such license (a) reasonable access to all media in which any of
the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof
and (b) a provision that the licensee shall apply substantially
the same quality control standards as were utilized by Borrower
prior to the date of the license. The use of such license by the
Collateral Agent shall be exercised, at the option of the
Collateral Agent, upon the occurrence and during the continuation
of an Event of Default, provided that any license, sub-license or
other transaction entered into by the Collateral Agent in
accordance herewith shall be binding upon the Grantors
notwithstanding any subsequent cure of an Event of Default.
ARTICLE VII
Intercreditor Agreements; Collateral Agent
SECTION 7.01. Effect of Acceptance of Benefits. By
acceptance of the benefits of this Agreement, each of the Secured
Parties shall be deemed to have agreed to be bound by the terms
hereof. The provisions of this Article VII are, and are intended,
solely to establish certain rights as between the Secured Parties
23
and shall not create, and shall not be construed as creating, any
rights enforceable by any Grantor, any Subsidiary or any Affiliate
of any Grantor (regardless of whether such Grantor, Subsidiary or
Affiliate is a Secured Party).
SECTION 7.02. Appointment of Collateral Agent. By
acceptance of the benefits of this Agreement, each of the Secured
Parties shall be deemed irrevocably (a) to consent to the
appointment of the Collateral Agent as its agent hereunder, (b) to
confirm that the Collateral Agent shall have the authority to act
as the exclusive agent of such Secured Party for enforcement of
any provisions of this Agreement against any Grantor or the
exercise of remedies hereunder and (c) to agree that such Secured
Party shall not take any action to enforce any provisions of this
Agreement against any Grantor or to exercise any remedy hereunder.
SECTION 7.03. Liability of Collateral Agent. The
Collateral Agent may act or refrain from acting hereunder, and
shall not incur any liability to the Secured Parties for acting or
refraining from acting hereunder, in accordance with any such
consent, direction or request of the Required Lenders as shall be
required or permitted under the Credit Agreement. The Debenture
Holders as Secured Parties shall not be entitled to, and shall
not, (a) direct the actions of the Collateral Agent hereunder, (b)
take any action, or commence any legal proceeding seeking, to
require, compel or cause the Collateral Agent to enforce any
provisions of this Agreement against any Grantor or to exercise
any remedy hereunder, (c) take any action, or commence any legal
proceeding seeking, to prevent or enjoin the Collateral Agent
from taking any action (including, without limitation, the
enforcement of any provisions of this Agreement against any
Grantor, the exercise of any remedy hereunder, the release of any
Collateral hereunder or the consent to any amendment or
modification of this Agreement or the grant of any waiver
hereunder), or refraining from taking any such action, in
accordance with this Agreement or (d) take any action, or commence
any legal proceeding seeking, to delay, hinder or otherwise impair
the Collateral Agent in taking any such action in accordance with
this Agreement. By acceptance of the benefits under this
Agreement, the Debenture Holders as Secured Parties will be deemed
to have acknowledged and agreed that the provisions of the
preceding sentence are intended to induce the Lenders to permit
the Debenture Holders to be Secured Parties under this Agreement
and are being relied upon by the Lenders as consideration
therefor.
SECTION 7.04. Duties of Collateral Agent. THE COLLATERAL
AGENT HAS CONSENTED TO SERVE AS COLLATERAL AGENT HEREUNDER ON THE
EXPRESS UNDERSTANDING, AND THE DEBENTURE HOLDERS AS SECURED
PARTIES, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT, SHALL BE
DEEMED TO HAVE AGREED, THAT THE COLLATERAL AGENT SHALL HAVE NO
DUTY AND SHALL OWE NO OBLIGATION OR RESPONSIBILITY (FIDUCIARY OR
24
OTHERWISE) TO THE DEBENTURE HOLDERS AS SECURED PARTIES, OTHER THAN
THE DUTY TO PERFORM ITS EXPRESS OBLIGATIONS UNDER THIS AGREEMENT
IN ACCORDANCE WITH THEIR TERMS, SUBJECT IN ALL EVENTS TO THE
PROVISIONS OF SECTIONS 6.02 AND 8.05 AND THE OTHER PROVISIONS OF
THIS AGREEMENT LIMITING THE RESPONSIBILITY OR LIABILITY OF THE
COLLATERAL AGENT HEREUNDER.
SECTION 7.05. Indemnification of Collateral Agent. Each
Secured Party shall, ratably in accordance with the amount of
Secured Obligations owed to it, indemnify the Collateral Agent (to
the extent it shall not have been reimbursed by the Borrower)
against any expense or liability that the Collateral Agent would
be entitled to recover from the Borrower pursuant to Section 8.05.
Any amount so owed by a Secured Party can be withheld by the
Collateral Agent from any amount owed to such Secured Party.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Waivers; Amendment. (a) No failure or delay
of the Collateral Agent in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude
any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Collateral Agent
and of the other Secured Parties hereunder and under the other
Loan Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or consent to any departure by any
Grantors therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or
consent shall be effective only in the specific instance and for
the purpose for which given. No notice or demand on any Grantors
in any case shall entitle such Grantors to any other or further
notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to a written agreement
entered into among the Collateral Agent and the Grantor or
Grantors with respect to which such waiver, amendment or
modification is to apply, subject to any consent required in
accordance with Section 9.02 of the Credit Agreement.
SECTION 8.02. Security Interest Absolute. All rights of
the Collateral Agent hereunder, the grant of a security interest
in the Collateral and all obligations of each Grantor hereunder
shall be absolute and unconditional irrespective of (a) any lack
of validity or enforceability of the Credit Agreement, any other
Loan Document, any
25
agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any
change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations, or any other amendment or
waiver of or any consent to any departure from the Credit
Agreement, any other Loan Document or any other agreement or
instrument relating to any of the foregoing, (c) any exchange,
release or nonperfection of any other collateral, or any release
or amendment or waiver of or consent to or departure from any
guaranty, for all or any of the Obligations or (d) any other
circumstance that might otherwise constitute a defense available
to, or a discharge of, any Grantor in respect of the Obligations
or in respect of this Agreement (other than the indefeasible
payment in full of all the Obligations).
SECTION 8.03. Notices. All communications and notices
hereunder shall be in writing and given as provided in Section
9.01 of the Credit Agreement. All communications and notices
hereunder to any Subsidiary Guarantor shall be given to it at the
address for notices set forth on Schedule I (in care of the
Borrower). All communications and notices hereunder to the
Debenture Holders shall be given to such Debenture Holders (c/o
the Trustee) at: The Bank of New York, 101 Barclay Street, 21st
Floor West, New York, NY 10286, Attention: Corporate Trust
Administration.
SECTION 8.04. Further Assurances. Each Grantor agrees to
do such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments,
as the Collateral Agent may at any time reasonably request in
connection with the administration and enforcement of this
Agreement or with respect to the Collateral or any part thereof or
in order better to assure and confirm unto the Collateral Agent
its rights and remedies hereunder.
SECTION 8.05. Reimbursement of Collateral Agent; Indemnity.
(a) Each Grantor agrees to pay upon demand to the Collateral
Agent the amount of any and all reasonable expenses, including the
reasonable fees, other charges and disbursements of its counsel
and of any experts or agents, that the Collateral Agent may incur
in connection with (i) the administration of this Agreement, (ii)
the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Collateral
Agent hereunder or (iv) the failure by such Grantor to perform or
observe any of the provisions hereof.
(b) Without limitation of its indemnification obligations
under the other Loan Documents, each Grantor agrees to indemnify
the Collateral Agent and the other Indemnitees (as defined in
Section 9.03 of the Credit Agreement) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel
fees, other charges and disbursements, incurred by or asserted
against any
26
Indemnitee arising out of, in any way connected with, or as a
result of (i) the execution or delivery of this Agreement or any
other Loan Document or any agreement or instrument contemplated
hereby or thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the
Transactions and the other transactions contemplated thereby or
(ii) any claim, litigation, investigation or proceeding relating
to any of the foregoing, whether or not any Indemnitee is a party
thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses resulted from the gross
negligence or wilful misconduct of such Indemnitee or any
Affiliate of such Indemnitee (or of any officer, director,
employee, advisor or agent of such Indemnitee or any of such
Indemnitee's Affiliates).
(c) Any amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security
Documents. The provisions of this Section 8.05 shall remain
operative and in full force and effect regardless of the
termination of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the
Obligations, the invalidity or unenforceability of any term or
provision of this Agreement or any other Loan Document or any
investigation made by or on behalf of the Collateral Agent or any
other Secured Party. All amounts due under this Section 8.05
shall be payable on written demand therefor and shall bear
interest at the rate specified in Section 2.12 of the Credit
Agreement.
SECTION 8.06. Binding Effect; Several Agreement;
Assignments. Whenever in this Agreement any of the parties hereto
is referred to, such reference shall be deemed to include the
successors and assigns of such party, and all covenants, promises
and agreements by or on behalf of any Grantor that are contained
in this Agreement shall bind and inure to the benefit of its
successors and assigns. This Agreement shall become effective as
to any Grantor when a counterpart hereof executed on behalf of
such Grantor shall have been delivered to the Collateral Agent and
a counterpart hereof shall have been executed on behalf of the
Collateral Agent, and thereafter shall be binding upon such
Grantor and the Collateral Agent and their respective successors
and assigns, and shall inure to the benefit of such Grantor, the
Collateral Agent and the other Secured Parties, and their
respective successors and assigns, except that no Grantor shall
have the right to assign its rights hereunder or any interest
herein or in the Collateral (and any such attempted assignment
shall be void), except as expressly contemplated by this Agreement
or the other Loan Documents. This Agreement shall be construed as
a separate agreement with respect to each Grantor and may be
amended, modified, supplemented, waived or released with respect
to any Grantor without the approval of any other Grantor and
without affecting the obligations of any other Grantor hereunder.
27
SECTION 8.07. Survival of Agreement; Severability. (a)
All covenants, agreements, representations and warranties made by
each Grantor herein and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document shall be considered to have
been relied upon by the Collateral Agent and the other Secured
Parties and shall survive the making by the Lenders of the Loans
and the issuance of the Letters of Credit by the Issuing Banks,
regardless of any investigation made by the Secured Parties or on
their behalf, and shall continue in full force and effect as long
as the principal of or any accrued interest on any Loan or any
other fee or amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or the LC Exposure does not
equal zero and as long as the Commitments have not been
terminated.
(b) In the event any one or more of the provisions
contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby (it being
understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The
parties shall endeavor in good-faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 8.08. Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
SECTION 8.09. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute
a single contract, and shall become effective as provided in
Section 8.06. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually executed counterpart of this
Agreement.
SECTION 8.10. Rules of Interpretation. The rules of
interpretation specified in Section 1.03 of the Credit Agreement
shall be applicable to this Agreement. Section headings used
herein are for convenience of reference only, are not part of this
Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting this Agreement.
SECTION 8.11. Jurisdiction; Consent to Service of Process.
(a) Each Grantor hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of
the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern
28
District of New York, and any appellate court from any thereof, in
any action or proceeding arising out of or relating to this
Agreement or any other Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby
irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in
such New York State or, to the extent permitted by law, in such
Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement or
any other Loan Document shall affect any right that the Collateral
Agent or any other Secured Party may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan
Document against any Grantor or its properties in the courts of
any jurisdiction.
(b) Each Grantor irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to
this Agreement or any other Loan Document in any court referred to
in paragraph (a) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section
8.03. Nothing in this Agreement or any other Loan Document will
affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 8.12. Waiver of Jury Trial. EACH PARTY HERETO
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW,
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.12.
SECTION 8.13. Additional Grantors. Pursuant to Section
5.11 of the Credit Agreement, each Subsidiary Loan Party that was
not in existence or not a Subsidiary Loan Party on the date of the
29
Credit Agreement is required to enter in this Agreement as a
Subsidiary Guarantor upon becoming a Subsidiary Loan Party. Upon
execution and delivery by the Collateral Agent and a Subsidiary
Loan Party of an instrument in the form of Annex 3, such
Subsidiary Loan Party shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as
a Subsidiary Guarantor herein. The execution and delivery of such
instrument shall not require the consent of any Grantor hereunder.
The rights and obligations of each Grantor hereunder shall remain
in full force and effect notwithstanding the addition of any new
Subsidiary Guarantor as a party to this Agreement.
SECTION 8.14. Termination. The Security Interest shall
terminate when (i) all the Obligations have been indefeasibly paid
in full in cash, the Lenders have no further commitment to lend,
the Exposure has been reduced to zero and the Issuing Banks have
no further commitment to issue Letters of Credit under the Credit
Agreement, or (ii) upon the earlier occurrence of the conditions
for release and termination set forth in Section 9.14 of the
Credit Agreement, at which time the Collateral Agent shall execute
and deliver to the Grantors, at the Grantors' expense, all Uniform
Commercial Code termination statements and similar documents that
the Grantors shall reasonably request to evidence termination of
the Security Interest as well as termination of the powers of
attorney herein set forth and assignment by the Collateral Agent
of its right, title and interest in any licenses granted pursuant
to Section 6.03. Any execution and delivery of termination
statements or documents pursuant to this Section 8.14 shall be
without recourse to or warranty by the Collateral Agent. Upon any
sale or other transfer by any Grantor of any Collateral that is
permitted under the Credit Agreement to any person that is not a
Grantor, or, upon the effectiveness of any written consent to the
release of the security interest granted hereby in any Collateral
pursuant to Section 9.02(b) of the Credit Agreement, the security
interest in such Collateral shall be automatically released. A
Grantor shall automatically be released from its obligations
hereunder and the Security Interest in the Collateral of such
Grantor shall be automatically released in the event that all the
capital stock of such Grantor shall be sold, transferred or
otherwise disposed of to a person that is not an Affiliate of the
Borrower in accordance with the terms of the Credit Agreement,
provided that the Required Lenders shall have consented to such
sale, transfer or other disposition (to the extent required by the
Credit Agreement) and the terms of such consent did not provide
otherwise.
30
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their duly authorized officers or
agents, all as of the day and year first above written.
THE CHASE MANHATTAN BANK, as
Collateral Agent,
by
Name:
Title:
PHILLIPS-VAN HEUSEN CORPORATION,
by
Name:
Title:
EACH OF THE GUARANTORS LISTED ON
SCHEDULE I HERETO,
by
Name:
Title:
31
SCHEDULE I
GUARANTORS
SCHEDULE II
COPYRIGHTS
SCHEDULE III
LICENSES
SCHEDULE IV
PATENTS
SCHEDULE V
TRADEMARKS
Annex 1 to the
Security Agreement
DEPOSIT BANK AGREEMENT dated as of [
], among [Name of Grantor], a [ ]
corporation (the "Grantor"), THE CHASE MANHATTAN
BANK, a New York banking corporation ("Chase"),
as collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties
(such term, and each other capitalized term used
but not defined herein, having the meaning given
it in the Security Agreement referred to below)
and [ ], a
[ ] banking corporation (the
"Deposit Bank").
A. The Grantors and the Collateral Agent are parties to a
Security Agreement dated as of April 22, 1998 (as amended,
supplemented or otherwise modified from time to time, the
"Security Agreement"), and the related Credit Agreement, dated as
of April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among Phillips-Van
Heusen Corporation, the lenders from time to time party thereto
(the "Lenders") and Chase, as administrative agent and Collateral
Agent. Pursuant to the terms of the Security Agreement, the
Grantors have granted to the Collateral Agent, for the ratable
benefit of the Secured Parties, a security interest in the
Accounts Receivable and other Collateral (including Inventory,
cash, cash accounts and Proceeds) to secure the payment and
performance of the Obligations and have irrevocably appointed the
Collateral Agent as their agent to collect amounts due in respect
of Accounts Receivable and Inventory.
B. The Deposit Bank has established and maintains the
Deposit Accounts (as defined below) listed on Schedule 1 for the
benefit of the Grantor.
NOW, THEREFORE, the parties, in consideration of the sum of
$1.00 and other good and valuable consideration, the receipt and
sufficiency of which consideration is hereby acknowledged by each
of the parties, hereto agree as follows:
1. Each of the Deposit Bank and the Grantor hereby
acknowledges that (a) Chase is the Collateral Agent for the
Secured Parties pursuant to the Security Agreement and the Credit
Agreement and (b) the Grantor has granted to the Collateral Agent
a security interest in the Accounts Receivable and other
Collateral, including (i) each deposit account or other similar
account (each such account, a "Deposit Account") that the Grantor
maintains with the Deposit Bank, (ii) all funds on deposit in, or
otherwise to the credit of any such Deposit Account (the "Deposit
Account Funds") and (iii) all items (and Proceeds thereof) that
come into the possessions of the Deposit Bank in connection with
any such Deposit Account (the "Deposit Account Items"), to secure
the payment of Obligations pursuant to the Security Agreement.
2. Each of the Deposit Bank and the Grantor hereby agrees
that, upon the occurrence and during the continuance of an Event
of Default, the Deposit Bank shall take direction from the
Collateral Agent with respect to (a) each Deposit Account that the
Grantor maintains with the Deposit Bank, (b) all Deposit Account
Funds and (c) all Deposit Account Items.
3. This Agreement shall terminate when (a) all the
Obligations have been indefeasibly paid in full in cash, the
Lenders have no further commitment to lend, the Exposure has been
reduced to zero and the Issuing Banks have no further commitment
to issue Letters of Credit under the Credit Agreement, or (b) upon
the earlier occurrence of the conditions for release and
termination set forth in Section 9.14 of the Credit Agreement.
4. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Delivery of an executed signature page to this Agreement by
facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.
5. EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF [
] GOVERN THE DEPOSIT ACCOUNT, THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
[Name of Grantor],
by
Name:
Title:
2
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by
Name:
Title:
[Deposit Bank],
by
Name:
Title:
3
Schedule I
Annex 2 to the
Security Agreement
[Form Of]
PERFECTION CERTIFICATE
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as Administrative Agent and Collateral Agent, and (b) the
Guarantee Agreement dated as of April 22, 1998 (as amended,
supplemented or otherwise modified from time to time, the
"Guarantee Agreement") among the Guarantors and the Collateral
Agent.
The undersigned, an [executive officer or legal officer] of
the Borrower, hereby certifies to the Collateral Agent and each
other Secured Party as follows:
1. Names. (a) The exact corporate name of each Grantor, as
such name appears in its respective certificate of incorporation,
is as follows:
(b) Set forth below is each other corporate name each
Grantor has had in the past five years, together with the date of
the relevant change:
(c) Except as set forth in Schedule 1 hereto, no Grantor
has changed its identity or corporate structure in any way within
the past five years. Changes in identity or corporate structure
would include mergers, consolidations and acquisitions, as well as
any change in the form, nature or jurisdiction of corporate
organization. If any such change has occurred, include in
Schedule 1 the information required by Sections 1 and 2 of this
certificate as to each acquiree or constituent party to a merger
or consolidation.
(d) The following is a list of all other names (including
trade names or similar appellations) used by each Grantor or any
of its divisions or other business units in connection with the
conduct of its business or the ownership of its properties at any
time during the past five years:
(e) Set forth below is the Federal Taxpayer Identification
Number of each Grantor:
2. Current Locations. (a) The chief executive office of
each Grantor is located at the address set forth opposite its name
below:
Grantor Mailing Address County State
(b) Set forth below opposite the name of each Grantor are
all locations where such Grantor maintains any books or records
relating to any Accounts Receivable (with each location at which
chattel paper, if any, is kept being indicated by an "*"):
Grantor Mailing Address County State
(c) Set forth below opposite the name of each Grantor are
all the places of business of such Grantor not identified in
paragraph (a) or (b) above:
Grantor Mailing Address County State
(d) Set forth below opposite the name of each Grantor are
all the locations where such Grantor maintains any Collateral not
identified above:
Grantor Mailing Address County State
(e) Set forth below opposite the name of each Grantor are
the names and addresses of all persons other than such Grantor
that have possession of any of the Collateral of such Grantor:
Grantor Mailing Address County State
3. Unusual Transactions. All Accounts Receivable have been
originated by the Grantors and all Inventory has been acquired by
the Grantors in the ordinary course of business.
4. File Search Reports. Attached hereto as Schedule 4(A)
are true copies of file search reports from the Uniform Commercial
Code filing offices where filings described in Section 3.16 of the
Credit Agreement are to be made. Attached hereto as Schedule 4(B)
is a true copy of each financing statement or other filing
identified in such file search reports.
5. UCC Filings. Duly signed financing statements on Form
UCC-1 in substantially the form of Schedule 5 hereto have been
prepared for filing in the Uniform Commercial Code filing office
in each jurisdiction where a Grantor has Collateral as identified
in Section 2 hereof.
2
6. Schedule of Filings. Attached hereto as Schedule 6 is a
schedule setting forth, with respect to the filings described in
Section 5 above, each filing and the filing office in which such
filing is to be made.
7. Filing Fees. All filing fees and taxes payable in
connection with the filings described in Section 5 above have been
paid.
8. Stock Ownership. Attached hereto as Schedule 8 is a
true and correct list of all the duly authorized, issued and
outstanding stock of each Subsidiary and the record and beneficial
owners of such stock. Also set forth on Schedule 8 is each equity
Investment of the Borrower and each Subsidiary that represents 50%
or less of the equity of the entity in which such investment was
made.
9. Notes. Attached hereto as Schedule 9 is a true and
correct list of all notes held by the Borrower and each Subsidiary
and all intercompany notes between any of (i) the Borrower, (ii)
any Subsidiary of the Borrower and (iii) any other such
Subsidiary.
10. Advances. Attached hereto as Schedule 10 is (a) a true
and correct list of all advances (i) made by the Borrower to any
Subsidiary of the Borrower or (ii) made by any Subsidiary of the
Borrower to the Borrower or any other Subsidiary of the Borrower,
which advances will be on and after the date hereof evidenced by
one or more intercompany notes pledged to the Collateral Agent
under the Pledge Agreement, and (b) a true and correct list of all
unpaid intercompany transfers of goods sold and delivered by or to
the Borrower or any Subsidiary of the Borrower.
11. Mortgage Filings. Attached hereto as Schedule 11 is a
schedule setting forth, with respect to each Mortgaged Property,
(i) the exact corporate name of the corporation that owns such
property as such name appears in its certificate of incorporation,
(ii) if different from the name identified pursuant to clause (i),
the exact name of the current record owner of such property
reflected in the records of the filing office for such property
identified pursuant to the following clause and (iii) the filing
office in which a Mortgage with respect to such property must be
filed or recorded in order for the Collateral Agent to obtain a
perfected security interest therein.
3
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate on this [ ] day of April.
PHILLIPS-VAN HEUSEN CORPORATION
by
Name:
Title: [executive officer or legal officer]
4
Annex 3 to the
Security Agreement
SUPPLEMENT NO. __ dated as of
, to the Security Agreement dated as of
April 22, 1998 among PHILLIPS-VAN HEUSEN
CORPORATION, a Delaware corporation (the
"Borrower"), each Subsidiary of the Borrower
listed on Schedule I hereto (each such
Subsidiary individually a "Subsidiary Guarantor"
and collectively, the "Subsidiary Guarantors";
the Borrower and the Subsidiary Guarantors are
referred to collectively herein as the
"Grantors") and THE CHASE MANHATTAN BANK, a New
York banking corporation ("Chase"), as
collateral agent (in such capacity, the
"Collateral Agent") for the Secured Parties (as
defined in the Security Agreement).
Reference is made to (a) the Credit Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among the Borrower,
the lenders from time to time party thereto (the "Lenders") and
Chase, as administrative agent (in such capacity, the
"Administrative Agent"), (b) the Guarantee Agreement dated as of
April 22, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Guarantee Agreement"), among the
Subsidiary Guarantors and the Collateral Agent and (c) the
Indenture dated as of November 1, 1993, by and between the
Borrower and The Bank of New York, as Trustee for the holders (the
"Debenture Holders") of the Borrower's 7-3/4% Debentures due 2023.
The Lenders have agreed to make Loans to the Borrower, and
the Issuing Banks have agreed to issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and
subject to the conditions specified in, the Credit Agreement.
Each of the Subsidiary Guarantors has agreed to guarantee, among
other things, all the obligations of the Borrower under the Credit
Agreement. The obligations of the Lenders to make Loans and of
the Issuing Banks to issue Letters of Credit are conditioned upon,
among other things, the execution and delivery by the Grantors of
an agreement in the form hereof to secure (a) the due and punctual
payment by the Borrower of (i) the principal of and premium, if
any, and interest (including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the Borrower
under the Credit Agreement in respect of any Letter of Credit,
when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash
collateral and (iii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless
of whether allowed or allowable in such proceeding), of the
Borrower to the Secured Parties under the Credit Agreement and the
other Loan Documents, (b) the due and punctual performance of all
covenants, agreements, obligations and liabilities of the Borrower
under or pursuant to the Credit Agreement and the other Loan
Documents, (c) the due and punctual payment and performance of all
the covenants, agreements, obligations and liabilities of each
Loan Party under or pursuant to this Agreement and the other Loan
Documents, (d) the due and punctual payment and performance of all
obligations of the Borrower under each Hedging Agreement entered
into with any counterparty that was a Lender or an Affiliate
thereof at the time such Hedging Agreement was entered into, (e)
the due and punctual payment and performance of all obligations in
respect of overdrafts and related liabilities owed to the
Administrative Agent or any of its Affiliates and arising from
treasury, depository and cash management services in connection
with any automated clearing house transfers of funds and (f) the
due and punctual payment by the Borrower of all obligations and
liabilities of the Borrower in respect of the Debentures, when and
as due, whether at maturity, by acceleration, upon one or more
dates set for prepayment or otherwise (all the monetary and other
obligations described in the preceding clauses (a) through (f)
being collectively called the "Obligations").
Accordingly, the Collateral Agent and the New Grantor agree
as follows:
SECTION 1. In accordance with Section 8.12 of the Security
Agreement, the New Grantor by its signature below becomes a
Grantor under the Security Agreement with the same force and
effect as if originally named therein as a Grantor and the New
Grantor hereby (a) agrees to all the terms and provisions of the
Security Agreement applicable to it as a Grantor thereunder and
(b) represents and warrants that the representations and
warranties made by it as a Grantor thereunder are true and correct
on and as of the date hereof. In furtherance of the foregoing,
the New Grantor, as security for the payment and performance in
full of the Obligations (as defined in the Security Agreement),
does hereby create and grant to the Collateral Agent, its
successors and assigns, for the benefit of the Secured Parties,
their successors and assigns, a first-priority security interest
in and lien on all of the New Grantor's right, title and interest
in and to the Collateral (as defined in the Security Agreement) of
the New Grantor. Each reference to a "Grantor" in the Security
Agreement shall be deemed to include the New Grantor. The Security
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Grantor represents and warrants to the
Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it
and constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
2
SECTION 3. This Supplement may be executed in counterparts
(and by different parties hereto on different counterparts), each
of which shall constitute an original, but all of which when taken
together shall constitute a single contract. This Supplement shall
become effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together, bear
the signatures of the New Grantor and the Collateral Agent.
Delivery of an executed signature page to this Supplement by
facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Supplement.
SECTION 4. The New Grantor hereby represents and warrants
that (a) set forth on Schedule I attached hereto is a true and
correct schedule of the location of any and all Collateral of the
New Grantor and (b) set forth under its signature hereto, is the
true and correct location of the chief executive office of the New
Grantor.
SECTION 5. Except as expressly supplemented hereby, the
Security Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. In case any one or more of the provisions
contained in this Supplement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and in
the Security Agreement shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a
particular provision in a particular jurisdiction shall not in and
of itself affect the validity of such provision in any other
jurisdiction). The parties hereto shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be
in writing and given as provided in Section 8.03 of the Security
Agreement. All communications and notices hereunder to the New
Grantor shall be given to it at the address set forth under its
signature below.
SECTION 9. The New Grantor agrees to reimburse the
Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees,
other charges and disbursements of counsel for the Collateral
Agent.
3
IN WITNESS WHEREOF, the New Grantor and the Collateral Agent
have duly executed this Supplement to the Security Agreement as of
the day and year first above written.
[Name of New Grantor],
by
Name:
Title:
Address:
THE CHASE MANHATTAN BANK,
as Collateral Agent,
by
Name:
Title:
4
SCHEDULE I
to Supplement No.___ to the
Security Agreement
LOCATION OF COLLATERAL
Description Location
Exhibit H
[FORM OF] MORTGAGE, ASSIGNMENT OF LEASES AND RENTS, SECURITY
AGREEMENT AND FINANCING STATEMENT
THIS MORTGAGE, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FINANCING STATEMENT dated as
of April 22, 1998 (this "Mortgage"), by
PHILLIPS-VAN HEUSEN CORPORATION, a Delaware
corporation, having an office at 1290 Avenue of the
Americas, New York, NY 10104-0101 (the "Mortgagor"
or the "Borrower"), to THE CHASE MANHATTAN BANK, a
New York banking corporation, having an office at
270 Park Avenue, New York, New York 10017, as
collateral agent (in such capacity, the "
Collateral Agent") for the benefit of the Secured
Parties (as defined below) (the "Mortgagee");
WITNESSETH THAT:
A. Reference is made to (x) the Credit Agreement dated
as of April 22, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among
Mortgagor, the financial institutions party thereto as lenders
(the "Lenders"), The Chase Manhattan Bank, as administrative
agent (in such capacity, the "Administrative Agent") and as
swingline lender (in such capacity, the "Swingline Lender"),
CITICORP USA, INC., as documentation agent, and Chase
Securities Inc., as arranger and (y) the Indenture dated as of
November 1, 1993, by and between the Borrower and the Bank of
New York, as Trustee for the holders (the "Debenture Holders")
of the Borrower's 7-3/4% Debentures due 2023. As used herein,
the term "Secured Parties" shall mean (i) the Lenders, (ii)
the Collateral Agent, (iii) the Administrative Agent, (iii)
the Issuing Banks, (iv) each counterparty to a Hedging
Agreement entered into with the Borrower if such counterparty
was a Lender or an Affiliate thereof at the time the Hedging
Agreement was entered into, (v) the beneficiaries of each
indemnification obligation undertaken by the Borrower under
any Loan Document, (vi) the Debenture Holders and (vii) the
successors and permitted assigns of each of the foregoing.
Each capitalized term used herein but not defined herein shall
have the meaning assigned to such term in the Credit
Agreement. Pursuant to the Credit Agreement, (i) the Lenders
have lent or agreed to lend to the Borrower (a) on a revolving
basis, Revolving Loans, at any time and from time to time
during the Revolving Availability Period, in an aggregate
principal amount at any time outstanding not in excess of
$325,000,000, (ii) the Swingline Lender has agreed to lend, on
a revolving basis, Swingline Loans, at any time and from time
to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding not in
excess of $10,000,000 and (iii) the Issuing Banks have issued
and have agreed to issue Letters of Credit in an aggregate
face amount at any time outstanding not in excess of
$250,000,000, in each case on the terms and subject to the
conditions of the Credit Agreement.
B. In order to induce the Lenders to make Loans and the
Issuing Bank to issue Letters of Credit, the Subsidiary Loan
Parties have agreed to guarantee pursuant to the Guarantee
Agreement the due and punctual payment and performance of the
Obligations (as defined in paragraph C below).
C. The obligations of the Lenders to make Loans and of
the Issuing Bank to issue Letters of Credit under the Credit
Agreement are conditioned upon, among other things, the
execution and delivery by the Mortgagor of this Mortgage in
the form hereof, to secure (a) the due and punctual payment of
(i) the principal of and premium, if any, and interest
(including interest accruing during the pendency of any
bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or
otherwise, (ii) each payment required to be made by the
Borrower under the Credit Agreement in respect of any Letter
of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and
obligations to provide cash collateral, and (iii) all other
monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred
during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the
Mortgagor to the Secured Parties under the Credit Agreement,
this Mortgage and the other Loan Documents to which the
Mortgagor is or is to be a party, (b) the due and punctual
performance of all covenants, agreements, obligations and
liabilities of the Mortgagor under or pursuant to the Credit
Agreement, this Mortgage and the other Loan Documents, (c) the
due and punctual payment and performance of all obligations of
the Borrower under each Hedging Agreement entered into with a
counterparty that was a Lender or an Affiliate thereof at the
time such Hedging Agreement was entered into, (d) the due and
punctual payment and performance of all obligations in respect
of overdrafts and related liabilities owed to the
2
Administrative Agent or any of its Affiliates and arising from
treasury, depository and cash management services in
connection with any automated clearing house transfers of
funds and (e) the due and punctual payment by the Borrower of
all obligations and liabilities of the Borrower in respect of
the Debentures, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or
otherwise (all the obligations referred to in this paragraph
C being referred to, collectively, as the "Obligations").
D. Pursuant to the requirements of the Credit
Agreement, the Mortgagor is entering into this Mortgage to
create a security interest in the Mortgaged Property (as
defined herein) to secure the performance and payment by the
Mortgagor of the Obligations. The Credit Agreement also
requires the granting by other Loan Parties of mortgages (the
"Other Mortgages") that create security interests in certain
Mortgaged Properties other than the Mortgaged Property to
secure the performance of the Obligations.
Granting Clauses
NOW THEREFORE, IN CONSIDERATION OF the foregoing and in
order to secure (A) the due and punctual payment and
performance of the Obligations, (B) the due and punctual
payment by the Mortgagor of all taxes and insurance premiums
relating to the Mortgaged Property and (C) all disbursements
made by Mortgagee for the payment of taxes, common area
charges or insurance premiums, all fees, expenses or advances
in connection with or relating to the Mortgaged Property, and
interest on such disbursements and other amounts not timely
paid in accordance with the terms of the Credit Agreement,
this Mortgage and the other Loan Documents, Mortgagor hereby
grants, conveys, mortgages, assigns and pledges to the
Mortgagee (for the ratable benefit of the Secured Parties) a
security interest in all the following described property (the
"Mortgaged Property") whether now owned or held or hereafter
acquired:
(1) all Mortgagor's right, title and interest in all
the fee estate in the land more particularly described on
Exhibit A hereto (the "Land"), together with all rights
appurtenant thereto, including the easements over certain
other adjoining land granted by any easement agreements,
covenant or restrictive agreements and all air rights,
mineral rights, water rights, oil and gas rights and
development rights, if any, relating thereto, and also
together with all of the other easements, rights,
privileges, interests, hereditaments and appurtenances
3
thereunto belonging or in anyway appertaining and all of
the estate, right, title, interest, claim or demand
whatsoever of Mortgagor therein and in the streets and
ways adjacent thereto, either in law or in equity, in
possession or expectancy, now or hereafter acquired (the
"Premises");
(2) all Mortgagor's right, title and interest in all
buildings, improvements, structures, paving, parking
areas, walkways and landscaping now or hereafter erected
or located upon the Land, and all fixtures of every kind
and type affixed to the Premises or attached to or
forming part of any structures, buildings or improvements
and replacements thereof now or hereafter erected or
located upon the Land (the "Improvements");
(3) all Mortgagor's right, title and interest in all
apparatus, movable appliances, building materials,
equipment, fittings, furnishings, furniture, machinery
and other articles of tangible personal property of every
kind and nature, and replacements thereof, now or at any
time hereafter placed upon or used in any way in
connection with the use, enjoyment, occupancy or
operation of the Improvements or the Premises, including
all of Mortgagor's books and records relating thereto and
including all pumps, tanks, goods, machinery, tools,
equipment, lifts (including fire sprinklers and alarm
systems, fire prevention or control systems, cleaning
rigs, air conditioning, heating, boilers, refrigerating,
electronic monitoring, water, loading, unloading,
lighting, power, sanitation, waste removal,
entertainment, communications, computers, recreational,
window or structural, maintenance, truck or car repair
and all other equipment of every kind), restaurant, bar
and all other indoor or outdoor furniture (including
tables, chairs, booths, serving stands, planters, desks,
sofas, racks, shelves, lockers and cabinets), bar
equipment, glasses, cutlery, uniforms, linens,
memorabilia and other decorative items, furnishings,
appliances, supplies, inventory, rugs, carpets and other
floor coverings, draperies, drapery rods and brackets,
awnings, venetian blinds, partitions, chandeliers and
other lighting fixtures, freezers, refrigerators, walk-in
coolers, signs (indoor and outdoor), computer systems,
cash registers and inventory control systems, and all
other apparatus, equipment, furniture, furnishings, and
articles used in connection with the use or operation of
the Improvements or the Premises, it being understood
that the enumeration of any specific articles of property
shall in no way result in or be held to exclude any items
of property not specifically mentioned (the property
referred to in this subparagraph (3), the "Personal
Property");
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(4) all Mortgagor's right, title and interest in all
general intangibles relating to design, development,
operation, management and use of the Premises or the
Improvements, all certificates of occupancy, zoning
variances, building, use or other permits, approvals,
authorizations and consents obtained from and all
materials prepared for filing or filed with any
governmental agency in connection with the development,
use, operation or management of the Premises and
Improvements, all construction, service, engineering,
consulting, leasing, architectural and other similar
contracts concerning the design, construction,
management, operation, occupancy and/or use of the
Premises and Improvements, all architectural drawings,
plans, specifications, soil tests, feasibility studies,
appraisals, environmental studies, engineering reports
and similar materials relating to any portion of or all
of the Premises and Improvements, and all payment and
performance bonds or warranties or guarantees relating to
the Premises or the Improvements, all to the extent
assignable (the "Permits, Plans and Warranties");
(5) Mortgagor's interest in and rights under any and
all now or hereafter existing leases or licenses (under
which Mortgagor is landlord or licensor) and subleases
(under which Mortgagor is sublandlord), concession,
management, mineral or other agreements of a similar kind
that permit the use or occupancy of the Premises or the
Improvements for any purpose in return for any payment,
or the extraction or taking of any gas, oil, water or
other minerals from the Premises in return for payment of
any fee, rent or royalty (collectively, "Leases"), and
all agreements or contracts for the sale or other
disposition of all or any part of the Premises or the
Improvements, now or hereafter entered into by Mortgagor,
together with all charges, fees, income, issues, profits,
receipts, rents, revenues or royalties payable thereunder
("Rents");
(6) all Mortgagor's right, title and interest in and
to all real estate tax refunds and all proceeds of the
conversion, voluntary or involuntary, of any of the
Mortgaged Property into cash or liquidated claims
("Proceeds"), including Proceeds of insurance maintained
by the Mortgagor and condemnation awards, any awards that
may become due by reason of the taking by eminent domain
or any transfer in lieu thereof of the whole or any part
of the Premises or Improvements or any rights appurtenant
thereto, and any awards for change of grade of streets,
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together with any and all moneys now or hereafter on
deposit for the payment of real estate taxes, assessments
or common area charges levied against the Mortgaged
Property, unearned premiums on policies of fire and other
insurance maintained by the Mortgagor covering any
interest in the Mortgaged Property or required by the
Credit Agreement; and
(7) all Mortgagor's right, title and interest in and
to all extensions, improvements, betterments, renewals,
substitutes and replacements of and all additions and
appurtenances to, the Land, the Premises, the
Improvements, the Personal Property, the Permits, Plans
and Warranties and the Leases, hereinafter acquired by or
released to the Mortgagor or constructed, assembled or
placed by the Mortgagor on the Land, the Premises or the
Improvements, and all conversions of the security
constituted thereby, immediately upon such acquisition,
release, construction, assembling, placement or
conversion, as the case may be, and in each such case,
without any further mortgage, deed of trust, conveyance,
assignment or other act by the Mortgagor, all of which
shall become subject to the lien of this Mortgage as
fully and completely, and with the same effect, as though
now owned by the Mortgagor and specifically described
herein.
TO HAVE AND TO HOLD the Mortgaged Property unto the
Mortgagee, its successors and assigns, for the ratable benefit
of the Secured Parties, forever, subject only to the Permitted
Encumbrances (as hereinafter defined) and to satisfaction and
cancelation as provided in Section 3.04.
ARTICLE I
Representations, Warranties and Covenants of Mortgagor
Mortgagor agrees, covenants, represents and/or warrants
as follows:
SECTION 1.01. Title. (a) Mortgagor has good and
marketable title to an indefeasible fee estate in the Land and
Improvements subject to no lien, charge or encumbrance, and
this Mortgage is and will remain a valid and enforceable first
and prior lien on the Premises, Improvements and Rents subject
only to, in each case, Liens permitted by Section 6.02 of the
Credit Agreement and the exceptions and encumbrances referred
to in Schedule B to the title insurance policy being issued to
insure the lien of this Mortgage (collectively, the "Permitted
Encumbrances"). The Permitted Encumbrances do not materially
interfere with the current use, enjoyment or operation of the
Mortgaged Property.
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(b) Mortgagor has good and marketable title to all the
Personal Property subject to no lien, charge or encumbrance
other than this Mortgage and the Permitted Encumbrances.
Except as permitted under the Credit Agreement, the Personal
Property is not and will not become the subject matter of any
lease or other arrangement that is not a Permitted Encumbrance
whereby the ownership of any Personal Property will be held by
any person or entity other than Mortgagor; except as permitted
under the Credit Agreement, none of the Personal Property will
be removed from the Premises or the Improvements unless the
same is no longer needed for the continued operation of the
Premises and the Improvements as currently operated (or as
then operated, to the extent that any change from the current
manner of operation was permitted by the Credit Agreement) or
is replaced by other Personal Property of substantially equal
or greater utility and value; and Mortgagor will not create or
cause to be created (other than Permitted Encumbrances) any
security interest covering any of the Personal Property other
than the security interest in the Personal Property created in
favor of Mortgagee by this Mortgage or any other agreement
collateral hereto. The Mortgaged Property is served by water,
gas, electric, septic, storm and sanitary sewage facilities,
and such utilities serving the Premises and the Improvements
are located in and in the future will be located fully within
the Premises. There is vehicular access to the Premises and
the Improvements which is provided by, either a public
right-of-way abutting and contiguous with the Land or valid
recorded unsubordinated easements.
(c) Except as set forth on Schedule A hereto, there are
no leases affecting a material portion of the Mortgaged
Property. Each Lease is in full force and effect, and, except
as set forth on Schedule A hereto, Mortgagor has not given,
nor to Mortgagor's knowledge has it received, any uncured or
unwaived notice of default with respect to any material
obligation under any Lease. Each Lease is subject to no lien,
charge or encumbrance other than this Mortgage and the
Permitted Encumbrances. Mortgagor has not received any notice
of, nor has any knowledge of, any pending or contemplated
condemnation proceeding affecting the Mortgaged Property or
any sale or disposition thereof in lieu of condemnation.
Mortgagor is not obligated under any right of first refusal,
option or other contractual right to sell, assign or otherwise
dispose of any Mortgaged Property or any interest therein.
(d) All easement agreements, covenant or restrictive
agreements, supplemental agreements and any other instruments
hereinabove referred to and mortgaged hereby (collectively,
the "Agreements") are and will remain valid, subsisting and in
full force and effect, unless the failure to remain valid,
7
subsisting and in full force and effect, individually or in
the aggregate, could not reasonably be expected to have a
material adverse effect on the Mortgaged Property, and
Mortgagor is not in default thereunder and has fully performed
the material terms thereof required to be performed through
the date hereof, and has no knowledge of any default
thereunder or failure to fully perform the terms thereof by
any other party, nor of the occurrence of any event that after
notice or the passage of time or both will constitute a
default thereunder. Mortgagor is in compliance, and shall
comply, with all Agreements and Legal Requirements (including
land use and zoning ordinances, regulations and restrictions)
affecting the Mortgaged Property, except for any Agreements
and Legal Requirements, the failure to comply with which could
not reasonably be expected to have a material adverse effect
on the Mortgaged Property.
(e) Mortgagor has good and lawful right and full power
and authority to mortgage the Mortgaged Property and will
forever warrant and defend its title to the Mortgaged
Property, the rights of Mortgagee therein under this Mortgage
and the validity and priority of the lien of this Mortgage
thereon against the claims of all persons and parties except
those having rights under Permitted Encumbrances to the extent
of those rights.
(f) This Mortgage, when duly recorded in the appropriate
public records and when financing statements are duly filed in
the appropriate public records, will create a valid, perfected
and enforceable lien upon and security interest in all the
Mortgaged Property and there will be no defenses or offsets to
this Mortgage that will be asserted by Mortgagor or its
Affiliates (or any third party defense or offset now known to
Mortgagor or its Affiliates) or to any of the Obligations
secured hereby for so long as any portion of the Obligations
is outstanding.
SECTION 1.02. Credit Agreement; Certain Amounts. (a)
This Mortgage is given pursuant to the Credit Agreement. Each
and every term and provision of the Credit Agreement
(excluding the governing law provisions thereof), including
the rights, remedies, obligations, covenants, conditions,
agreements, indemnities, representations and warranties of the
parties thereto shall be considered as if a part of this
Mortgage.
(b) To the extent the representations and covenants
contained in this Mortgage with respect to the Mortgaged
Property are more stringent or expansive than comparable
8
representations and covenants contained in the Credit
Agreement, the representations and covenants contained herein
shall be construed to supplement the representations and
covenants in the Credit Agreement without creating a conflict
or inconsistency therewith, and Mortgagor shall be bound to
the more stringent or expansive representations and covenants
hereunder.
(c) If any remedy or right of Mortgagee pursuant hereto
is acted upon by Mortgagee or if any actions or proceedings
(including any bankruptcy, insolvency or reorganization
proceedings) are commenced in which Mortgagee is made a party
and is obliged to defend or uphold or enforce this Mortgage or
the rights of Mortgagee hereunder or the terms of any Lease,
or if a condemnation proceeding is instituted affecting the
Mortgaged Property, Mortgagor will pay all reasonable sums,
including reasonable attorneys' fees and disbursements,
incurred by Mortgagee related to the exercise of any remedy or
right of Mortgagee pursuant hereto or for the reasonable
expense of any such action or proceeding together with all
statutory or other costs, disbursements and allowances,
interest thereon from the date of demand for payment thereof
at the rate specified in clause (c) of Section 2.12(c) of the
Credit Agreement (the "Default Interest Rate"), and such sums
and the interest thereon shall, to the extent permissible by
law, be a lien on the Mortgaged Property prior to any right,
title to, interest in or claim upon the Mortgaged Property
attaching or accruing subsequent to the recording of this
Mortgage and shall be secured by this Mortgage to the extent
permitted by law. Any payment of amounts due under this
Mortgage not made on or before the due date for such payments
shall accrue interest daily without notice from the due date
until paid at the Default Interest Rate, and such interest at
the Default Interest Rate shall be immediately due upon demand
by Mortgagee.
SECTION 1.03. Payment of Taxes, Liens and Charges. (a)
Except as may be permitted by the Credit Agreement, Mortgagor
will pay and discharge from time to time prior to the time
when the same shall become delinquent, and before any interest
or penalty accrues thereon or attaches thereto, all taxes of
every kind and nature, all general and special assessments,
levies, permits, inspection and license fees, all water and
sewer rents, all vault charges, and all other public charges,
and all service charges, common area charges, private
maintenance charges, utility charges and all other private
charges, whether of a like or different nature, imposed upon
or assessed against the Mortgaged Property or any part thereof
or upon the Rents from the Mortgaged Property or arising in
respect of the occupancy, use or possession thereof.
(b) In the event of the passage of any state, Federal,
municipal or other governmental law, order, rule or regulation
9
subsequent to the date hereof (i) deducting from the value of
real property for the purpose of taxation any lien or
encumbrance thereon or in any manner changing or modifying the
laws now in force governing the taxation of this Mortgage or
debts secured by mortgages or deeds of trust (other than laws
governing income, franchise and similar taxes generally) or
the manner of collecting taxes thereon and (ii) imposing a tax
to be paid by Mortgagee, either directly or indirectly, on
this Mortgage or any of the Loan Documents or to require an
amount of taxes to be withheld or deducted therefrom,
Mortgagor will promptly notify Mortgagee of such event. In
such event Mortgagor shall (i) agree to enter into such
further instruments as may be reasonably necessary or
desirable to obligate Mortgagor to make any applicable
additional payments and (ii) Mortgagor shall make such
additional payments.
(c) At any time that an Event of Default shall occur
hereunder and be continuing, or if required by any law
applicable to Mortgagor or to Mortgagee, Mortgagee shall have
the right to direct Mortgagor to make an initial deposit on
account of real estate taxes and assessments, insurance
premiums and common area charges, levied against or payable in
respect of the Mortgaged Property in advance and thereafter
semi-annually, each such deposit to be equal to one-half of
any such annual charges estimated in a reasonable manner by
Mortgagee in order to accumulate with Mortgagee sufficient
funds to pay such taxes, assessments, insurance premiums and
charges.
SECTION 1.04. Payment of Closing Costs. Mortgagor shall
pay all costs in connection with, relating to or arising out
of the preparation, execution and recording of this Mortgage,
including title company premiums and charges, inspection
costs, survey costs, recording fees and taxes, reasonable
attorneys', engineers', appraisers' and consultants' fees and
disbursements and all other similar reasonable expenses of
every kind.
SECTION 1.05. Alterations and Waste; Plans. (a) Except
as may be permitted by the Credit Agreement, no Improvements
will be materially altered or demolished or removed in whole
or in part by Mortgagor. Mortgagor will not erect any
additions to the existing Improvements or other structures on
the Premises which will materially interfere with the
operation conducted thereon on the date hereof, without the
written consent of Mortgagee. Mortgagor will not commit any
waste on the Mortgaged Property or make any alteration to, or
change in the use of, the Mortgaged Property that will
diminish the utility thereof for the operation of the business
10
conducted thereon on the date hereof except as may be
permitted under the Credit Agreement or materially increase
any ordinary fire or other hazard arising out of construction
or operation, but in no event shall any such alteration or
change be contrary to the terms of any insurance policy
required to be kept pursuant to Section 1.06. Mortgagor will
maintain and operate the Improvements and Personal Property in
good repair, working order and condition, reasonable wear and
tear excepted.
(b) To the extent the same exist on the date hereof or
are obtained in connection with future permitted alterations,
Mortgagor shall maintain a complete set of final plans,
specifications, blueprints and drawings for the Mortgaged
Property either at the Mortgaged Property or in a particular
office at the headquarters of Mortgagor to which Mortgagee
shall have access upon reasonable advance notice and at
reasonable times.
SECTION 1.06. Insurance. Mortgagor will keep or cause
to be kept the Improvements and Personal Property insured
against such risks, and in the manner, required by Section
5.07 of the Credit Agreement.
SECTION 1.07. Casualty; Restoration of Casualty Damage.
Mortgagor, in accordance with Section 4.12 of the Security
Agreement, shall give Mortgagee prompt written notice of any
Casualty to the Mortgaged Property. Subject to the provisions
of Section 4.12 of the Security Agreement, payment of any loss
will be made directly in its entirety to Mortgagee and any
such proceeds relating to a Casualty shall be held or applied
by Mortgagee in accordance with Section 4.12 of the Security
Agreement.
SECTION 1.08. Condemnation/Eminent Domain. Mortgagor
shall, in accordance with Section 4.12 of the Security
Agreement, notify Mortgagee promptly upon obtaining knowledge
of any pending or threatened Condemnation of the Mortgaged
Property. All Condemnation Proceeds shall be held and applied
by Mortgagee in accordance with Section 4.12 of the Security
Agreement.
SECTION 1.09. Assignment of Leases and Rents. (a)
Mortgagor hereby irrevocably and absolutely grants, transfers
and assigns all of its right, title and interest in all
Leases, together with any and all extensions and renewals
thereof, for purposes of securing and discharging the
performance by Mortgagor of the Obligations. Mortgagor has
not assigned or executed any assignment of, and will not
assign or execute any assignment of, any other Lease or their
respective Rents to anyone other than Mortgagee.
11
(b) Without Mortgagee's prior written consent, Mortgagor
will not (i) modify, amend, terminate or consent to the
cancelation or surrender of any Lease if such modification,
amendment, termination or consent would, in the reasonable
judgment of the Mortgagee, be adverse in any material respect
to the interests of the Lenders, the value of the Mortgaged
Property or the lien created by this Mortgage or (ii) consent
to an assignment of any tenant's interest in any Lease or to
a subletting thereof covering a material portion of the
Mortgaged Property.
(c) Subject to Section 1.09(d), Mortgagor has assigned
and transferred to Mortgagee all of Mortgagor's right, title
and interest in and to the Rents now or hereafter arising from
each Lease heretofore or hereafter made or agreed to by
Mortgagor, it being intended that this assignment establish,
subject to Section 1.09(d), an absolute transfer and
assignment of all Rents and all Leases to Mortgagee and not
merely to grant a security interest therein. Subject to
Section 1.09(d), Mortgagee may in Mortgagor's name and stead
(with or without first taking possession of any of the
Mortgaged Property personally or by receiver as provided
herein) operate the Mortgaged Property and rent, lease or let
all or any portion of any of the Mortgaged Property to any
party or parties at such rental and upon such terms as
Mortgagee shall, in its sole discretion, determine, and may
collect and have the benefit of all of said Rents arising from
or accruing at any time thereafter or that may thereafter
become due under any Lease.
(d) So long as an Event of Default shall not have
occurred and be continuing, Mortgagee will not exercise any of
its rights under Section 1.09(c), and Mortgagor shall receive
and collect the Rents accruing under any Lease; but after the
happening and during the continuance of any Event of Default,
Mortgagee may, at its option, receive and collect all Rents
and enter upon the Premises and Improvements through its
officers, agents, employees or attorneys for such purpose and
for the operation and maintenance thereof. Mortgagor hereby
irrevocably authorizes and directs each tenant, if any, and
each successor, if any, to the interest of any tenant under
any Lease, respectively, to rely upon any notice of a claimed
Event of Default sent by Mortgagee to any such tenant or any
of such tenant's successors in interest, and thereafter to pay
Rents to Mortgagee without any obligation or right to inquire
as to whether an Event of Default actually exists and even if
some notice to the contrary is received from the Mortgagor,
who shall have no right or claim against any such tenant or
successor in interest for any such Rents so paid to Mortgagee.
12
Each tenant or any of such tenant's successors in interest
from whom Mortgagee or any officer, agent, attorney or
employee of Mortgagee shall have collected any Rents, shall be
authorized to pay Rents to Mortgagor only after such tenant or
any of their successors in interest shall have received
written notice from Mortgagee that the Event of Default is no
longer continuing, unless and until a further notice of an
Event of Default is given by Mortgagee to such tenant or any
of its successors in interest.
(e) Mortgagee will not become a mortgagee in possession
so long as it does not enter or take actual possession of the
Mortgaged Property. In addition, Mortgagee shall not be
responsible or liable for performing any of the obligations of
the landlord under any Lease, for any waste by any tenant, or
others, for any dangerous or defective conditions of any of
the Mortgaged Property, for negligence in the management,
upkeep, repair or control of any of the Mortgaged Property or
any other act or omission by any other person.
(f) Mortgagor shall furnish to Mortgagee, within 30 days
after a request by Mortgagee to do so, a written statement
containing the names of all tenants, subtenants and
concessionaires of the Premises or Improvements, the terms of
any Lease, the space occupied and the rentals or license fees
payable thereunder.
SECTION 1.10. Restrictions on Transfers and
Encumbrances. Except as permitted by the Credit Agreement,
Mortgagor shall not directly or indirectly sell, convey,
alienate, assign, lease, sublease, license, mortgage, pledge,
encumber or otherwise transfer, create, consent to or suffer
the creation of any lien, charges or any form of encumbrance
upon any interest in or any part of the Mortgaged Property, or
be divested of its title to the Mortgaged Property or any
interest therein in any manner or way, whether voluntarily or
involuntarily (other than resulting from a condemnation), or
engage in any common, cooperative, joint, time-sharing or
other congregate ownership of all or part thereof; provided,
however, that Mortgagor may in the ordinary course of business
within reasonable commercial standards, enter into easement or
covenant agreements that relate to and/or benefit the
operation of the Mortgaged Property and that do not materially
or adversely affect the use and operation of the same (except
for customary utility easements that service the Mortgaged
Property, which are permitted).
SECTION 1.11. Security Agreement. This Mortgage is both
a mortgage of real property and a grant of a security interest
in personal property, and shall constitute and serve as a
"Security Agreement" within the meaning of the uniform
13
commercial code as adopted in the state wherein the Premises
are located ("UCC"). Mortgagor has hereby granted unto
Mortgagee a security interest in and to all the Mortgaged
Property described in this Mortgage that is not real property,
and simultaneously with the recording of this Mortgage,
Mortgagor has filed or will file UCC financing statements, and
will file continuation statements prior to the lapse thereof,
at the appropriate offices in the state in which the Premises
are located to perfect the security interest granted by this
Mortgage in all the Mortgaged Property that is not real
property. Mortgagor hereby appoints Mortgagee as its true and
lawful attorney-in-fact and agent, for Mortgagor and in its
name, place and stead, in any and all capacities, to execute
any document and to file the same in the appropriate offices
(to the extent it may lawfully do so), and to perform each and
every act and thing reasonably requisite and necessary to be
done to perfect the security interest contemplated by the
preceding sentence. Mortgagee shall have all rights with
respect to the part of the Mortgaged Property that is the
subject of a security interest afforded by the UCC in addition
to, but not in limitation of, the other rights afforded
Mortgagee hereunder and under the Security Agreement.
SECTION 1.12. Filing and Recording. Mortgagor will
cause this Mortgage, any other security instrument creating a
security interest in or evidencing the lien hereof upon the
Mortgaged Property and each instrument of further assurance to
be filed, registered or recorded in such manner and in such
places as may be required by any present or future law in
order to publish notice of and fully to protect the lien
hereof upon, and the security interest of Mortgagee in, the
Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all reasonable expenses
incidental to the execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security
instrument with respect to the Personal Property, and any
instrument of further assurance and all Federal, state, county
and municipal recording, documentary or intangible taxes and
other taxes, duties, imposts, assessments and charges arising
out of or in connection with the execution, delivery and
recording of this Mortgage, any mortgage supplemental hereto,
any security instrument with respect to the Personal Property
or any instrument of further assurance.
SECTION 1.13. Further Assurances. Upon demand by
Mortgagee, Mortgagor will, at the cost of Mortgagor and
without expense to Mortgagee, do, execute, acknowledge and
deliver all such further acts, deeds, conveyances, mortgages,
assignments, notices of assignment, transfers and assurances
as Mortgagee shall from time to time reasonably require for
14
the better assuring, conveying, assigning, transferring and
confirming unto Mortgagee the property and rights hereby
conveyed or assigned or intended now or hereafter so to be, or
which Mortgagor may be or may hereafter become bound to convey
or assign to Mortgagee, or for carrying out the intention or
facilitating the performance of the terms of this Mortgage, or
for filing, registering or recording this Mortgage, and on
demand, Mortgagor will also execute and deliver and hereby
appoints Mortgagee as its true and lawful attorney-in-fact and
agent, for Mortgagor and in its name, place and stead, in any
and all capacities, to execute and file to the extent it may
lawfully do so, one or more financing statements, chattel
mortgages or comparable security instruments reasonably
requested by Mortgagee to evidence more effectively the lien
hereof upon the Personal Property and to perform each and
every act and thing requisite and necessary to be done to
accomplish the same.
SECTION 1.14. Additions to Mortgaged Property. All
right, title and interest of Mortgagor in and to all
extensions, improvements, betterments, renewals, substitutes
and replacements of, and all additions and appurtenances to,
the Mortgaged Property hereafter acquired by or released to
Mortgagor or constructed, assembled or placed by Mortgagor
upon the Premises or the Improvements, and all conversions of
the security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement or
conversion, as the case may be, and in each such case without
any further mortgage, conveyance, assignment or other act by
Mortgagor, shall become subject to the lien and security
interest of this Mortgage as fully and completely and with the
same effect as though now owned by Mortgagor and specifically
described in the grant of the Mortgaged Property above, but at
any and all times Mortgagor will execute and deliver to
Mortgagee any and all such further assurances, mortgages,
conveyances or assignments thereof as Mortgagee may reasonably
require for the purpose of expressly and specifically
subjecting the same to the lien and security interest of this
Mortgage.
SECTION 1.15. No Claims Against Mortgagee. Nothing
contained in this Mortgage shall constitute any consent or
request by Mortgagee, express or implied, for the performance
of any labor or services or the furnishing of any materials or
other property in respect of the Mortgaged Property or any
part thereof, nor as giving Mortgagor any right, power or
authority to contract for or permit the performance of any
labor or services or the furnishing of any materials or other
property in such fashion as would permit the making of any
claim against Mortgagee in respect thereof.
SECTION 1.16. Fixture Filing. Certain of the Mortgaged
Property is or will become "fixtures" (as that term is defined
15
in the UCC) on the Land, and this Mortgage upon being filed
for record in the real estate records of the county wherein
such fixtures are situated shall operate also as a financing
statement filed as a fixture filing in accordance with the
applicable provisions of said UCC upon such of the Mortgaged
Property that is or may become fixtures.
ARTICLE II
Defaults and Remedies
SECTION 2.01. Events of Default. Any Event of Default
under the Credit Agreement (as such term is defined therein)
shall constitute an Event of Default under this Mortgage.
SECTION 2.02. Demand for Payment. If an Event of
Default shall occur and be continuing, then, upon written
demand of Mortgagee, Mortgagor will pay to Mortgagee all
amounts due hereunder and such further amount as shall be
sufficient to cover the costs and expenses of collection,
including attorneys' fees, disbursements and expenses incurred
by Mortgagee and Mortgagee shall be entitled and empowered to
institute an action or proceedings at law or in equity for the
collection of the sums so due and unpaid, to prosecute any
such action or proceedings to judgment or final decree, to
enforce any such judgment or final decree against Mortgagor
and to collect, in any manner provided by law, all moneys
adjudged or decreed to be payable.
SECTION 2.03. Rights To Take Possession, Operate and
Apply Revenues. (a) If an Event of Default shall occur and
be continuing, Mortgagor shall, upon demand of Mortgagee,
forthwith surrender to Mortgagee actual possession of the
Mortgaged Property and, if and to the extent not prohibited by
applicable law, Mortgagee itself, or by such officers or
agents as it may appoint, may then enter and take possession
of all the Mortgaged Property without the appointment of a
receiver or an application therefor, exclude Mortgagor and its
agents and employees wholly therefrom, and have access to the
books, papers and accounts of Mortgagor.
(b) If Mortgagor shall for any reason fail to surrender
or deliver the Mortgaged Property or any part thereof after
such demand by Mortgagee, Mortgagee may to the extent not
prohibited by applicable law, obtain a judgment or decree
conferring upon Mortgagee the right to immediate possession or
requiring Mortgagor to deliver immediate possession of the
Mortgaged Property to Mortgagee, to the entry of which
judgment or decree Mortgagor hereby specifically consents.
Mortgagor will pay to Mortgagee, upon demand, all reasonable
16
expenses of obtaining such judgment or decree, including
reasonable compensation to Mortgagee's attorneys and agents
with interest thereon at the Default Interest Rate; and all
such expenses and compensation shall, until paid, be secured
by this Mortgage.
(c) Upon every such entry or taking of possession,
Mortgagee may, to the extent not prohibited by applicable law,
hold, store, use, operate, manage and control the Mortgaged
Property, conduct the business thereof and, from time to time,
(i) make all necessary and proper maintenance, repairs,
renewals, replacements, additions, betterments and
improvements thereto and thereon, (ii) purchase or otherwise
acquire additional fixtures, personalty and other property,
(iii) insure or keep the Mortgaged Property insured, (iv)
manage and operate the Mortgaged Property and exercise all the
rights and powers of Mortgagor to the same extent as Mortgagor
could in its own name or otherwise with respect to the same,
or (v) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted
Mortgagee, all as may from time to time be directed or
determined by Mortgagee to be in its best interest and
Mortgagor hereby appoints Mortgagee as its true and lawful
attorney-in-fact and agent, for Mortgagor and in its name,
place and stead, in any and all capacities, to perform any of
the foregoing acts. Mortgagee may collect and receive all the
Rents, issues, profits and revenues from the Mortgaged
Property, including those past due as well as those accruing
thereafter, and, after deducting (i) all expenses of taking,
holding, managing and operating the Mortgaged Property
(including compensation for the services of all persons
employed for such purposes), (ii) the costs of all such
maintenance, repairs, renewals, replacements, additions,
betterments, improvements, purchases and acquisitions, (iii)
the costs of insurance, (iv) such taxes, assessments and other
similar charges as Mortgagee may at its option pay, (v) other
proper charges upon the Mortgaged Property or any part thereof
and (vi) the compensation, expenses and disbursements of the
attorneys and agents of Mortgagee, Mortgagee shall apply the
remainder of the moneys and proceeds so received first to the
payment of the Mortgagee for the satisfaction of the
Obligations, and second, if there is any surplus, to
Mortgagor, subject to the entitlement of others thereto under
applicable law.
(d) Whenever, before any sale of the Mortgaged Property
under Section 2.06, all Obligations that are then due shall
have been paid and all Events of Default fully cured,
Mortgagee will surrender possession of the Mortgaged Property
back to Mortgagor, its successors or assigns. The same right
of taking possession shall, however, arise again if any
subsequent Event of Default shall occur and be continuing.
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SECTION 2.04. Right To Cure Mortgagor's Failure to
Perform. Should Mortgagor fail in the payment, performance or
observance of any term, covenant or condition required by this
Mortgage or the Credit Agreement (with respect to the
Mortgaged Property), Mortgagee may pay, perform or observe the
same, and all payments made or costs or expenses incurred by
Mortgagee in connection therewith shall be secured hereby and
shall be, without demand, immediately repaid by Mortgagor to
Mortgagee with interest thereon at the Default Interest Rate.
Mortgagee shall be the judge using reasonable discretion of
the necessity for any such actions and of the amounts to be
paid. Mortgagee is hereby empowered to enter and to authorize
others to enter upon the Premises or the Improvements or any
part thereof for the purpose of performing or observing any
such defaulted term, covenant or condition without having any
obligation to so perform or observe and without thereby
becoming liable to Mortgagor, to any person in possession
holding under Mortgagor or to any other person.
SECTION 2.05. Right to a Receiver. If an Event of
Default shall occur and be continuing, Mortgagee, upon
application to a court of competent jurisdiction, shall be
entitled as a matter of right to the appointment of a receiver
to take possession of and to operate the Mortgaged Property
and to collect and apply the Rents. The receiver shall have
all of the rights and powers permitted under the laws of the
state wherein the Mortgaged Property is located. Mortgagor
shall pay to Mortgagee upon demand all reasonable expenses,
including receiver's fees, reasonable attorney's fees and
disbursements, costs and agent's compensation incurred
pursuant to the provisions of this Section 2.05; and all such
expenses shall be secured by this Mortgage and shall be,
without demand, immediately repaid by Mortgagor to Mortgagee
with interest thereon at the Default Interest Rate.
SECTION 2.06. Foreclosure and Sale. (a) If an Event of
Default shall occur and be continuing, Mortgagee may elect to
sell the Mortgaged Property or any part of the Mortgaged
Property by exercise of the power of foreclosure or of sale
granted to Mortgagee by applicable law or this Mortgage. In
such case, Mortgagee may commence a civil action to foreclose
this Mortgage, or it may proceed and sell the Mortgaged
Property to satisfy any Obligation. Mortgagee or an officer
appointed by a judgment of foreclosure to sell the Mortgaged
Property, may sell all or such parts of the Mortgaged Property
as may be chosen by Mortgagee at the time and place of sale
fixed by it in a notice of sale, either as a whole or in
separate lots, parcels or items as Mortgagee shall deem
expedient, and in such order as it may determine, at public
18
auction to the highest bidder. Mortgagee or an officer
appointed by a judgment of foreclosure to sell the Mortgaged
Property may postpone any foreclosure or other sale of all or
any portion of the Mortgaged Property by public announcement
at such time and place of sale, and from time to time
thereafter may postpone such sale by public announcement or
subsequently noticed sale. Without further notice, Mortgagee
or an officer appointed to sell the Mortgaged Property may
make such sale at the time fixed by the last postponement, or
may, in its discretion, give a new notice of sale. Any
person, including Mortgagor or Mortgagee or any designee or
affiliate thereof, may purchase at such sale.
(b) The Mortgaged Property may be sold subject to unpaid
taxes and Permitted Encumbrances, and, after deducting all
costs, fees and expenses of Mortgagee (including costs of
evidence of title in connection with the sale), Mortgagee or
an officer that makes any sale shall apply the proceeds of
sale in the manner set forth in Section 2.08.
(c) Any foreclosure or other sale of less than the whole
of the Mortgaged Property or any defective or irregular sale
made hereunder shall not exhaust the power of foreclosure or
of sale provided for herein; and subsequent sales may be made
hereunder until the Obligations have been satisfied, or the
entirety of the Mortgaged Property has been sold.
(d) If an Event of Default shall occur and be
continuing, Mortgagee may instead of, or in addition to,
exercising the rights described in Section 2.06(a) above and
either with or without entry or taking possession as herein
permitted, proceed by a suit or suits in law or in equity or
by any other appropriate proceeding or remedy (i) to
specifically enforce payment of some or all of the
Obligations, or the performance of any term, covenant,
condition or agreement of this Mortgage or any other Loan
Document or any other right, or (ii) to pursue any other
remedy available to Mortgagee, all as Mortgagee shall
determine most effectual for such purposes.
SECTION 2.07. Other Remedies. (a) In case an Event of
Default shall occur and be continuing, Mortgagee may also
exercise, to the extent not prohibited by law, any or all of
the remedies available to a secured party under the uniform
commercial code of the State wherein the Mortgaged Property is
located.
(b) In connection with a sale of the Mortgaged Property
or any Personal Property and the application of the proceeds
of sale as provided in Section 2.08, Mortgagee shall be
entitled to enforce payment of and to receive up to the
principal amount of the Obligations, plus all other charges,
19
payments and costs due under this Mortgage, and to recover a
deficiency judgment for any portion of the aggregate principal
amount of the Obligations remaining unpaid, with interest.
SECTION 2.08. Application of Sale Proceeds and Rents.
After any foreclosure sale of all or any of the Mortgaged
Property, Mortgagee shall receive the proceeds of sale, no
purchaser shall be required to see to the application of the
proceeds and Mortgagee shall apply the proceeds of the sale
together with any Rents that may have been collected and any
other sums that then may be held by Mortgagee under this
Mortgage as follows:
FIRST, to the payment of the costs and expenses of
such sale, including compensation to Mortgagee's
attorneys and agents, and of any judicial proceedings
wherein the same may be made, and of all expenses,
liabilities and advances made or incurred by Mortgagee
under this Mortgage, together with interest at the
Default Interest Rate on all advances made by Mortgagee,
including all taxes or assessments (except any taxes,
assessments or other charges subject to which the
Mortgaged Property shall have been sold) and the cost of
removing any Permitted Encumbrance (except any Permitted
Encumbrance subject to which the Mortgaged Property was
sold);
SECOND, to the Mortgagee for the distribution to the
Secured Parties for the satisfaction of the Obligations
owed to the Secured Parties; and
THIRD, to the Mortgagor, its successors or assigns,
or as a court of competent jurisdiction may otherwise
direct.
The Mortgagee shall have absolute discretion as to the time of
application of any such proceeds, moneys or balances in
accordance with this Mortgage. Upon any sale of the Mortgaged
Property by the Mortgagee (including pursuant to a power of
sale granted by statute or under a judicial proceeding), the
receipt of the Mortgagee or of the officer making the sale
shall be a sufficient discharge to the purchaser or purchasers
of the Mortgaged Property so sold and such purchaser or
purchasers shall not be obligated to see to the application of
any part of the purchase money paid over to the Mortgagee or
such officer or be answerable in any way for the
misapplication thereof.
SECTION 2.09. Mortgagor as Tenant Holding Over. If
Mortgagor remains in possession of any of the Mortgaged
Property after any foreclosure sale by Mortgagee, at
20
Mortgagee's election Mortgagor shall be deemed a tenant
holding over and shall forthwith surrender possession to the
purchaser or purchasers at such sale or be summarily
dispossessed or evicted according to provisions of law
applicable to tenants holding over.
SECTION 2.10. Waiver of Appraisement, Valuation, Stay,
Extension and Redemption Laws. Mortgagor waives, to the
extent not prohibited by law, (i) the benefit of all laws now
existing or that hereafter may be enacted providing for any
appraisement of any portion of the Mortgaged Property, (ii)
the benefit of all laws now existing or that may be hereafter
enacted in any way extending the time for the enforcement or
the collection of amounts due under any of the Obligations or
creating or extending a period of redemption from any sale
made in collecting said debt or any other amounts due
Mortgagee, (iii) any right to at any time insist upon, plead,
claim or take the benefit or advantage of any law now or
hereafter in force providing for any appraisement, homestead
exemption, valuation, stay, statute of limitations, extension
or redemption, or sale of the Mortgaged Property as separate
tracts, units or estates or as a single parcel in the event of
foreclosure or notice of deficiency, and (iv) all rights of
redemption, valuation, appraisement, stay of execution, notice
of election to mature or declare due the whole of or each of
the Obligations and marshalling in the event of foreclosure of
this Mortgage.
SECTION 2.11. Discontinuance of Proceedings. In case
Mortgagee shall proceed to enforce any right, power or remedy
under this Mortgage by foreclosure, entry or otherwise, and
such proceedings shall be discontinued or abandoned for any
reason, or shall be determined adversely to Mortgagee, then
and in every such case Mortgagor and Mortgagee shall be
restored to their former positions and rights hereunder, and
all rights, powers and remedies of Mortgagee shall continue as
if no such proceeding had been taken.
SECTION 2.12. Suits To Protect the Mortgaged Property.
Mortgagee shall have power (a) to institute and maintain suits
and proceedings to prevent any impairment of the Mortgaged
Property by any acts that may be unlawful or in violation of
this Mortgage, (b) to preserve or protect its interest in the
Mortgaged Property and in the Rents arising therefrom and (c)
to restrain the enforcement of or compliance with any
legislation or other governmental enactment, rule or order
that may be unconstitutional or otherwise invalid if the
enforcement of or compliance with such enactment, rule or
order would impair the security or be prejudicial to the
interest of Mortgagee hereunder.
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SECTION 2.13. Filing Proofs of Claim. In case of any
receivership, insolvency, bankruptcy, reorganization,
arrangement, adjustment, composition or other proceedings
affecting Mortgagor, Mortgagee shall, to the extent permitted
by law, be entitled to file such proofs of claim and other
documents as may be necessary or advisable in order to have
the claims of Mortgagee allowed in such proceedings for the
Obligations secured by this Mortgage at the date of the
institution of such proceedings and for any interest accrued,
late charges and additional interest or other amounts due or
that may become due and payable hereunder after such date.
SECTION 2.14. Possession by Mortgagee. Notwithstanding
the appointment of any receiver, liquidator or trustee of
Mortgagor, any of its property or the Mortgaged Property,
Mortgagee shall be entitled, to the extent not prohibited by
law, to remain in possession and control of all parts of the
Mortgaged Property now or hereafter granted under this
Mortgage to Mortgagee in accordance with the terms hereof and
applicable law.
SECTION 2.15. Waiver. (a) No delay or failure by
Mortgagee to exercise any right, power or remedy accruing upon
any breach or Event of Default shall exhaust or impair any
such right, power or remedy or be construed to be a waiver of
any such breach or Event of Default or acquiescence therein;
and every right, power and remedy given by this Mortgage to
Mortgagee may be exercised from time to time and as often as
may be deemed expedient by Mortgagee. No consent or waiver by
Mortgagee to or of any breach or default by Mortgagor in the
performance of the Obligations shall be deemed or construed to
be a consent or waiver to or of any other breach or Event of
Default in the performance of the same or any other
Obligations by Mortgagor hereunder. No failure on the part of
Mortgagee to complain of any act or failure to act or to
declare an Event of Default, irrespective of how long such
failure continues, shall constitute a waiver by Mortgagee of
its rights hereunder or impair any rights, powers or remedies
consequent on any future Event of Default by Mortgagor.
(b) Even if Mortgagee (i) grants some forbearance or an
extension of time for the payment of any sums secured hereby,
(ii) takes other or additional security for the payment of any
sums secured hereby, (iii) waives or does not exercise some
right granted herein or under the Loan Documents, (iv)
releases a part of the Mortgaged Property from this Mortgage,
(v) agrees to change some of the terms, covenants, conditions
or agreements of any of the Loan Documents, (vi) consents to
the filing of a map, plat or replat affecting the Premises,
(vii) consents to the granting of an easement or other right
affecting the Premises or (viii) makes or consents to an
agreement subordinating Mortgagee's lien on the Mortgaged
22
Property hereunder; no such act or omission shall preclude
Mortgagee from exercising any other right, power or privilege
herein granted or intended to be granted in the event of any
breach or Event of Default then made or of any subsequent
default; nor, except as otherwise expressly provided in an
instrument executed by Mortgagee, shall this Mortgage be
altered thereby. In the event of the sale or transfer by
operation of law or otherwise of all or part of the Mortgaged
Property, Mortgagee is hereby authorized and empowered to deal
with any vendee or transferee with reference to the Mortgaged
Property secured hereby, or with reference to any of the
terms, covenants, conditions or agreements hereof, as fully
and to the same extent as it might deal with the original
parties hereto and without in any way releasing or discharging
any liabilities, obligations or undertakings.
SECTION 2.16. Remedies Cumulative. No right, power or
remedy conferred upon or reserved to Mortgagee by this
Mortgage is intended to be exclusive of any other right, power
or remedy, and each and every such right, power and remedy
shall be cumulative and concurrent and in addition to any
other right, power and remedy given hereunder or now or
hereafter existing at law or in equity or by statute.
ARTICLE III
Miscellaneous
SECTION 3.01. Partial Invalidity. In the event any one
or more of the provisions contained in this Mortgage shall for
any reason be held to be invalid, illegal or unenforceable in
any respect, such validity, illegality or unenforceability
shall, at the option of Mortgagee, not affect any other
provision of this Mortgage, and this Mortgage shall be
construed as if such invalid, illegal or unenforceable
provision had never been contained herein or therein.
SECTION 3.02. Notices. All notices and communications
hereunder shall be in writing and given to Mortgagor in
accordance with the terms of the Credit Agreement at the
address set forth on the first page of this Mortgage and to
the Administrative Agent or any Lender as provided in the
Credit Agreement.
SECTION 3.03. Successors and Assigns. All of the
grants, covenants, terms, provisions and conditions herein
shall run with the Premises and the Improvements and shall
apply to, bind and inure to, the benefit of the permitted
23
successors and assigns of Mortgagor and the successors and
assigns of Mortgagee.
SECTION 3.04. Satisfaction and Cancellation. (a)
Except as otherwise provided in the Credit Agreement, the
conveyance to Mortgagee of the Mortgaged Property as security,
created and consummated by this Mortgage shall be null and
void when all the Obligations have been indefeasibly paid in
full in accordance with the terms of the Loan Documents and
the Lenders have no further commitment to make Loans under the
Credit Agreement, no Letters of Credit are outstanding and the
Issuing Lender has no further obligation to issue Letters of
Credit under the Credit Agreement.
(b) Upon a sale or financing by Mortgagor of all or any
portion of the Mortgaged Property that is permitted under the
Credit Agreement and the application of the Net Proceeds of
such sale or financing in accordance with the Credit
Agreement, the lien of this Mortgage shall be released from
the applicable portion of the Mortgaged Property. Mortgagor
shall give Mortgagee reasonable written notice of any sale or
financing of the Mortgaged Property prior to the closing of
such sale or financing.
(c) In connection with any termination or release
pursuant to paragraph (a), the Mortgage shall be marked
"satisfied" by the Mortgagee, and this Mortgage shall be
canceled of record at the request and at the expense of the
Mortgagor. Mortgagee shall execute any documents reasonably
requested by Mortgagor to accomplish the foregoing or to
accomplish any release contemplated by paragraph (a) and
Mortgagor will pay all costs and expenses, including
reasonable attorneys' fees, disbursements and other charges,
incurred by Mortgagee in connection with the preparation and
execution of such documents.
SECTION 3.05. Definitions. As used in this Mortgage,
the singular shall include the plural as the context requires
and the following words and phrases shall have the following
meanings: (a) "including" shall mean "including but not
limited to"; (b) "provisions" shall mean "provisions, terms,
covenants and/or conditions"; (c) "lien" shall mean "lien,
charge, encumbrance, security interest, mortgage or deed of
trust"; (d) "obligation" shall mean "obligation, duty,
covenant and/or condition"; and (e) "any of the Mortgaged
Property" shall mean "the Mortgaged Property or any part
thereof or interest therein". Any act that Mortgagee is
permitted to perform hereunder may be performed at any time
and from time to time by Mortgagee or any person or entity
24
designated by Mortgagee. Any act that is prohibited to
Mortgagor hereunder is also prohibited to all lessees of any
of the Mortgaged Property. Each appointment of Mortgagee as
attorney-in-fact for Mortgagor under the Mortgage is
irrevocable, with power of substitution and coupled with an
interest. Subject to the applicable provisions hereof,
Mortgagee has the right to refuse to grant its consent,
approval or acceptance or to indicate its satisfaction, in its
sole discretion, whenever such consent, approval, acceptance
or satisfaction is required hereunder.
SECTION 3.06. Multisite Real Estate Transaction.
Mortgagor acknowledges that this Mortgage is one of a number
of Other Mortgages and Security Documents that secure the
Obligations. Mortgagor agrees that the lien of this Mortgage
shall be absolute and unconditional and shall not in any
manner be affected or impaired by any acts or omissions
whatsoever of Mortgagee and without limiting the generality of
the foregoing, the lien hereof shall not be impaired by any
acceptance by the Mortgagee of any security for or guarantees
of any of the Obligations hereby secured, or by any failure,
neglect or omission on the part of Mortgagee to realize upon
or protect any Obligation or indebtedness hereby secured or
any collateral security therefor including the Other Mortgages
and other Security Documents. The lien hereof shall not in
any manner be impaired or affected by any release (except as
to the property released), sale, pledge, surrender,
compromise, settlement, renewal, extension, indulgence,
alteration, changing, modification or disposition of any of
the Obligations secured or of any of the collateral security
therefor, including the Other Mortgages and other Security
Documents or of any guarantee thereof, and Mortgagee may at
its discretion foreclose, exercise any power of sale, or
exercise any other remedy available to it under any or all of
the Other Mortgages and other Security Documents without first
exercising or enforcing any of its rights and remedies
hereunder. Such exercise of Mortgagee's rights and remedies
under any or all of the Other Mortgages and other Security
Documents shall not in any manner impair the indebtedness
hereby secured or the lien of this Mortgage and any exercise
of the rights or remedies of Mortgagee hereunder shall not
impair the lien of any of the Other Mortgages and other
Security Documents or any of Mortgagee's rights and remedies
thereunder. Mortgagor specifically consents and agrees that
Mortgagee may exercise its rights and remedies hereunder and
under the Other Mortgages and other Security Documents
separately or concurrently and in any order that it may deem
appropriate and waives any rights of subrogation.
SECTION 3.07. Intercreditor Agreements; Mortgagee. (a)
By acceptance of the benefits of this Mortgage, each of the
Secured Parties shall be deemed to have agreed to be bound by
25
the terms hereof. The provisions of this Section 3.07 are,
and are intended, solely to establish certain rights as
between the Secured Parties and shall not create, and shall
not be construed as creating, any rights enforceable by the
Mortgagor, any Subsidiary or any Affiliate of the Mortgagor
(regardless of whether the Mortgagor, Subsidiary or Affiliate
is a Secured Party).
(b) By acceptance of the benefits of this Mortgage, each
of the Secured Parties shall be deemed irrevocably (i) to
consent to the appointment of the Mortgagee as its agent
hereunder, (ii) to confirm that the Mortgagee shall have the
authority to act as the exclusive agent of such Secured Party
for enforcement of any provisions of this Mortgage against the
Mortgagor or the exercise of remedies hereunder and (iii) to
agree that such Secured Party shall not take any action to
enforce any provisions of this Mortgage against the Mortgagor
or to exercise any remedy hereunder.
(c) The Mortgagee may act or refrain from acting
hereunder, and shall not incur any liability to the Secured
Parties for acting or refraining from acting hereunder, in
accordance with any such consent, direction or request of the
Required Lenders as shall be required or permitted under the
Credit Agreement. The Debenture Holders as Secured Parties
shall not be entitled to, and shall not, (i) direct the
actions of the Mortgagee hereunder, (ii) take any action, or
commence any legal proceeding seeking, to require, compel or
cause the Mortgagee to enforce any provisions of this Mortgage
against the Mortgagor or to exercise any remedy hereunder,
(iii) take any action, or commence any legal proceeding
seeking, to prevent or enjoin the Mortgagee from taking any
action (including, without limitation, the enforcement of any
provisions of this Mortgage against the Mortgagor, the
exercise of any remedy hereunder, the release of the Mortgaged
Property hereunder or the consent to any amendment or
modification of this Mortgage or the grant of any waiver
hereunder), or refraining from taking any such action, in
accordance with this Mortgage or (iv) take any action, or
commence any legal proceeding seeking, to delay, hinder or
otherwise impair the Mortgagee in taking any such action in
accordance with this Mortgage. By acceptance of the benefits
under this Mortgage, the Debenture Holders as Secured Parties
will be deemed to have acknowledged and agreed that the
provisions of the preceding sentence are intended to induce
the Lenders to permit the Debenture Holders to be Secured
Parties under this Mortgage and are being relied upon by the
Lenders as consideration therefor.
(d) THE MORTGAGEE HAS CONSENTED TO SERVE AS MORTGAGEE
HEREUNDER ON THE EXPRESS UNDERSTANDING, AND THE DEBENTURE
HOLDERS AS SECURED PARTIES, BY ACCEPTING THE BENEFITS OF THIS
26
MORTGAGE, SHALL BE DEEMED TO HAVE AGREED, THAT THE MORTGAGEE
SHALL HAVE NO DUTY AND SHALL OWE NO OBLIGATION OR
RESPONSIBILITY (FIDUCIARY OR OTHERWISE) TO THE DEBENTURE
HOLDERS AS SECURED PARTIES, OTHER THAN THE DUTY TO PERFORM ITS
EXPRESS OBLIGATIONS UNDER THIS MORTGAGE IN ACCORDANCE WITH
THEIR TERMS, SUBJECT IN ALL EVENTS TO THE PROVISIONS OF THIS
MORTGAGE LIMITING THE RESPONSIBILITY OR LIABILITY OF THE
MORTGAGEE HEREUNDER.
(e) Each Secured Party shall, ratably in accordance with
the amount of the Obligations owed to it, indemnify the
Mortgagee (to the extent it shall not have been reimbursed by
the Mortgagor) against any expense or liability that the
Mortgagee would be entitled to recover from the Mortgagor
pursuant to this Mortgage. Any amount so owed by a Secured
Party can be withheld by the Mortgagee from any amount owed to
such Secured Party.
ARTICLE IV
Particular Provisions
This Mortgage is subject to the following provisions
relating to the particular laws of the state wherein the
Premises are located:
SECTION 4.01. Applicable Law; Certain Particular
Provisions. This Mortgage shall be governed by and construed
in accordance with the internal law of the State of New York;
provided, however, that the provisions of this Mortgage
relating to the creation, perfection and enforcement of the
lien and security interest created by this Mortgage in respect
of the Mortgaged Property and the exercise of each remedy
provided hereby, including the power of foreclosure or power
of sale procedures set forth in this Mortgage, shall be
governed by and construed in accordance with the internal law
of the state where the Mortgaged Property is located, and
Mortgagor and Mortgagee agrees to submit to jurisdiction and
the laying of venue for any suit on this Mortgage in such
state. The terms and provisions set forth in Appendix A
attached hereto are hereby incorporated by reference as though
fully set forth herein. In the event of any conflict between
the terms and provisions contained in the body of this
27
Mortgage and the terms and provisions set forth in Appendix A,
the terms and provisions set forth in Appendix A shall govern
and control.
IN WITNESS WHEREOF, this Mortgage has been duly executed
and delivered to Mortgagee by Mortgagor on the date of the
acknowledgment attached hereto.
PHILLIPS-VAN HEUSEN
CORPORATION, a Delaware
corporation,
by
Name:
Title:
Attest:
by
____________________________
Name:
Title:
[Corporate Seal]
28
[NEED LOCAL FORM OF ACKNOWLEDGMENT]
29
Exhibit A
to Mortgage
Legal Description
Schedule A
to Mortgage
Leases of Mortgaged Property
Appendix A
to Mortgage
Local Law Provisions