EXHIBIT 2
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MASTER RESTRUCTURING AGREEMENT
among
LONDON FOG INDUSTRIES, INC.,
THE EXISTING MANAGEMENT HOLDERS,
THE SEVERAL LENDERS
PARTIES HERETO
and
THE CHASE MANHATTAN BANK,
as Agent
Dated as of February 27, 1998
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS............................................. 2
1.1 Defined Terms................................................ 2
1.2 Other Definitional Provisions................................ 9
SECTION 2. MERGER OF LFI MERGER CORP. WITH AND INTO
LONDON FOG............................................ 10
2.1 Formation of LFI Merger Corp................................. 10
2.2 Filing of Certificate of Merger; Effect of Merger............ 10
SECTION 3. TREATMENT OF CONGRESS; RESTRUCTURE OF EXISTING
SUBORDINATED OBLIGATIONS; TREATMENT OF
EXISTING EQUITY AND MANAGEMENT HOLDERS;
ALLOCATION............................................ 11
3.1 Treatment of Existing Congress Obligations................... 11
3.2 Restructure of Existing Subordinated Obligations............. 11
3.3 Treatment of Existing Series B Equity Holders................ 14
3.4 Treatment of Management Holders.............................. 14
3.5 Old Debt Agreements Superseded............................... 15
3.6 Cancellation of Old Master Restructuring Agreement........... 15
3.7 Existing Management Holders' Employment Agreements........... 15
SECTION 4. APPOINTMENT OF BOARD OF DIRECTORS....................... 16
4.1 Board of Directors........................................... 16
SECTION 5. SHELF REGISTRATION...................................... 16
5.1 Shelf Registration........................................... 16
5.2 Registration Procedures...................................... 17
5.3 Registration Expenses........................................ 20
5.4 Indemnification.............................................. 20
SECTION 6. REPRESENTATIONS AND WARRANTIES.......................... 20
6.1 No Material Tax Liability.................................... 20
6.2 Capitalization............................................... 21
6.3 Corporate Existence; Compliance with Law..................... 21
6.4 Corporate Power; Authorization; Enforceable
Obligations................................................ 21
6.5 No Legal Bar................................................. 22
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6.6 No Material Litigation....................................... 22
6.7 No Default................................................... 22
SECTION 7. CONDITIONS PRECEDENT.................................... 22
7.1 Conditions to Restructure of Existing Obligations............ 22
SECTION 8. MISCELLANEOUS........................................... 25
8.1 Amendments and Waivers....................................... 25
8.2 Notices...................................................... 26
8.3 Payment of Expenses.......................................... 26
8.4 Counterparts................................................. 27
8.5 Severability................................................. 27
8.6 Integration.................................................. 27
8.7 GOVERNING LAW................................................ 27
8.8 Submission To Jurisdiction; Waivers.......................... 28
8.9 Acknowledgements............................................. 28
8.10 WAIVERS OF JURY TRIAL........................................ 29
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SCHEDULES
1A Lender Allocation Schedule
1B Existing Series B Equity Allocation Schedule
1C Management Holder Allocation Schedule
2 Additional Management Holders
2.1 Distribution of Common Stock of LFI Merger Corp.
3.2 Legend
5.4 Indemnification with Respect to Shelf Registration Statement
6.2 Capitalization of London Fog
8.2 Address for Notices
EXHIBITS
A Amended and Restated By-Laws
B Amended and Restated Certificate of Incorporation
C-1 Second Amended and Restated Employment Agreement With
Respect to Robert E. Gregory, Jr.
C-2 Second Amended and Restated Employment Agreement With
Respect to C. William Crain.
D Amendment to Senior Loan Agreement
E-1 Agreement of Merger
E-2 Certificate of Merger
F Existing Series B Equity Holder Consent and Joinder
G Management Stock Option Agreements
H Form of Management Warrant
I Form of Merger Warrant
J New Subordinated Note Indenture
K Registration Rights Agreement
L Stock Subscription Agreement
M Form of Closing Certificate
N-1 Opinion of Proskauer Rose LLP
N-2 Opinion of Stuart Fisher, Esq.
N-3 Opinion of Young, Conaway, Stargatt & Taylor
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MASTER RESTRUCTURING AGREEMENT, dated as of February 27, 1998, among
(i) London Fog Industries, Inc., a Delaware corporation ("London Fog"), (ii) the
Subsidiary Guarantors (as defined in Subsection 1.1), (iii) the several banks
and other financial institutions from time to time parties to the Term Loan
Agreement and the Note Agreement (each as defined in the Recitals) (the
"Lenders"), (iv) The Chase Manhattan Bank, a New York banking corporation, as
agent for the Lenders (in such capacity, the "Agent"), and (v) the Existing
Management Holders (as defined in subsection 1.1).
W I T N E S S E T H :
WHEREAS, London Fog, the Lenders and the Agent are parties to a Term
Loan Agreement dated as of May 31, 1995 (as heretofore amended, supplemented or
otherwise modified, the "Term Loan Agreement"), pursuant to which loans to
London Fog by the Lenders in the original aggregate principal amount of
$175,000,000 plus interest accreted and accrued and unpaid thereon are
outstanding;
WHEREAS, London Fog, the Lenders and the Agent are parties to a Note
Agreement dated as of May 31, 1995 (as heretofore amended, supplemented or
otherwise modified, the "Note Agreement"; together with the Term Loan Agreement,
collectively, together with all related documents, instruments and agreements,
including, without limitation, predecessor agreements, the "Old Debt
Agreements"), pursuant to which loans to London Fog by the Lenders in the
original aggregate principal amount of $36,000,000 plus interest accreted and
unpaid thereon are outstanding;
WHEREAS, pursuant to the Subsidiary Guarantee dated as of May 20, 1994
(as amended by Amendment No. 1 thereto dated as of May 31, 1995, the "Existing
Subsidiaries Guarantee") by the Subsidiary Guarantors in favor of the Agent for
the ratable benefit of the Lenders, the Subsidiary Guarantors guaranteed the
Existing Subordinated Obligations (as defined in subsection 1.1).
WHEREAS, Congress, London Fog and the Subsidiary Guarantors are
parties to a Loan and Security Agreement dated as of May 15, 1997, (as
heretofore or as may hereafter be amended, supplemented or otherwise modified,
the "Senior Loan Agreement"), pursuant to which Congress (as defined in
subsection 1.1) has from time to time made loans to, and issued letters of
credit for the account of, London Fog, guaranteed by the Subsidiary Guarantors;
WHEREAS, the Lenders and the Existing Series B Equity Holders (as
defined in subsection 1.1) hold approximately 88% and 7%, respectively, of the
issued and outstanding Old Preferred Stock (as defined in subsection 1.1) (on a
fully diluted basis) and the Existing
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Management Holders hold Old Series C Options (as defined in subsection 1.1) to
purchase 5% of the Old Preferred Stock (on a fully diluted basis);
WHEREAS, (a) London Fog, the Lenders and the Agent have engaged in
negotiations to effect (i) a restructuring of London Fog's obligations under the
Old Debt Agreements and (ii) a recapitalization of London Fog, including the
merger of LFI Merger Corp. with and into London Fog, with London Fog being the
surviving corporation and (b) London Fog and Congress have engaged in
negotiations to effect certain modifications to the Senior Loan Agreement; and
WHEREAS, (a) London Fog has requested, and the Agent and the Lenders
are agreeable, that the obligations of London Fog and the Subsidiary Guarantors
under the Old Debt Agreements be restructured, LFI Merger Corp. be merged with
and into London Fog, and London Fog be recapitalized, as contemplated by this
Agreement, and (b) London Fog has requested, and Congress is agreeable, that the
Senior Loan Agreement be modified, as contemplated by the Amendment to Senior
Loan Agreement (as defined in subsection 1.1).
NOW, THEREFORE, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"Additional Management Holders": the individuals listed on Schedule 2
and any other individuals to whom Management Stock Options are issued after
the date hereof, together with their successors, heirs and assigns.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either (a) to vote securities
having 10% or more of the ordinary voting power for the election of
directors of such Person or (b) to direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.
"Agent": The Chase Manhattan Bank, as the agent for the Lenders under
this Agreement and the other Restructuring Documents.
"Agreement": this Master Restructuring Agreement, as amended,
supplemented or otherwise modified from time to time.
"Agreement of Merger": the Agreement of Merger dated as of February
27, 1998 between LFI Merger Corp. and London Fog, substantially in the form
of Exhibit E-1.
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"Amended and Restated By-Laws": the amended and restated by-laws of
London Fog, substantially in the form of Exhibit A.
"Amended and Restated Certificate of Incorporation": the amended and
restated certificate of incorporation of London Fog, substantially in the
form of Exhibit B.
"Amended and Restated Management Holders' Employment Agreements ": the
collective reference to (a) the Second Amended and Restated Employment
Agreement dated as of February 27, 1998 between Robert E. Gregory, Jr. and
London Fog and (b) the Second Amended and Restated Employment Agreement
dated as of February 27, 1998 between C. William Crain and London Fog,
substantially in the forms of Exhibits C-1 and C-2, respectively.
"Amendment to Senior Loan Agreement": Amendment No. 1 dated as of
February 27, 1998 among London Fog, Pacific Trail, Inc., The Scranton
Outlet Corporation and Congress with respect to the Senior Loan Agreement,
substantially in the form of Exhibit D.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person that is not a
corporation and any and all warrants or options to purchase any of the
foregoing.
"Certificate of Merger": the Certificate of Merger of LFI Merger Corp.
with and into London Fog, substantially in the form of Exhibit E-2.
"Chase": The Chase Manhattan Bank, a New York banking corporation.
"Closing": the time on the Closing Date at which the conditions
precedent set forth in subsection 7.1 shall have been satisfied or waived
in accordance with the terms hereof.
"Closing Date": the date on which the conditions precedent set forth
in subsection 7.1 shall have been satisfied or waived in accordance with
the terms hereof.
"Commission": the United States Securities and Exchange Commission or
any successor thereto.
"Congress": Congress Financial Corporation, a California corporation.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
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"Exchange Act": the Securities Exchange Act of 1934, as amended, and
any successor legislation thereto.
"Existing Congress Obligations": the indebtedness and other
obligations of London Fog and the Subsidiary Guarantors to Congress under
the Senior Loan Agreement and the other Financing Agreements referred to
therein.
"Existing Management Holders": Robert E. Gregory, Jr. and C. William
Crain, together with their successors, heirs and assigns.
"Existing Management Holders' Employment Agreements": the collective
reference to (a) the Amended and Restated Employment Agreement dated as of
May 31, 1995 between Robert E. Gregory, Jr. and London Fog and (b) the
Amended and Restated Employment Agreement dated as of May 31, 1995 between
C. William Crain and London Fog.
"Existing Series B Equity Allocation Schedule": the Existing Series B
Equity Allocation Schedule annexed as Schedule 1B, setting forth for each
Existing Series B Equity Holder, the number of Warrants to be delivered,
pursuant to the Certificate of Merger, to such Existing Series B Equity
Holder at the Closing.
"Existing Series B Equity Holder Consent and Joinder": the Existing
Series B Equity Holder Consent and Joinder, substantially in the form of
Exhibit F.
"Existing Series B Equity Holders": all holders as of the Closing Date
of Old Series B Preferred Stock.
"Existing Subordinated Obligations": the indebtedness and other
obligations of London Fog and the Subsidiary Guarantors to the Lenders
under the Old Debt Agreements and the other Loan Documents referred to
therein.
"Form S-1": such form of registration statement under the Securities
Act as in effect on the date hereof or any successor form thereto.
"Form S-3": such form of registration statement under the Securities
Act as in effect on the date hereof or any successor form thereto.
"Governmental Authority": any nation or government, any state or other
political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Holders": the holders from time to time of the Registerable
Securities.
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"Lender Allocation Schedule": the Lender Allocation Schedule annexed
as Schedule 1A, setting forth for each Lender (a) the principal amount of
the New Subordinated Indebtedness to be issued at the Closing to such
Lender, (b) the number of shares of New Common Stock to be delivered to
such Lender at the Closing and (c) the number of Merger Warrants to be
delivered, pursuant to the Certificate of Merger and subsection 3.2(d), to
such Lender at the Closing.
"Lenders": the financial institutions parties to the Old Debt
Agreements, together with their successors and assigns.
"LFI Merger Corp.": LFI Merger Corp., a Delaware corporation.
"Management Anti-Dilution Warrants": the warrants of London Fog issued
to the Management Holders terminating on the seventh anniversary of the
Closing Date which are exercisable, upon the terms and conditions contained
therein, in the aggregate into 83,799 shares of the New Common Stock
(representing in the aggregate approximately 0.79% of the issued and
outstanding New Common Stock after giving effect to the issuance of
2,000,000 shares of New Common Stock pursuant to the Management Stock
Options and after giving effect to the exercise of the Management
Anti-Dilution Warrants and the exercise of the Merger Warrants),
substantially in the form of Exhibit H.
"Management Holder Allocation Schedule": the Management Holder
Allocation Schedule annexed as Schedule 1C, setting forth for each
Management Holder (i) the number of Management Stock Options to be
delivered to such Management Holder at the Closing and (ii) the number of
Management Anti-Dilution Warrants to be delivered to such Management Holder
at the Closing.
"Management Holders": the collective reference to the Existing
Management Holders and the Additional Management Holders.
"Management Stock Options": the options granted to the Management
Holders representing the right to acquire an aggregate of 2,000,000 shares
of the New Common Stock (representing in the aggregate 20% of the issued
and outstanding New Common Stock after giving effect to the issuance of
2,000,000 shares of New Common Stock pursuant to the Management Stock
Options but not giving effect to the exercise of the Management
Anti-Dilution Warrants and the exercise of the Merger Warrants) pursuant
to, and upon the terms and conditions contained in, the Management Stock
Option Agreements.
"Management Stock Option Agreements": the Management Stock Option
Agreements between London Fog and each Management Holder with respect to
the Management Stock Options, substantially in the form of Exhibit G.
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"Material Adverse Effect": a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or
prospects of London Fog and its Subsidiaries taken as a whole or (b) the
validity or enforceability of this Agreement or any of the other
Restructuring Documents or the rights or remedies of the Agent or the
Lenders hereunder or thereunder.
"Merger Warrants": the warrants of London Fog issued to each holder of
Old Series B Preferred Stock or each holder of common stock of LFI Merger
Corp., as the case may be, terminating on the seventh anniversary of the
Closing Date which are exercisable in the aggregate into 530,726 shares of
the New Common Stock (representing in the aggregate 5.0% of the issued and
outstanding New Common Stock after giving effect to the issuance of
2,000,000 shares of New Common Stock pursuant to the Management Stock
Options and after giving effect to the exercise of the Management
Anti-Dilution Warrants and the exercise of the Merger Warrants) issued
pursuant to, and upon the terms and conditions contained in, the
Certificate of Merger, substantially in the form of Exhibit I.
"New Common Stock": the common stock, $.01 par value per share, of
London Fog, authorized pursuant to the Amended and Restated Certificate of
Incorporation.
"New Subordinated Indebtedness": the $100,000,000 of subordinated
indebtedness issued to the Lenders pursuant to the New Subordinated Note
Indenture.
"New Subordinated Note Indenture": the Indenture dated as of February
27, 1998 among London Fog, the Subsidiary Guarantors and IBJ Schroder Bank
& Trust Company, as Trustee, substantially in the form of Exhibit J.
"New Subordinated Notes": the Initial Notes and, when issued in
exchange for Initial Notes upon the effectiveness of the Shelf Registration
Statement as provided in the New Subordinated Note Indenture, the Exchange
Notes, in each case as defined in the New Subordinated Note Indenture.
"Old By-Laws": the by-laws of London Fog in effect immediately prior
to the Closing.
"Old Certificate of Incorporation": the certificate of incorporation
of London Fog in effect immediately prior to the Closing.
"Old Common Stock": the common stock, $.01 par value per share, of
London Fog issued and outstanding immediately prior to the filing of the
Certificate of Merger pursuant to subsection 2.2(a).
"Old Debt Agreements': as defined in the Recitals hereto.
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"Old Master Restructuring Agreement": the Master Restructuring
Agreement dated as of May 31, 1995, as amended, among London Fog, London
Fog Corporation, certain of the Existing Series B Equity Holders, the
Existing Management Holders, the Lenders and the Agent.
"Old Preferred Stock": the 17.5% Per Annum Cumulative Preferred Stock,
Series A-1, A-2, B and C, of London Fog issued and outstanding immediately
prior to the filing of the Certificate of Merger pursuant to subsection
2.2(a).
"Old Series A Preferred Stock": the collective reference to the Old
Series A-1 Preferred Stock and Old Series A-2 Preferred Stock.
"Old Series A-1 Preferred Stock": the 17.5% Per Annum Cumulative
Preferred Stock, Series A-1, of London Fog, issued pursuant to, and upon
the terms and conditions contained in, the Old Certificate of
Incorporation.
"Old Series A-2 Preferred Stock": the 17.5% Per Annum Cumulative
Preferred Stock, Series A-2, of London Fog, issued pursuant to, and upon
the terms and conditions contained in, the Old Certificate of
Incorporation.
"Old Series B Preferred Stock": the 17.5% Per Annum Cumulative
Preferred Stock, Series B, of London Fog, issued pursuant to, and upon the
terms and conditions contained in, the Old Certificate of Incorporation.
"Old Series C Option Agreement": the Series C Option Agreement dated
as of May 31, 1995 between the Existing Management Holders and London Fog
with respect to the Old Series C Options.
"Old Series C Options": the options to purchase shares of Old Series C
Preferred Stock granted to the Existing Management Holders pursuant to, and
upon the terms and conditions contained in, the Old Series C Option
Agreement.
"Old Series C Preferred Stock": the 17.5% Per Annum Cumulative
Preferred Stock, Series C, of London Fog, issuable pursuant to, and upon
the terms and conditions contained in, the Old Certificate of
Incorporation.
"Person": an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
governmental authority or other entity of whatever nature.
"Preliminary Prospectus": each preliminary prospectus included in a
Registration Statement or in any amendment thereto prior to the date on
which such Registration Statement is declared effective under the
Securities Act, including any prospectus filed with the Commission pursuant
to Rule 424(a) under the Securities Act.
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"Prospectus": each prospectus included in a Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective
Registration Statement in accordance with Rule 430A), together with any
supplement thereto, as filed with, or transmitted for filing to, the
Commission pursuant to Rule 424(b) under the Securities Act.
"Registerable Securities": (a) the New Subordinated Notes, (b) the New
Common Stock and (c) any other securities issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange
for or in replacement of, the New Subordinated Notes or the New Common
Stock.
"Registration": registration of securities pursuant to the Securities
Act.
"Registration Rights Agreement": the Registration Rights Agreement
dated as of February 27, 1998 with respect to shares of New Common Stock
issued (i) upon exercise of the Merger Warrants and (ii) upon exercise of
the Management Anti- Dilution Warrants, substantially in the form of
Exhibit K.
"Registration Statement": any registration statement (including the
Preliminary Prospectus, the Prospectus, any amendments (including any
post-effective amendments) thereof, any supplements and all exhibits
thereto and any documents incorporated therein by reference pursuant to the
rules and regulations of the Commission), filed by London Fog with the
Commission which complies with the requirements of the Securities Act and
the rules and regulations of the Commission thereunder.
"Required Lenders": the holders of at least a majority in outstanding
principal amount of the New Subordinated Indebtedness.
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
"Restructuring Documents": this Agreement, the New Subordinated Note
Indenture, the New Subordinated Notes, the Registration Rights Agreement,
the Amended and Restated By-Laws, the Amended and Restated Certificate of
Incorporation, the Certificate of Merger and any other agreement or
instrument executed and delivered in connection herewith and therewith.
"Rule 415": Rule 415 promulgated by the Commission under the
Securities Act or any successor to such Rule.
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"Rule 424(b)": Rule 424(b) promulgated by the Commission under the
Securities Act or any successor to such Rule.
"Rule 430A": Rule 430A promulgated by the Commission under the
Securities Act or any successor to such Rule.
"Securities Act": the Securities Act of 1933, as amended, or any
successor legislation thereto.
"Senior Loan Agreement": as defined in the Recitals hereto.
"Shelf Filing Period": the period from 90 days following the Closing
Date to July 31, 1998.
"Shelf Registration Period": as defined in subsection 5.1(b).
"Shelf Registration Statement": as defined in subsection 5.1(a).
"Stock Subscription Agreement": the Stock Subscription Agreement dated
as of February 27, 1998 among the Lenders and LFI Merger Corp.,
substantially in the form of Exhibit L.
"Subsidiary": as to any Person, a corporation, partnership or other
entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation, partnership or other entity are at the time owned, or the
management of which is otherwise controlled, directly or indirectly through
one or more intermediaries, or both, by such Person. Unless otherwise
qualified, all references to a "Subsidiary" or to "Subsidiaries" in this
Agreement shall refer to a Subsidiary or Subsidiaries of London Fog.
"Subsidiary Guarantors": as defined in the New Subordinated Note
Indenture.
1.2 Other Definitional Provisions. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have the
defined meanings when used in the other Restructuring Documents or any
certificate or other document made or delivered pursuant hereto or thereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
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(c) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. MERGER OF LFI MERGER CORP. WITH AND INTO LONDON FOG
2.1 Formation of LFI Merger Corp. Effective on the Closing Date, but
immediately prior to the action taken pursuant to subsection 2.2, (a) the
Lenders and LFI Merger Corp. shall (i) enter into the Stock Subscription
Agreement pursuant to which the Lenders shall contribute to LFI Merger Corp. (A)
all shares of Old Series A Preferred Stock held by the Lenders (an aggregate of
106,763.589 shares) and (B) all shares of Old Common Stock held by the Lenders
(an aggregate of 80,000 shares) in exchange for 100% of the issued and
outstanding shares of common stock of LFI Merger Corp. (an aggregate of
245,839.5 shares), which shares of common stock of LFI Merger Corp. shall
thereupon be distributed to each Lender on a pro rata basis as set forth on
Schedule 2.1, and (ii) take all action necessary to consummate the merger set
forth in subsection 2.2 and otherwise comply with the provisions of the Stock
Subscription Agreement and (b) LFI Merger Corp. and London Fog shall enter into
the Agreement of Merger and take all action necessary to consummate the merger
set forth in subsection 2.2.
2.2 Filing of Certificate of Merger; Effect of Merger. (a) Effective
on the Closing Date, contemporaneously with the consummation of the transactions
set forth in Section 3, London Fog shall file or cause to be filed with the
Secretary of State of the State of Delaware the Certificate of Merger.
(b) Upon the filing of the Certificate of Merger and pursuant to the
Agreement of Merger, the following events shall occur contemporaneously with the
transactions set forth in subsections 3.1, 3.2, 3.3 and 3.4:
(i) LFI Merger Corp. shall merge with and into London Fog, with London Fog
being the surviving corporation;
(ii) the Old Preferred Stock shall be cancelled and retired and cease
to exist;
(iii) the Old Common Stock shall be cancelled and retired and cease to
exist;
(iv) all options (including, without limitation, the Old Series C
Options) to purchase Capital Stock of London Fog and warrants exercisable
into shares of Capital Stock of London Fog shall be cancelled and retired
and cease to exist;
(v) the common stock of LFI Merger Corp. shall be cancelled and
retired and cease to exist;
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(vi) each share of Old Series B Preferred Stock or other rights in
respect thereof immediately prior to cancellation thereof as set forth in
clause (ii) above shall be converted into 4.60536 Merger Warrants for each
such share of Old Series B Preferred Stock (and for each share into which
any options or warrants may have been exercisable);
(vii) each share of common stock of LFI Merger Corp. or other rights
in respect thereof immediately prior to cancellation thereof as set forth
in clause (v) above shall be converted into 2.0 Merger Warrants for each
such share of common stock (and for each share into which any options or
warrants may have been exercisable);
(viii) each share of Old Common Stock or other rights in respect
thereof immediately prior to cancellation thereof as set forth in clause
(iii) above shall be converted into $.01 in cash for each such share of Old
Common Stock (and for each share into which any options or warrants may
have been exercisable);
(ix) the Amended and Restated Certificate of Incorporation shall, as
set forth in the Certificate of Merger and pursuant to section 251(e) of
the Delaware General Corporation Law, without the necessity of any further
action by any party, be the certificate of incorporation of London Fog; and
(x) London Fog shall assume, by operation of law, all debts,
liabilities, obligations and contracts of LFI Merger Corp. and shall, by
operation of law, continue to be obligated for all debts, liabilities and
contracts of London Fog, and all property, real or personal, including,
without limitation, all of the Capital Stock of the Subsidiary Guarantors,
and all rights, privileges and powers of each of LFI Merger Corp. and
London Fog shall vest in London Fog, in accordance with the Delaware
General Corporation Law.
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SECTION 3. TREATMENT OF CONGRESS; RESTRUCTURE OF EXISTING SUBORDINATED
OBLIGATIONS; TREATMENT OF EXISTING EQUITY AND MANAGEMENT
HOLDERS; ALLOCATION; CERTAIN AGREEMENTS
3.1 Treatment of Existing Congress Obligations. At the Closing,
subject to the terms and conditions hereof, contemporaneously with the filing of
the Certificate of Merger pursuant to subsection 2.2(a), London Fog, the
Subsidiary Guarantors and Congress shall execute and deliver the Amendment to
Senior Loan Agreement, which Amendment shall, among other things, provide for
Congress' consent (to the extent required) to the transactions contemplated
hereby.
3.2 Restructure of Existing Subordinated Obligations. At the Closing,
subject to the terms and conditions hereof and in exchange for the consideration
set forth below, contemporaneously with the filing of the Certificate of Merger
pursuant to subsection 2.2(a), the Existing Subordinated Obligations shall be
restructured as follows:
(a) New Subordinated Notes. In renewal and extension of (but not in
substitution and exchange for, or in payment or novation of) $100,000,000
in aggregate principal amount of the Existing Subordinated Obligations,
London Fog shall issue, and the Subsidiary Guarantors shall guarantee, on
the terms and conditions contained in the New Subordinated Note Indenture,
$100,000,000 in aggregate principal amount of the New Subordinated Notes,
which New Subordinated Notes shall (i) be allocated among the Lenders in
accordance with the Lender Allocation Schedule, (ii) bear interest and be
paid in accordance with the terms of the New Subordinated Note Indenture,
(iii) until the effectiveness of the Shelf Registration Statement as
provided in Section 5, bear the legend substantially as set forth in
Schedule 3.2 and (iv) be otherwise subject to the terms and conditions of
the New Subordinated Note Indenture. To satisfy the requirements of this
subsection 3.2(a), at the Closing London Fog shall be permitted to issue
for the benefit of the Lenders temporary promissory notes representing
$100,000,000 in aggregate principal amount of the New Subordinated Notes to
be issued pursuant to the New Subordinated Note Indenture; provided that
the temporary promissory notes shall be exchanged for the New Subordinated
Notes to be issued pursuant to the New Subordinated Note Indenture as soon
as practicable after the Closing.
(b) New Common Stock. In satisfaction of the remainder of the
aggregate outstanding amount of the Existing Subordinated Obligations
(including, without limitation, (i) interest accrued and unpaid on the
remaining Existing Subordinated Obligations to the Closing Date and (ii)
fees (other than fees required to be paid at Closing pursuant to subsection
7.1(l)) accrued and unpaid on the remaining Existing Subordinated
Obligations to the Closing Date), London Fog shall issue to the Lenders an
aggregate of 8,000,000 shares of New Common Stock, which New Common Stock
shall (A) represent in the aggregate 80% of the New Common Stock issued and
outstanding after giving effect to the issuance of 2,000,000 shares of New
Common Stock pursuant to
13
the Management Stock Options but not giving effect to the exercise of the
Management Anti-Dilution Warrants and the exercise of the Merger Warrants,
(B) be allocated among the Lenders in accordance with the Lender Allocation
Schedule and (C) until the effectiveness of the Shelf Registration
Statement as provided in Section 5, bear the legend substantially as set
forth in Schedule 3.2. To satisfy the requirements of this subsection
3.2(b), at the Closing London Fog shall be permitted to issue for the
benefit of the Lenders a global stock certificate in respect of the New
Common Stock, representing in the aggregate the number of shares of New
Common Stock to be issued to the Lenders pursuant to this subsection
3.2(b); provided that the New Common Stock shall be allocated among the
Lenders pursuant to clause (B) of the immediately preceding sentence as
soon as practicable after the Closing.
(c) Cancellation of Notes Under Old Debt Agreements; Certain
Acknowledgements. At the Closing, upon the consummation of the transactions
set forth in clauses (a) and (b) above, each Lender shall deliver to London
Fog all the promissory notes issued under, and evidencing the indebtedness
under, the Old Debt Agreements, which promissory notes, whether or not in
such Lender's possession and whether or not delivered pursuant to this
subsection 3.2(c), shall be deemed superseded, cancelled and replaced
(provided that the indebtedness evidenced by said notes shall have been
renewed and extended in the amount of $100,000,000 plus interest accruing
thereon after the date hereof and otherwise satisfied pursuant to
subsections 3.2(a) and (b)). Each Lender acknowledges, effective upon the
Closing, that such Lender shall hold no indebtedness or other obligations
or security interests under the Old Debt Agreements, except security
interests held by the Agent under the Old Debt Agreements that will be held
solely by the Trustee under the New Subordinated Note Indenture. The Agent
acknowledges that upon the Closing it has delivered to London Fog (and to
Congress) a true and correct copy of the Register of the Existing
Subordinated Obligations, as such Register has been maintained by the Agent
under the Old Debt Agreements, showing the registered holders of the
Existing Subordinated Obligations as the date hereof, based on the
information provided to the Agent in connection with the execution and
delivery of the Old Debt Agreements and any subsequent assignments of the
Existing Subordinated Obligations. The Agent further acknowledges that upon
execution and delivery of the New Subordinated Note Indenture, the Agent
shall no longer hold any security interests in or liens on any asset or
property of London Fog (after giving effect to the merger pursuant to
Section 2) or any of the Subsidiary Guarantors, and all such security
interests and liens previously held by the Agent shall, pursuant to the New
Subordinated Note Indenture and the Security Documents (as defined in the
New Subordinated Note Indenture), be held solely by the Trustee under the
New Subordinated Note Indenture for the benefit of the holders of the New
Subordinated Notes.
(d) Merger Warrants Effective upon the Closing, pursuant to the
Certificate of Merger and as set forth in subsection 2.2(b)(vii), London
Fog shall issue to the Lenders 491,679 in aggregate number of Merger
Warrants, which Merger Warrants shall (i) be exercisable into approximately
4.63% of the New Common Stock issued and outstanding
14
after giving effect to the issuance of 2,000,000 shares of New Common Stock
pursuant to the Management Stock Options and after giving effect to the
exercise of the Management Anti-Dilution Warrants and the exercise of the
Merger Warrants and (ii) be allocated among the Lenders in accordance with
the Lender Allocation Schedule. To satisfy the requirements of this
subsection 3.2(d), at the Closing London Fog shall be permitted to issue
for the benefit of the Lenders a global warrant certificate representing
the aggregate number of Merger Warrants to be issued to the Lenders
pursuant to this subsection 3.2(d); provided that the Merger Warrants shall
be allocated among the Lenders pursuant to clause (ii) of the immediately
preceding sentence as soon as practicable after the Closing.
(e) Accredited Investor or QIB. Each Lender represents that it is
either an "accredited investor" within the meaning of Rule 501 under the
Securities Act or a QIB (as defined in the New Subordinated Note
Indenture), and is acquiring the New Subordinated Notes, the New Common
Stock and the Merger Warrants for its own account without a view toward
resale or distribution in a manner that would violate applicable securities
laws.
3.3 Treatment of Existing Series B Equity Holders. Effective
upon the Closing, pursuant to the Certificate of Merger and as set forth in
subsection 2.2(b)(vi), London Fog shall issue to the Existing Series B Equity
Holders 39,047 in aggregate number of Merger Warrants, which Merger Warrants
shall (i) be exercisable in the aggregate into approximately 0.37% of the New
Common Stock issued and outstanding after giving effect to the issuance of
2,000,000 shares of New Common Stock pursuant to the Management Stock Options
and after giving effect to the exercise of the Management Anti-Dilution Warrants
and the exercise of the Merger Warrants and (ii) be allocated among the Existing
Series B Equity Holders in accordance with the Existing Series B Equity
Allocation Schedule. To satisfy the requirements of this subsection 3.3, at the
Closing London Fog shall be permitted to issue for the benefit of the Existing
Series B Equity Holders a global warrant certificate representing in the
aggregate the number of Merger Warrants to be issued to the Existing Series B
Equity Holders pursuant to this subsection 3.3; provided that the Merger
Warrants shall be allocated among the Existing Series B Equity Holders pursuant
to clause (ii) of the immediately preceding sentence as soon as practicable
after the Closing.
3.4 Treatment of Management Holders.
(a) Existing Management Holders. At the Closing, contemporaneously
with the filing of the Certificate of Merger pursuant to subsection 2.2(a),
London Fog shall issue to the Existing Management Holders Management Stock
Options representing the right to acquire in the aggregate 1,000,000 shares of
New Common Stock, which Management Stock Options shall (i) represent the right
to purchase in the aggregate 10.00% of the New Common Stock issued and
outstanding after giving effect to the issuance of 2,000,000 shares of New
Common Stock pursuant to the Management Stock Options but not giving effect to
the exercise of the Management Anti-Dilution Warrants and the exercise of the
Merger Warrants, (ii) be allocated among the Existing Management Holders in
accordance with the Management Holder Allocation
15
Schedule and (iii) be otherwise subject to the terms and conditions of, and vest
in favor of the Existing Management Holders as set forth in, the relevant
Management Stock Option Agreement.
(b) Cancellation of Old Series C Options and Old Series C Stock Option
Agreement. At the Closing, immediately prior to the consummation of the
transaction set forth in clause (a) above, the Old Series C Option Agreement and
the Old Series C Options shall, without the necessity of further action by any
party, be deemed terminated and cancelled and shall be of no further force and
effect.
(c) Additional Management Holders. At the Closing, contemporaneously
with the filing of the Certificate of Merger pursuant to subsection 2.2(a), or
from time to time following the Closing, London Fog shall issue to the
Additional Management Holders Management Stock Options representing the right to
acquire in the aggregate 1,000,000 shares of New Common Stock, which Management
Stock Options shall (i) represent the right to purchase in the aggregate 10.00%
of the New Common Stock issued and outstanding after giving effect to the
issuance of 2,000,000 shares of New Common Stock pursuant to the Management
Stock Options but not giving effect to the exercise of the Management Anti-
Dilution Warrants and the Merger Warrants, (ii) be allocated among the
Additional Management Holders in accordance with the Management Holder
Allocation Schedule and (iii) be otherwise subject to the terms and conditions
of, and vest in favor of the Additional Management Holders as set forth in, the
relevant Management Stock Option Agreement.
(d) Management Anti-Dilution Warrants. At the Closing,
contemporaneously with the filing of the Certificate of Merger pursuant to
subsection 2.2(a), or from time to time following the Closing, London Fog shall
issue to the Management Holders 83,799 in aggregate number of Management
Anti-Dilution Warrants, which Management Anti-Dilution Warrants shall (i) be
exercisable in the aggregate into approximately 0.79% of the New Common Stock
issued and outstanding after giving effect to the issuance of 2,000,000 shares
of New Common Stock pursuant to the Management Stock Options and after giving
effect to the exercise of the Management Anti-Dilution Warrants and the exercise
of the Merger Warrants and (ii) be allocated among the Management Holders in
accordance with the Management Holder Allocation Schedule.
3.5 Old Debt Agreements Superseded. Upon the Closing, the Old Debt
Agreements shall be superseded by this Agreement, the New Subordinated Note
Indenture and (to the extent applicable) the other Restructuring Documents and
shall be of no further force and effect (provided that the Existing Subordinated
Obligations shall have been renewed, extended and otherwise satisfied pursuant
to subsections 3.2(a) and (b)).
3.6 Cancellation of Old Master Restructuring Agreement. Upon the
Closing, the Old Master Restructuring Agreement shall, with respect to each
party hereto party to the Old Master Restructuring Agreement and each Existing
Series B Equity Holder who executes and delivers the Existing Series B Equity
Holder Consent and Joinder, be deemed terminated and cancelled and shall be of
no further force and effect.
16
3.7 Existing Management Holders' Employment Agreements. At the
Closing, subject to the terms and conditions hereof, each Existing Management
Holder and London Fog shall execute and deliver the Amended and Restated
Existing Management Holder Employment Agreement with respect to such Existing
Management Holder, which Agreement shall provide, among other things, that (a)
the term of such Existing Management Holder Employment Agreement shall be
extended for at least three years from the termination date thereof (as set
forth in Section 1 therein) and (b) commencing with the beginning of the fiscal
year ending in February 2000, the provisions contained in such Existing
Management Holder Employment Agreements providing for an annual bonus based on
6% of Consolidated EBITA (as defined therein), in the case of Robert E. Gregory,
Jr., or 4% of Consolidated EBITA (as defined therein), in the case of C. William
Crain, as the case may be, shall be deleted and replaced with provisions
providing for an annual bonus to be paid to each such Existing Management Holder
as may be determined by the then-current Board of Directors of London Fog or a
sub-committee thereof.
SECTION 4. APPOINTMENT OF BOARD OF DIRECTORS
4.1 Board of Directors. During the period from the Closing Date to the
date that the directors elected at the first annual meeting of stockholders
following the Closing Date scheduled for the purpose of electing directors
pursuant to section 211 of the Delaware General Corporation Law shall commence
serving their respective terms (such date, the "Outside New Board Date"), the
individuals currently serving as directors on the Board of Directors of London
Fog shall, in accordance with the terms of the Amended and Restated By-Laws,
continue to serve as directors; provided, however, that as soon as practicable
following the Closing Date but in no event later than the Outside New Board
Date, the Board of Directors of London Fog shall consist of five (5) individuals
who shall be elected in accordance with the terms of the Amended and Restated
Certificate of Incorporation and the Amended and Restated By-Laws; provided,
further, that four directors shall be elected, as set forth in the Amended and
Restated By-Laws, by the holders of the New Common Stock and the fifth director
shall be the Chairperson of the Board of Directors of London Fog who shall also
be the then-current Chief Executive Officer of London Fog.
SECTION 5. SHELF REGISTRATION
5.1 Shelf Registration. (a) London Fog shall prepare and, at any time
during the Shelf Filing Period, shall file with the Commission a "shelf"
Registration Statement on Form S-1 or Form S-3, as appropriate, relating to the
offer and sale of the Registerable Securities by the Holders from time to time
in accordance with the methods of distribution set forth in such Registration
Statement (the "Shelf Registration Statement").
(b) London Fog shall use its best reasonable efforts to have the Shelf
Registration Statement declared effective under the Securities Act by the
Commission no later than 135 days after the filing thereof and shall keep the
Shelf Registration Statement continuously effective for a period of two years
from the date on which the Shelf Registration Statement is declared
17
effective under the Securities Act or such shorter period (in either such case,
such period being called the "Shelf Registration Period") that will terminate
when either (i) all the Registerable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or (ii) all the Registerable Securities are eligible for sale pursuant
to Rule 144(k) promulgated under the Securities Act. London Fog shall be deemed
not to have used its reasonable best efforts to keep the Shelf Registration
Statement effective during the Shelf Registration Period if it voluntarily takes
any action that would result in Holders of Registerable Securities covered
thereby not being able to offer and sell such Registerable Securities during the
Shelf Registration Period unless such action is required by applicable law;
provided, however, that the foregoing shall not apply to actions taken by London
Fog in good faith and for valid business reasons (not including avoidance of its
obligations hereunder and under the other Restructuring Documents), including,
without limitation, the acquisition or divestiture of assets, so long as London
Fog within 120 days thereafter complies with the requirements of subsection
5.2(h). Any such period during which London Fog fails to keep the Shelf
Registration Statement effective and usable for offers and sales of Registerable
Securities is referred to as a "Suspension Period." A Suspension Period shall
commence on and include the date that London Fog gives notice that the Shelf
Registration Statement is no longer effective or the Prospectus included therein
is no longer usable for offers and sales of Registerable Securities and shall
end on the date when each Holder of Registerable Securities covered by such
Shelf Registration Statement either receives the copies of the supplemented or
amended Prospectus contemplated by subsection 5.2(h) or is advised in writing by
London Fog that use of the Prospectus may be resumed. If one or more Suspension
Periods occur, the two-year time period referenced above shall be extended by
the number of days included in each such Suspension Period.
(c) Notwithstanding any other provisions hereof, London Fog will
ensure that (i) any Shelf Registration Statement and any amendment thereto and
any Prospectus forming part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto (in
either case, other than with respect to information included therein in reliance
upon or in conformity with written information furnished to London Fog by or on
behalf of any Holder specifically for use therein (the "Holders' Information"))
does not, when it becomes effective, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading and (iii) any Prospectus forming
part of any Shelf Registration Statement, and any supplement to such Prospectus
(in either case, other than with respect to the Holders' Information), does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) In the event the Shelf Registration Statement is filed on Form
S-1, upon satisfaction of the requirements therefor, London Fog may amend the
Shelf Registration Statement on Form S-1 to become a Registration Statement on
Form S-3.
5.2 Registration Procedures. In connection with the Shelf Registration
Statement, the following provisions shall apply:
18
(a) London Fog shall furnish to each Holder, prior to the filing
thereof with the Commission, a copy of the Shelf Registration Statement and
each amendment thereto and each supplement, if any, to the Prospectus
included therein and shall use reasonable efforts to reflect in each such
document, when so filed with the Commission, such comments as one counsel
for the Holders reasonably may propose.
(b) London Fog shall advise each Holder, and, if requested by any such
Holder, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use
of the Prospectus included in the Shelf Registration Statement until the
requisite changes have been made):
(i) when the Shelf Registration Statement and any amendment thereto
has been filed with the Commission and when such Shelf Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Shelf Registration Statement or the Prospectus included therein or for
additional information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
any proceedings for that purpose;
(iv) of the receipt by London Fog of any notification with respect to
the suspension of the qualification of the Registerable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and
(v) of the happening of any event that requires the making of any
changes in the Shelf Registration Statement or the Prospectus so that, as
of such date, the statements therein are not misleading and do not omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading.
(c) London Fog shall use its best reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of the Shelf
Registration Statement at the earliest possible time.
(d) London Fog shall furnish to each Holder of Registerable Securities
included within the coverage of the Shelf Registration Statement, without
charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and
schedules, and, if any Holder so requests in writing, all exhibits
(including those incorporated by reference).
19
(e) London Fog shall, during the Shelf Registration Period, promptly
deliver to each Holder of Registerable Securities included within the
coverage of the Shelf Registration Statement, without charge, as many
copies of the Prospectus (including each Preliminary Prospectus) included
in such Shelf Registration Statement and any amendment or supplement
thereto as any such Holder may reasonably request; and London Fog consents
to the use of the Prospectus or any amendment or supplement thereto by each
of the selling Holders of Registerable Securities in connection with the
offering and sale of the Registerable Securities covered by the Prospectus
or any amendment or supplement thereto.
(f) Prior to any public offering of Registerable Securities pursuant
to the Shelf Registration Statement, London Fog shall use its best
reasonable efforts to register, qualify or cooperate with the Holders of
Registerable Securities included therein and their respective counsel in
connection with the registration or qualification of such Registerable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions as any such Holder reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and
sale in such jurisdictions of the Registerable Securities covered by such
Shelf Registration Statement; provided, however, that London Fog shall not
be required to qualify generally to do business in any jurisdiction where
it is not then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction where it
is not then so subject.
(g) London Fog shall cooperate with the Holders to facilitate the
timely preparation and delivery of certificates representing Registerable
Securities to be sold pursuant to the Shelf Registration Statement free of
any restrictive legends and in such denominations and registered in such
names as the Holders may request in writing prior to sales of Registerable
Securities pursuant to such Shelf Registration Statement.
(h) If (i) any event contemplated by clauses (b)(ii) through (v) above
occurs during the Shelf Registration Period or (ii) any Suspension Period
remains in effect more than 120 days after the occurrence of any event
contemplated by clauses (b)(ii) through (v) above, London Fog will promptly
prepare a post-effective amendment to the Shelf Registration Statement or a
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Registerable Securities
from a Holder, the Prospectus will not include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(i) Not later than the effective date of the Shelf Registration
Statement, London Fog shall provide a CUSIP number for the Registerable
Securities and provide the applicable trustee or transfer agent with
printed certificates for the Registerable Securities, as the case may be,
in a form eligible for deposit with The Depository Trust Company.
20
(j) London Fog shall comply with all applicable rules and regulations
of the Commission and will make generally available to the Holders as soon
as practicable after the effective date of the Shelf Registration Statement
an earnings statement satisfying the provisions of Section 11(a) of the
Securities Act; provided that in no event shall such earnings statement be
delivered later than 45 days after the end of a 12-month period (or 90
days, if such period is a fiscal year) beginning with the first month of
London Fog's first fiscal quarter commencing after the effective date of
the applicable Registration Statement, which statements shall cover such
12-month period.
(k) London Fog shall cause the New Subordinated Note Indenture to be
qualified under the Trust Indenture Act of 1939, as amended, as required by
applicable law in a timely manner.
(l) London Fog may require each Holder of Registerable Securities to
be sold pursuant to the Shelf Registration Statement to furnish to London
Fog such information regarding such Holder and the distribution of such
Registerable Securities as London Fog may, from time to time, reasonably
require for inclusion in such Shelf Registration Statement, and London Fog
may exclude from such registration the Registerable Securities of any
Holder that fails to furnish such information within a reasonable time
after receiving such request.
(m) Each Holder agrees by acquisition of the Registerable Securities
that, upon receipt of any notice from London Fog (i) of a Suspension Period
under subsection 5.1(b) or (ii) pursuant to subsection 5.2(b)(ii) through
(v) hereof, such Holder will discontinue any disposition of the
Registerable Securities held by it until such Holder's receipt of copies of
the supplemental or amended Prospectus contemplated by subsection 5.2(h)
hereof or until advised in writing (the "Advice") by London Fog that the
use of the applicable Prospectus may be resumed. If London Fog shall give
any notice under subsection 5.2(b)(ii) through (v) during the Shelf
Registration Period, the two-year period referenced in the definition of
"Shelf Registration Period" in subsection 5.1(b) shall be extended by the
number of days during such period from and including the date of the giving
of such notice to and including the date when each seller of Registerable
Securities covered by such Shelf Registration Statement shall have received
(x) the copies of the supplemental or amended Prospectus contemplated by
subsection 5.2(h) (if an amended or supplemental Prospectus is required) or
(y) the Advice (if no amended or supplemental Prospectus is required).
5.3 Registration Expenses. London Fog shall bear all expenses incurred
in connection with the performance of its obligations under this Section 5 and
London Fog shall reimburse the Holders for the reasonable fees and disbursements
of Simpson Thacher & Bartlett, as counsel to the Holders, in connection with the
Shelf Registration Statement.
21
5.4 Indemnification. In connection with the Shelf Registration
Statement or any Prospectus delivery pursuant thereto, London Fog shall
indemnify and hold harmless each Holder, its directors, officers, agents and
employees and each Person, if any, who controls such Holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and the
directors, officers, agents and employees of such controlling Persons as set
forth on Schedule 5.4.
SECTION 6. REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Lenders to enter into this Agreement and
to restructure the Existing Subordinated Obligations, London Fog hereby
represents and warrants to the Agent and each Lender:
6.1 No Material Tax Liability. The restructuring or the
recapitalization of London Fog will not result in any material current cash tax
liability of London Fog or its Subsidiaries to the United States Internal
Revenue Service, except for liabilities pursuant to the alternative minimum tax.
6.2 Capitalization. The authorized and issued Capital Stock of London
Fog as at the Closing Date (after giving effect to the transactions contemplated
by this Agreement) is as set forth in Schedule 6.2. There are no outstanding
rights, options, warrants or agreements for the purchase from, or sale by,
London Fog of any shares of its Capital Stock, except as set forth on Schedule
6.2. All of the issued and outstanding shares of Capital Stock of London Fog are
validly issued, fully paid and non-assessable.
6.3 Corporate Existence; Compliance with Law. Each of London Fog and
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
and (d) is in compliance with all Requirements of Law except to the extent that
the failure to comply therewith could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.4 Corporate Power; Authorization; Enforceable Obligations. Each of
London Fog and the Subsidiary Guarantors have the corporate power and authority,
and the legal right, to make, deliver and perform this Agreement and the other
Restructuring Documents to which it is a party and London Fog has taken all
necessary corporate action to authorize (a) the execution, delivery and
performance of this Agreement and the other Restructuring Documents to which it
is a party and (b) the issuance and delivery of the New Common Stock, the Merger
Warrants, the Management Anti-Dilution Warrants and the Management Stock
Options. Upon delivery to the Lenders of certificates representing the New
Common Stock, pursuant to this Agreement, such
22
shares will be validly issued, full paid and non-assessable and free of
preemptive rights, and the Lenders will have good title to such shares, free and
clear of any lien. Upon issuance of shares of New Common Stock upon the exercise
of the Merger Warrants or the Management Anti-Dilution Warrants, as the case may
be, such shares will be validly issued, fully paid and non-assessable and free
of preemptive rights, and the holders thereof will have good title to such
shares, free and clear of any lien. No consent or authorization of, filing with,
notice to or other act by or in respect of, any Governmental Authority or any
other Person is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement and the other
Restructuring Documents to which London Fog and the Subsidiary Guarantors is a
party. This Agreement has been, and each other Restructuring Document to which
each of London Fog and the Subsidiary Guarantors is a party will be, duly
executed and delivered on behalf of London Fog and each such Subsidiary
Guarantor. This Agreement constitutes, and each other Restructuring Document to
which it is a party when executed and delivered will constitute, a legal, valid
and binding obligation of London Fog and each such Subsidiary Guarantor
enforceable against London Fog and each such Subsidiary Guarantor in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an implied covenant of good
faith and fair dealing.
6.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Restructuring Documents to which each of London Fog and
the Subsidiary Guarantors is a party will not violate any Requirement of Law or
Contractual Obligation of any of London Fog or its Subsidiaries and will not
result in, or require, the creation or imposition of an lien on any of their
respective properties or revenues pursuant to any such Requirement of Law or
Contractual Obligation.
6.6 No Material Litigation. No litigation by, investigation by, or
proceeding of or before any arbitrator or any Governmental Authority is pending
or, to the knowledge of London Fog, threatened by or against any of London Fog,
or its Subsidiaries or against any of their respective properties or revenues
(including after giving effect to the merger of LFI Merger Corp. with and into
London Fog) (a) with respect to any of the Restructuring Documents or any of the
transactions contemplated hereby or thereby, or (b) which could reasonably be
expected to have a Material Adverse Effect.
6.7 No Default. None of London Fog or any Subsidiary Guarantor is in
default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
After giving effect to the transactions contemplated hereby, no default or event
of default has occurred and is continuing under the Senior Loan Agreement or the
New Subordinated Note Indenture.
23
SECTION 7. CONDITIONS PRECEDENT
7.1 Conditions to Restructure of Existing Obligations. The agreement
of each Lender to restructure the Existing Subordinated Obligations, the
agreement of Congress to enter into the Amendment to the Senior Loan Agreement,
the agreement of each Lender and each Existing Management Holder to recapitalize
London Fog and the effectiveness of this Agreement is subject to the
satisfaction (unless otherwise waived to the extent permitted pursuant to
subsection 8.1), immediately prior to or concurrently with such restructuring on
the Closing Date, of the following conditions precedent:
(a) Restructuring Documents. The Agent shall have received (i) this
Agreement, executed and delivered by a duly authorized officer of each of
the parties hereto, with a counterpart for each party hereto, (ii) the New
Subordinated Note Indenture, executed and delivered by a duly authorized
officer of each of the parties thereto, together with all related
subordinated loan documents required to be executed and delivered
thereunder, with a counterpart for each Lender, and (iii) the Amendment to
the Senior Loan Agreement, executed and delivered by a duly authorized
officer of each of the parties thereto.
(b) Related Agreements. The Agent shall have received, with a copy for
each Lender, such other documents or instruments as may be reasonably
requested by the Agent, including, without limitation, a copy of any debt
instrument, security agreement or other material contract to which London
Fog or its Subsidiaries may be a party, including without limitation, (i)
the Amended and Restated Management Holders' Employment Agreements, (ii)
the Registration Rights Agreement and (iii) the Guarantees, the Security
Documents and the Subordination Agreement (each as defined in the New
Subordinated Note Indenture).
(c) Closing Certificate. The Agent shall have received, with a
counterpart for each Lender, a certificate of London Fog and each
Subsidiary Guarantor, dated the Closing Date, substantially in the form of
Exhibit M, with appropriate insertions and attachments, satisfactory in
form and substance to the Agent, executed by the President or any Vice
President and the Secretary or any Assistant Secretary of London Fog or
such Subsidiary Guarantor, as applicable.
(d) Corporate Proceedings. The Agent shall have received, with a
counterpart for each Lender, a copy of the resolutions, in form and
substance satisfactory to the Agent, of the Board of Directors (and, where
applicable, the stockholders) of each of London Fog, each Subsidiary
Guarantor and LFI Merger Corp. authorizing (i) the execution, delivery and
performance of the Restructuring Documents to which it is a party, (ii) the
restructure and recapitalization contemplated hereunder and (iii) the
merger of LFI Merger Corp. with and into London Fog, each certified by the
Secretary or an Assistant Secretary of London Fog, such Subsidiary
Guarantor or LFI Merger Corp., as applicable, as of the Closing Date, which
certificate shall be in form and substance satisfactory to the Agent
24
and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded.
(e) Corporate Documents. The Agent shall have received, (i) with a
counterpart for each Lender, true and complete copies of the Amended and
Restated Certificate of Incorporation and Amended and Restated By-Laws of
London Fog certified as of the Closing Date as complete and correct copies
thereof by the Secretary or an Assistant Secretary of London Fog and (ii)
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each Subsidiary Guarantor,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of the applicable Subsidiary
Guarantor.
(f) Legal Opinions. (i) The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:
(A) the legal opinion of Proskauer Rose LLP, special counsel
to London Fog and the Subsidiary Guarantors, substantially in the form
of Exhibit N-1;
(B) the legal opinion of Stuart Fisher, Esq., general
counsel of London Fog, substantially in the form of Exhibit N-2; and
(C) the legal opinion of Young, Conaway, Stargatt & Taylor,
special Delaware counsel to London Fog and the Subsidiary Guarantors,
substantially in the form of Exhibit N-3.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Agent may reasonably
require. Congress may rely on the provisions of the legal opinions referred
to above as may be specified therein.
(g) Delivery of New Common Stock. The Agent shall have received the
certificates or a global certificate representing the New Common Stock to
be issued to the Lenders in accordance with the Lender Allocation Schedule.
(h) Delivery of Lenders' Merger Warrants. The Agent shall have
received the certificates or a global certificate representing the Merger
Warrants to be issued to the Lenders in accordance with the Lender
Allocation Schedule.
(i) No Default. No Default or Event of Default shall have occurred and
be continuing under the Senior Loan Agreement or the New Subordinated Note
Indenture.
(j) Delivery of Existing Series B Equity Holders' Merger Warrants. The
Existing Series B Equity Holders shall have received the certificates or a
global certificate representing the Merger Warrants to be issued to the
Existing Series B Equity Holders
25
pursuant to the Certificate of Merger and in accordance with the Existing
Series B Equity Holder Allocation Schedule.
(k) Management Stock Option Agreement. The Existing Management Holders
and London Fog shall have received, with a counterpart for the Agent and
each Lender and Congress, the Management Stock Option Agreements, with
respect to such Existing Management Holders, executed and delivered by the
parties thereto.
(l) Fees and Expenses. London Fog shall have reimbursed, with respect
to invoices received at least one Business Day prior to the Closing Date,
each Lender and the Agent for all its reasonable costs and expenses,
including, without limitation, (i) the reasonable fees and disbursements of
counsel to each Lender and the Agent (including Simpson Thacher & Bartlett
and the allocated fees and expenses of in-house counsel) and (ii) the
reasonable fees and expenses of Alvarez & Marsal, Inc., in connection with
the restructure and recapitalization contemplated hereby; provided that
with respect to invoices received by London Fog thereafter, London Fog
shall reimburse the entity submitting such invoice in accordance with this
Agreement as soon as practicable after receipt of such invoice.
(m) Agreement of Merger; Certificate of Merger. (i) The Agent shall
have received, with a copy for each Lender, a copy of the Agreement of
Merger, executed and delivered by a duly authorized officer of each of the
parties thereto. (ii) London Fog shall have filed or caused to be filed
with the Secretary of State of the State of Delaware, and the Secretary of
State of the State of Delaware shall have accepted for filing, the
Certificate of Merger.
(n) Amended and Restated Certificate of Incorporation.
Contemporaneously with the filing of the Certificate of Merger pursuant to
subsection 7.1(m), London Fog shall have filed or caused to be filed with
the Secretary of State of the State of Delaware, and the Secretary of State
of the State of Delaware shall have accepted for filing, the Amended and
Restated Certificate of Incorporation.
(o) Management Anti-Dilution Warrants. The Management Holders
receiving Management Stock Options at the Closing shall have received the
certificates or a global certificate representing the Management
Anti-Dilution Warrants to be issued to such Management Holders in
accordance with the Management Holder Allocation Schedule.
(p) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Agreement and the other Restructuring
Documents shall be reasonably satisfactory in form and substance to the
Agent, and the Agent shall have received such other documents and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
26
SECTION 8. MISCELLANEOUS
8.1 Amendments and Waivers. Neither this Agreement, nor any terms
hereof, may be amended, waived, supplemented or modified except in accordance
with the provisions of this subsection 8.1. The Agent, the Required Lenders,
London Fog and the Existing Management Holders may from time to time, (a) enter
into written amendments, supplements or modifications hereto for the purpose of
adding any provisions to this Agreement or changing in any manner the rights of
the parties hereunder or (b) waive, on such terms and conditions as the parties
hereto may specify in such instrument, any of the requirements of this
Agreement; provided, however, that any such waiver and any such amendment,
supplement or modification which shall amend, modify or waive (i) any provisions
of subsection 3.1, and any corresponding definition in subsection 1.1, shall
only require the consent of each of London Fog, the Agent and the Required
Lenders, (ii) any provisions of Section 2, subsection 3.3 and Section 5, and any
corresponding definition of subsection 1.1, shall only require the consent of
each of London Fog, the Agent and the Required Lenders, (iii) any provisions of
subsection 3.2, and any corresponding definition of subsection 1.1, shall only
require the consent of each of London Fog, the Agent and each Lender affected
thereby, (iv) any provisions of subsections 3.4 and 3.7, and any corresponding
definition in subsection 1.1, shall only require the consent of each of London
Fog, the Agent, the Required Lenders and the Existing Management Holders and (v)
any provisions of subsections 3.5 and 3.6 and Section 4, and any corresponding
definition in subsection 1.1, shall only require the consent of each of London
Fog, the Agent and the Required Lenders. Any such waiver and any such amendment,
supplement or modification shall apply equally to, and shall be binding upon all
of, the parties hereto and all future holders of the New Subordinated
Indebtedness.
8.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of London Fog and the Agent, and as
set forth in Schedule 8.2 in the case of the other parties hereto, or to such
other address as may be hereafter notified by the respective parties hereto and
their successors and assigns:
London Fog: London Fog Industries, Inc.
1332 Londontown Boulevard
Eldersburg, Maryland 21784
Attention: Edward M. Krell
Telecopy: 410-549-8499
with a copy to: London Fog Industries, Inc.
8 West 40th Street
New York, New York 10018
Attention: Stuart Fisher, Esq.
Telecopy: 212-790-3195
27
The Agent: The Chase Manhattan Bank
270 Park Avenue, 30th Floor
New York, New York 10017
Attention: Mr. Charles O. Freedgood
Telecopy: 212-661-8396
provided that any notice, request or demand to or upon the Agent and the Lenders
shall not be effective until received.
8.3 Payment of Expenses. London Fog agrees (a) to pay or reimburse the
Agent for all its out-of-pocket costs and expenses incurred in connection with
the development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement and the other Restructuring Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Restructuring
Documents and any such other documents, including, without limitation, the fees
and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to the Agent, (c) to pay,
indemnify, and hold each Lender and the Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, which
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement, the other Restructuring
Documents and any such other documents, and (d) to pay, indemnify, and hold each
Lender and the Agent and their respective officers, directors, partners,
members, employees, affiliates, agents and controlling persons (each, an
"indemnitee") harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, the other Restructuring Documents and any such other documents,
including, without limitation, any of the foregoing relating to the use of
proceeds of the loans or the violation of, noncompliance with or liability
under, any environmental law applicable to the operations of London Fog, any of
its Subsidiaries or any of their respective properties (all the foregoing in
this clause (d), collectively, the "indemnified liabilities"), provided, that
London Fog shall have no obligation hereunder to any indemnitee with respect to
indemnified liabilities to the extent such indemnified liabilities are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from the gross negligence or willful misconduct of such indemnitee. The
agreements in this subsection 8.3 shall survive repayment of the Senior Loan
Agreement and the New Subordinated Indebtedness, and all other amounts payable
under the Restructuring Documents.
28
8.4 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts (including by
telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with London Fog and the Agent.
8.5 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.6 Integration. This Agreement and the other Restructuring Documents
represents the agreement of London Fog, the Subsidiary Guarantors, the Agent,
the Lenders and the Existing Management Holders with respect to the subject
matter hereof, and there are no promises, undertakings, representations or
warranties by London Fog, the Subsidiary Guarantors, the Agent, any Lender or
any Existing Management Holder relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Restructuring
Documents.
8.7 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.8 Submission To Jurisdiction; Waivers. Each of London Fog, the
Subsidiary Guarantors, the Agent, the Lenders and the Existing Management
Holders hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Restructuring Documents
to which it is a party, or for recognition and enforcement of any judgment
in respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to London Fog
and the Subsidiary Guarantors at
29
their respective addresses set forth in subsection 8.2 or at such other
address of which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this subsection 8.8 any special, exemplary, punitive or consequential
damages.
8.9 Acknowledgements. Each of London Fog, the Subsidiary Guarantors
and the Existing Management Holders hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Restructuring Documents;
(b) neither the Agent nor any Lender (as a lender) has any fiduciary
relationship with or duty to London Fog arising out of or in connection
with this Agreement or any of the other Restructuring Documents, and the
relationship between Agent and Lenders, on the one hand, and London Fog, on
the other hand, in connection herewith or therewith is solely that of
debtor and creditor and, in the case of the Lenders, stockholder thereof;
and
(c) no joint venture is created hereby or by the other Restructuring
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among London Fog, the Subsidiary Guarantors,
the Existing Management Holders and the Lenders.
8.10 WAIVERS OF JURY TRIAL. EACH OF LONDON FOG, THE SUBSIDIARY
GUARANTORS, THE EXISTING MANAGEMENT HOLDERS, THE AGENT AND THE LENDERS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER RESTRUCTURING DOCUMENT AND
FOR ANY COUNTERCLAIM THEREIN.
4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
LONDON FOG INDUSTRIES, INC.
By:
------------------------------------
Name: Edward M. Krell
Title: Chief Financial Officer
CLIPPER MIST, INC.
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
LONDON FOG SPORTSWEAR, INC.
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
MATTHEW MANUFACTURING CO., INC.
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
PACIFIC TRAIL, INC.
By:
-----------------------------------
Name: Stuart B. Fisher
Title: Secretary
PTI HOLDING CORP.
By:
-----------------------------------
Name: Stuart B. Fisher
Title: Secretary
PTI TOP COMPANY, INC.
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
STAR SPORTSWEAR MANUFACTURING
CORP.
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
THE MOUNGER CORPORATION
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
THE SCRANTON OUTLET CORPORATION
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
WASHINGTON HOLDING COMPANY
By:
------------------------------------
Name: Stuart B. Fisher
Title: Secretary
ROBERT E. GREGORY, JR., as an Existing
Management Holder
----------------------------------------
C. WILLIAM CRAIN, as an Existing
Management Holder
----------------------------------------
THE CHASE MANHATTAN BANK, as Agent
and as a Lender
By:
------------------------------------
Name:
Title:
BIII CAPITAL PARTNERS L.P.
By:
------------------------------------
Name:
Title:
BAKER NYE SPECIAL CREDITS, INC.
By:
------------------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:
------------------------------------
Name:
Title:
BEAR STEARNS & CO. INC.
By:
-------------------------------------
Name:
Title:
CIBC OPPENHEIMER CORP.
By: Contrarian Capital Advisors, L.L.C.,
its duly authorized agent
By:
------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
------------------------------------
Name:
Title:
CONTRARIAN CAPITAL PARTNERS L.L.C.
By:
------------------------------------
Name:
Title:
DLJ CAPITAL FUNDING, INC.
By:
------------------------------------
Name:
Title:
DAYSTAR LLC, as agent
By:
------------------------------------
Name:
Title:
DAYSTAR SPECIAL SITUATIONS FUND LP
By:
------------------------------------
Name:
Title:
FOOTHILL CAPITAL CORPORATION
By:
------------------------------------
Name:
Title:
MELLON BANK, N.A., as Trustee for First
Plaza Group Trust, as directed by
Contrarian Capital Advisors, L.L.C.
By:
------------------------------------
Name:
Title:
MWV SEPARATE ACCOUNT ALPHA, LLC
By:
------------------------------------
Name:
Title:
MORGENS WATERFALL DOMESTIC
PARTNERS, L.L.C.
By:
------------------------------------
Name:
Title:
NATEXIS BANQUE BCFE
By:
------------------------------------
Name:
Title:
PRIME INCOME TRUST
By:
-----------------------------------
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
By:
------------------------------------
Name:
Title: